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
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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