Reedy Lagoon Corporation Limited
Annual Report 2018

Plain-text annual report

A.C.N. 006 639 514 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Reedy Lagoon Corporation Limited Contents 30 June 2018 Chairman's letter Review of operations Corporate directory Directors' report Auditor's independence declaration Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Independent auditor's report to the members of Reedy Lagoon Corporation Limited Shareholder information Tenement schedule 1 2 8 9 17 18 19 20 21 22 44 45 48 50 26 September 2018 Dear Shareholders, Annual Report 2018 In the last financial year Reedy Lagoon completed its acquisition of 3 lithium brine projects in Nevada, USA. In addition, the Company raised $4.3 million and commenced a substantial exploration program including drilling at 2 lithium brine projects. Multiple brines were intersected in the drilling at the Columbus Salt Marsh project and while lithium and boron were detected, their concentration was not considered high enough to be significant. Drilling at the Big Smoky South project provided information that led the Company to peg additional ground creating Reedy Lagoon’s fourth lithium brine project, the Clayton Valley project. Work on the projects is described in more detail in the Review of Operations. The outlook for lithium demand remains strong. Several countries are proposing the replacement of internal combustion engines with electric vehicles. Lithium is likely to be the basis of electric vehicle technology for some time. Importantly for Reedy Lagoon there have been developments in the direct extraction of lithium from brines which supports the Company’s aim to produce lithium from brines at greatly reduced water consumption rates and without the need for costly evaporation ponds. Yours sincerely Jonathan Hamer Chairman Reedy Lagoon Corporation Limited 1 Reedy Lagoon Corporation Limited Review of operations 30 June 2018 Overview Reedy Lagoon is exploring for lithium in the United States of America. The identification of increasing demand for lithium, and the prospect of emerging new processing technologies for extracting lithium from brines, led to Reedy Lagoon developing projects in Nevada, USA. At 30 June 2018 the Company held 4 project areas located in Nevada where it is exploring for lithium. The project areas are in closed geological basins which share similar geology with Clayton Valley in which North America's only lithium producing brine operation is located. The lithium brine projects are: Alkali Lake North Big Smoky South Clayton Valley, and Columbus Salt Marsh Other lithium projects were and are being assessed. Reedy Lagoon also has projects targeting iron-ore in Western Australia and uranium in South Australia. These projects are secondary to the prime focus which is lithium and no work was conducted during the year on projects other than North American lithium brine projects. 2 Reedy Lagoon Corporation Limited Review of operations 30 June 2018 Exploration Lithium Exploration Nevada Lithium Brine Projects Alkali Lake North: Big Smoky South: Clayton Valley: Columbus Salt Marsh: Nevada, USA LITHIUM BRINES 128 claims – 2,554 acres (1,033 ha) 245 claims – 4,677 acres (1,893 ha) 112 claims – 2,240 acres (906 ha) 167 claims –3,291 acres (1,332 ha) RLC 100% The Nevada lithium brine projects comprise: Columbus Salt Marsh, Big Smoky South, Clayton Valley and Alkali Lake North. The projects are located in 3 large and separate ground water catchment areas in Nevada, USA. The projects are all within 50 kilometres of the Silver Peak Lithium brine operation owned by Albemarle Corp. which is located 360 kilometres by road (US-95 route) from the Tesla Gigafactory (Lithium-ion batteries) in Reno. The four projects cover a combined area of 5,164 hectares (12,762 acres) under 652 placer claims. All the placer claims are 100% owned and there are no royalty arrangements. 3 Reedy Lagoon Corporation Limited Review of operations 30 June 2018 Alkali Lake North Project LITHIUM in BRINE Nevada, USA RLC 100% Alkali Lake North Project covers part of a discrete sub basin located 30 kilometres northeast of Silver Peak and it occurs within an extensive 30 kilometres long, northwest trending basin that drains to the south towards Alkali Lake. Satellite and gravity imagery suggest that a deep basin is masked by recent alluvium. Several hot springs discharge alkaline salts onto the surface of the playa lake located 10 kilometres to the south west of the project area. Towards the end of the report period the Company entered into a contract for a 3-dimensional audio magnetotelluric (3D AMT) survey to improve the resolution of conductivity anomalies that were interpreted in 2D AMT survey data acquired during the prior period (ASX release 29 May 2017). No field work was conducted on the project during the period. Big Smoky South Project LITHIUM in BRINE Nevada, USA RLC 100% Big Smoky South Project is located 10 kilometres northwest of the Silver Peak lithium operation where the southern end of Big Smoky Valley meets the western side of Clayton Valley. This northwest striking valley is defined by a series of major northwest and north east faults. Based on USGS open file gravity data there is a discrete sub-basin in the centre of the valley with more than 2.4 kilometres of subsidence. In addition to the extensive Tertiary volcanic deposits in the area there are significant deposits of volcanic ash in the valley that in places are more than 30 metres thick. These ash deposits are considered by the Company to have come from the same volcanic eruptions that deposited similar ash deposits considered a source for the lithium in the brines being processed by the Silver Peak Lithium Brine operation. The ash deposits are capped by very recent basalt lava flows and cinder cones. The presence of recent volcanism is considered to be an important heat source for driving geothermal activity which can dissolve lithium from the volcanic ash beds and circulate it in ground water convection cells. 4 Reedy Lagoon Corporation Limited Review of operations 30 June 2018 Drilling conducted during the period investigated a highly conductive zone extending from 600 metres to more than 850 meters below surface interpreted in 2D AMT survey data acquired during the prior period (ASX release 16 April 2018). Drill hole MBD-01 was terminated at a depth of 401 metres after intersecting a thick sequence of lake sediments which the Company interpreted as being beneath the geological horizons that are prospective for lithium bearing brines. Pump testing and sampling of four selected zones was attempted in MDB-01, including in a zone of volcanic ash layers intersected between 59 and 100 metres down hole depth from surface. However, fluid flow rates were too low to allow effective sampling (ASX 30 July 2018). Lithium clay minerals were detected by analysis of hyperspectral data from drill core scans of the core from MBD-01 (refer ASX release 27 June 2018). Subsequent to the end of the period sections of the drill core were sampled for assay to determine lithium content. Clayton Valley Project LITHIUM in BRINE Nevada, USA RLC 100% Clayton Valley Project is located within 10 kilometres northwest of the Silver Peak lithium operation where the southern end of Big Smoky Valley meets the western side of Clayton Valley (refer to above description and diagram). The project area was acquired by claim staking following interpretation of the geology observed in the core of drill hole MBD-01 on the nearby Big Smoky South project (ASX release 24 May 2018). Towards the end of the report period the Company entered into a contract for a 3-dimensional audio magnetotelluric (3D AMT) survey to identify conductivity anomalies potentially caused by brine. 5 Reedy Lagoon Corporation Limited Review of operations 30 June 2018 Columbus Salt Marsh LITHIUM in BRINE Nevada, USA RLC 100% The Columbus Salt Marsh project is located 45 kilometres northwest of Clayton Valley. The Columbus Salt Marsh valley represents a closed basin with extensive Tertiary volcanic deposits in the surrounding hills. USGS open file gravity data indicates that the centre of the valley has subsided up to 3.5km. The valley is fault bounded and several geothermal springs discharge alkali salts onto the lake surface. These alkali deposits have in the past been mined for borax. Drilling conducted during the period investigated a highly conductive zone extending from 600 metres to more than 1,000 meters below surface interpreted in 2D AMT survey data acquired during the prior period (ASX release 2 February 2018). Drill hole CBD-01 was completed on reaching target depth at 1,000 metres. Six aquifers located within zones of volcanic ash and tuff were pump tested and brine samples were collected for assay. While the brines tested have high conductivity the maximum lithium concentration detected was 10 mg/L. This level is not considered by the Company to be high enough to indicate potential for economic recovery of lithium (ASX release 23 April 2018). Lithium clay minerals were detected by analysis of hyperspectral data from drill core scans of the core from CBD-01 (ASX release 27 June 2018). 90 samples were submitted for assay from drill hole CBD-01. Assay results for these samples were received after the report period and range from 20 ppm to 200 ppm lithium and from 10 ppm to 150 ppm boron. These levels are anomalous but not commercial (ASX release 28 August 2018). 6 Reedy Lagoon Corporation Limited Review of operations 30 June 2018 Iron Ore Exploration Burracoppin Project IRON ORE – MAGNETITE Western Australia RLC 100% The project area is under application (E70/4941, lodged 9/01/2017, area 5,854 ha) and no field work was conducted during the report period. Tenure to the project area was held by the Company from 2010 to relinquishment in 2016. During this period the Burracoppin Magnetite prospect was discovered and metallurgical studies on core samples produced concentrate with high iron levels (67% to 70% Fe) and low levels of impurities at a relatively coarse grind size (P80 -150 micron) (refer to ASX release 23 November 2012). Uranium Exploration Edward Creek Project RLC 100% All diamond interest farmed out to DiamondCo Limited which conducts diamond exploration independently from RLC. RLC retained nil interest in diamond. Following the end of the report period on 20 July 2018 DiamondCo withdrew from the Diamond Farm Out Agreement and all interest in diamond reverted to RLC. South Australia URANIUM RLC’s past exploration at Edward Creek has identified uranium on the north eastern margin of the Gawler Craton in South Australia. The project area comprises EL 5580 (343 square kilometres). No field work was conducted by RLC on the project during the report period. Geoffrey Fethers Managing Director Competent Person’s Statement: The information in the section headed “Lithium Exploration” of this report as it relates to exploration results and geology was compiled by Mr Geoff Balfe who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Balfe is a consultant to Reedy Lagoon Corporation Limited. Mr Balfe has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Balfe consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. Where Exploration Results have been reported in earlier RLC ASX Releases referenced in this report, those releases are available to view on the NEWS page of reedylagoon.com.au. The company confirms that it is not aware of any new information or data that materially affects the information included in those earlier releases. The company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. 7 Reedy Lagoon Corporation Limited Corporate directory 30 June 2018 Directors Contact details Jonathan M. Hamer Chairman, Non-Executive Director Geoffrey H. Fethers Managing Director and Company Secretary Adrian C. Griffin Non-Executive Director Phone : 03 8420 6280 Fax : 03 8420 6299 Email : info@reedylagoon.com.au Company secretary Geoffrey H. Fethers Share register Auditor Solicitors Link Market Services Limited (ABN 54 063 214 537) Level 1, 333 Collins Street Melbourne, Victoria 3000 Telephone : 1300 554 474 www.linkmarketservices.com.au Moore Stephens Level 18, 530 Collins Street Melbourne Victoria 3000 www.moorestephens.com.au King & Wood Mallesons Level 50, 600 Bourke Street Melbourne Victoria 3000 Stock exchange listing Reedy Lagoon Corporation Limited shares are listed on the Australian Securities Exchange (ASX code: RLC) Website www.reedylagoon.com.au Corporate Governance Statement Refer to www.reedylagoon.com.au 8 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Reedy Lagoon Corporation Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2018. Directors The following persons were directors of Reedy Lagoon Corporation Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Jonathan M. Hamer Geoffrey H. Fethers Adrian C. Griffin Principal activities During the financial year the principal continuing activities of the consolidated entity consisted of: ● exploration for minerals in the United States of America. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the consolidated entity after providing for income tax amounted to $4,615,766 (30 June 2017: Loss $808,688). Refer to the separate review of operations that comes directly before this directors' report. Significant changes in the state of affairs On 18 December 2017 Reedy Lagoon acquired 100% of the share capital of Nevada Lithium Pty Ltd. During the year, the Company issued 225,733,710 fully paid shares to: • • raise $3,580,278 before costs; and settle liabilities totalling $2,021,500 (of which $2,000,000 was for the acquisition of Nevada Lithium Pty Ltd). The Company also raised $754,210 before costs by the issue of 37,710,515 options at a price of 2 cents each that have an exercise price of 8 cents and expiry date 6/04/2021. There were no other significant changes in the state of affairs of the consolidated entity during the financial year. Matters subsequent to the end of the financial year There were no matters subsequent to the end of the financial year. No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Likely developments and expected results of operations At the date of this report, there are no future developments of the Company which warrant disclosure. Environmental regulation The Company's operations are subject to environmental regulations in relation to its exploration activities under State legislation in Australia and Federal legislation in USA. The directors are not aware of any breaches of environmental regulations during the period covered by this report. 9 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 Information on directors Name: Title: Age: Qualifications: Experience and expertise: Jonathan M. Hamer Chairman – Non Executive 63 BA, LLB. A former partner of King & Wood where he practised in the areas of corporate and finance law. Jonathan has been advising RLC since 1988 on a range of legal and commercial issues, including in its various joint venture agreements and capital raisings. Jonathon has served on the RLC board for 11 years. Other current directorships: Former directorships): Interests in shares: Interests in options: Nil Nil (last 3 years) 13,661,946 fully paid ordinary shares 1,900,907 options Name: Title: Age: Qualifications: Experience and expertise: Geoffrey H. Fethers M AusIMM 61 B.Sc.(Hons), M AusIMM Manages the operations of RLC. He is a geologist with over 25 years exploration experience. He was employed by De Beers Australia Exploration Limited (formerly Stockdale Prospecting Limited) from 1980 to 1985. He founded RLC in 1986. He is a Member of the Geological Society of Australia and the Australian Institute of Mining and Metallurgy. Geoffrey is a founding director. Other current directorships: Former directorships: Special responsibilities: Interests in shares: Interests in options: Nil Nil (last 3 years) Manages the operations of RLC. 32,881,031 fully paid ordinary shares 4,875,000 options Name: Title: Age: Qualifications: Experience and expertise: Adrian C. Griffin Director 65 B.Sc.(Hons), M AusIMM Adrian Griffin, aged 65, has accumulated extensive experience in the resource sector over the past 35 years. During that time he has held directorships in a number of private and listed resource companies and overseen the operation of large, integrated mining and processing facilities, including the Bulong nickel-cobalt operation in the late 1990s to his current position as Managing Director of Lithium Australia NL, a company developing lithium extraction and recovery technologies. Mr Griffin was a director of Reedy Lagoon from 9 May 2007 until resigning on 27 November 2009 to act as technical director of Ferrum Crescent, an iron-ore developer in South Africa. He re-joined RLC as a director on 30 June 2014. Mr Griffin was also a founding director of Northern Uranium and Parkway Minerals (developer of to recover potassium and other metals from glauconite). Recently, he was instrumental in identifying the global opportunity to establish lithium micas as a source feed for the lithium chemical industry. the KMax process Other current directorships: Managing Director-Lithium Australia NL; Non-executive Director- Northern Minerals Ltd; Chairman-Parkway Minerals NL Former directorships: Special responsibilities: Interests in shares: Interests in options: Nil (last 3 years) Nil 33,568,559 fully paid ordinary shares 4,242,652 options 10 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ‘Interests in shares and options’ quoted above are as at the date of this report. Company secretary Geoffrey H. Fethers is the company's secretary. Details of his qualifications and experience are disclosed in the information on directors section above. Meetings of directors The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2018, and the number of meetings attended by each director were: Jonathan M. Hamer Geoffrey H. Fethers Adrian C. Griffin Full Board Attended 14 14 10 Held 14 14 14 Held: represents the number of meetings held during the time the director held office. Remuneration report (audited) This remuneration report outlines the Director and Executive remuneration arrangements of the Company in accordance with the Corporations Act 2001 and its Regulations. It also provides the remuneration disclosures required by paragraphs AUS25.4 and AUS 25.7.2 of AASB 124 Related Party Disclosures which have been transferred to the Remuneration Report in accordance with the Corporations Regulation 2M 6.04 This report outlines the remuneration arrangements in place for the Directors (both Executive and Non- Executive) and Executives of the Company. This report is audited as the entity has transferred the disclosures from the financial statements. For the purposes of this report the term ‘Senior Executive‘ encompasses the Managing Director, Executive Directors and Secretary of the Company. The remuneration report is set out under the following main headings: ● ● ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration Currently, the Company does not have a separate remuneration committee. Because of the size of the Board and the operations of the Company, the Directors are of the view that there is no need for a separate remuneration committee. The Board as a whole reviews the remuneration packages and policies applicable to the Chairman, Senior Executives and Non-Executive Directors on an annual basis. Remuneration levels are set to attract or retain, as appropriate, qualified and experienced Directors and Senior Executives. From time to time and as required, the Board will seek independent professional advice on the appropriateness of remuneration packages. The current nature and amount of remuneration payable to Chairman, Executives and Non-Executive Directors is not dependent upon the satisfaction of a performance condition. Instead part of the remuneration takes the form of options which will have value if the Company’s share price increases. 11 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 Use of remuneration consultants The Company did not make use of remuneration consultants during the 2018 financial year. Voting and comments made at the company's 16 November 2017 Annual General Meeting ('AGM') At the 16 November 2017 AGM, 95% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2017. The company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. The key management personnel of the consolidated entity consisted of the following directors of Reedy Lagoon Corporation Limited: ● ● ● J Hamer G Fethers A Griffin Short-term benefits Post- employ- ment benefits Long- term benefits Share- based payments 2018 Cash salary and fees $ Bonus $ Non- monetary $ Super- annuation $ Long service leave $ Equity- settled $ Total $ Non-Executive Directors: J Hamer A Griffin 60,000 40,000 Executive Directors: G Fethers * 132,000 232,000 - - - - - - - - - - - - 8,276 2,758 68,276 42,758 12,540 12,540 2,537 2,537 13,792 160,869 24,826 271,903 Mr Fethers was the sole executive employee of the company for the year ended 30 June 2018. * As at 30 June 2018, $0 (2017: $208,945) of short term employee benefits remain unpaid. Short-term benefits Post- employ- ment benefits Long- term benefits Share- based payments 2017 Cash salary and fees * $ Non- monetary $ Super- annuation * $ Long service leave * $ Equity- settled $ Bonus $ Total $ Non-Executive Directors: J Hamer A Griffin 40,000 40,000 Executive Directors: G Fethers * 132,000 212,000 - - - - - - - - - - - - 1,013 338 41,013 40,338 12,540 12,540 2,546 2,546 1,689 148,775 3,040 230,126 * Mr Fethers was the sole executive employee of the company for the year ended 30 June 2017. 12 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: J Hamer A Griffin Executive Directors: G Fethers Fixed remuneration 2018 2017 At risk - STI At risk - LTI 2018 2017 2018 2017 88% 94% 98% 99% 91% 99% - - - - - - 12% 6% 2% 1% 9% 1% Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Title: Agreement commenced: Details: Name: Title: Agreement commenced: Details: Name: Title: Agreement commenced: Term of agreement: G Fethers Managing Director 1 May 2007 Mr G Fethers is the Company’s Executive Managing Director under a contract of employment which commenced on 1 May 2007. Under the contract Mr Fethers is entitled to $132,000 per annum plus statutory superannuation. The contract does not have any fixed term and may be terminated by the Company or Mr Fethers on reasonable notice. No payments or retirement benefits are payable on termination. J Hamer Chairman - Non Executive 1 May 2007 Mr J Hamer is employed as the Company’s Non-executive Chairman. His appointment as a Director commenced on 9 May 2007 with agreed director fees payable at an annual rate of $40,000 plus options under the terms of the Directors Options Scheme. From 1 January 2018 the annual rate was increased to $80,000. There is no fixed term and no set retirement benefits are payable on termination. Mr Adrian Griffin Director 30 June 2014 Mr A Griffin is employed as a Non-executive Director. His appointment as a Director commenced on 30 June 2014 with agreed director fees payable at an annual rate of $40,000 plus options under the terms of the Directors Options Scheme. There is no fixed term and no set retirement benefits are payable on termination. Key management personnel have no entitlement to termination payments, other than accrued leave balances, in the event of removal for misconduct. Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2018. Shares were issued to each director in lieu of cash payable for fees/salary/super. 13 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Grant date Vesting date and exercisable date Expiry date Fair value per option at grant date Exercise price 29 December 2017 31 December 2020 31 December 2020 $0.0375 $0.0276 Options granted carry no dividend or voting rights. The number of options over ordinary shares granted to and vested by directors and other key management personnel as part of compensation during the year ended 30 June 2018 are set out below: Name J Hamer G Fethers A Griffin Number of options granted during the year 2018 Number of options granted during the year 2017 Number of options vested during the year 2018 Number of options vested during the year 2017 300,000 500,000 100,000 300,000 500,000 100,000 300,000 500,000 100,000 300,000 500,000 100,000 Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Ordinary shares G Fethers J Hamer A Griffin Balance at the start of the year Received in lieu of Remuner- ation Additions Disposals Balance at the end of the year 26,869,492 12,207,245 7,100,671 46,177,408 511,539 27,007,500 (21,507,500) 32,881,031 - 13,661,946 854,701 600,000 - 33,568,559 427,350 26,040,538 1,793,590 53,648,038 (21,507,500) 80,111,536 14 Reedy Lagoon Corporation Limited Directors' report 30 June 2018 Option holding The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at the start of the year Granted & Acquired Exercised Expired / Forfeited Balance at the end of the year Options over ordinary shares G Fethers J Hamer A Griffin 1,500,000 4,875,000 900,000 1,900,907 300,000 4,242,652 (500,000) (600,000) (300,000) (200,000) (100,000) 2,700,000 11,018,559 (1,800,000) (900,000) (1,000,000) 4,875,000 1,900,907 4,242,652 11,018,559 This concludes the remuneration report, which has been audited. Shares under option Unissued ordinary shares of Reedy Lagoon Corporation Limited under option at the date of this report are as follows: Grant date Expiry date 29 December 2017 6 April 2018 31 December 2020 6 April 2021 Exercise price Number under option $0.0375 900,000 $0.08 37,710,515 38,610,515 No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate. Shares issued on the exercise of options There were 1,800,000 ordinary shares of Reedy Lagoon Corporation Limited issued on the exercise of options during the year ended 30 June 2018 and up to the date of this report. Indemnity and insurance of officers During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company (as named above) and all executive officers of the Company and of any related body corporate against a liability incurred in such capacity of 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. The Company has not otherwise, during or since the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer. Indemnity and insurance of auditor During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company (as named above) and all executive officers of the Company and of any related body corporate against a liability incurred in such capacity of 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. The Company has not otherwise, during or since the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. 15 AUDITOR’S INDEPENDENCE DECLARATION  UNDER S 307C OF THE CORPORATIONS ACT 2001   TO THE DIRECTORS OF REEDY LAGOON CORPORATION LIMITED AND CONTROLLED ENTITIES  I declare that, to the best of my knowledge and belief, during the year ended 30 June 2018, there have been:  i. ii. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001  in relation to the audit; and  no contraventions of any applicable code of professional conduct in relation to the audit.  MOORE STEPHENS AUDIT (VIC)  ABN 16 847 721 257  RYAN LEEMON  Partner  Audit & Assurance Services  Melbourne, Victoria  26 September 2018  17                                         Reedy Lagoon Corporation Limited Statement of profit or loss and other comprehensive income For the year ended 30 June 2018 Note Consolidated 2018 $ 2017 $ Revenue 6 15,567 26,675 Expenses Corporate and administration expenses Employee and director benefits expense Exploration expenditure Depreciation and amortisation expense Share based payments expense Restructure costs Other expenses 7 7 (134,199) (240,917) (4,088,781) - (24,826) - (142,610) (75,848) (154,826) (484,583) (394) (3,040) (56,585) (60,087) Loss before income tax expense (4,615,766) (808,688) Income tax expense 8 - - Loss after income tax expense for the year attributable to the owners of Reedy Lagoon Corporation Limited (4,615,766) (808,688) Items that may be reclassified subsequently to profit or loss Foreign Currency Translation Other comprehensive income for the year, net of tax 970 970 - - Total comprehensive loss for the year attributable to the owners of Reedy Lagoon Corporation Limited Basic earnings per share Diluted earnings per share (4,614,796) (808,688) Cents Cents 29 29 (1.574) (1.574) (0.565) (0.565) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 18 Reedy Lagoon Corporation Limited Statement of financial position As at 30 June 2018 Assets Current assets Cash and cash equivalents Trade and other receivables Other Total current assets Non-current assets Deposits and Bonds Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Employee benefits Provision for site restoration Total current liabilities Non-current liabilities Employee benefits Total non-current liabilities Total liabilities Net Assets (liabilities) Note Consolidated 2018 $ 2017 $ 9 10 11a 1,248,204 35,203 10,256 1,293,663 183,299 22,958 11,986 218,243 11b 216,891 216,891 1,510,554 - - 218,243 12 13 33,805 85,910 54,120 173,835 14,239 282,755 - 296,994 14 28,873 28,873 26,335 26,335 202,708 1,307,846 323,329 (105,086) Equity Issued capital Reserves Accumulated losses Total Equity (deficiency in equity) 15 16 780,536 20,919,160 15,666,091 5,875 (20,391,850) (15,777,052) (105,086) 1,307,846 The above statement of financial position should be read in conjunction with the accompanying notes 19 Reedy Lagoon Corporation Limited Statement of changes in equity For the year ended 30 June 2018 Consolidated Issued capital $ Accumulated Losses $ Option Reserves $ Total deficiency in equity $ Balance at 1 July 2016 14,778,609 (14,980,999) 15,470 (186,920) Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year - - - (808,688) - (808,688) - - - (808,688) - (808,688) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 15) Share-based payments (note 30) Lapse of options Balance at 30 June 2017 887,482 - - 15,666,091 - - 12,635 (15,777,052) - 3,040 (12,635) 5,875 Consolidated Issued capital $ Accumulated losses $ Option Reserves $ 887,482 3,040 - (105,086) Total deficiency in equity $ Balance at 1 July 2017 15,666,091 (15,777,052) 5,875 (105,086) Loss after income tax expense for the year Rounding adjustment Other comprehensive income for the year, net of tax Total comprehensive loss for the year - - - - (4,615,766) (2) (970) (4,614,798) - - - - (4,615,766) (2) (970) (4,614,798) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 15) Share-based payments (note 30) Exercise of options (note 15) Lapse of options Balance at 30 June 2018 5,248,164 - 4,905 - 20,919,160 - - - - (20,391,850) 755,710 24,826 (4,905) (970) 780,536 6,003,874 24,826 - (970) 1,307,846 The above statement of changes in equity should be read in conjunction with the accompanying notes 20 Reedy Lagoon Corporation Limited Statement of cash flows For the year ended 30 June 2018 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Payments for exploration activities Net cash used in operating activities Cash flows from investing activities Payments for deposits and bonds Net cash from investing activities Cash flows from financing activities Proceeds from issue of shares Capital raising costs Proceeds from borrowings Repayment of borrowings Net cash from financing activities Net increase in cash and cash equivalents Impact of exchange rates on foreign cash balances Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year Note Consolidated 2018 $ 2017 $ 14,830 (716,243) 4,722 (2,024,269) (2,720,960) 20,234 (223,117) 936 (484,583) (686,530) 28 (216,891) (216,891) - 15, 16 4,356,995 (351,709) - (3,500) 4,001,786 1,063,935 970 183,299 1,248,204 9 835,947 (17,841) 30,000 (26,500) 821,606 135,076 - 48,223 183,299 The above statement of cash flows should be read in conjunction with the accompanying notes 21 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 1. General information The financial statements cover Reedy Lagoon Corporation Limited as a consolidated entity consisting of Reedy Lagoon Corporation Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Reedy Lagoon Corporation Limited's functional and presentation currency. Reedy Lagoon Corporation Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 18 530 Collins Street Melbourne VIC 3121 A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 26 September 2018. The directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Going concern For the year ended 30 June 2018 the Group made a loss of $4,615,766 (2017: loss of $808,688), has net assets of $1,307,846 (2017: Net deficiency $105,086), and had operating cash outflows $2,720,960 (2017: $686,530). All project assets are valued in the accounts at $0 (refer to Exploration, Evaluation and Development Expenditure below). Notwithstanding this, the financial report has been prepared on a going concern basis. At the date of this report the Group had approximately $750k in bank deposits. At the date of this report all the Group’s lithium brine project tenements, comprising the Placer Claims in Nevada, were current to 31 August 2019 and the only known committed liability (other than trade payable and employee provisions) was an estimated A$54k to complete rehabilitation of two drill sites. Annual overheads have been budgeted at $540k. At the date of this report the Group has sufficient funds to meet all commitments as and when they fall due for at least 12 months other than discretionary expenditure (which can be deferred or discontinued). Exploration and associated additional overheads will be undertaken only if funded by capital raising in the form of new securities and/or by joint venture partners. In the event that the group is not able to raise additional funding, it may be required to discontinue exploration and may not be able to continue its operations as a going concern. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). 22 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 24. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Reedy Lagoon Corporation Limited ('company' or 'parent entity') as at 30 June 2018 and the results of all subsidiaries for the year then ended. Reedy Lagoon Corporation Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Exploration, Evaluation and Development Expenditure Expenditure incurred on the acquisition of exploration properties and exploration, evaluation and development costs, including acquisition of Nevada Lithium Pty Ltd (refer to notes 3 & 4) are written off as incurred where the activities in the areas of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Once it is determined that the costs can be recouped through sale or successful development and exploitation of the area of interest then the on- going costs are accumulated and carried forward for each area of interest. 23 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. When production commences, carried forward exploration, evaluation and development costs are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. Each area of interest is also reviewed annually and accumulated costs written off to the extent that they will not be recoverable in the future. Provision for restoration costs is made at the reporting date based on the net present value of the estimated costs of restoration at that date. The Group assesses its provision for restoration costs at each reporting date. Revenue recognition Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Rendering of services Revenue from the rendering of a service is recognised upon the delivery of the service to the customers or in accordance with contractual rights. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. Where the contract outcome cannot be reliably estimated, revenue is only recognised to the extent of the recoverable costs incurred to date. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established, less allowance for doubtful receivables. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or ● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 24 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Other receivables are recognised at amortised cost, less any provision for impairment. Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 5-10 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. 25 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows: ● during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period. ● from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date. All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability. 26 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Reedy Lagoon Corporation Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Goods and Services Tax ('GST') Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2018. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below. 27 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) AASB 9 Financial Instruments This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The consolidated entity will adopt this standard from 1 January 2018 but the impact of its adoption is not expected to be material. AASB 15 Revenue from Contracts with Customers This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will adopt this standard from 1 January 2018 but the impact of its adoption is not expected to be material. 28 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 2. Significant accounting policies (continued) AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The consolidated entity will adopt this standard from 1 July 2019 but the impact of its adoption is currently being assessed. Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Share-based payment transactions Equity-settled share-based payments are measured at fair value of the equity instrument at the grant date. Fair value is measured by the use of either a Binomial or Black-Scholes model (as described at note 29) taking into account the terms and conditions upon which the instruments were granted. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non- transferability, exercise restrictions, and behavioural considerations. Estimation of useful lives of assets The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Management has determined not to recognise the deferred tax asset, given that the group has experienced losses, on a historical basis. Employee benefits provision As discussed in note 2, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. 29 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 3. Critical accounting judgements, estimates and assumptions (continued) Exploration expenditures The consolidated entity expenses expenditures relating to exploration as they are incurred as they are not considered likely to be recoverable. The consolidated entity has not extracted any reserves and therefore all of the exploration expenses should be expensed. Management assessed such judgement in light of no mineral reserves being found as of yet. Provision for restoration Significant estimates and assumptions are made in determining this provision as there are a number of factors that will affect the ultimate liability. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases/decreases and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at balance date represents management’s best estimate of the present value of the future restoration costs required. Note 4. Acquisition of Lithium Brine Projects in Nevada. On 22 December 2016 Reedy Lagoon entered into an agreement (Share Purchase Agreement) under which Reedy Lagoon acquired Nevada Lithium Pty Ltd. At the date of acquisition Nevada Lithium Pty Ltd owned 3 lithium brine projects in Nevada, USA through its wholly-owned subsidiary, Sierra Lithium LLC. All the Company’s operations in North America are run through Sierra Lithium LLC. To complete the acquisition Reedy Lagoon issued $2m "worth" of RLC shares to the vendors of Nevada Lithium on 18 December 2017. The number of RLC Shares (80,000,000) issued to the vendors was calculated by reference to the offer price of RLC Shares under a capital raising of at least $2m to fund drilling on the projects. Further details in note 31. Note 5. Operating segments Identification of reportable operating segments The company is organised into one operating segments: mineral exploration in Australia. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. Note 6. Revenue Interest Other Revenue Consolidated 2018 $ 2017 $ 4,722 10,845 15,567 936 25,739 26,675 30 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2017 Note 7. Expenses Loss before income tax includes the following specific expenses: Depreciation Plant and equipment Scientific equipment Total depreciation Exploration Tenement applications fees and rents Lithium Brine Project Placer Claim costs (refer to note 31) Other exploration expenditure Payments made in relation to Nevada Lithium Pty Ltd (refer to note 4) Total exploration Note 8. Income tax expense Consolidated 2018 $ 2017 $ - - - 394 - 394 50,018 1,973,118 2,065,645 - 4,088,781 2,590 47,639 434,354 484,583 Consolidated 2018 $ 2017 $ Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 30% (4,615,766) (1,384,730) (808,688) (242,606) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Capital allowances share issue costs Non-deductible equity settled benefits expense Non-deductible-Impairment of Placer Claims Other non-deductible (deductible) expenses Non-deductible overseas exploration expenditure Deferred tax asset (on account of losses) not brought to account Income tax expense (22,359) 7,448 608,065 1,383 614,778 (175,415) 175,415 - (67) 912 (378) 88,402 (153,737) 153,737 - The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in the statement of financial position as the recovery of this benefit is uncertain. The potential future income tax benefit will only be obtained if: a) The Company derives future assessable income of a nature and amount sufficient to enable the benefit to be realised; b) The Company continues to comply with the conditions for deductibility imposed by the law; and c) No changes in tax legislation adversely affect the Company in realising the benefit. Note 9. Current assets - cash and cash equivalents Cash at bank 31 Consolidated 2018 $ 2017 $ 1,248,204 183,299 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2017 Note 10. Current assets - trade and other receivables Trade receivables Other receivables GST receivable Note 11a. Current assets - other Prepayments Note 11b. Non-Current assets – Deposits and Bonds Deposits and Bonds Note 12. Current liabilities - trade and other payables Amounts payable to directors Other payables and accruals Refer to note 18 for further information on financial instruments. Note 13. Current liabilities - employee benefits Annual leave Accrued directors wages / fees 32 Consolidated 2018 $ 2017 $ 4,461 - 30,741 35,203 8,024 423 14,511 22,958 Consolidated 2018 $ 2017 $ 10,256 11,986 Consolidated 2018 $ 2017 $ 216,891 - Consolidated 2018 $ 2017 $ - 33,805 33,805 3,500 10,739 14,239 Consolidated 2018 $ 2017 $ 85,910 - 85,910 73,810 208,945 282,755 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2017 Note 14. Non-current liabilities - employee benefits Long service leave Note 15. Equity - issued capital Consolidated 2018 $ 2017 $ 28,873 26,335 2018 Shares Consolidated 2017 Shares 2018 $ 2017 $ Ordinary shares - fully paid 401,408,878 175,675,168 20,919,160 15,666,091 Movements in ordinary share capital Details Date Shares Issue price $ Balance Shares issued as directors' fees Issue of shares Issue of shares Less share issue costs Balance Issue of shares Sierra Lithium acquisition Option exercised Option exercised Option exercised Option exercised Option exercised-transfer option reserve Shares issued as directors fee Shares issued as directors fee Less share issue costs 1 July 2016 27 October 2016 25 November 2016 20 April 2017 30 June 2017 18 December 2017 18 December 2017 18 December 2017 18 December 2017 13 March 2018 13 March 2018 20 March 2018 20 June 2018 111,026,946 8,000,000 39,250,000 17,398,222 - 175,675,168 142,140,120 80,000,000 100,000 100,000 800,000 800,000 105,556 1,688,034 - 14,778,609 69,376 314,000 521,947 (17,841) $0.0087 $0.0080 $0.0300 $0.0000 15,666,091 $0.025 3,553,533 $0.025 2,000,000 $0.0133 1,300 $0.011 1,100 $0.011 8,800 $0.0133 10,640 4,905 4,750 19,750 (351,709) $0.045 $0.0117 Balance 30 June 2018 401,408,878 20,919,160 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share buy-back There is no current on-market share buy-back. 33 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 15. Equity - issued capital (continued) Capital risk management RLC’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and exploit the mineral assets under its control in order to provide future returns for shareholders and benefits for other stakeholders. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. The Company continuously reviews the capital structure to ensure:- • sufficient funds are available to implement its exploration expenditure programs in accordance with forecasted needs; and • sufficient funds for the other operational needs of the Company is maintained. The capital risk management policy remains unchanged from the 30 June 2017 annual report. Note 16. Equity - reserves Share-based payments reserve Consolidated 2018 $ 2017 $ 780,536 5,875 Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Balance at 1 July 2016 Share based payments (refer to note 30) Expiry of options Balance at 30 June 2017 Issue of 37,710,515 options at $0.02 each Share based payments (refer to note 30) Exercise of options Expiry of options Balance at 30 June 2018 Note 17. Equity - dividends Total $ 15,470 3,040 (12,635) 5,875 755,710 24,826 (4,905) (970) 780,536 There were no dividends paid, recommended or declared during the current or previous financial year. 34 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 18. Financial instruments Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk. Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis. Market risk Foreign currency risk The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. Price risk The consolidated entity is not exposed to any significant price risk. Interest rate risk The consolidated entity is not exposed to significant interest rate risk. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral. The consolidated entity trade and other receivables consist of GST receivable and interest receivable. For this reason the consolidated entity is not exposed to significant credit risk. Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) to pay debts as and when they become due and payable. The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. 35 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 18. Financial instruments (continued) Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ - - 33,805 - 33,805 - - - - - - Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - - 33,805 - 33,805 Remaining contractual maturities $ - 10,739 3,500 14,239 - - - - - - 10,739 3,500 14,239 Consolidated - 2018 Non-derivatives Non-interest bearing Trade other payables Amounts payable to directors Total non-derivatives Consolidated - 2017 Non-derivatives Non-interest bearing Trade payables Amounts payable to directors Total non-derivatives The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Note 19. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments Consolidated 2018 $ 2017 $ 232,000 12,540 2,537 24,826 271,903 212,000 12,540 2,546 3,040 230,126 As at 30 June 2018, $0 (2017: $208,945) of short term employee benefits remain unpaid. 36 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 20. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by Moore Stephens Audit (Vic), the auditor of the company: Audit services - Moore Stephens Audit (Vic) Audit or review of the financial statements Other services - Moore Stephens Audit (Vic) Tax and compliance services Consolidated 2018 $ 2017 $ 23,000 15,900 37,925 60,925 8,225 24,125 It is the Company’s policy to engage the external auditor to provide services additional to their audit duties where the external auditor’s experience and expertise with the Companies are important and it is logical and efficient for them to provide those services. The provision of non-audit services during the year by the external auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001. Note 21. Contingent liabilities The Company is not aware of any contingent liabilities other than the costs of completing rehabilitation of the two drill sites used by the Company during drilling at its Columbus Salt Marsh and Big Smoky South projects (drill holes CBD-01 and MBD-01 respectively). A provision of US$40,000 (A$54,120) has been made for this work which is expected to be completed in the normal course of business and when weather conditions are appropriate. Note 22. Exploration expenditure commitments The Company held 652 Placer Claims located in Nevada, USA. Annual Land Fees comprising US$155 and US$12 per Placer Claim are payable to the Bureau of Land Management (“BLM”) and Esmeralda County respectively. At the date of this report all Land Fees were paid up to 31 August 2019. There is no minimum exploration expenditure requirement for Placer Claims located in Nevada, USA. The Company held one tenement, EL5580 located in South Australia. All diamond interests on EL5580 were farmed out to DiamondCo Limited under the terms of the Diamond Farm-out Agreement. DiamondCo Limited withdrew from the Diamond Farm Out Agreement subsequent to the report period. Ongoing annual exploration expenditure is required to maintain title to the entirety of EL5580. Tenement expenditure will be determined by the Company and is dependent upon exploration results and available cash resources. The statutory expenditure requirement is subject to negotiation with the relevant state department, and expenditure commitments may be reduced subject to reduction of exploration area and/or relinquishment of non-prospective tenements. Unless the Minister determines otherwise, if the minimum expenditure ($130,000) is not satisfied then 50% of the licence area must be reduced by the end of 11 Nov 2018. No provision has been made in the accounts for exploration commitments. Note 23. Related party transactions Parent entity Reedy Lagoon Corporation Limited is the parent entity. 37 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 23. Related party transactions (continued) Subsidiaries Interests in subsidiaries are set out in note 25. Joint ventures Interests in joint ventures are set out in note 26. Key management personnel Disclosures relating to key management personnel are set out in note 19 and the remuneration report included in the directors' report. Transactions with related parties DiamondCo Limited, a company of which Mr Fethers and Mr Hamer are directors and shareholders, held the rights to diamonds located on EL 5580 through a joint venture agreement dated 26 March 2007. Opportunities to reduce mobilisation costs and expand small scale programmes by combining field activities were exploited where possible. Where services for combined RLC and DiamondCo programmes were contracted RLC normally acted as principal and invoiced DiamondCo on a cost recovery basis. RLC provided the services of Mr Fethers and office services to DiamondCo at normal commercial rates. Total fees invoiced by RLC during the financial year to DiamondCo amounting to $14,523 (2017: $25,739). Receivable from and payable to related parties The amount of $2,126 (2017: $8,024) was payable by DiamondCo Limited at 30 June 2018 and no trade payables to related parties at the current and previous reporting date. Amount payable to directors at 30 June 2018 is $0 (2017: $ 3,500). Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 24. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive loss Parent 2018 $ 2017 $ (2,724,964) (2,723,994) (808,688) (808,688) 38 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 24. Parent entity information (continued) Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Accumulated losses Total Equity Parent 2018 $ 2017 $ 3,230,415 3,347,236 218,243 218,243 148,588 148,588 296,994 323,329 780,536 20,919,160 15,666,091 5,875 (18,501,048) (15,777,052) (105,086) 3,198,648 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017. Contingent liabilities There are no contingent liabilities as at balance date. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment at as 30 June 2018 and 30 June 2017. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 2, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Note 25. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the accounting policy described in note 2: Name Bullamine Magnetite Pty Ltd Nevada Lithium Pty Ltd Principal place of business / Country of incorporation Ownership interest 2017 % 2018 % Australia Australia 100.00% 100.00% 100.00% - 39 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 26. Interests in joint ventures EL 5580 was subject to a joint venture agreement, the Diamond Farm Out Agreement, which transferred all RLC’s interest in diamonds in this tenement to DiamondCo Limited. DiamondCo Limited withdrew form the agreement following the end of the report period and all interests in diamond on EL 5580 have reverted to the Company. Tenements which pre-date and carry through to EL 5580 were subject to a joint venture agreement, the Edward Creek Base Metals Joint Venture (“ECBMJV”) which was terminated and all interests in the ECBMJV were forfeited to RLC on 9 June 2009. The termination of the joint venture was disputed by the other parties, but RLC considers the dispute to be baseless. Prior to the termination of the joint venture RLC held a 62% interest in the tenements. Note 27. Events after the reporting period Since 30 June 2018, the company has advanced amounts totalling $375,264 to its American bank account to fund its operations. Geophysical surveys contracted during the report period have been completed following the report period. All Land Fees in respect of the Company’s Placer Claims (BLM and Esmeralda County – refer to Tenement Schedule note 4) for the period ending 31 August 2019 were paid during August 2018. Assessment of the Company’s existing projects and exploration for additional lithium brine projects in North America was continuing at the date of this report. No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Note 28. Reconciliation of loss after income tax to net cash used in operating activities Consolidated 2018 $ 2017 $ Loss after income tax expense for the year (4,615,766) (808,688) Adjustments for: Depreciation and amortisation Impairment of Placer Claims Share-based payments Shares issued in lieu of fees Change in operating assets and liabilities: Increase in trade and other receivables Decrease/(increase) in prepayments Increase/(decrease) in trade and other payables Increase in employee benefits Increase in provision for site restoration Increase/(Decrease) in accrued salaries and director's fees Net cash used in operating activities - 1,973,118 24,826 24,500 394 3,040 69,376 (12,246) 1,730 23,067 14,233 54,120 (208,542) (2,720,960) (17,938) (136) 2,226 15,251 - 49,945 (686,530) 40 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2017 Note 29. Earnings per share Loss after income tax attributable to the owners of Reedy Lagoon Corporation Limited Consolidated 2018 $ 2017 $ (4,615,766) (808,688) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 293,313,566 143,115,772 Weighted average number of ordinary shares used in calculating diluted earnings per share 293,313,566 143,115,772 Basic earnings per share Diluted earnings per share Cents Cents (1.574) (1.574) (0.565) (0.565) The rights to options held by option holders have not been included in the weighted average number of ordinary shares for the purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 ‘Earnings per Share’. The rights to options are non-dilutive as the Company has generated a loss for the financial year. Note 30. Share-based payments A share option plan has been established by the company and approved by shareholders at a general meeting, whereby the company may, at the discretion of the board, grant options over ordinary shares in the company to certain key management personnel. Remuneration arrangements of key management personnel are disclosed in the annual financial report. In addition, on 29 November 2017, after approval at the company's annual general meeting, a total of 900,000 were issued to directors as part of their remuneration packages. Each director received the below options:- • Geoffrey H. Fethers – 500,000 options, exercise price 3.75 cents, expiring on 31 December 2020 with a value $13,792; • Adrian C. Griffin – 100,000 options, exercise price 3.75 cents, expiring on 31 December 2020 with a • value $2,758; and Jonathan M. Hamer – 300,000 options, exercise price 3.75 cents, expiring on 31 December 2020 with a value $8,276. Set out below are summaries of options granted under the plan: 2018 Grant date Expiry date Exercise price Balance at the start of the year Granted Exercised Lapsed Balance at the end of the year 13/11/2014 31/12/2017 $0.2000 900,000 - - (900,000) 30/12/2015 31/12/2018 $0.0110 $0.0133 25/11/2016 31/12/2019 29/11/2017 31/12/2020 $0.0375 900,000 900,000 - 2,700,000 - - 900,000 900,000 (900,000) (900,000) - - - - - (900,000) - - - 900,000 900,000 41 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 2017 Grant date Expiry date 29/11/2013 31/12/2016 13/11/2014 31/12/2017 30/12/2015 31/12/2018 25/11/2016 31/12/2019 Exercise price Balance at the start of the year Granted Exercised Lapsed Balance at the end of the year $0.2000 $0.2000 $0.0110 $0.0133 900,000 900,000 900,000 - 2,700,000 - - - 900,000 900,000 - - - - - (900,000) - - - - 900,000 900,000 900,000 (900,000) 2,700,000 For the options granted during the current financial year the valuation model inputs used to determine the fair value at the grant date, are as follows: Grant date Expiry date Share price at grant date Exercise price Expected volatility Dividend yield Risk-free interest rate Fair value at grant date 28/11/2017 31/12/2020 $0.058 $0.0375 76.00% - 2.21% $0.0276 An expense of $24,826 (2017: $3,040) has been recognised in the statement of comprehensive income for the current period in relation to the above options. 42 Reedy Lagoon Corporation Limited Notes to the financial statements 30 June 2018 Note 31. Acquisition of Lithium Brine Projects in Nevada (a) Business Combinations During the financial half year ended 31 December 2017 the Group completed the following business combinations. Acquisition of Nevada Lithium Pty Ltd On 18 December 2018 the Group acquired 100% of the share capital of Nevada Lithium Pty Ltd. Nevada Lithium Pty Ltd has a wholly owned subsidiary, Sierra Lithium LLC, which owns the lithium brine project in Nevada, USA. (a) Purchase consideration $2,000,000 Issue of 80,000,000 ordinary fully paid shares in the Company (refer note – 15 : Equity - issued capital) (b) Identifiable assets acquired and liabilities assumed The fair values of identifiable assets acquired and liabilities assumed of Nevada Lithium Pty Ltd and its subsidiary as at the date of acquisition were: Current assets Cash and cash equivalents Total current assets Non-Current assets Deposits & Bonds Placer Claims Total non-current assets Total Identifiable Assets Current Liabilities Other payables Total current liabilities Non-current liabilities Total non-current liabilities Total Liabilities Fair Value at acquisition date A$ (i) 18,629 18,629 119,125 1,973,118 2,092,243 2,110,872 110,872 110,872 - 110,872 Total identifiable net assets acquired at fair value on business combination Total consideration 2,000,000 2,000,000 The cash flow on acquisition is as follows: Net cash acquired with the subsidiary Cash paid Net consolidated cash inflow 18,629 - 18,629 (i) The Placer Claims were represented by the acquired subsidiary's interests in the lithium bine project located in Nevada, USA. This project is a green field early stage exploration project. The amount paid for the Placer Claims has been written off by the Group in accordance with Group's accounting policy that all costs associated with expenditure incurred on the acquisition of exploration properties, are written off as incurred where the area of interest has not yet reached a stage that permits a reasonable assessment of the existence of economical recoverable reserves. 43 INDEPENDENT AUDITOR’S REPORT  TO THE MEMBERS OF REEDY LAGOON CORPORATION LIMITED AND CONTROLLED ENTITIES  Report on the Audit of the Financial Report  Opinion  We have audited the financial report of Reedy Lagoon Corporation Ltd and its controlled entities (the Company),  which comprises the consolidated statement of financial position as at 30 June 2018, 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:  a) the accompanying financial report of the Company is in accordance with the Corporations Act 2001, including:  i. giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its financial  performance for the year then ended; and   ii. complying with Australian Accounting Standards and the Corporations Regulations 2001.  b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.  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 Company 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.  Emphasis of Matter – Going Concern  Without modifying the opinion expressed above, we draw attention to Note 2 “Significant Accounting Policies  – Going Concern” which indicates the company incurred a loss for the period ended 30 June 2018 of  $4,615,766 and that the company’s ability to continue the exploration and development of its mining tenements,  continue to assess new projects and meet operational expenditure at current levels is dependent upon future  capital raising. These conditions along with other matters as set forth in Note 2, indicate the existence of a material  uncertainty that may cast significant doubt about the company’s ability to continue as a going concern and  therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of  business.  45                                          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.  In addition to the matter described in the Material Uncertainty Related to Going Concern Section above we have  determined the matters described below to be the key audit matters to be communicated in our report. KEY AUDIT MATTER 1 – Acquisition of Nevada Lithium Brine   Refer to Note 31 – Acquisition of Lithium Brine Projects Nevada   Nevada Lithium Brine was acquired during the  financial year through the issue of $2 million in  shares. The placer claims on the purchase was  subsequently written off in the Statement of Profit  and Loss and Other Comprehensive Income. Our procedures included, amongst others:   Discussed the nature of the transaction with  management and documented its treatment to  ensure compliance with Australian Accounting  Standards;   Agreed acquisition to supporting legal  agreements; and   Agreed the journal entries processed for the  transaction to the underlying support for the  acquisition ensuring they were consistent with  accounting policies and relevant accounting  standards.   Other Information  The directors are responsible for the other information.  The other information comprises the information included  in the Company’s annual report for the year ended 30 June 2018, 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 conclusion thereon.  In connection with our audit of the financial report, our responsibility is to read the other information and, in doing  so, consider whether the other information is materially inconsistent with the financial report or our knowledge  obtained in the audit or otherwise appears to be materially misstated.  If, based on the work we have performed, we conclude that there is a material misstatement of this other  information, we are required to report that fact.  We have nothing to report in this regard.  Responsibilities of the Directors for the Financial Report  The directors of the Company are responsible for the preparation of the financial report that gives a true and fair  view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal  control as the directors determine is necessary to enable the preparation of the financial report that gives a true  and fair view and is free from material misstatement, whether due to fraud or error.  In preparing the financial report, the directors are responsible for assessing the ability of the Company 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.  46                                    Auditor’s Responsibilities for the Audit of the Financial Report  Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from  material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our  opinion.  Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in  accordance with the Australian Auditing Standards will always detect a material misstatement when it  exists.  Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,  they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial  report.  A further description of our responsibilities for the audit of the financial report is located on the Auditing and  Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This  description forms part of our auditor’s report.  We also provide the directors with a statement that we have complied with relevant ethical requirements  regarding independence, and to communicate with them all relationships and other matters that may reasonably  be thought to bear on our independence, and where applicable, related safeguards.  From the matters communicated with the directors, we determine those matters that were of most significance in  the audit of the financial report of the current period and are therefore the key audit matters. We describe these  matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in  extremely rare circumstances, we determine that a matter should not be communicated in our report because the  adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such  communication.  Report on the Remuneration Report  Opinion on the Remuneration Report  We have audited the Remuneration Report included in pages 11 to 15 of the directors’ report for the year ended 30  June 2018.  In our opinion, the Remuneration Report of Reedy Lagoon Corporation Ltd, for the year ended 30 June 2018  complies with section 300A of the Corporations Act 2001.  Responsibilities  The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in  accordance with section 300A of the Corporations Act 2001.  Our responsibility is to express an opinion on the  Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.   MOORE STEPHENS AUDIT (VIC)  ABN 16 847 721 257  RYAN LEEMON  Partner  Audit & Assurance Services  Melbourne, Victoria  26 September 2018  47                                                      Reedy Lagoon Corporation Limited Shareholder information 30 June 2018 The shareholder information set out below was applicable as at 27 August 2018. Distribution of quoted equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Number of holders of ordinary shares 45 22 82 573 353 1,075 531 Ordinary shares % of total shares Number held Issued 32,000,000 23,639,874 17,327,460 15,038,623 14,800,588 13,622,594 13,568,559 7,425,000 7,398,279 7,350,000 6,000,000 5,998,600 5,775,000 5,525,000 5,361,000 4,510,000 4,500,000 4,466,950 3,259,200 3,259,200 200,825,927 8.39 6.20 4.54 3.94 3.88 3.57 3.56 1.95 1.94 1.93 1.57 1.57 1.51 1.51 1.45 1.41 1.18 1.17 0.85 0.85 52.65 Needmore Investments Pty Ltd Chromite Pty Ltd (Spinel A/C) Citycastle Pty Ltd Jagen Pty Ltd Sked Pty Ltd Mr Jonathan M. Hamer Mr Adrian C. Griffin Wifam Investments Pty Ltd (Wischer Family S/F A/C) Pyrope Holdings Pty Ltd (Chromite Staff S/Fund A/C) Park Road SF Pty Ltd (Park Road Super Fund A/C) DJ Coughlan Drilling Pty Ltd BNP Paribas Nominees Pty Ltd Tromso Pty Limited Tardis Victoria Pty Ltd M&K Korkidas Pty Ltd (M&K Korkidas P/L S/Fund A/C) AMAX Pacific Pty Limited Dale Estates No 1 Pty Ltd Mr Jamie Lai Meadowhead Investments Pty Ltd JHY Investments Pty Ltd 48 Reedy Lagoon Corporation Limited Shareholder information 30 June 2018 Unquoted equity securities Mr Adrian C. Griffin Substantial holders Substantial holders in the company are set out below: Sked Pty Ltd City Castle Pty Ltd Sked Pty Ltd Sked Pty Ltd (Super Fund A/C Traders Macquarie Pty Ltd Mr Adrian C. Griffin Chromite Pty Ltd Chromite Pty Ltd (Spinel A/C) Geoffrey H. Fethers Pyrope Holdings Pty Ltd (Chromite Staff S/Fund A/C) Ranview Pty Ltd Needmore Investments Pty Ltd Ordinary shares Number held 20,000,000 Ordinary shares Number held % of total shares issued 17,327,460 14,800,588 2,141,518 2,342,948 36,615,514 33,568,559 23,639,874 1,225,608 7,398,279 617,270 32,881,031 32,000,000 9.12 8.36 8.19 7.97 Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. 49 Reedy Lagoon Corporation Limited Tenement schedule 30 June 2018 Tenement Schedule Tenements held at 20 September 2018 : Located in Australia Tenement EL 5580 Edward Creek project (SA) E70/4941 Burracoppin (WA) Area (km2) Status Minimum Annual Expenditure Commitment $ Company Interest (direct or indirect) 343 Current 130,000 100% 1, & 2 58 Application TBD 100% Located in USA Tenements (all Placer Claims located in Nevada) 3 & 4 Claim Name Claim Numbers Alkali Lake North Project WH Claims WH-1 to WH-128 Big Smoky South Project MB Claims MB-53 to MB-68 MB- 77 to MB-82 MB-89 to MB-96 MB-101 to MB-228 MB-301 to MB-318 MB-320 MB-322 to MB-340 MB-342 MB-344 to MB-368 MB-370 to MB-382 MB-384 to MB-390 MB-392 to MB-398 MB-353A, MB-356A MB-376A, MB-378A MB-387A, MB-389A Clayton Valley Project CV Claims CV-1 to CV-112 Columbus Salt Marsh Project CB Claims CB-1 to CB-12 CB-17 to CB-28 CB-33 to CB-44 CB-47 to CB-60 CB-63 to CB-76 CB-79 to CB-95 CB-101 to CB-186 Corresponding BLM NMC Number Total Claims Total Area NMC 1138328 NMC 1138455 NMC 1138180 to NMC 1138327 NMC 1146188 to NMC 1146278 NMC 1161852 To NMC 1161857 NMC 1176204 NMC 1176315 to 128 1,033 ha 245 1,893 ha to 112 906 ha NMC 1138099 167 1,332 ha to NMC 1138179 NMC 1146279 NMC 1146364 to Notes to the tenement schedule: 1. EL 5580 was subject to a joint venture agreement, the Diamond Farm Out Agreement, which transfers all RLC’s interest in diamonds in the tenement to DiamondCo Limited. DiamondCo Limited withdrew from the Diamond Farm Out Agreement subsequent to the report period. At the date of this report more than $20,000 had been expended on exploration by DiamondCo Limited on EL 5580 during the current 12 month term. The Company’s interest in EL5580 is the Victory uranium prospect on which no work was done during the report period. 50 Reedy Lagoon Corporation Limited Tenement schedule 30 June 2018 2. The Statutory expenditure requirement for Australian tenements is subject to negotiation with the relevant state department, and expenditure commitments may be varied between tenements, or reduced subject to reduction of exploration area and/or relinquishment of non-prospective tenements. 3. The Placer Claims in each of the 4 lithium brine projects in Nevada (Alkali Lake North, Big Smoky South, Clayton Valley and Columbus Salt Marsh) are owned 100% by RLC through its wholly owned subsidiary, Sierra Lithium LLC. 4. Annual Land Fees comprising US$155 and US$12 per Placer Claim are payable to the BLM and Esmeralda County respectively. All Land Fees are paid up to 31 August 2019. There is no minimum exploration expenditure requirement for Placer Claims located in Nevada, USA. 51 

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