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ANNUAL REPORT
20
20
Corporate Directory
DIRECTORS
Hugh Warner
Sam Hosack
Harry Greaves
Gerry Fahey
Zed Rusike
HeNian Chen
SECRETARY
Andrew Whitten
PRINCIPAL &
REGISTERED OFFICE
Suite 6, 245 Churchill Ave
Subiaco, WA 6008
Telephone: (08) 9217 3300
Email: info@prospectresources.com.au
AUDITORS
Stantons International
Level 2
1 Walker Avenue
West Perth WA 6005
SHARE REGISTRY
Automic Pty Ltd
Level 5
126 Phillip Street
Sydney NSW 2000
Telephone: 1300 288 664
Email: hello@automic.com.au
Investor Portal:
https://investor.automic.com.au
ASX CODE
Shares – PSC
LEGAL REPRESENTATIVES
King & Wood Mallesons
Level 30, QV1 Building
250 St Georges Terrace
Perth WA 6000
ACN 124 354 329
Table of Contents
Corporate Directory
Overview
Managing Director’s Report
Review of Operations
Directors' Report
Directors' Report
Directors' Declaration
Financial Report
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to and Forming Part of the
Financial Statements
Auditor's Independence Declaration
Independent Auditor’s Report
ASX Additional Information
2
4
13
22
24
25
26
27
28
59
60
64
1.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020
Managing
Director's Report
Dear Shareholders,
I am pleased to provide this Annual Report of your
Company’s performance in FY2020. Whilst the
Company achieved many corporate and project
milestones, we were limited on what we could
achieve due to the global turmoil caused by
Covid-19.
Even with these challenges that we have all faced
this year, nothing has changed the fact that
Arcadia is in a unique position, because it is the
only lithium deposit that can produce both low
iron spodumene for the electric vehicle market and
ultra-low iron petalite lithium concentrates for the
glass and ceramics markets.
2020, the year of milestones
The year consisted of balancing development of
opportunities with risk management (cutting
costs) in the face of a global pandemic. Prospect
made substantial progress on its strategic objective
to become Africa’s leading lithium producer by
releasing our updated Definitive Feasibility Study
("DFS") and signing the ultra-low iron petalite
offtake agreement with Sibelco.
As you will remember from our ASX
announcements this year, a lot of 2020 has been
focused on the ultra-low iron petalite market.
Whilst most Australian spodumene producers
have been hamstrung by low spodumene prices in
2020, ultra-low iron petalite prices have remained
strong. Assuming tantalum and petalite revenues
are credited against the cost of spodumene
production, then even at these low prices, our
spodumene is expected to make a healthy margin.
This is an example of why Arcadia is unique and
our products are in demand.
In late December 2019, the Company appointed
African Export-Import Bank (“Afreximbank”) to
arrange and manage the primary syndication of a
2.
Leading the way in the
battery revolution
US$143m project finance debt facility. Given the upheaval
in global markets, progress with Afreximbank has been
frustratingly slow. That being said, we have not used this as
a reason to slow down parallel initiatives:
• Sibelco offtake. The Company signed the largest ultra-
low iron petalite offtake agreement in the world (up to
700,000 tonnes over 7 years).
• MOU with Uranium One. The Company signed a
Memorandum of Understanding (“MOU”) with Uranium
One for the purpose of Uranium One to undertake due
diligence on Prospect and Arcadia with the intention
to invest in or acquire Prospect or Arcadia and secure
more than 50% of the spodumene offtake. These
discussions are progressing well.
• Renaissance Capital. The Company appointed
Renaissance Capital as its exclusive financial advisor in
relation to the potential sale, directly or indirectly, of the
Company’s interest in the Arcadia Lithium Project or of
Prospect itself to Uranium One. We are working closely
with Renaissance Capital.
Lithium, the strategic mineral
In line with our long-term strategy, we see lithium as a
robust and sustainable element to the electrification
thematic that has and will continue to fundamentally
revolutionise the way we live. Lithium’s role in the storage,
use and transfer of energy has already touched the globe
through our use of smart phones for global communication,
laptops, electric grid stability and storage to power our
homes, and electric vehicles to drive us. Ultra-low iron
petalite is the primary ingredient in the production of
induction cooktops that provides heat for us to cook our
food, other high temperature glass products, fiberglass and
wind turbines.
Prospect well positioned for success
In all industries there are business cycles and the success of
the Company is determined by how it performs during the
challenging times, not only during cycle peaks. Lithium is
no different and Prospect made the most of 2020 to open
new markets, conduct expansive technical work to de-risk
Arcadia’s future operations, extended Arcadia’s Life of Mine
and substantially improve Arcadia’s project economics.
Whilst the events of 2020 have delayed the development of
Arcadia, we have still moved closer to the date for first dig
and first products. We are well positioned for Prospect to
take full advantage of the irrefutable wave of demand and
the emerging supply gaps. We have a tier one deposit, an
experienced management team and high-quality offtake
partners.
On behalf of the Board and Management, I would like to
thank you for your valuable contribution and continued
support. While we remain vigilant about the short term
market outlook, our long term view remains positive and we
are well placed to meet demand for the lithium the world
needs well into the future.
Thank you for your continued support of Prospect
Resources.
Sam Hosack
Managing Director
30 September 2020
3.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020 Review of
Operations
4.
Below is a summary of key operational announcements made during the financial year. Please use the summary as
a memory prompt of how much our team has achieved in the year. Please also refer to the Company’s website (www.
prospectresources.com.au) as an additional source of information on Prospect.
Key Announcements
September 2019 Quarter
19 July
31 July
RBZ approves PSC to increase Arcadia ownership to 87%
Low iron report confirms premium pricing for Arcadia
23 August
MOU signed for power supply to Arcadia
December 2019 Quarter
20 September
Prospect Resources’ listing on the Frankfurt Stock Exchange
4 November
Petalite passes glass & ceramics manufacturers process
20 November
Significant increase in Arcadia’s Ore Reserve
6 December
Arcadia receives government incentive
12 December
Updated DFS confirms robust lithium mine
12 December
Prospect signs MOU with Uranium One
16 December
Prospect secures power supply at Arcadia
17 December
Afreximbank mandated to arrange debt facility
30 December
Placement and offtake discussions to advance Arcadia
March 2020 Quarter
6 January
Petalite passes second product qualification stage
14 January
Equity Placement
11 February
Caesium discovered in satellite deposits around Arcadia
13 March
Extension of MOU with Uranium One
June 2020 Quarter
3 April
6 April
15 April
27 April
13 May
28 May
30 June
Share Rights Issue
Entitlement Issue Prospectus
Prospect Resources signs MOU with Sibelco
Prospect extends MOU with Uranium One
Completion of Entitlement Issue
Update of Sibelco MOU
Update to discussions with Sibelco
5.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020 Arcadia Lithium Project
Location
The Arcadia Lithium Project is located approximately
35 km east of Harare, Zimbabwe providing convenient
access to skilled and semi-skilled labour. A Mining Lease
has been granted over an area of more than 10 km2
and Environmental Approvals are in place. The Project
is located close to major highways and railheads, with
the Beira Port being less than 580 km away by rail/road
transport. Grid power access via switchyard is within 4
km of the Project with 20 MVA capacity. There is surplus
groundwater available.
Geology
The Arcadia Lithium deposit is hosted within a series
of 14 stacked, sub parallel petalite-spodumene bearing
pegmatites that intrude the local Archaean age Harare
Greenstone Belt. Dimensions of the pegmatites defined
by drilling to date are 4.5 km along strike (SW-NE), with an
average thickness of 15 m and dipping 15 degrees to the
NW. The Main Pegmatite is exposed in the historical pit,
and the deposit is open along strike to the southwest. The
deposit is cut by the NNE-SSW trending Mashonganyika
Fault zone, as well as a regional SW-NE trending dolerite
dyke that appears to truncate the pegmatite to the NW. A
total of 194 RC and 111 diamond drill holes have been drilled
on the project (26,682m).
Location of Arcadia Lithium Project
6.
Arcadia Project Highlights
Benchmark Low Iron Petalite Report
Prospect Resources received an independent market report
from leading market analysis firm Benchmark Mineral
Intelligence (“Benchmark”) on the use of lithium in the glass
& ceramics market and the premium pricing of low iron
petalite concentrate. The findings in the report were:
•
In 2018, the global lithium market size was 276,000
LCE with 17% (46,500 LCE or 470,000t equivalent of 4%
low iron petalite concentrate) going into the glass &
ceramics market;
• Globally, there were only two producers of low iron
lithium concentrates (one being petalite concentrate,
now closed, and another being a spodumene
concentrate producer) that meets the glass & ceramics
market specifications, offering Prospect a unique
competitive advantage;
•
18% of the glass & ceramics market (8,500 LCE)
is supplied by ultra-low iron petalite concentrate
(equivalent to 86,000t of 4% Li2O petalite concentrate)
which the Arcadia mine will produce;
• Growth in market share of ultra-low iron petalite has
been restricted due to a lack of product volume and
continuity of supply volumes - Arcadia will be able to
satisfy this demand.
The battery industry is not the only sector using lithium
minerals and chemicals. In 2018, an estimated 17% of
lithium production was consumed by the glass and
ceramics market. This can be consumed as a mineral
(petalite or spodumene) or as a refined chemical product
(lithium carbonate). Only ultra-low iron petalite and low
iron spodumene can be used efficiently in the glass and
ceramics industry.
In recent times, there have only been two major producers
of these low iron lithium concentrates. Now that the only
ultra-low iron petalite producer has ceased operations,
there are question marks over future supply of such
product. Clearly, this is an opportunity for Arcadia. There
are no listed lithium companies in Australia, Canada or
South America that can supply this product.
Increased JORC Reserve Estimates
On 20 November 2019, Prospect Resources announced
a significant increase in the Ore Reserve estimate for the
Arcadia Lithium Project. The upgraded Ore Reserve of
37.4Mt grading 1.22% Li2O and 121ppm Ta2O5, represents a
39% increase on the Ore Reserve announced in December
2017.
The Ore Reserve hosts ~ 1.2Mt of contained lithium
carbonate equivalent (LCE), 10 million pounds of Ta2O5 and
increased Arcadia’s mine life to >15 years.
7.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020 Arcadia Ore Reserve Statement (20 November 2019)
Category
Proven
Probable
TOTAL
Tonnes (Mt)
Li2O %
Ta2O5 ppm
Li2O (kt)
Ta2O5 (Mlbs)
11.3
26.1
37.4
1.28
1.20
1.22
114
124
121
144
314
457
2.8
7.2
10.0
The Mineral Resource (capturing material above 0.2% Li2O) is outlined below:
Arcadia JORC Mineral Resource Statements (24 October 2017)
Global Resource - 0.2% Li2O Cut-off
Category
Measured
Indicated
Inferred
TOTAL
Tonnes (Mt)
Li2O %
Ta2O5 ppm
Li2O (kt)
Ta2O5 (Mlbs)
15.9
45.4
11.4
72.7
1.17%
1.10%
1.06%
1.11%
121
121
111
119
185
502
121
808
4.2
12.1
2.8
19.1
Updated Definitive Feasibility Study
Prospect released the outcomes of its Definitive Feasibility Study (“DFS”) based on the proposed 2.4 Mtpa mining and
processing operation on 12 December 2019. The DFS confirms that Arcadia will be a strong, high-margin project with
current forecast Life of Mine (LOM) revenue of US$3.42 billion and average annual EBITDA of US$114 million over an
estimated 15.5-year mine life.
The key study outcomes for the 2.4 Mtpa DFS are set out below:
Study Outcome
Average Annual EBITDA First 5 Years (Real)
Estimated Mine Life
LOM Project Revenue (Real & excluding tantalum credits)
LOM Project EBITDA (Real)
Capital Costs (Pre-production)
Sustaining Capital
Pre-Tax NPV10
Internal Rate of Return (IRR, Pre-tax)
LOM Cash Operating Costs (Real, net of tantalum credits)
Project Payback (from first production)
DFS – 2.4Mtpa Base Case
US$168 million
15.5 years – Open Pit
US$3.42 billion
US$1.77 billion
US$162 million
US$35 million
US$710 million
71%
US$344/t
1.5 years
The project economics position Arcadia in the lowest operating cost quartile and as a high margin, tier one lithium project.
In line with the Prospect’s strategic focus of petalite being sold into the glass & ceramics market, the mine plan has been
scheduled to produce 100,000tpa of ultra-low iron petalite production to satisfy customer volumes. This steady state supply
will provide the glass & ceramic customers with long term security of supply, something which they have not been able to
achieve prior to Arcadia.
Afreximbank appointed as Mandated Lead Arranger
Prospect appointed African Export-Import Bank (“Afreximbank”) to arrange and manage the primary syndication of a
US$143m project finance debt facility. This process has been delayed due to the uncertainty created by the Covid-19.
8.
Offtake Agreements
Prospect has now entered into offtake agreements with Sinomine Resource (Hong Kong) International Trading Co., Limited
(“Sinomine”) and with Sibelco N.V. for its lithium concentrates as follows:
(i) Sinomine
The Offtake Agreement has a term of seven years delivering 280,000 tonnes 6% Li2O (lithia) spodumene concentrate and
784,000 tonnes 4% Li2O petalite concentrate (Petalite). Prospect is entitled to increase the quantities of Spodumene and
decrease the quantities of Petalite, provided the lithia units of the combined Spodumene and Petalite do not change.
Sinomine has agreed to make an advanced payment to Prospect of US$10m following the ball mill being delivered and bolt
installed at the Project.
(ii) Sibelco
The Offtake Agreement has a term of seven years delivering up to 100,000 dmt per annum of high quality ultra-low iron
petalite concentrate, resulting in a total of up to 700,000 dmt over the lifetime of the contract.
MOU signed with Uranium One and appointment of Renaissance Capital
Prospect has entered into a Memorandum of Understanding (“MOU”) with Uranium One Group JSC (“Uranium One”).
Uranium One is a global energy company and one of the world’s largest uranium producers, with a diverse portfolio of assets
worldwide, including in Kazakhstan, the United States and Tanzania. Uranium One is a company of ROSATOM, the Russian
State Corporation for Nuclear Energy.
The purpose of the MOU is to complete due diligence on the Company and its Arcadia Lithium Project; and subject to
satisfactory due diligence, negotiate:
•
equity investment terms in Prospect or its subsidiaries; and
• offtake terms for at least 51% of the Company’s future lithium production.
The discussions with Uranium One are progressing well. In light of this, Prospect appointed Renaissance Securities (Cyprus)
Limited (“Renaissance Capital”) as its exclusive financial advisor in relation to the potential sale, directly or indirectly, of the
Company’s interest in the Arcadia Lithium Project or of Prospect itself to Uranium One or its affiliates.
9.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020 Other Projects
Penhalonga – Gold
Chishanya – Phosphate
The Penhalonga Gold Project consists of a number of shear
and vein hosted gold deposits along the southern side of
the Penhalonga Valley covering an area of approximately
1.8km2, including the historic Battersea Gold Mine and the
dormant Penhalonga Gold Mine, 5km north of Mutare. It
is situated in the Mutare Greenstone Belt which extends
eastward into Mozambique. In terms of gold production
per unit area, the Mutare Greenstone Belt at 122kg Au/
km2 is one of the richest belts within Zimbabwe. Historical
production from the Penhalonga valley between 1897
and 1937 amounted to: Gold 1.3m oz, Silver 1.6m oz, Lead
7,258 tonnes and Copper 5.2 tonnes. Prospect also owns a
number of lead tenements within the Mutare Greenstone
Belt.
The Chishanya Phosphate Project is one of 5 known
phosphate bearing carbonatites in Zimbabwe. The deposit
has been explored by a number of companies since the
1950s including Anglo American and Rhodesia Chrome
Mines Ltd. The deposit is a series of un-exploited phosphate
bearing, apatite-magnetite lenses in carbonatite located
near Birchenough Bridge, Manicaland. The potential for
Rare Earth Elements (REEs) has also never previously been
assessed.
Gwanda East - Gold
The Group terminated the Farvic joint venture farming
agreement at Gwanda East by mutual consent and sold its
non-core Gwanda East claims and plant and equipment for
its written down value of US$105,864.
10.
Competent Person Statement
The Company confirms it is not aware of any new information or data that
materially affects the information included in the Arcadia Mineral Resource
Estimate and that all material assumptions and technical parameters underpinning
the estimate continue to apply and have not materially changed when referring to
its resource announcement made on 25 October 2017.
The Company confirms it is not aware of any new information or data that
materially affects the information included in the Arcadia Ore Reserve Estimate and
that all material assumptions and technical parameters underpinning the estimate
continue to apply and have not materially changed when referring to its reserve
announcement made on 20 November 2019.
11.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020 Directors'
Report
12.
The Directors of Prospect Resources Limited (“the
Company”) submit hereby the annual report of the
Company and its subsidiaries, (together the “Consolidated
Entity” or “Group”) for the financial year ended 30 June
2020. In order to comply with the provisions of the
Corporations Act 2001, the Directors’ Report as follows:
OFFICERS AND DIRECTORS
The Directors at any time during or since the end of the
year are:
Name
Hugh Warner
Sam Hosack
Particulars
Executive Chairperson
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Significant changes in the state of affairs of the Group
during the financial year were as follows:
1)
The Company issued 9,639,999 new ordinary shares via
a placement to raise $1,688,000 before costs;
2) The Company issued 40,344,767 new ordinary shares via
rights issue to raise $2,017,000 before costs; and
3) The Group terminated the Farvic joint venture farming
agreement at Gwanda East by mutual consent and
sold its non-core Gwanda East claims and plant and
equipment for its written down value of US$105,864.
Managing Director
ENVIRONMENTAL REGULATIONS
Duncan (Harry) Greaves
Executive Director
Gerry Fahey
Non-Executive Director
Zivanayi (Zed) Rusike
Non-Executive Director
HeNian Chen
Meng Sun
Non-Executive Director
Alternate to Mr Chen
The above named Directors held office during and since the
end of the financial year, except as otherwise stated.
PRINCIPAL ACTIVITY
The principal activity of the Group is exploration, evaluation
and development of mineral resources.
The Group is aware of its environmental obligations with
regards to its exploration and development activities and
ensures that it complies with all regulations when carrying
out exploration and development work.
MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
Other than the following, the directors are not aware of any
significant events since the end of the reporting period:
• On 17 August 2020, the Group announced it had
entered into an offtake agreement with Belgium based
Sibelco N.V. to supply up to 700,000 dry metric tonnes
of ultra-low iron petalite over seven years.
REVIEW OF OPERATIONS AND RESULTS
DIVIDENDS
The Group has recognised a loss after tax from continuing
operations of $4,607,000 (2019: Loss $5,753,000). The loss
has reduced from the prior year due to project generation
costs reducing to $Nil (2019: $784,000) and share based
payments expense reducing to $Nil (2019: $535,000). The
Group undertook cost reduction initiatives in the last
quarter of the financial year with the impact of these
reductions to be realised in financial year 2021.
Additional information on the operations and financial
position of the Group is set out in the Review of Operations
and Directors’ Report.
No dividends were recommended or paid during the
current year.
LIKELY DEVELOPMENTS/STRATEGIES AND
PROSPECTS
The Group will continue to develop the Arcadia Lithium
Project and extract value from its other non-core assets.
13.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020Directors' Report INFORMATION ON DIRECTORS
Hugh Warner (Executive Chairperson)
appointed 3 January 2012
Experience and Expertise
Mr Warner holds a Bachelor of Economics from the
University of Western Australia. He has broad experience
as a public company director, having been a director of a
number of publicly listed companies involved in the mining,
oil and gas, biotechnology and service industries.
Other Current Listed Directorships
None
Duncan (Harry) Greaves (Executive Director)
appointed 15 July 2013
Experience and Expertise
Mr Greaves is a fourth generation Zimbabwean. He
holds a B.Sc (agriculture) from the University of Natal (in
South Africa). He is the founding shareholder of Farvic
Consolidated Mines (Pvt) Ltd which operates the Prince
Olaf, Farvic and Nicolson gold mines in southern Zimbabwe
all of which he brought back into production over the
last 10 years including the design and construction of two
milling facilities. He is a well respected and well known
member of the Zimbabwe mining fraternity.
Other Current Listed Directorships
Former Listed Directorships in the Last Three Years
None
None
Special Responsibilities
Chairperson
Interests in Shares and Options
20,458,336 ordinary shares and Nil options
Sam Hosack (Managing Director)
appointed 14 July 2018
Experience and Expertise
Mr Hosack is a third generation Zimbabwean, residing
in Western Australia. He holds a Bachelors Engineering
Degree (Hons) from Essex University in UK, MBA from
Ashcroft Business School (UK) and respective professional
registrations. He has hands on experience in the delivery
of large scale mining, power and port projects to market,
as well as their operations. For the 12 years prior to
commencing at Prospect Resources, he was employed by
First Quantum Minerals Ltd, primarily in their Projects team,
where most recently he has project managed the building
of a port (coal offloading and copper loading), 120km 230kV
transmission line and a 300MW coal fired powerstation
for the Minera Panama Project in Panama. His mining
and operations experience in North and Southern Africa,
Europe, Australia and Central America will be central in
delivering the Arcadia Project and in building Prospect into
a diversified mining business.
Other Current Listed Directorships
None
Former Listed Directorships in the Last Three Years
None
Special Responsibilities
None
Interests in Shares and Options
2,000,000 ordinary shares and 4,500,000 options
Former Listed Directorships in the Last Three Years
None
Special Responsibilities
None
Interests in Shares and Options
5,517,954 ordinary shares and Nil options
Gerry Fahey (Non-Executive Director)
appointed 15 July 2013
Experience and Expertise
Mr Fahey has 40 years’ experience in both the international
and local minerals industry. He is a specialist in mining
geology, mine development and training and worked for
10 years as Chief Geologist Mining for Delta Gold where he
was actively involved with the development of the Eureka,
Chaka, Globe and Phoenix gold mines and the following
Australian gold projects: Kanowna Belle, Golden Feather,
Sunrise and Wallaby. Gerry is currently a Director of Focus
Minerals Ltd and a former Director of CSA Global Pty Ltd,
Modun Resources Limited and a former member of the
Joint Ore Reserve Committee (JORC).
Other Listed Current Directorships
Focus Minerals Ltd (appointed 20 April 2011)
Former Listed Directorships in the Last Three Years
None
Special Responsibilities
None
Interests in Shares and Options
1,025,000 ordinary shares and Nil options
14.
Directors' Report Zivanayi (Zed) Rusike (Non-Executive Director)
appointed 26 September 2013
Experience and Expertise
Mr Rusike graduated in Accountancy in Birmingham, England,
before returning to Zimbabwe in 1982. He was Managing
Director of United Builders Merchants before being promoted
to Group Managing Director for Radar Holdings Limited, then,
a large quoted company on the Zimbabwe Stock Exchange.
He retired from the Radar Group of companies in 2005 to
pursue his personal interests and is currently the Executive
Chairman of Dulux Paints Limited. Zed is a former President
of The Confederation of Zimbabwe Industries.
Other Current Listed Directorships
None
Former Listed Directorships in the Last Three Years
None
Special Responsibilities
None
Interests in Shares and Options
3,040,374 ordinary shares and Nil options
HeNian Chen (Non-Executive Director)
appointed 13 November 2017
Experience and Expertise
Mr Chen has served as the Chairman of Changshu Yuhua
Property Co. Ltd since 2003, and has served as the Deputy
Chairman of Afore New Energy Technology (Shanghai) Co.
Ltd since 2007.
Former Listed Directorships in the Last Three Years
None
Special Responsibilities
None
Interests in Shares and Options
6,165,796 ordinary shares and Nil options
COMPANY SECRETARY
The company secretary is Andrew Whitten. Andrew was
appointed to the position of company secretary on 10 April
2012. Andrew is a Solicitor Director of Automic Legal Pty Ltd,
where he specialises in corporate finance and securities law.
MEETINGS OF DIRECTORS
The number of meetings of the Company’s board held
during the year ended 30 June 2020 that each Director was
eligible to attend, and the number of meetings attended by
each Director were:
Director
Eligible to attend
Attended
Number of Meetings
Hugh Warner
Sam Hosack
Harry Greaves
Gerry Fahey
Zed Rusike
HeNian Chen
2
2
2
2
2
2
2
2
2
2
-
2
The Company’s business was conducted via circular
resolutions.
15.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020Directors' Report REMUNERATION REPORT (AUDITED)
The Remuneration Report is set out under the following
main headings:
1) Principles used to determine the nature and amount of
remuneration;
2) Details of remuneration;
3) Service agreements; and
4) Share-based compensation.
The information provided in this Remuneration Report
has been audited as required by Section 308(3C) of the
Corporations Act 2001.
This report details the nature and amount of remuneration
for each director and executive of Prospect Resources
Limited. The information provided in the remuneration
report includes remuneration disclosures that are audited
as required by the Corporations Act 2001 and its regulations.
For the purposes of this report, Key Management Personnel
of the Group are defined as those persons having authority
and responsibility for planning, directing and controlling
the major activities of the Group, directly or indirectly,
including any director (whether executive or otherwise) of
the parent company.
For the purposes of this report, the term ‘executive’ includes
those key management personnel who are not directors of
the parent company.
(1) Principles used to determine the nature
and amount of remuneration
It is the Group’s objective to provide maximum stakeholder
benefit from the retention of a high quality board and
executives by remunerating directors and executives fairly
and appropriately with reference to relevant employment
market conditions. To assist in achieving the objective, the
Board links the nature and amount of executive director’s
emoluments to the Group’s financial and operational
performance. The intended outcomes of this remuneration
structure are:
• Retention and motivation of directors and executives
• Performance rewards to allow directors and executives
to share the rewards of the success of the Group.
The remuneration of an executive director will be decided
by the Board. In determining competitive remuneration
rates the Board reviews local and international trends
among comparative companies and the industry generally.
It also examines terms and conditions for any options
issued.
During the year, external consultants were not used for
determining remuneration.
The maximum remuneration of non-executive directors is
the subject of shareholder resolution in accordance with
the Group’s Constitution, and the Corporations Act 2001
as applicable and is set at $500,000. The appointment of
non-executive director remuneration within that maximum
will be made by the Board having regards to the inputs and
value to the Group of the respective contributions by each
non-executive director.
The Board may award additional remuneration to non-
executive directors called upon to perform extra services or
make special exertions on behalf of the Group. There is no
scheme to provide retirement benefits, other than statutory
superannuation, to non-executive directors. All equity
based remuneration paid to directors and executives is
valued at the cost to the Group and expensed. Options are
valued using the Black-Scholes methodology.
Performance Based Remuneration
The Board may pay bonuses to directors and executives at
its discretion.
The issue of options to directors and executives is to
encourage the alignment of personal and shareholder
returns. The intention of this program is to align the
objectives of directors/executives with that of the business
and shareholders. In addition, all directors and executives
are encouraged to hold shares in the Company.
Group Performance, Shareholder Wealth and Key
Management Personnel Remuneration
The Group 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.
The remuneration policy has been tailored to maximise the
commonality of goals between shareholders, directors and
executives. The method applied in achieving this aim to
date being the issue of options to directors and executives
to encourage the alignment of personal and shareholder
interests. The Group believes this policy will be the most
effective in increasing shareholder wealth.
16.
Directors' Report REMUNERATION REPORT (AUDITED) continued
Performance of Prospect Resources Limited
The table below sets out summary information about the consolidated entity’s earnings and movements in shareholder
wealth for the financial year ended 30 June 2020 and prior.
Revenue
Net loss before tax
Net loss after tax
Share price at beginning of year (cents)
Share price at end of year (cents)
Dividends
Basic and diluted earnings per share
(cents per share)
30 June 2020
30 June 2019
30 June 2018
30 June 2017
30 June 2016
$’000
369
(4,607)
(4,607)
$’000
3,320
(5,722)
(5,753)
$’000
3,892
(5,401)
(5,640)
$’000
110
(12,794)
(12,794)
$’000
71
(1,727)
(1,727)
30 June 2020
30 June 2019
30 June 2018
30 June 2017
30 June 2016
22.5
7.2
-
(1.79)
35.0*
22.5
-
(3.52)
2.0
3.5
-
2.2
2.0
-
0.3
2.2
-
(0.32)
(0.76)
(0.18)
* The Company underwent a 10 for 1 share consolidation in 2019. The 2019 opening share price has been restated, however the data from years prior to
2019 have not been restated.
Remuneration of Key Management Personnel
The following persons were identified as Key Management Personnel of Prospect Resources Limited during the financial
year:
Directors
Hugh Warner
Executive Chairperson
Sam Hosack
Managing Director
Harry Greaves
Executive Director
Gerry Fahey
Non-Executive Director
Zed Rusike
Non-Executive Director
HeNian Chen
Non-Executive Director
Executives
Trevor Barnard General Manager
Roger Tyler
Chief Geologist
Chris Hilbrands Chief Financial Officer
17.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020Directors' Report REMUNERATION REPORT (AUDITED) continued
(2) Details of remuneration
SHORT TERM
POST
EMPLOYMENT
EQUITY
OTHER
2020
Salary & Fees
$
Bonus
$
Other
$
Superannuation
$
Options
$
Leave Accruals
$
Total
$
Performance
%
Non-Executive Directors
Z Rusike
G Fahey
H Chen (i)
21,000
19,178
19,178
Executive Directors
H Warner
S Hosack
H Greaves
Executives
T Barnard
R Tyler
C Hilbrands
Total
Notes
214,306
286,828
218,751
221,814
118,714
171,233
1,291,002
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,822
1,822
20,070
19,172
-
-
-
16,267
59,153
-
-
-
-
-
-
-
-
-
-
-
-
-
21,000
21,000
21,000
41,299
275,675
2,630
308,630
-
-
-
218,751
221,814
118,714
31,359
218,859
75,288
1,425,443
-
-
-
-
-
-
-
-
-
-
(i) HeNian Chen fees were paid or are payable to his alternate director, Meng Sun.
SHORT TERM
POST
EMPLOYMENT
EQUITY
OTHER
2019
Salary & Fees
$
Bonus
$
Other
$
Superannuation
$
Options
$
Leave Accruals
$
Total
$
Performance
%
Non-Executive Directors
Z Rusike
G Fahey
H Chen (i)
24,000
21,918
21,918
Executive Directors
H Warner
228,311
-
-
-
-
S Hosack (ii)
309,582
100,000
H Greaves
250,000
Executives
T Barnard (iii)
244,486
R Tyler
227,928
C Hilbrands
182,648
L John (iv)
20,833
-
-
-
-
-
Total
Notes
1,531,624
100,000
-
-
-
-
-
-
-
-
-
-
-
-
2,082
2,082
21,689
-
-
-
-
29,304
534,985
-
-
-
17,352
-
-
-
-
-
-
-
-
-
7,318
16,351
-
-
-
24,000
24,000
24,000
257,318
990,222
250,000
244,486
227,928
2,342
202,342
-
20,833
-
-
-
-
54%
-
-
-
-
-
72,509
534,985
26,011
2,265,129
24%
(i) HeNian Chen fees were paid or are payable to his alternate director, Meng Sun.
(ii)
Sam Hosack was employed as a part time executive on 13 May 2018 and became Managing Director on 14 July 2018.
(iii) Trevor Barnard was appointed General Manager on 1 August 2018.
(iv) Lee John ceased being a KMP on 31 July 2018, upon the appointment of Trevor Barnard. Biomet Engineering, an entity associated with Lee John,
was paid or is payable $20,833 to 31 July 2018.
Short term incentives
In 2020, no bonuses were recognised. In 2019, Sam Hosack was entitled to a first year anniversary bonus of $100,000 on 14
July 2019. This was recognised in the year ended 30 June 2019.
18.
Directors' Report
REMUNERATION REPORT (AUDITED) continued
(3) Service agreements
Executive Directors
Sam Hosack entered into an Executive Services Agreement commencing 13 May 2018 with a total annual salary of
$35,000 per annum inclusive of superannuation. The total annual salary increased to $350,000 per annum inclusive of
superannuation upon his appointment to Managing Director which occurred on 14 July 2018. Effective 1 April 2020, Sam
Hosack’s remuneration was reduced by 50.3% to $174,000 per annum.
Hugh Warner entered into an Executive Services Agreement commencing 1 June 2016 with a total annual salary of
$250,000 per annum inclusive of superannuation (if applicable) from 1 August 2016. Effective 1 April 2020, Hugh Warner’s
remuneration was reduced by 25% to $187,500 per annum.
Harry Greaves entered into an Executive Services Agreement commencing 1 June 2016 with a total annual salary of
$250,000 per annum inclusive of superannuation (if applicable) from 1 August 2016. Effective 1 April 2020, Harry Greaves
remuneration was reduced by 50% to $125,000 per annum.
Non-Executive Directors
Non-executive directors entered into either a Non-Executive Services Agreement or Consultancy Agreement commencing
1 June 2016, or if later on commencement of appointment, with a total annual salary of $24,000 per annum inclusive of
superannuation (if applicable). Effective 1 April 2020, non-executive director remuneration was reduced by 50% to $12,000
per annum.
Other Executives
Trevor Barnard signed a consulting agreement with a subsidiary of the Company commencing 1 August 2018, for
ZAR2,640,000 per annum. Effective 1 April 2020, Trevor Barnard’s contract was converted into a USD based value and
reduced by approximately 40% to US$112,260 (approx. AUD 160,000) per annum.
Roger Tyler signed a twelve month fixed term contract with a subsidiary of the Company commencing 15 March 2017,
renewed on 15 March 2018 and 15 March 2019, for US$72,000 per annum. In addition, Roger Tyler entered into a consultancy
agreement with Prospect Resources Limited commencing 1 July 2016 with a total annual remuneration of US$60,000
increasing to US$90,000 from 1 September 2016. Effective 1 October 2019, Roger Tyler’s contract with the subsidiary was
cancelled and his consultancy agreement with Prospect Resources Limited was reduced to US$72,000 per annum. Effective
1 April 2020, Roger Tyler’s contract was reduced by 75% to US$18,000 per annum.
Chris Hilbrands entered into an Executive Services Agreement commencing 1 June 2016 with a total annual remuneration of
$100,000 inclusive of superannuation. The total annual salary increased to $200,000 per annum inclusive of superannuation
effective from 1 July 2018. Effective 1 April 2020, Chris Hilbrands remuneration was reduced by 25% to $150,000 per annum.
Termination
For all Directors and Executives other than Mr Hosack, Mr Tyler and Mr Barnard, terms of employment require that the Company
provide the Executive with six months’ written notice. The Directors or Executive may terminate their employment at any
time and will be entitled to six months’ salary. The Company can terminate an Executive’s employment by giving one months
notice if the Executive commits or becomes guilty of gross misconduct and summarily without notice if convicted of any major
criminal offence. Mr Hosack and Mr Tyler terms of employment require that the Company or Executive provide the other with
three months’ notice, while Mr Barnard’s requires that the Company or Executive provide the other with 30 days notice.
(4) Share-based compensation
The Company issued Nil options to directors or key management personnel during the financial year (2019: Nil). Nil options
were exercised (2019: 9,375,000 post consolidation) and Nil options (2019: 7,160,000 post consolidation) expired during the year.
During the financial year, the following share based payment arrangements to directors and key management personnel
were in existence:
Options
Grant date
Grant date
fair value (i)
Exercise price (i)
Expiry date
Vesting date
Issued 13/05/18
13/05/18
$0.1740
$0.60
12/05/22
14/10/18
(i)
The Company undertook a 1:10 share consolidation during the prior year. The above disclosures have been restated where appropriate to reflect the
post consolidation values.
The Company did not recognise any share based payment compensation to key management personnel during the current
financial year. No options were granted, expired or exercised during the year.
19.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020Directors' Report REMUNERATION REPORT (AUDITED) continued
Key Management Personnel Equity Holdings
Ordinary Shares Held at
30 June 2020
Opening
balance
Granted as
compensation
On exercise
of options
Net other
change (i)
Closing
balance
Z Rusike
G Fahey
H Chen
H Warner
S Hosack
H Greaves
T Barnard
R Tyler
C Hilbrands
1,740,374
500,000
4,932,637
16,366,668
1,000,000
3,595,794
1,375,000
500,000
1,115,000
31,125,473
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,300,000
3,040,374
525,000
1,233,159
1,025,000
6,165,796
4,091,668
20,458,336
1,000,000
2,000,000
1,922,160
400,270
124,560
278,750
5,517,954
1,775,270
624,560
1,393,750
10,875,567
42,001,040
(i)
Shares acquired via rights issue.
Options Held at
30 June 2020
Opening
balance
Granted as
compensation
Exercised
Expired
Closing
balance
Vested
during the
year
Vested and
exercisable
Z Rusike
G Fahey
H Chen
H Warner
S Hosack
H Greaves
T Barnard
R Tyler
C Hilbrands
-
-
-
-
4,500,000
-
-
-
-
4,500,000
Additional Information
(a)
Shares under option
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,500,000
-
-
-
-
4,500,000
(End of Remuneration Report)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,500,000
-
-
-
-
4,500,000
At the date of signing this report, the Company has 4,500,000 unlisted options over ordinary shares under issue (30 June
2019: 4,500,000). These options are exercisable as follows:
Details
No of options (i)
Grant Date
Expiry Date
Conversion Price
$
Management incentive options
4,500,000
13/05/2018
12/05/2022
0.60
Share options carry no rights to dividends and no voting rights.
4,500,000
(i)
The Company undertook a 1:10 share consolidation during the prior period. The number of options and exercise price are post this share consolidation.
20.
Directors' Report (b)
Insurance of officers
During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the
company secretary, and any executive officers of the Company and of any related body corporate against a liability incurred
by such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
(c)
Agreement to indemnify officers
The Company has entered into agreements with the directors to provide access to Company records and to indemnify
them. The indemnity relates to any liability as a result of being, or acting in their capacity as, an officer of the Company to
the maximum extent permitted by law; and for legal costs incurred in successfully defending civil or criminal proceedings.
No liability has arisen under these indemnities as at the date of this report.
(d)
Proceedings on Behalf of the Company
To the best of the directors’ knowledge, no person has applied to the court under Section 237 of the Corporations Act 2001
for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a
party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings
have been brought or intervened on behalf of the Company with leave of the court under Section 237.
(e)
Auditor
Stantons International is the appointed auditor.
(f)
Indemnity of Auditor
The auditor (Stantons International) has not been indemnified under any circumstance.
(g)
Audit Services
During the financial year $74,000 (excluding GST) was paid or payable for audit services provided by Stantons International
(2019: $55,000). Non related audit firms have been paid or are payable $54,000 for audit services of subsidiaries (2019:
$25,000).
(h)
Non-audit Services
Non-audit services totaling $3,500 (2019: $30,000) were provided by the auditor or any entity associated with the auditor.
The fees paid related to the preparation of an Independent Experts Report. The Board of Directors is satisfied that the
provision of non-audit services during the year is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
(i)
Auditor’s independence declaration
A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is set out on
page 59 of the Annual Report.
(j)
Corporate Governance Statement
The directors of the Group support and adhere to the principles of corporate governance, recognising the need for the
highest standard of corporate behaviour and accountability. Please refer to the corporate governance statement dated
30 September 2020 released to ASX and posted on the Company’s website www.prospectresources.com.au/company/
corporate-governance.
Signed in accordance with a resolution of the directors.
Sam Hosack
Managing Director
Perth, Western Australia
Dated 30 September 2020
21.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020Directors' Report
Directors' Declaration
(1) In the opinion of the directors of Prospect Resources Limited (“the Company”):
(a) the accompanying financial statements, notes thereto are in accordance with
the Corporations Act 2001 including:
(i) giving a true and fair view of the consolidated entity’s financial position as at
30 June 2020 and of its performance for the year then ended; and
(ii) complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001;
(b) as set out in Note 2(c), there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and payable;
(c) the financial statements and notes thereto are in accordance with International
Financial Reporting Standards issued by the International Accounting Standards
Board as stated in Note 2(a) to the financial statements; and
(d) the audited remuneration disclosures set out on pages 16 to 20 of the Directors’
Report comply with accounting standard AASB 124 Related Party Disclosures
and the Corporations Regulations 2001.
(2) This declaration has been made after receiving the declarations required to be
made to the directors in accordance with Section 295A of the Corporations Act 2001
for the financial year ended 30 June 2020.
This declaration is signed in accordance with a resolution of the Board of directors.
Sam Hosack
Managing Director
Perth, Western Australia
Dated 30 September 2020
22.
Financial
Report
23.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2020
Revenue from continuing operations
Other income
Cost of sales
Depreciation expense
Development costs expensed
Employee benefits expenses
Exploration and evaluation expenditure expensed
Reversal of impairment of exploration and evaluation expenditure/(impairment)
Impairment of assets held for sale
Occupancy expenses
Project generation expense
Share based payment – options expense
Other administrative expenses
Loss before tax
Note
5(a)
5(b)
5(c)
11
12(a)
9
18(a)
Consolidated
2020
$’000
314
55
(260)
(88)
(973)
(1,316)
-
21
(268)
(56)
-
-
(2,036)
(4,607)
2019
$’000
3,320
-
(2,614)
(92)
(905)
(1,619)
(118)
(132)
-
(59)
(784)
(535)
(2,184)
(5,722)
Income tax
6
-
(31)
Loss after tax from continuing operations
(4,607)
(5,753)
Discontinued operations
Loss for the year from discontinued operations
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of tax
28
-
(4,607)
(1,216)
(6,969)
637
637
843
843
Total comprehensive loss for the year
(3,970)
(6,126)
Loss attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive loss attributable to:
Equity holders of the Company
Non-controlling interests
Loss per share
Basic loss per share (cents)
Diluted loss per share (cents)
Loss per share - continuing operations
Basic loss per share (cents)
Diluted loss per share (cents)
26(a)
26(a)
25
25
25
25
(4,389)
(218)
(4,607)
(3,776)
(194)
(3,970)
(1.79)
(1.79)
(1.79)
(1.79)
(7,152)
183
(6,969)
(6,050)
(76)
(6,126)
(3.52)
(3.52)
(2.92)
(2.92)
The accompanying notes form part of these financial statements
24.
Consolidated Statement of Financial Position
AS AT 30 JUNE 2020
Current Assets
Cash and cash equivalents
Trade and other receivables
Assets held for sale
Other current assets
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation expenditure
Mine properties
Intangible assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Tax liabilities
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Note
7
8
9
10
11
12(a)
12(b)
13
14
15
6(c)
15
16(b)
17(a)
17(e)
Total Equity Attributable to Shareholders of Parent Company
Non-controlling interests
Total Equity
The accompanying notes form part of these financial statements
Consolidated
2020
$’000
1,698
458
298
711
3,165
550
-
24,257
581
25,388
2019
$’000
5,474
328
-
644
6,446
1,411
-
21,084
499
22,994
28,553
29,440
509
171
-
680
-
-
982
131
-
1,113
43
43
680
1,156
27,873
28,284
65,429
12,756
61,870
12,143
(49,090)
(44,701)
29,095
(1,222)
27,873
29,312
(1,028)
28,284
25.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' Report Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Government tax credits and rebates
Payments to suppliers and employees
Payment for development costs expensed
Payments for exploration expenditure expensed (net of gold sold)
Income tax paid
Notes
Consolidated
2020
$’000
11
200
(3,753)
(699)
21
-
2019
$’000
2,970
454
(9,591)
(1,250)
(118)
(282)
Net cash flows used in operating activities
7(a)
(4,220)
(7,817)
Cash flows from investing activities
Interest received
Payments for development costs
Payment for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for exploration expenditure and acquisition of tenements (net of gold sold)
Payment for intangible assets
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from exercise of options
Capital raising costs
Net cash flows from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on the balance of cash held in foreign currencies
Cash and cash equivalents at end of year
7
The accompanying notes form part of these financial statements
15
98
(3,047)
(9,346)
(60)
49
-
(81)
(577)
93
(132)
(348)
(3,124)
(10,212)
3,705
-
(146)
3,559
(3,785)
5,474
9
1,698
3,995
1,501
(362)
5,134
(12,895)
16,393
1,976
5,474
26.
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2020
Issued
Capital
$’000
56,736
Option
Reserves
$’000
10,312
Foreign
currency
Translation
reserve
Accumulated
Losses
Attributable
to owners of
the parent
Non-
controlling
interests
$’000
$’000
$’000
171
(37,526)
29,693
$’000
(952)
Total
Equity
$’000
28,741
Balance at 30 June 2018
Loss for the year
Other comprehensive
income:
Exchange differences
arising on translation of
foreign operations
Total comprehensive loss
for the year
Issue of ordinary shares
for cash
Issue of ordinary shares
upon exercise of options
-
-
-
3,995
1,501
Share capital raising costs
(362)
Options issued
Disposal of Prospect
Cobalt Pte Ltd
-
-
535
-
-
-
-
-
-
-
-
(7,152)
(7,152)
183
(6,969)
1,102
-
1,102
(259)
843
1,102
(7,152)
(6,050)
(76)
(6,126)
-
-
-
-
-
-
-
-
23
(23)
3,995
1,501
(362)
535
-
-
-
-
-
-
3,995
1,501
(362)
535
-
Balance at 30 June 2019
61,870
10,847
1,296
(44,701)
29,312
(1,028)
28,284
Loss for the year
Other comprehensive
income:
Exchange differences
arising on translation of
foreign operations
Total comprehensive loss
for the year
Issue of ordinary shares
for cash
-
-
-
3,705
Share capital raising costs
(146)
-
-
-
-
-
-
(4,389)
(4,389)
(218)
(4,607)
613
-
613
24
637
613
(4,389)
(3,776)
(194)
(3,970)
-
-
-
-
3,705
(146)
-
-
3,705
(146)
Balance at 30 June 2020
65,429
10,847
1,909
(49,090)
29,095
(1,222)
27,873
The accompanying notes form part of these financial statements
27.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' Report NOTE 1. CORPORATE INFORMATION
The financial report of Prospect Resources Limited (“the
Company”) for the year ended 30 June 2020 was authorised
for issue in accordance with a resolution of the directors on
30 September 2020.
Prospect Resources Limited is a company limited by shares
and incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange.
The financial statements comprise the consolidated
financial statements of the Company and its subsidiaries
(together the “Consolidated Entity” or “Group”). For
the purposes of preparing the consolidated financial
statements the Company is a for-profit entity.
The principal activity of the Group is exploration, evaluation
and development of mineral resources.
NOTE 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies adopted in the
preparation of the Financial Report are set out below.
These policies have been consistently applied to the years
presented, unless otherwise stated.
(a)
Basis of preparation
This general purpose Financial Report has been prepared
in accordance with the Corporations Act 2001, Accounting
Standards and Interpretations, and comply with other
requirements of law, unless stated otherwise.
Accounting Standards include Australian Standards,
compliance with Australian Accounting Standards ensures
that the financial statements and notes of the Company
and Group comply with International Financial Reporting
Standards (‘IFRS’).
It is recommended that this financial report be read in
conjunction with the public announcements made by
Prospect Resources Limited during the year in accordance
with the continuous disclosure requirements arising under
the Corporations Act 2001.
Historical cost convention
These financial statements have been prepared under the
historical cost convention modified, where applicable, for
financial assets and financial liabilities carried at fair value.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date,
regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating
the fair value of an asset or a liability, the Group takes into
account the characteristics of the asset or liability if market
participants would take those characteristics into account
when pricing the asset or liability at the measurement
date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements
is determined on such a basis, except for share-based
payment transactions that are within the scope of AASB 2:
Share Based Payments, leasing transactions that are within
the scope of AASB 16: Leases, and measurements that have
some similarities to fair value but are not fair value, such as
net realisable value in AASB 102: Inventories or value in use
in AASB 136: Impairment of Assets.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based
on the degree to which the inputs to the fair value
measurements are observable and the significance of the
inputs to the fair value measurement in its entirety, which
are described as follows:
•
•
•
Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity
can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or
liability.
Critical accounting estimates
The preparation of financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise
its judgment in the process of applying the Group’s
accounting policies. Where these are areas involving a
higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the financial
statements, these are disclosed in Note 2(bb).
Comparative figures
When required by accounting standards, comparative
figures have been adjusted to conform to changes in
presentation for the current year. When the Group applies
an accounting policy retrospectively, makes a retrospective
restatement or reclassifies items in its financial statements,
a statement of financial position as at the beginning of the
earliest comparative period will be disclosed.
(b)
Principles of Consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled
by the Company and its subsidiaries. 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.
28.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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, including:
•
the size of the Company’s holding of voting rights
relative to the size and dispersion of holdings of the
other vote holders;
• potential voting rights held by the Company, other vote
holders or other parties;
•
•
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate
that the Company has, or does not have, the current
ability to direct the activities at the time that decisions
need to be made, including voting patterns at previous
shareholders’ meetings.
Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated
statement of profit or loss and other comprehensive
income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive
income are attributed to the owners of the Company and to
the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and
to the non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
(c)
Going Concern
For the year ended 30 June 2020, the Group recorded
a loss of $4,607,000 (2019: loss $6,969,000) and had net
cash outflows from operating and investing activities of
$7,344,000 (2019: $18,029,000). As at reporting date, the
Group had cash and cash equivalents of $1,698,000. These
conditions indicate a material uncertainty that may cast
significant doubt about the Group’s and the Company’s
ability to continue as going concerns.
The Group’s principal objective is to develop the Arcadia
Project and as such, it does not presently have a source of
operating income sufficient to fund its operations, rather
it is reliant on equity raisings or funds from other external
sources to fund its activities.
To support the activities outlined in the Directors’ Report,
the Group will be required to raise additional funds. The
Group has previously been successful in raising cash
through equity raisings, as and when required.
meet its operating costs and pay its debts as and when they
fall due for at least twelve months from the date of this report.
However, the Directors acknowledge that material
uncertainty remains over the Group’s ability to meet its
funding requirements, as future funding is uncertain until
secured. If for any reason the Group is unable to continue
as a going concern, then this could impact the Group’s
ability to realise assets at their recognised values and to
extinguish liabilities in the normal course of business at the
amounts stated in the consolidated financial statements.
(d)
Application of new and revised Accounting
Standards
The Group has considered the implications of new and
amended Accounting Standards which have become
applicable for the current financial reporting period. The
Group had to change its accounting policies as a result of
adopting the following Standard:
• AASB 16: Leases
The Group has 1 lease which could be cancelled on 3
months notice with the total obligation being $12,000. As
a result, this has been treated as a short term lease and
therefore, all lease payments expensed directly to profit or
loss. The adoption of AASB 16 does not have a significant
impact on the financial report.
Leases
The Group as lessee
At inception of a contract the Group assesses if the contract
contains or is a lease. If there is a lease present, a right-
of-use asset and a corresponding liability are recognised
by the Group where the Group is a lessee. However, all
contracts that are classified as short-term leases (i.e. leases
with a remaining lease term of 12 months or less) and
leases of low-value assets are recognised as an operating
expense on a straight-line basis over the term of the lease.
Initially, the lease liability is measured at the present
value of the lease payments still to be paid at the
commencement date. The lease payments are discounted
at the interest rate implicit in the lease. If this rate cannot
be readily determined, the Group uses incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability are as follows;
• fixed lease payments less any lease incentives;
•
•
•
•
variable lease payments that depend on index or
rate, initially measured using the index or rate at the
commencement date;
the amount expected to be payable by the lessee under
residual value guarantees;
the exercise price of purchase options if the lessee is
reasonably certain to exercise the options;
lease payments under extension options, if the lessee is
reasonably certain to exercise the options; and
The consolidated financial statements for the year ended
30 June 2020 have been prepared on a going concern basis,
as in the opinion of Directors, the Group will be in a position to
• payments of penalties for terminating the lease, if the
lease term reflects the exercise of options to terminate
the lease.
29.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The right-of-use asses comprise the initial measurement of the corresponding lease liability, any lease payments made at or
before the commencement date and any initial direct costs. The subsequent measurement of the right-of-use assets is at
cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the costs of the right-of-use asset reflects that the Group
anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.
Initial Application of AASB 16: Leases
The Group has adopted AASB 16: Leases retrospectively with the cumulative effect of initially applying AASB 16 recognised as
1 July 2019. In accordance with AASB 16, the comparatives for the 2018 reporting period have not been restated.
The following practical expedients have been used by the Group in applying AASB 16 Leases for the first time:
•
Leases that have remaining lease term of less than 12 months as at 1 July 2019 have been accounted for in the same way
as short-term lease.
(e)
New and Revised Accounting Standards for Application in Future Periods
Standard/Interpretation
AASB 17 Insurance Contracts
AASB 2018-7 Amendments to Australian Accounting Standards
– Definition of Material
AASB 2019-1 Amendments to Australian Accounting Standards
– References to the Conceptual Framework
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
1 January 2021
30 June 2022
1 January 2020
30 June 2021
1 January 2020
30 June 2021
The directors believe that these new Standards and Interpretations will not have a material impact on the Group
(f)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated
customer returns, rebates and other similar allowances.
Sale of Goods
Revenue from sale of goods in the course of ordinary activities is brought to account when delivered to the customer
and selling prices are known or can be reasonably estimated. For spodumene and petalite concentrate sales, the above
conditions are generally satisfied when title passes to the customer, typically on the bill of lading date when the concentrate
is delivered to the vessel. For gold, this is generally when the gold is credited to the metal account of the customer.
Government Tax Credits and Rebates
Government tax credits and rebates, inclusive of research and development tax credit, are recognised as income at their fair
value where there is a reasonable assurance that the government tax credit or rebate will be received and the Group will
comply with all attached conditions.
Farming Income
Revenue from the sale of farming goods is brought to account when delivered to the customer and selling prices are known
or can be reasonably estimated.
Interest Income
Interest revenue is recognised on a time proportionate basis using the effective interest method.
(g)
Cash and Cash Equivalents
For statement of cash flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.
(h)
Income Tax
The income tax expense or revenue for the period is the tax payable on a current period’s taxable income based on the
income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
30.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred tax is accounted for using the liability method in
respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the financial statements. No deferred income tax will
be recognised from the initial recognition of an asset or
liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Materials and supplies are measured at the lower of cost or
net realisable value. The cost is determined using the first-
in, first-out principle and includes expenditure incurred in
acquiring the inventories. Any provision for obsolescence
is determined by reference to specific items of stock. A
regular review is undertaken to determine the extent of
any provision for obsolescence.
Deferred tax is calculated at the tax rates that are expected
to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the income
statement except where it relates to items that may be
credited directly to equity, in which case the deferred tax
is adjusted directly against equity. Deferred income 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 tax losses.
(i)
Trade and other receivables
Trade receivables
Trade receivables are amounts due from customers
for goods sold or services performed in the ordinary
course of business. They are generally due for settlement
within 30 days and therefore are all classified as current.
Trade receivables are recognised initially at the amount
of consideration that is unconditional unless they
contain significant financing components, when they
are recognised at fair value. The Group holds the trade
receivables with the objective to collect the contractual
cash flows and therefore measures them subsequently at
amortised cost using the effective interest method. Details
about the Group’s impairment policies and the calculation
of the loss allowance are provided in Note 2(t).
Other receivables
Other receivables are recognised at fair value and
subsequently measured at amortised cost, less provision
for impairment.
(j)
Inventories
Product inventories comprise ore in stockpiles, work-in-
progress and finished goods and are physically measured
or estimated and valued at the lower of average cost or net
realisable value. Net realisable value is the estimated future
sales price of the product the entity expects to realise when
the product is processed and sold, less estimated costs to
complete production and bring the product to sale. Where
the time value of money is material, these future prices and
costs to complete are discounted.
Cost is determined by using the weighted-average method
and comprises direct purchase costs and an appropriate
portion of fixed and variable overhead costs, including
depreciation and amortisation, incurred in converting
materials into finished goods, based on the normal
production capacity. The cost of production is allocated to
joint products using a ratio of spot prices by volume at each
month end. Separately identifiable costs of conversion of
each mineral are specifically allocated.
(k)
Assets held for sale
Non-current assets are classified as held for sale if their
carrying amount will be recovered principally through
a sale transaction rather than continued use. They are
measured at the lower of their carrying amount and fair
value less costs of disposal. For non-current assets to
be classified as held for sale, they must be available for
immediate sale in their present condition and their sale
must be highly probable.
An impairment loss is recognised for any initial or
subsequent write down of the non-current asset to fair
value less costs of disposal. A gain is recognised for any
subsequent increases in fair value less costs of disposal of
a non-current asset, but not in excess of any cumulative
impairment loss previously recognised.
Non-current assets are not depreciated or amortised
while they are classified as held for sale. Interest and other
expenses attributable to the liabilities of assets held for sale
continue to be recognised.
Non-current assets classified as held for sale are presented
separately on the face of the statement of financial
position, in current assets.
(l)
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment
losses. Depreciation is recognised so as to write off the cost
or valuation of assets less their residual values over their
useful lives, using the straight-line method. The estimated
useful lives, residual values and depreciation method
are reviewed at the end of each reporting period, with
the effect of any changes in estimate accounted for on a
prospective basis.
Depreciation rates and methods shall be reviewed at least
annually and, where changed, shall be accounted for as a
change in accounting estimate. During the current year,
the directors determined that the useful lives of each class
of asset are:
• Buildings
• Plant and equipment
• Office equipment and
furniture and fittings
20 to 40 years
5 to 15 years
3 to 5 years
• Vehicles
5 years
31.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Where depreciation rates or methods are changed, the
net written down value of the asset is depreciated from
the date of the change in accordance with the new
depreciation rate or method. Depreciation recognised
in prior financial years shall not be changed, that is, the
change in depreciation rate or method shall be accounted
for on a ‘prospective’ basis.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
(m)
Exploration expenditure
Exploration and evaluation expenditure incurred on
granted exploration licences is accumulated in respect of
each identifiable area of interest. These costs are carried
forward where the rights to tenure of the area of interest
are current and to the extent that they are expected to
be recouped through the successful development of the
area or where activities in the area have not yet reached a
stage that permits reasonable assessment of the existence
of economically recoverable reserves. Accumulated costs
in relation to any abandoned area will be written off in
full against profit in the period in which the decision to
abandon the area is made. When production commences,
the accumulated costs for the relevant area of interest will
be amortised over the life of the area of interest according
to the rate of depletion of the economically recoverable
reserves. A regular review will be undertaken of each area
of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest.
(n)
Mine properties
Mines under construction
Expenditure is transferred from ’Exploration and evaluation
assets’ to ’Mines under construction’ which is a subcategory
of ’Mine properties’ once the work completed to date
supports the future development of the property and such
development receives appropriate approvals.
After transfer of the exploration and evaluation assets, all
subsequent expenditure on the construction, installation,
or completion of infrastructure facilities recognised in
’Mines under construction’. Development expenditure is
net of proceeds from the sale of ore extracted during the
development phase to the extent that it is considered
integral to the development of the mine. Any costs
incurred in testing the assets to determine if they are
functioning as intended, are capitalised, net of any
proceeds received from selling any product produced
while testing. Where these proceeds exceed the cost of
testing, any excess is recognised in the statement of profit
or loss and other comprehensive income. After production
starts, all assets included in ‘Mines under construction’ are
then transferred to ’Producing mines’ which is also a sub-
category of ’Mine properties’.
Mine properties and property, plant and equipment
(i) Initial recognition
Upon completion of the mine construction phase, the
assets are transferred into “Property, plant and equipment”
or “Mine properties”. Items of property, plant and
equipment and producing mine are stated at cost, less
accumulated depreciation and accumulated impairment
losses.
The initial cost of an asset comprises its purchase price
or construction cost, any costs directly attributable to
bringing the asset into operation, the initial estimate of
the rehabilitation obligation, and, for qualifying assets
(where relevant), borrowing costs. The purchase price
or construction cost is the aggregate amount paid and
the fair value of any other consideration given to acquire
the asset. The capitalised value of a finance lease is also
included in property, plant and equipment.
Mine properties also consist of the fair value attributable
to mineral reserves and the portion of mineral resources
considered to be probable of economic extraction at the
time of an acquisition. When a mine construction project
moves into the production phase, the capitalisation
of certain mine construction costs ceases, and costs
are either regarded as part of the cost of inventory or
expensed, except for costs which qualify for capitalisation
relating to mining asset additions, improvements or new
developments, mine development or mineable reserve
development.
(ii) Depreciation/amortisation
Accumulated mine development costs are depreciated/
amortised on a Unit Of Production (UOP) basis over the
economically recoverable reserves of the mine concerned,
except in the case of assets whose useful life is shorter
than the life of the mine, in which case, the straight-line
method is applied. The unit of account for run-of-mine
(ROM) costs is tonnes of ore, whereas the unit of account
for post-ROM costs are recoverable tonnes of Li2O. Rights
and concessions are depleted on the UOP basis over
the economically recoverable reserves of the relevant
area. The UOP rate calculation for the depreciation/
amortisation of mine development costs takes into
account expenditures incurred to date, together with
sanctioned future development expenditure. Economically
recoverable reserves include proven and probable reserves.
The estimated fair value attributable to the mineral
reserves and the portion of mineral resources considered
to be probable of economic extraction at the time of the
acquisition is amortised on a UOP basis whereby the
denominator is the proven and probable reserves, and
for some mines, a portion of mineral resources which
are expected to be extracted economically. These other
mineral resources may be included in depreciation
calculations in limited circumstances and where there is
a high degree of confidence in their economic extraction.
This would be the case when the other mineral resources
do not yet have the status of reserves merely because
the necessary detailed evaluation work has not yet been
performed and the responsible technical personnel
agree that inclusion of a proportion of measured and
indicated resources is appropriate based on historic reserve
conversion rates.
32.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The estimated fair value of the mineral resources that are
not considered to be probable of economic extraction at
the time of the acquisition is not subject to amortisation,
until the resource becomes probable of economic
extraction in the future and is recognised in exploration
and evaluation assets.
The premium paid in excess of the intrinsic value of land to
gain access is amortised over the life of the mine.
Other plant and equipment, such as mobile mine
equipment, is generally depreciated on a straight-line basis
over their estimated useful lives, as follows:
• Buildings
• Plant and equipment
• Office equipment and
furniture and fittings
20 to 40 years
5 to 15 years
3 to 5 years
• Vehicles
5 years
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying
amount of the asset) is included in statement of profit or
loss and other comprehensive income when the asset is
derecognised.
The asset’s residual values, useful lives and methods of
depreciation/amortisation are reviewed at each reporting
period and adjusted prospectively, if appropriate.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping
(waste removal) costs both during the development phase
and production phase of its operations. Stripping costs
incurred in the development phase of a mine, before the
production phase commences (development stripping),
are capitalised as part of the cost of constructing the mine
and subsequently amortised over its useful life using a UOP
method. The capitalisation of development stripping costs
ceases when the mine/component is commissioned and
ready for use as intended by management.
Stripping activities undertaken during the production
phase of a surface mine (production stripping) are
accounted for as set out below. After the commencement
of production, further development of the mine may
require a phase of unusually high stripping that is similar
in nature to development phase stripping. The cost of such
stripping is accounted for in the same way as development
stripping (as outlined above).
Production stripping is generally considered to create
two benefits, being either the production of inventory
or improved access to the ore to be mined in the future.
Where the benefits are realised in the form of inventory
produced in the period, the production stripping costs
are accounted for as part of the cost of producing those
inventories. Where the benefits are realised in the form
of improved access to ore to be mined in the future, the
costs are recognised as a non-current asset, referred to as a
‘stripping activity asset’, if the following criteria are met:
(a) Future economic benefits (being improved access
to the ore body) are probable
(b) The component of the ore body for which access
will be improved can be accurately identified
(c) The costs associated with the improved access can
be reliably measured
If any of the criteria are not met, the production stripping
costs are charged to profit or loss as operating costs as
they are incurred. In identifying components of the ore
body, the Group works closely with the mining operations
personnel for each mining operation to analyse each of the
mine plans. Generally, a component will be a subset of the
total ore body, and a mine may have several components.
The mine plans, and therefore the identification of
components, can vary between mines for a number of
reasons. These include, but are not limited to: the type of
commodity, the geological characteristics of the ore body,
the geographical location, and/or financial considerations.
Given the nature of the Group’s operations, components
are generally either major pushbacks or phases and they
generally form part of a larger investment decision which
requires board approval.
The stripping activity asset is initially measured at cost,
which is the accumulation of costs directly incurred to
perform the stripping activity that improves access to the
identified component of ore, plus an allocation of directly
attributable overhead costs. If incidental operations are
occurring at the same time as the production stripping
activity, but are not necessary for the production stripping
activity to continue as planned, these costs are not
included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping
activity asset are not separately identifiable, a relevant
production measure is used to allocate the production
stripping costs between the inventory produced and
the stripping activity asset. This production measure is
calculated for the identified component of the ore body
and is used as a benchmark to identify the extent to which
the additional activity of creating a future benefit has
taken place. The Group uses the expected volume of waste
extracted compared with the actual volume for a given
volume of ore production of each component.
The stripping activity asset is accounted for as an addition
to, or an enhancement of, an existing asset, being the
mine asset, and is presented as part of ’Mine properties’ in
the statement of financial position. This forms part of the
total investment in the relevant cash generating unit(s),
which is reviewed for impairment if events or changes of
circumstances indicate that the carrying value may not be
recoverable.
33.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The stripping activity asset is subsequently depreciated
using the UOP method over the life of the identified
component of the ore body that became more accessible
as a result of the stripping activity. Economically
recoverable reserves, which comprise proven and probable
reserves, are used to determine the expected useful life of
the identified component of the ore body. The stripping
activity asset is then carried at cost less depreciation and
any impairment losses.
Major maintenance and repairs
Expenditure on major maintenance refits or repairs
comprises the cost of replacement assets or parts of assets
and overhaul costs. Where an asset, or part of an asset,
that was separately depreciated and is now written off is
replaced, and it is probable that future economic benefits
associated with the item will flow to the Group through an
extended life, the expenditure is capitalised.
Where part of the asset was not separately considered as a
component and therefore not depreciated separately, the
replacement value is used to estimate the carrying amount
of the replaced asset(s) which is immediately written off.
All other day-to-day maintenance and repairs costs are
expensed as incurred.
•
it is technically feasible to complete the software so that
it will be available for use
• management intends to complete the software and
use or sell it
•
•
•
•
there is an ability to use or sell the software
it can be demonstrated how the software will generate
probable future economic benefits
adequate technical, financial and other resources
to complete the development and to use or sell the
software are available, and
the expenditure attributable to the software during its
development can be reliably measured
Directly attributable costs that are capitalised as part of
the software include employee costs and an appropriate
portion of relevant overheads. Capitalised development
costs are recorded as intangible assets and amortised from
the point at which the asset is ready for use.
The Group amortises intangible assets with a limited useful
life, using the straight-line method over the following
periods:
•
IT development and software
12 years
Borrowing costs
(p)
Investments in Associates
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale (a qualifying asset) are capitalised as
part of the cost of the respective asset. Borrowing costs
consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.
Where funds are borrowed specifically to finance a project,
the amount capitalised represents the actual borrowing
costs incurred. Where surplus funds are available for a short
term from funds borrowed specifically to finance a project,
the income generated from the temporary investment of
such amounts is also capitalised and deducted from the
total capitalised borrowing cost. Where the funds used
to finance a project form part of general borrowings, the
amount capitalised is calculated using a weighted average
of rates applicable to relevant general borrowings of the
Group during the period.
An associate is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the entity but is not control or joint control those
policies. Investments in associates are accounted for in
the consolidated financial statements by applying the
equity method of accounting, whereby the investment is
initially recognised at cost (including transaction costs) and
adjusted thereafter for the post-acquisition change in the
Group’s share of net assets of the associate. In addition,
the Group’s share of the profit or loss of the associate is
included in the Group’s profit or loss.
The carrying amount of the investment includes, when
applicable, goodwill relating to the associate. Any discount
on acquisition, whereby the Group’s share of the net fair
value of the associate exceeds the cost of investment,
is recognised in profit or loss in the period in which the
investment is acquired.
All other borrowing costs are recognised in the statement
of profit or loss and other comprehensive income in the
period in which they are incurred.
Profits and losses resulting from transactions between the
Group and the associate are eliminated to the extent of the
Group’s interest in the associate.
(o)
Intangible Assets
Software
Costs associated with maintaining software programmes
are recognised as an expense as incurred. The cost
of purchasing software, and development costs that
are directly attributable to the design and testing of
identifiable and unique software products controlled by
the Group are recognised as intangible assets where the
following criteria are met:
When the Group’s share of losses in the associate equals or
exceeds its interest in the associate, the Group discontinues
recognising its share of losses unless it has incurred legal
or constructive obligations or made payments on behalf
of the associate. When the associate subsequently makes
profits, the Group will resume recognising its share of those
profits once its share of the profits equals the share of the
losses not recognised.
34.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Interests in Joint Arrangements
Joint arrangements represent the contractual sharing
of control between parties in a business venture where
unanimous decisions about relevant activities are required.
wholly settled within one year after the end of the period
in which the employees render the related services are
classified as short-term benefits and are measured at the
amount due to be paid.
Separate joint venture entities providing joint venturers
with an interest to net assets are classified as a joint
venture and accounted for using the equity method. Refer
to Note 2(p) for a description of the equity method of
accounting.
(s)
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 usually
paid within 30 days of recognition.
Joint operations represent arrangements whereby joint
operators maintain direct interests in each asset and
exposure to each liability of the arrangement. The Group’s
interest in the assets, liabilities, revenue and expenses of
joint operations are included in the respective line items of
the consolidated financial statements.
Gains and losses resulting from sales to a joint operation
are recognised to the extent of the other parties’ interests.
When the Group makes purchases from a joint operation,
it does not recognise its share of the gains and losses from
the joint arrangement until it resells those goods/assets to
a third party.
(r)
Provision
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation.
Provision for site restoration and rehabilitation
In accordance with the Group’s environmental policy
and applicable legal requirements, a provision for site
restoration and rehabilitation in respect of disturbed land is
recognised when the land is disturbed.
The provision is the best estimate of the present value
of the expenditure required to settle the restoration and
rehabilitation obligation at the reporting date, based
on current legal requirements and technology. Future
restoration and rehabilitation costs are reviewed annually,
and any changes are reflected in the present value of
the restoration and rehabilitation provision at the end
of the reporting period. The unwinding of the effect of
discounting on the provision is recognised as a finance
cost.
Provision for employee entitlements
Provision is made for employee entitlements accumulated
as a result of employees rendering services up to the end
of the reporting period. These benefits include wages,
salaries, annual leave and long service leave. Liabilities
in respect of employees’ services rendered that are not
expected to be wholly settled within one year after the end
of the period in which the employees render the related
services recognised as long-term employee benefits.
These liabilities are measured at the present value of the
estimated future cash outflow to the employees using the
projected unit credit method. Liabilities expected to be
(t)
Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the financial instrument. Financial
instruments (except for trade receivables) are measured
initially at fair value adjusted by transaction costs, except for
those carried at ‘fair value through profit or loss’, in which
case transaction costs are expensed to profit or loss. Where
available, quoted prices in an active market are used to
determine the fair value. In other circumstances, valuation
techniques are adopted. Subsequent measurement of
financial assets and financial liabilities are described below.
Trade receivables are initially measured at the transaction
price if the receivables do not contain a significant
financing component in accordance with AASB 15.
Financial assets are derecognised when the contractual
rights to the cash flows from the financial asset expire,
or when the financial asset and all substantial risks and
rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled, or expired.
Classification and measurement
Financial assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial
assets are initially measured at fair value adjusted for
transaction costs (where applicable).
For the purpose of subsequent measurement, financial
assets other than those designated and effective as
hedging instruments are classified into the following
categories upon initial recognition:
•
•
•
amortised cost;
fair value through other comprehensive income
(FVOCI); and
fair value through profit or loss (FVPL).
Classifications are determined by both:
•
•
the contractual cash flow characteristics of the financial
assets; and
the Group’s business model for managing the financial
asset.
35.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets at amortised cost
Financial assets are measured at amortised cost if the
assets meet with the following conditions (and are not
designated as FVPL);
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the
Group designated a financial liability at fair value through
profit or loss.
•
•
they are held within a business model whose objective
is to hold the financial assets and collect its contractual
cash flows; and
the contractual terms of the financial assets give rise
to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
After initial recognition, these are measured at amortised
cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The
Group’s cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Financial assets at fair value through other
comprehensive income
The Group measures debt instruments at fair value
through OCI if both of the following conditions are met:
•
•
the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on the principal amount
outstanding; and
the financial asset is held within a business model with
the objective of both holding to collect contractual cash
flows and selling the financial asset.
For debt instruments at fair value through OCI, interest
income, foreign exchange revaluation and impairment
losses or reversals are recognised in the statement of profit
or loss and computed in the same manner as for financial
assets measured at amortised cost. The remaining fair
value changes are recognised in OCI.
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the
definition of equity under AASB 132 Financial Instruments:
Presentation and are not held for trading.
Financial assets at fair value through profit or loss
(FVPL)
Financial assets at fair value through profit or loss include
financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or loss
or financial assets mandatorily required to be measured
at fair value. Financial assets are classified as held for
trading if they are acquired for the purpose of selling or
repurchasing in the near term.
Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables or as derivatives designated as
hedging instruments in an effective hedge, as appropriate.
Subsequently, financial liabilities are measured at
amortised cost using the effective interest method except
for derivatives and financial liabilities designated at FVPL,
which are carried subsequently at fair value with gains or
losses recognised in profit or loss.
All interest-related charges and, if applicable, gains and
losses arising on changes in fair value are recognised in
profit or loss.
(u)
Foreign Currency Transactions and Balances
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 consolidated financial statements are presented in
Australian dollars which is the parent entity’s functional
currency. The functional currency of all subsidiaries other
than Thornvlei is US dollars. Thornvlei’s functional currency
is Zimbabwe Dollars.
Transaction and balances
Foreign currency transactions are translated into the
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 profit or loss, except
where deferred in equity when the exchange difference
arises on monetary items receivable from or payable to a
foreign operation for which settlement is neither planned
nor likely to occur (therefore forming part of the net
investment in the foreign operation).
Exchange differences arising on the translation of
non-monetary items are recognised directly in other
comprehensive income to the extent that the underlying
gain or loss is recognised in other comprehensive income,
otherwise the exchange difference is recognised in the
profit or loss.
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 exchange rates
prevailing at the end of the reporting period;
36.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
•
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 with functional currencies other than the
Australian dollar are recognised in other comprehensive
income and included in the foreign currency translation
reserve in the statement of financial position. The
cumulative amount of these differences is reclassified
into profit or loss in the period in which the operation is
disposed of.
(v)
Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options
are shown in equity as a deduction from the proceeds.
(w)
Earnings per share
Basic earnings per share (“EPS”) is calculated by dividing
the result attributable to equity holders of the Company
by the weighted number of shares outstanding during the
year. Diluted EPS adjusts the figures used in the calculation
of basic EPS to take into account the after income tax
effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average
number of shares assumed or known to have been issued
in relation to dilutive potential ordinary shares.
(x)
Goods and Services Tax (GST)
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 an item of the expense.
Receivables and payables in the balance sheet are shown
exclusive of GST. Cash flows are presented in the statement
of cash flow on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as
operating cash flows.
(y)
Dividends
Provision is made for the amount of any dividend declared,
being appropriately authorised and no longer at the
discretion of the Company, on or before the end of the
financial year but not distributed at balance date.
(z)
Impairment of Assets
At each reporting date, the Group reviews the carrying
values of its tangible and intangible assets to determine
whether there is any indication that those assets have
been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair
value less cost to sell and value in use, is compared to the
asset’s carrying value. Any excess of the asset’s carrying
value over its recoverable amount is expensed to the
Statement of profit or loss.
Impairment testing is performed annually for intangible
assets with indefinite lives.
(aa)
Share based payment transactions
Equity settled transactions
The Company provides benefits to its employees (including
key management personnel) in the form of share based
payments, whereby employees render services in exchange
for shares or rights over shares (equity settled transactions).
The cost of these equity settled transactions with
employees is measured by reference to the fair value of the
equity instruments at the date at which they are granted.
The charge to the statement of profit or loss and other
comprehensive income is taken when the options are
granted. There is a corresponding entry to equity.
The dilutive effect, if any, of outstanding options is reflected
as additional share dilution in the computation of diluted
earnings per share.
(bb)
Critical Accounting Judgement and Key
Sources of Uncertainty
In the application of the Group’s accounting policies which
are described above in Note 2(a), the Directors are required
to make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and
associated assumptions are based on historical experience
and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affect only that period, or in the period of
the revision and future periods of the revision affects both
current and future periods.
Key Estimates
Ore reserves
Economically recoverable ore reserves represent the
estimated quantity of product in an area of interest that
can be expected to be profitably extracted, processed and
sold under current and foreseeable economic conditions.
The Group determines and reports ore reserves under
the standards incorporated in the Australasian Code for
Reporting Exploration Results, Mineral Resources and Ore
Reserves, 2012 Edition (the JORC Code). The determination
of ore reserves includes estimates and assumptions about
a range of geological, technical and economic factors,
including: quantities, grades, productions techniques,
recovery rates, production costs, transport costs,
commodity demand, commodity prices and exchange
rates. Changes in ore reserves impact the assessment of
recoverability of exploration and evaluation assets, property,
plant and equipment, the carrying amount of assets
depreciated on a units of production basis, provision for
site restoration and the recognition of deferred tax assets,
including tax losses.
37.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Exploration an evaluation expenditure
The application of the Group’s accounting policy
for exploration and evaluation expenditure requires
judgement to determine whether future economic
benefits are likely, from either future exploitation or sale, or
whether activities have not reached a stage that permits a
reasonable assessment of the existence of reserves.
In addition to applying judgement to determine
whether future economic benefits are likely to arise
from the Group’s Exploration & Evaluation assets or
whether activities have not reached a stage that permits
a reasonable assessment of the existence of reserves,
the Group has to apply a number of estimates and
assumptions. The estimates directly impact when the
Group defers exploration and evaluation expenditure. The
deferral policy requires management to make certain
estimates and assumptions about future events and
circumstances, particularly, whether an economically
viable extraction operation can be established. Any
such estimates and assumptions may change as new
information becomes available. If, after expenditure is
capitalised, information becomes available suggesting
that the recovery of expenditure is unlikely, the relevant
capitalised amount is written off in the statement of profit
or loss and other comprehensive income in the period
when the new information becomes available.
Mine Properties
Estimated economically recoverable reserves are used in
determining the depreciation and/or amortisation of mine-
specific assets. This results in a depreciation/amortisation
charge proportional to the depletion of the anticipated
remaining life-of-mine production. The life of each item,
which is assessed at least annually, has regard to both
its physical life limitations and present assessments of
economically recoverable reserves of the mine property at
which the asset is located. These calculations require the
use of estimates and assumptions, including the amount
of recoverable reserves and estimates of future capital
expenditure. The calculation of the Unit of Production
(“UOP”) rate of depreciation/amortisation could be
impacted to the extent that actual production in the
future is different from current forecast production based
on economically recoverable reserves, or if future capital
expenditure estimates change. Changes to economically
recoverable reserves could arise due to changes in the
factors or assumptions used in estimating reserves,
including:
•
The effect on economically recoverable reserves of
differences between actual commodity prices and
commodity price assumptions
estimates of the extent and costs of rehabilitation activities,
technological changes, and regulatory changes. These
uncertainties may result in future actual expenditure
differing from the amounts currently provided. Therefore,
significant estimates and assumptions are made in
determining the provision for mine rehabilitation. As
a result, there could be significant adjustments to
the provisions established which would affect future
financial result. The provision at reporting date represents
management’s best estimate of the present value of the
future rehabilitation costs required.
Share based payments
The fair value of employee share options and share
appreciation rights is measured using Black Scholes.
Measurement inputs include share price on measurement
date, exercise price of the instrument, expected volatility
(based on weighted average historic volatility adjusted for
changes expected due to publicly available information),
weighted average expected life of the instruments
(based on historical experience and general option holder
behaviour), expected dividends, the risk-free interest rate
(based on government bonds) and probability applied
to the non-vesting conditions (based on management’s
judgement formed in consideration of all the available facts
and circumstances).
Service and non-market performance conditions
attached to the transactions are not taken into account
in determining fair value. Any different estimates and
assumptions affecting the measurement inputs would
have resulted in different grant date fair values, which
would have changed equity settled share-based payments
expense. Subsequent changes to this estimate could have
a significant effect on share based payment expense and
the associated equity-settled payments reserve. The fair
value calculation and inputs to the Black Scholes model are
shown at Note 18(a).
Impairment
The future recoverability of capitalised exploration and
evaluation expenditure is dependent on a number of
factors, including whether the Group decides to exploit
the related permit itself or, if not, whether it successfully
recovers the related exploration and evaluation asset
through sale.
Deferred tax assets
Management have made a judgement for the non
recognition of deferred tax asset as the recovery of tax
losses and other deferred tax assets is not considered
probable at this stage.
• Unforeseen operational issues
(bb)
Rounding of Amounts
Changes in estimates are accounted for prospectively.
Rehabilitation Provision
The ultimate rehabilitation costs are uncertain, and cost
estimates can vary in response to many factors, including
The Group has applied the relief available to it under ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. Accordingly, the amounts in the
financial statements and directors’ report have been
rounded to the nearest $1,000.
38.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 3. FINANCIAL RISK MANAGEMENT
Risk management is the role and responsibility of the Board. The Group’s current activities expose it to minimal risk.
However, as activities increase there may be exposure to interest rate, market, credit, and liquidity risks.
(a) Market Risk
(i) Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result
of changes in market rates and the effective weighted average interest rates on classes of financial assets and financial
liabilities, is as follows:
30 June 2020
Financial Assets
Cash and deposits
Trade and other receivables
Other
Weighted average interest rate
Financial Liabilities
Trade and other payables
Weighted average interest rate
30 June 2019
Financial Assets
Cash and deposits
Trade and other receivables
Weighted average interest rate
Financial Liabilities
Trade and other payables
Weighted average interest rate
Floating
interest rate
1 year or less
Over 1 year
to 5 years
More than 5
years
Non interest
bearing
$’000
$’000
$’000
$’000
$’000
1,364
-
-
1,364
0.25%
-
-
-
4,707
-
4,707
1.32%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
334
458
9
801
-
150
150
-
767
328
1,095
-
518
518
-
Total
$’000
1,698
458
9
2,165
0.16%
150
150
-
5,474
328
5,802
1.13%
518
518
-
The Group has interest bearing assets and therefore income and operating cash flows are subject to changes in the market
rates. However, market changes in interest rates will not have a material impact on the profitability or operating cash flows
of the Group. A movement in interest rates of +/- 100 basis points will result in less than a +/- $14,000 (2019: $47,000) impact
on the Group’s income and operating cash flows. At this time, no detailed sensitivity analysis is undertaken by the Group.
(ii) Price Risk
The Group is not exposed to equity securities price risk as it holds no investments in securities classified on the balance
sheet as either fair value through profit or loss or at fair value through other comprehensive income.
The Group is not currently exposed to significant commodity price risk as it still operates in the exploration & development
phase. However, future operational cash flows will be affected by fluctuations in the lithium price and other commodity
prices. The Group will develop strategies to mitigate this risk when it moves from the exploration & development phase
into the production phase.
39.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 3. FINANCIAL RISK MANAGEMENT (continued)
(iii) Currency risk
Currency risk arises from investments and borrowings that are denominated in a currency other than the respective
functional currencies of Group entities.
The Group is exposed to foreign currency risk in the form of financial instruments held in US Dollars (USD) and Zimbabwe
Dollars (ZWL). The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian
dollars, was as follows:
Cash and cash equivalents - USD
Cash and cash equivalents - ZWL
Trade and other payables - USD
Trade and other payables - ZWL
Total Exposure
2020
$’000
253
13
(374)
(20)
(128)
2019
$’000
662
50
(462)
(22)
228
Assuming all other variables remain constant, a 10% strengthening of the Australian dollar at 30 June 2020 against the
USD and ZWL would have resulted in a decreased loss of $12,000 (2019: increased loss $20,000) and $1,000 (2019: $3,000)
respectively. A 10% weakening of the AUD would have resulted in an increased loss of $12,000 (2019 decreased loss: $20,000)
against the USD and $1,000 (2019: $3,000) against the ZWL, assuming all other variables remain constant. The Group does
not currently hedge against currency risk.
(b) 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, and arises principally from the Group’s cash and cash equivalents.
Cash and cash equivalents comprise of cash on hand and demand deposits. The Group limits its credit risk by holding cash
balances and demand deposits with reputable counterparties with acceptable credit rating
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash to meet commitments as and when they fall
due. The Group manages liquidity risk by preparing forecasts and monitoring actual cash flows and requirements for
future capital raisings. The Group does not have committed credit lines available, which is appropriate given the nature
of its operations. Surplus funds are invested in a cash management account with Westpac Banking Corporation which is
available as required.
The material liquidity risk for the Group is the ability to raise equity in the future.
(d) Effective interest rate and repricing analysis
Cash and cash equivalents are the only interest bearing financial instruments of the Group.
(e) Fair value of financial instruments
Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis. The directors
consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial
statements approximate their fair values.
40.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 4. SEGMENT INFORMATION
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
In the current year the Group engaged in exploration for minerals and project development activities in Zimbabwe. The
operations were located in Australia, Singapore and Zimbabwe with the head office being in Australia and Singapore
balances included with Zimbabwe.
Geographical segments
Revenue
Other external revenue
Total segment revenue
Results
Australia
Zimbabwe
Consolidated
2020
$’000
2019
$’000
2020
$’000
215
215
431
431
154
154
2019
$’000
2,889
2,889
2020
$’000
369
369
2019
$’000
3,320
3,320
Segment net profit/(loss) before tax
(3,874)
(6,348)
(733)
626
(4,607)
(5,722)
Assets
Segment assets
Liabilities
Segment liabilities
1,901
5,381
26,652
24,059
28,553
29,440
Depreciation
8
6
520
538
160
80
618
680
1,156
86
88
92
The amount of non-current assets added during the year in Australia $Nil and Zimbabwe $2,928,000 (2019: Australia
$35,000 and Zimbabwe $10,125,000)
The accounting policies of the reportable segments are the same as the Group’s accounting policies as described in Note 2.
NOTE 5(a). REVENUE FROM CONTINUING OPERATIONS
Farm income
Government tax credits and rebates
Interest revenue
Sale of merchandise
Other revenue
NOTE 5(b). OTHER INCOME
Gain on derecognition of provision for rehabilitation
Gain on sale of property, plant and equipment
NOTE 5(c). COST OF SALES
Cost of sales from farming
Cost of sales from merchandise
Consolidated
2020
$’000
11
200
15
88
-
314
45
10
55
19
241
260
2019
$’000
169
333
98
2,677
43
3,320
-
-
-
174
2,440
2,614
41.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 6. INCOME TAX
(a) Numerical reconciliation of income tax expense to prima facie tax payable
Loss before income tax expense
Tax at the Australian tax rate of 27.5% (2019: 27.5%)
Tax effect of differential corporate tax rates
Tax effect of amounts which are not deductible (taxable) income
Under-recognition of prior year tax expense
Foreign exchange adjustment on tax losses brought forward (1)
Tax losses not (used)/recognised
Income tax expense
(b) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit (Australia 26%, Zimbabwe 0% - 25.75%)
Consolidated
2020
$’000
2019
$’000
(4,607)
(4,607)
(1,267)
479
937
(361)
716
(504)
-
Consolidated
2020
$’000
11,620
2,955
(5,722)
(5,722)
(1,574)
14
1,572
(403)
3,974
(3,552)
31
2019
$’000
11,697
2,715
(1) During the prior year, the Zimbabwe Government introduced a domestic currency called the Zimbabwe Dollar (ZWL).
The Group is required to lodge its tax returns in Zimbabwe in local ZWL. The closing exchange rate between the AUD/
ZWL at 30 June 2020 was $43.74 (2019: $4.74). This has resulted in carried forward losses being devalued.
Tax losses have not been recognised as a deferred tax asset as recoupment is dependent on, amongst other matters,
sufficient future assessable income being earned. That is not considered certain in the foreseeable future and accordingly
there is uncertainty that the losses can be utilised. The deferred tax liabilities of the Group relate to capitalised exploration
costs. The Group’s Arcadia Project has obtained Special Economic Zone status which results in a 0% tax rate for the first 5
years, then 15% thereafter. The deferred tax liabilities of the Group are estimated as $Nil (2019: $Nil).
(c) Current tax liability
Income tax payable
Consolidated
2020
$’000
2019
$’000
-
-
42.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 7. CASH AND CASH EQUIVALENTS
Cash at bank
Consolidated
2020
$’000
1,698
2019
$’000
5,474
Included in the Group’s cash and cash equivalents are Zimbabwe Dollars. Zimbabwe Dollars have been disclosed under
cash and cash equivalents as it meets the definition of cash and cash equivalents. The Zimbabwe to Australian Dollar
exchange rate at 30 June 2020 was 43.74 (2019: 4.74) and the Zimbabwe Dollar is considered legal tender in Zimbabwe. The
Group holds AUD$13,000 in Zimbabwe Dollars (2019: AUD$50,000) which is included in the cash at bank balance. These
funds are freely available for use in Zimbabwe.
(a) Reconciliation of operating loss after income tax to net cash flows used in operating activities
Operating loss after tax
Non-cash items
Depreciation
Share based payments - options
Impairment of assets held for sale
Impairment of capitalised exploration and evaluation expenditure
Loss on disposal of subsidiary
(Gain)/loss on sale of property, plant and equipment
Foreign exchange difference
Interest received
Changes in operating assets and liabilities
Decrease/(increase) in operating trade and other receivables
Decrease in inventories
Decrease/(increase) in other assets
(Decrease)/increase in operating trade and other payables
(Decrease)/increase in provisions
(Decrease) in tax liabilities
Consolidated
2020
$’000
(4,607)
2019
$’000
(6,969)
88
-
268
-
-
(10)
166
(15)
24
-
229
(360)
(3)
-
117
535
-
132
133
69
(1,719)
(98)
(3)
228
(279)
157
131
(251)
Net cash flows used in operating activities
(4,220)
(7,817)
(b) Non-cash transactions
During the current year, the Company did not enter into any non-cash financing or investing activities (2019: $Nil).
43.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 8. TRADE AND OTHER RECEIVABLES
GST/VAT receivable
Related party receivable (refer note 23(b))
Other receivables
Consolidated
2020
$’000
168
167
123
458
2019
$’000
172
27
129
328
These amounts generally arise from transactions during usual operating activities of the consolidated entity and are non-interest
bearing. These amounts do not contain any impaired receivables and are not considered overdue.
NOTE 9. ASSETS HELD FOR SALE
Property – 169 Arcturus Road, Harare
Consolidated
2020
$’000
298
2019
$’000
-
During the year, the directors resolved to sell the company’s property asset and have accepted an offer. As at 30 June 2020, the sale
was highly probable, and as such has been classified as assets held for sale. The property has been reclassified from property, plant
and equipment to assets held for sale and valued at its expected net realisable value, after taking into consideration market prices
and selling costs.
Consolidated
2020
$’000
2019
$’000
331
(33)
298
(559)
(7)
(268)
-
-
-
-
-
-
Consolidated
2020
$’000
9
702
-
711
2019
$’000
9
626
9
644
The amount is derived as follows:
Expected proceeds from the sale of assets held for sale
Less: selling costs
Expected net proceeds
Transferred carrying value of assets held for sale (Note 11)
Foreign exchange
Impairment recognised
NOTE 10. OTHER CURRENT ASSETS
Deposits
Prepayments
Other
44.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 11. PROPERTY, PLANT AND EQUIPMENT
Buildings
Plant and machinery
Vehicles
Office equipment
Consolidated
2020
$’000
11
304
30
205
550
Reconciliation of Property, plant and equipment – 2020
$’000
$’000
Buildings
Plant and
machinery
Vehicles
$’000
Office
equipment
$’000
Opening balance at cost
Additions
Disposals
Reclassification to assets held for sale
Effect of foreign currency exchange differences
Closing balance at cost
Opening accumulated depreciation
Depreciation
Disposals
Reclassification to assets held for sale
Effect of foreign currency exchange differences
Closing accumulated depreciation
Net written down value
586
4
-
(590)
12
12
(17)
(15)
-
31
-
(1)
11
710
63
142
33
(301)(i)
(118)(i)
-
(38)
434
(201)
(95)
150(i)
-
16
(130)
304
-
5
62
(78)
(26)
76(i)
-
(4)
(32)
30
357
21
-
-
9
387
(88)
(92)
-
-
(2)
(182)
205
2019
$’000
569
509
64
269
1,411
Total
$’000
1,795
121
(419)
(590)
(12)
895
(384)
(228)
226
31
10
(345)
550
(i) During the year, the Group sold property, plant and equipment at fair market value to Farvic for USD$105,864 (AUD$157,688), and to Mixnote for
USD$26,750 (AUD$39,845). Refer to Note 23(b)
Reconciliation of Property, plant and equipment – 2019
$’000
$’000
Buildings
Plant and
machinery
Vehicles
$’000
Office
equipment
$’000
Opening balance at cost
Additions
Disposals
Effect of foreign currency exchange differences
Closing balance at cost
Opening accumulated depreciation
Depreciation
Disposals
Effect of foreign currency exchange differences
Closing accumulated depreciation
Net written down value
556
-
-
30
586
(2)
(15)
-
-
(17)
569
819
102
(52)
(159)
710
(164)
(84)
10
37
(201)
509
171
169
(206)
8
142
(75)
(60)
61
(4)
(78)
64
74
306
(26)
3
357
(21)
(74)
8
(1)
(88)
269
Total
$’000
1,620
577
(284)
(118)
1,795
(262)
(233)
79
32
(384)
1,411
45.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 11. PROPERTY, PLANT AND EQUIPMENT (continued)
Depreciation
Depreciation transferred to capitalised mine properties
Depreciation per Note 7(a)
Depreciation from discontinued operations
Depreciation recognised in statement of profit or loss and other comprehensive income
NOTE 12. EXPLORATION, EVALUATION & MINE PROPERTIES
Total expenditure incurred and carried forward in respect of specific projects:
Exploration & Evaluation Expenditure
Gwanda East – Gold
Good Days – Lithium
Verdale – Lithium
Mine Properties
Arcadia – Lithium
(a) Exploration & Evaluation Expenditure
Opening balance
Expenditure incurred
Impairment of exploration and evaluation expenditure
Transfer to mines under construction
Proceeds from gold sales from exploration and evaluation ore
Effect of foreign currency exchange differences
Closing balance
(b) Mine Properties
Mines Under Construction
Opening balance
Expenditure incurred
Transfer from exploration and evaluation expenditure
Effect of foreign currency exchange differences
Consolidated
2020
$’000
228
(140)
88
-
88
2019
$’000
233
(116)
117
(25)
92
Consolidated
2020
$’000
2019
$’000
-
-
-
-
-
-
24,257
24,257
21,084
21,084
-
-
21
-
(21)
-
-
21,084
2,726
-
447
11,430
424
(132)
(11,348)
(374)
-
-
-
9,156
11,348
580
Closing balance
24,257
21,084
The Board of Directors undertook an impairment review of the Group’s exploration, evaluation & mine properties as at 30
June 2020 resulting in an impairment reversal for the current year of $21,000 (2019: expense $132,000). The current year
impairment reversal relates to the Group’s claims at Gwanda East due to the recognition of gold proceeds (2019: claims at
Good Days and Verdale).
46.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 13. INTANGIBLE ASSETS
Capitalised ERP costs (under construction)
Opening balance
Additions
Effect of foreign currency exchange differences
Amortisation expense
Closing balance
Amortisation
Amortisation transferred to capitalised mine properties
Amortisation recognised in statement of profit or loss and other comprehensive income
NOTE 14. TRADE AND OTHER PAYABLES
Trade payables
Accruals
Unearned trading income
Other payables
Consolidated
2020
$’000
2019
$’000
581
499
81
11
(10)
581
Consolidated
2020
$’000
10
(10)
-
499
151
339
9
-
499
2019
$’000
-
-
-
Consolidated
2020
$’000
2019
$’000
143
341
18
7
509
508
254
210
10
982
Trade payables are normally settled on 30 – 60 day terms. Trade payables are not past due and are non-interest bearing.
NOTE 15. PROVISIONS
Current
Employee entitlements
Non-current
Provision for rehabilitation
Consolidated
2020
$’000
2019
$’000
171
131
-
43
During the year, the Company disposed of its gold mining claims at Gwanda East. The rehabilitation provision related to
those claims has been de-recognised and credited to other operating income.
47.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 16. CONTRIBUTED EQUITY
(a) Issued share capital
Ordinary shares fully paid
(b) Movement in ordinary share capital
Details
Balance at 30 June 2018
Issue of shares via exercise of options
Share consolidation (1 for 10)
Issue of shares via placements
Issue of shares upon exercise of options
Cost of capital raising
Balance at 30 June 2019
Issue of shares via placement and rights issue
Cost of capital raising
Balance at 30 June 2020
2020
2019
Shares
Shares
285,936,524
235,951,758
Number of
shares
1,981,114,971
65,000,000
(1,841,503,213)
23,500,000
7,840,000
-
$’000
56,736
325
-
3,995
1,176
(362)
235,951,758
61,870
49,984,766
-
3,705
(146)
285,936,524
65,429
On 11 June 2019, shareholders approved a 1 for 10 share consolidation.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held. On a show of hands or on a poll every holder of ordinary shares
present at a meeting in person or by proxy is entitled to one vote.
NOTE 17. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share based payments reserves (refer to Note 17(c))
Foreign currency translation reserve (refer to Note 17(d))
Total reserves
Consolidated
2020
$’000
10,847
1,909
12,756
2019
$’000
10,847
1,296
12,143
48.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 17. RESERVES AND ACCUMULATED LOSSES (continued)
(b) Movement in options
Date
Details
Balance at 30 June 2018
11/10/2018
19/11/2018
31/12/2018
06/02/2019
11/06/2019
15/06/2019
15/06/2019
Options exercised
Options exercised
Options expired
Options expired
Consolidation (1 for 10)
(144,000,000)
Options exercised
Options expired
(7,840,000)
(3,660,000)
Number of
options
310,000,000
(5,000,000)
(60,000,000)
(65,000,000)
(20,000,000)
$’000
10,312
-
-
-
-
-
-
-
Balance at 30 June 2019
4,500,000
10,847
Share based payment expense
-
535
Balance at 30 June 2020
(c) Share Based Payments Reserve
4,500,000
10,847
Movement in reserve
2020
Number of Options
2020
$’000
2019
Number of Options
Balance at the beginning of the year
4,500,000
10,847
31,000,000*
Options issued
Options exercised
Options expired
-
-
-
-
-
-
-
(14,340,000)
(12,160,000)
2019
$’000
10,312
535
-
-
Balance at the end of the year
4,500,000
10,847
4,500,000
10,847
* restated opening balance to be post 1 for 10 share consolidation
(d) Foreign Currency Translation Reserve
Movement in reserve
Opening balance
Currency translation differences
Disposal of DRC subsidiaries
Closing balance
Nature and Purpose of Reserves
Consolidated
2020
$’000
1,296
613
-
1,909
2019
$’000
171
1,102
23
1,296
The share based payments reserve arises pursuant to an issue of shares or options as consideration for a service or an
acquisition transaction.
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries and translation differences on intercompany loans.
49.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 17. RESERVES AND ACCUMULATED LOSSES (continued)
(e) Accumulated Losses
Accumulated losses at beginning of year
Net loss attributable to equity holders of the Company
Disposal of DRC subsidiaries
Accumulated losses at end of year
NOTE 18. SHARE-BASED PAYMENTS
(a) Recognised Share-Based Payment Expense
Options
Consolidated
2020
$’000
2019
$’000
(44,701)
(37,526)
(4,389)
-
(7,152)
(23)
(49,090)
(44,701)
The share based payments expense was $Nil (2019: $535,000), with $Nil recognised in the statement of financial
performance (2019: $535,000). The following table lists the inputs to the model used:
No. of options
Grant date
Share price
Exercise price
Interest rate
Expiry date
Volatility
Fair value at grant date before discount
Discount for being unlisted
Fair value after discount
45,000,000
13/05/2018
$0.038
$0.06
2.015%
12/05/2022
91.83%
$0.0217
20%
$0.0174
The above disclosure relates to the previous financial year and are pre 1 for 10 consolidation.
The following share-based payment arrangements were in existence during the current and prior reporting periods:
Option Series
Number
Grant Date
Expiry Date
Exercise Price
Fair Value per Option
at Grant Date
Issued 13 May 2018 (i)
45,000,000
13/05/2018
12/05/2022
Issued 06 Feb 2018
20,000,000
06/02/2018
06/02/2019
Issued 21 Jul 2017
65,000,000
21/07/2017
31/12/2018
Issued 22 Jul 2016 (ii)
115,000,000
22/07/2016
15/06/2019
Issued 22 Jul 2016
27,000,000
22/07/2016
21/07/2019
Issued 20 Nov 2015 (iii)
65,000,000
20/11/2015
19/11/2018
$0.06
$0.10
$0.05
$0.015
$0.015
$0.005
$0.0174
$0.0075
$0.0046
$0.0576
$0.0577
$0.0019
(i) Options vested upon completion of probationary period, being 14 October 2018.
(ii) Options vest upon 20 day VWAP being $0.03 or above. These options have vested.
(iii) Options vest upon 20 day VWAP being $0.01 or above. These options have vested.
The above disclosures relate to the previously financial year and are pre 1 for 10 consolidation.
50.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 18. SHARE-BASED PAYMENTS (continued)
(b) Summary of options granted
The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in, share options
issued during the year:
2020
No
2020
WAEP
2019
No
Outstanding at the beginning of the year
4,500,000
0.600
31,000,000*
Granted during the year
Exercised during the year
Expired during the year
-
-
-
-
-
-
-
(14,340,000)
(12,160,000)
Outstanding at the end of the year
4,500,000
0.600
4,500,000
* restated opening balance to be post 1 for 10 share consolidation
(c) Weighted average remaining contractual life
2019
WAEP
$0.323
-
(0.105)
(0.477)
0.600
The weighted average remaining contractual life for the share options outstanding as at 30 June 2020 is 1.87 years (2019: 2.87
years).
(d) Range of exercise price
The range of exercise prices for options outstanding at the end of the year was $0.60 (2019: $0.60).
(e) Weighted average fair value
The weighted average fair value of options granted during the year was N/a (2019: $N/a).
(f) Share options exercised during the year
Nil options were exercised in 2020 (2019: 14,340,000 post consolidation).
NOTE 19. COMMITMENTS FOR EXPENDITURE
(a) Exploration Commitments
In order to maintain an interest in the mining and exploration tenements in which the Group is involved, the Group is
committed to meet the conditions under which the tenements were granted and the obligations of any joint venture and/or
acquisition agreements. Outstanding exploration commitments are as follows:
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
There are no minimum expenditure commitments on the Group’s Zimbabwe tenements.
Consolidated
2020
$’000
2019
$’000
-
-
-
-
-
-
-
-
51.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 19. COMMITMENTS FOR EXPENDITURE (continued)
(b) Operating Lease Commitments
The Group has one operating lease commitment for office rental and can cancel these with 3 months’ notice totaling $12,000.
(c) Other Commitments
The Group has a commitment for ongoing annual licensing and permit fees related to the Arcadia mining lease and its
Special Economic Zone status totaling $18,000.
The Group has entered into contracts with its directors and certain executives and consultants whereby minimum notice
periods (usually six months) have been provided by the Group. This totals $420,000 as at 30 June 2020 (2019: $1,000,000).
The Group has entered into an offtake agreement to deliver 280,000 tonnes of 6% Li2O spodumene concentrate and
784,000 tonnes of 4% Li2O petalite concentrate over a 7 year term. The Group will receive a US$10,000,000 offtake
prepayment upon the ball mill being delivered and bolt installed at the Project.
The Group has entered into an offtake agreement to deliver up to 100,000 tonnes per annum of high quality, ultra-low iron
4.1% petalite concentrate for 7 years, totaling up to 700,000 tonnes.
The Group entered into a conditional agreement to acquire a further 17% in the Arcadia Lithium Project, increasing its
ownership from 70% to 87%. At completion, the Group is required to issue 9,497,680 new ordinary shares and pay cash of
$1,187,210.
NOTE 20. CONTINGENT LIABILITIES
The Group has no contingent liabilities.
NOTE 21. AUDITOR’S REMUNERATION
Auditor of the parent entity
Audit and audit review of the financial reports
Other services
Network firm of the parent auditor
Audit services
Auditor of Subsidiaries
Audit services
Consolidated
2020
$’000
2019
$’000
74
4
78
-
-
54
54
55
30
85
-
-
25
25
The auditor of Prospect Resources Limited is Stantons International. The auditor of the Zimbabwe subsidiaries is Deloitte.
52.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 22. KEY MANAGEMENT PERSONNEL DISCLOSURES
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
Consolidated
2020
$’000
1,366
59
-
2019
$’000
1,657
73
535
1,425
2,265
NOTE 23. RELATED PARTY TRANSACTIONS
(a) Anglo Pacific Ventures Pty Ltd
The Company paid $56,304 (2019: $46,505) to Anglo Pacific Ventures Pty Ltd for rent. Mr Warner is a Director and beneficiary
of Anglo Pacific Ventures Pty Ltd.
(b) Farvic Consolidated Mines (Private) Limited
The Group is owed $163,025 by Farvic (2019: $Nil). This amount receivable is interest free and payable on demand,
refer Note 8. Harry Greaves and Zed Rusike are directors and shareholders of Farvic.
During the year, the Group sold property, plant and equipment and gold claims at fair market value to Farvic for
USD105,864 (AUD$157,688) (2019: Nil).
Farvic toll treated the Group’s development gold ore under a tribute agreement and invoiced its expected cost of
processing, amounting to US$66,126 (A$98,497) (2019: US$296,092 (A$413,788)).
The Group is owed $4,061 by Mixnote Investments (Pvt) Limited (Mixnote), a subsidiary of Farvic (2019: $27,000). The
amount is recognised as a trade receivable and is interest free, refer Note 8. During the year, the Company sold assets at
fair market value to Mixnote for USD 26,750 (A$39,845) (2019 – Nil).
The Group entered into a conditional agreement to acquire a further 17% in the Arcadia Lithium Project, increasing its
ownership from 70% to 87%. At completion, the Group is required to issue 9,497,680 new ordinary shares and pay cash of
$1,187,210.
(c) CSA Global Pty Ltd
The Company paid $110,503 (2019: $1,430) to CSA Global Pty Ltd for mining study services. Mr Fahey is a Principal Consultant,
Mine Geology with CSA Global Pty Ltd (a member of ERM Group of Companies).
(d) Loans to Subsidiaries
At 30 June 2020, the Company has loaned US$3,419,000 (AUD$4,808,000) (2019: US$14,119,000 / AUD$19,962,000) to its 70%
owned subsidiary Hawkmoth Mining and Exploration (Private) Limited (‘HME’). The Company has a recoverable book value
of this loan of AUD$859,000 (2019: AUD$16,268,000). During the year, HME transferred US$10,700,000 of this loan to PLZ.
The loan facility is interest free and there are no fixed repayment terms.
At 30 June 2020, the Company has loaned US$17,041,000 (AUD$24,830,000) (2019: US$4,208,000 / AUD$6,000,000) to its
70% owned subsidiary Prospect Lithium Zimbabwe (Private) Limited (‘PLZ’). The Company has a recoverable book value
of this loan of AUD$24,830,000 (2019: AUD$6,000,000). During the year, HME transferred US$10,700,000 of debt from the
Company to PLZ. The loan facility is interest free and there are no fixed repayment terms.
At 30 June 2020, the Company has loaned US$70,000 (AUD$102,000) (2019: US$70,000 / AUD$100,000) to its 70% owned
subsidiary Thornvlei Farming Enterprises (Private) Limited (‘TFE’). The Company has a recoverable book value of this loan of
AUD$Nil (2019: AUD$100,000). The loan facility is interest free and there are no fixed repayment terms.
53.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 24. SUBSEQUENT EVENTS
Other than the following, the directors are not aware of any significant events since the end of the reporting period:
• On 17 August 2020, the Group announced it had entered into an offtake agreement with Belgium based Sibelco N.V. to
supply up to 700,000 dry metric tonnes of ultra-low iron petalite over seven years.
NOTE 25. LOSS PER SHARE
Basic loss per share (cents per share)
Basic loss per share from continuing operations (cents per share)
Basic loss per share from discontinuing operations (cents per share)
Amount used in the calculation of basic EPS
• From continuing operations
• From discontinued operations
Loss after income tax attributable to members of Prospect Resources Limited
Consolidated
2020
(1.79)
(1.79)
-
$’000
(4,389)
-
(4,389)
2019
(3.52)
(2.92)
(0.60)
$’000
(5,936)
(1,216)
(7,152)
• Weighted average number of ordinary shares outstanding during the year used in the
245,286,908
203,252,374
calculation of basic earnings/(loss) per share
The options of the Company are not considered dilutive for the purpose of the calculation of diluted loss per share as their
conversion to ordinary shares would not decrease the net profit per share nor increase the net loss per share. Consequently,
diluted loss per share is the same as basic loss per share.
The Company undertook a 1:10 share consolidation during the prior year. The numbers disclosed above for the prior year are
post this share consolidation.
NOTE 26. SUBSIDIARIES
Details of the Group’s material subsidiaries at the end of the reporting period are as follows.
Principal activity
Country
incorporation
Prospect Minerals Pte Ltd
Holding company
Singapore
Prospect Lithium Zimbabwe (Pvt) Limited
Exploration & evaluation
Zimbabwe
Thornvlei Farming Enterprises (Private) Limited
Farming
Zimbabwe
Hawkmoth Mining & Exploration (Pvt) Ltd
Exploration & evaluation
Zimbabwe
Coldawn Investments (Private) Limited
Exploration & evaluation
Zimbabwe
Ownership and
voting interest
2020
100%
70%
70%
70%
70%
2019
100%
70%
70%
70%
70%
54.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 26A. DETAILS OF NON-WHOLLY OWNED SUBSIDIARIES THAT HAVE MATERIAL
NON-CONTROLLING INTERESTS
The table below shows details of non-wholly owned subsidiaries of the Group that have non-controlling interests:
Place of
incorporation
and principal
place of
business
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Proportion of ownership
interests and voting rights
held by non-controlling
interests
2020
%
30%
30%
30%
30%
2019
%
30%
30%
30%
30%
Name of subsidiary
Prospect Lithium
Zimbabwe
Thornvlei
Hawkmoth
Coldawn
Profit/(loss) allocated to
non-controlling interests
Accumulated non-
controlling interests
2020
$’000
(60)
(68)
(90)
-
(218)
2019
$’000
68
(54)
169
-
183
2020
$’000
(20)
(71)
(1,131)
-
2019
$’000
37
(45)
(1,020)
-
(1,222)
(1,028)
Summarised financial information in respect of the Group’s Zimbabwe subsidiaries that have non-controlling interests have
been aggregated together and is set out below. The summarised financial information below represents amounts before
intragroup eliminations.
Zimbabwe Subsidiaries
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net liabilities
Equity attributable to owners of the Company
Non-controlling interest
Total (deficit)
2020
$’000
1,275
24,726
(158)
2019
$’000
1,086
22,338
(576)
(29,914)
(26,275)
(4,071)
(2,849)
(1,222)
(4,071)
(3,427)
(2,399)
(1,028)
(3,427)
55.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 26A. DETAILS OF NON-WHOLLY OWNED SUBSIDIARIES THAT HAVE MATERIAL
NON-CONTROLLING INTERESTS (continued)
Revenue
Expenses
(Loss)/profit for the year
(Loss)/profit attributable to owners of the Company
(Loss)/profit attributable to the non-controlling interests
(Loss)/profit for the year
Other comprehensive income/(loss) attributable to owners of the Company
Other comprehensive income/(loss) attributable to the non-controlling interests
Other comprehensive income/(loss) for the year
Total comprehensive (loss)/income attributable to owners of the Company
Total comprehensive (loss) attributable to the non-controlling interests
Total comprehensive (loss)/income for the year
Dividends paid to non-controlling interests
Net cash (outflow)/inflow from operating activities
Net cash (outflow) from investing activities
Net cash inflow from financing activities
Net cash (outflow)/inflow
Year ended
2020
$’000
Year ended
2019
$’000
154
(878)
(724)
(506)
(218)
(724)
56
24
80
(450)
(194)
(644)
-
(94)
2,889
(2,256)
633
450
183
633
(292)
(259)
(551)
158
(76)
82
-
510
(1,498)
(9,890)
1,464
(128)
9,390
10
56.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 NOTE 27. PROSPECT RESOURCES LIMITED PARENT COMPANY INFORMATION
ASSETS
Current Assets
Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
TOTAL LIABILITIES
EQUITY
Contributed equity
Reserve
Accumulated losses
FINANCIAL PERFORMANCE
(Loss) for the year
Other comprehensive income
Total comprehensive (loss)
2020
$’000
1,880
26,539
28,419
520
520
65,429
10,847
2019
$’000
5,351
23,104
28,455
538
538
61,870
10,847
(48,377)
(44,800)
27,899
27,917
(3,577)
(6,428)
-
-
(3,577)
(6,428)
Parent Entity Contingencies and Guarantees
The parent entity has not guaranteed any loans for any entities during the year.
Parent Entity Commitments
The parent entity has entered into contracts with its directors and certain executives whereby minimum notice periods
(usually six months) have been provided by the parent entity. This totals $325,000 (2019: $500,000).
57.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportNotes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020
NOTE 28. DISCONTINUED OPERATIONS
(a) Disposal of Prospect Cobalt Pte Ltd and its subsidiaries
On 28 June 2019, the Company completed the sale of its 100% investment in Prospect Cobalt Pte Ltd (‘Prospect Cobalt’)
to New Energy Metals Limited (“NRG”). Prospect Cobalt owned a 100% interest in an exploration business in Democratic
Republic of Congo (“DRC”). The consideration for the disposal was:
At completion
• A$1,000 and costs of transferring ownership
Additional contingent consideration
• A$50,000 of new shares in NRG’s proposed seed capital placing
• A$100,000 of new shares in NRG’s proposed IPO placing
• A$1,000,000 on delineation of a JORC Inferred Mineral Resource Estimate of greater the 5Mt at an average grade
of greater than 2% copper and greater then 0.5% cobalt on existing or future projects generated by NRG and its
subsidiaries in the DRC; and
• A net smelter royalty (NSR) of 1% on any copper and cobalt products produced from existing or future projects generated
by NRG and its subsidiaries in the DRC.
During the year, NRG advised that they would not pursue exploration activities in DRC and would be winding up Prospect
Cobalt. The Company agreed to waive its rights to the contingent consideration.
(b) Analysis of loss for the year from discontinued operations
The results of the discontinued operations (ie exploration in DRC business) included in the loss for the year are set out below.
Loss for the year from discontinued operations
Loss on disposal
Expenses
Loss before tax
Attributable income tax expense
Loss for the year from discontinued operations (attributable to owners of the Company)
(c) Loss on deconsolidation of subsidiary
Net disposal consideration
Net assets disposed of
Loss on deconsolidation before income tax
2020
$’000
-
-
-
-
-
2020
$’000
-
-
-
2019
$’000
(133)
(1,082)
(1,215)
(1)
(1,216)
2019
$’000
1
(134)
(133)
58.
Notes to and Forming Part of the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2020 Auditors’ Independence Declaration
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
30 September 2020
The Directors
Prospect Resources Limited
Suite 6, 245 Churchill Ave
SUBIACO, WA 6008
Dear Sirs
RE:
PROSPECT RESOURCES 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 Prospect Resources Limited.
As Audit Director for the audit of the financial statements of Prospect Resources Limited for the year ended
30 June 2020, 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 sincerely,
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LIMITED
Martin Michalik
Director
Liability limited by a scheme approved
under Professional Standards Legislation
59.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' Report
Independent Auditor’s Report
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
PROSPECT RESOURCES LIMITED
Report on the Audit of the Financial Report
Opinion
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
We have audited the financial report of Prospect Resources Limited (the Company) and its subsidiaries (“the
Group”), which comprises the consolidated statement of financial position as at 30 June 2020, 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 the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
Without modifying our audit opinion expressed above, attention is drawn to the following matter.
As referred to in Note 2(c) to the financial statements, the financial statements have been prepared on a going
concern basis. At 30 June 2020, the Group had cash and cash equivalents of $1,698,000, incurred net cash outflows
from operating activities totalling $4,220,000 and incurred a loss after income tax of $4,607,000.
The ability of the Group to continue as a going concern and meet its planned mine development, administration and
other commitments is dependent upon the Group raising further working capital and/or successfully exploiting its
mineral assets. In the event that the Group is not successful in recapitalising the Group and/or raising further equity
or successfully exploiting its mineral assets, the Group may not be able to meet its liabilities as and when they fall
due and the realisable value of the Group’s current and non-current assets may be significantly less than book
values.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Liability limited by a scheme approved
under Professional Standards Legislation
60.
Independent Auditor’s Report
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Mine Properties
As at 30 June 2020, the capitalised value of Mine
Properties totalled $24,257,000 (refer to Note 12
of the financial report).
The carrying value of capitalised Mine Properties
is a key audit matter due to:
▪
▪
▪
The significance of
(approximately 85% of total assets);
the
total balance
that
The Board has determined
the
exploration stage at the Arcadia Lithium
Project has been completed and therefore
the capitalised exploration and evaluation
expenditure has been transferred to Mine
Properties;
the requirements of
The necessity to assess management’s
application of
the
accounting standard Exploration for and
Evaluation of Mineral Resources (“AASB
6”), in relation to capitalised exploration and
evaluation costs which were transferred to
Mine Properties and the application of the
requirements of the accounting standard
AASB 116, Property, Plant and Equipment
(“AASB 116”) and AASB 136 Impairment of
light of any
Assets (“AASB 136”)
indicators of
that may be
present; and
in
impairment
▪ The assessment of significant judgements
made by management in relation to the
carrying
capitalised Mine
of
Properties.
value
Inter alia, our audit procedures included the following:
i.
ii.
iii.
iv.
v.
vi.
vii.
Assessing the Group’s right to tenure over
mining tenements by corroborating the
ownership of the relevant licences for
mineral resources to government registries
and relevant third-party documentation;
Reviewed ASX Announcements, Minutes
and held discussions with the Board and
Management to confirm the plans for the
development of the Arcadia Lithium Project;
.
Reviewing the directors’ assessment and
classification of the carrying value of the
Mine Properties, ensuring the veracity of
the data presented and that management
have considered the effect of potential
impairment indicators, commodity prices
and the stage of the Group’s projects taking
into account the requirements of AASB 116
and AASB 136;
Assessed the credentials of the experts
appointed to review the NPV Model relating
to
the Arcadia Lithium Project. Also
evaluated the NPV Model relating to the
Arcadia Lithium Project by checking, on a
sample basis, the accuracy and relevance
of the input data used in the model, as well
as challenging the reasonableness of key
assumptions based on our knowledge of
the business and ASX Announcements
made by the Company and published
market and industry data;
Performed a sensitivity analysis of the
inputs in the NPV Model relating to the
Arcadia Lithium Project;
Evaluation of Group documents
for
consistency with the intentions for the
development of the Arcadia Lithium Project
and corroborated with discussions with
management.
documents we
evaluated included:
The
▪ Minutes and Circular Resolutions of the
board and management;
▪ Announcements made by the Group to the
Australian Securities Exchange;
▪ Cash flow forecasts; and
▪ The Net Present Value Model of Arcadia
Lithium Mine Properties.
Reviewed
to
ensure appropriate disclosures are made.
financial statements
the
61.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' Report
Independent Auditor’s Report
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2020, 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 accordingly we do not express any form
of assurance opinion 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 Company 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 Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control.
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.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We 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, 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.
62.
Independent Auditor’s Report
We 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.
We 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 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.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
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 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
We have audited the Remuneration Report included in pages 16 to 20 of the directors’ report for the year ended 30
June 2020. The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance
with Australian Auditing Standards
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Prospect Resources Limited for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
30 September 2020
63.
Annual Report 2020 OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' Report
ASX Additional
Information
64.
ASX Additional Information ASX Additional Information
Additional Information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in
this report is set out below.
The shareholder information was applicable as at 23 September 2020.
(a)
Substantial Shareholders
The substantial shareholders are:
Name
LORD OF SEVEN HILLS HOLDINGS FZE
CITICORP NOMINEES PTY LIMITED
SINOMINE INTERNATIONAL EXPLORATION (HONG KONG) CO LTD
ELLIOT HOLDINGS PTY LTD – HD & DM WARNER
(b)
Voting Rights
Ordinary Shares
Number Held
Percentage of
Issued Shares
32,375,000
30,551,438
20,833,334
20,458,336
11.32
10.68
7.29
7.15
On a show of hands every member present at a meeting of shall have one vote and upon a poll each share shall have one
vote.
Options
There are no voting rights attached to the options
(c)
Distribution of Equity Security Holders
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
There were 764 holders of less than a marketable parcel of ordinary shares.
Ordinary Fully
Paid Shares % Issued Capital
166,512
1,788,812
2,079,284
18,102,382
0.06%
0.63%
0.73%
6.33%
263,799,534
92,26%
285,936,524
100.00%
65.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020 (d)
Equity Security Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
LORD OF SEVEN HILLS HOLDINGS FZE
CITICORP NOMINEES PTY LIMITED
SINOMINE INTERNATIONAL EXPLORATION (HONG KONG) CO LTD
MBM CAPITAL PARTNERS LLP
BNP PARIBAS NOMINEES PTY LTD
ELLIOT HOLDINGS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
ARMOURED FOX CAPITAL PROPRIETARY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR HUGH WARNER & MS DIANNE WARNER
MR RUSSELL PHILLIP QUINN
CONTINENTAL MINERALS LIMITED
MR JIUMIN YAN
MR ZIVANAYI RUSIKE
SOIRHU PTY LTD
WILLEC HOLDINGS PTY LTD
WINGFIELD INVESTMENTS LIMITED
MRS BIN ZHOU
MYLES DEVELOPMENT PTY LTD
20
MR ZIZHAO SHANG
TOTAL
Unquoted equity securities
Options – exercisable at 60 cents before 12 May 2022
Number Held
Percentage of
Issued Shares
32,375,000
30,551,438
20,833,334
14,125,000
10,372,652
9,895,834
9,396,700
9,271,089
8,583,512
8,479,168
4,850,000
3,791,150
3,725,052
3,040,374
3,025,001
3,000,000
2,799,449
2,582,093
2,244,000
2,220,211
11.32%
10.68%
7.29%
4.94%
3.63%
3.46%
3.29%
3.24%
3.00%
2.97%
1.70%
1.33%
1.30%
1.06%
1.06%
1.05%
0.98%
0.90%
0.78%
0.78%
185,161,057
64.76%
Number on
Issue
Number of
Holders
4,500,000
1
66.
ASX Additional Information
Exploration and mining licenses granted:
Prospect Resources Limited has interests in tenements via the following companies:
(1) Coldawn Investment (Private) Limited (“Coldawn”)
(2) Hawkmoth Mining and Exploration (Private) Limited (“Hawkmoth”)
(3) Prospect Lithium Zimbabwe (Pvt) Limited (“PLZ”)
Tenement
Type & Number
ML 38
37680
ME284G
23189
23190
23233
32132
32133
32126
32733
23277
23278
23279
23276
23281
23474
23630
23201
23217
23468
23469
23470
23471
23472
23473
Country
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Project
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
Arcadia
SG6853
Zimbabwe
Mistress
37856
37857
12227
Zimbabwe
Moonstone
Zimbabwe
Moonstone
Zimbabwe
Penhalonga
20560 BM
Zimbabwe
Penhalonga
10675
Zimbabwe
Penhalonga
21795 BM
Zimbabwe
Penhalonga
Registered Company
Name
% Held at
30 June 2020
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
PLZ
Coldawn
Coldawn
Coldawn
Coldawn
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
67.
OverviewReview of OperationsASX Additional InformationFinancial ReportDirectors' ReportAnnual Report 2020ASX Additional Information Tenement
Type & Number
Country
Project
Registered Company
Name
% Held at
30 June 2020
13166 BM
Zimbabwe
Penhalonga
18879
18880
18881
21748 BM
18666 BM
12212
12213
19474 BM
14135 BM
10338
G3425
18582 BM
G2335
M2873 BM
M2874 BM
M2875 BM
M2876 BM
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Penhalonga
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
Penhalonga
Penhalonga
Penhalonga
Penhalonga
Chishanya
Chishanya
Chishanya
Chishanya
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Coldawn
Hawkmoth
Hawkmoth
Hawkmoth
Hawkmoth
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
70%
68.
ASX Additional Information P
R
O
S
P
E
C
T
R
E
S
O
U
R
C
E
S
L
I
M
I
T
E
D
/
A
N
N
U
A
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Prospect Resources
+61 8 9217 3300
info@prospectresources.com.au
Suite 6, 245 Churchill Avenue
Subiaco WA 6008 Australia
PO Box 1273
Subiaco WA 6904 Australia