ABN 98 117 085 748SALT LAKE POTASH LTD ANNUAL REPORT 2019GROW WITH US.ASX/AIM: SO4 Ground Floor 239 Adelaide TerracePerth WA 6000, Australia Tel. +61 8 6559 5800Email: info@SO4.com.auSO4.COM.AUANNUAL REPORT DIRECTORSMr Ian Middlemas – ChairmanMr Tony Swiericzuk – Managing Director, CEOMr Bryn JonesMr Mark PearceCOMPANY SECRETARYMr Clint McGhieREGISTERED OFFICEGround Floor239 Adelaide TerracePerth WA 6000 AustraliaTelephone: +61 8 6559 5800Facsimile: +61 8 6559 5820LONDON OFFICE3C, 38 Jermyn StreetLondon SW1Y 6DN United KingdomTelephone: +44 207 478 3900Facsimile: +44 207 434 4450WEBSITEwww.so4.com.auSECURITIES EXCHANGE LISTINGAustralian Securities ExchangeASX Code: SO4 – Ordinary SharesLondon Stock Exchange (AIM)AIM Code: SO4 – Ordinary SharesNOMINATED ADVISERGrant Thornton UK LLP30 Finsbury SquareLondon EC2A 1AGAUDITORErnst & Young11 Mounts Bay Road Perth WA 6000BANKERSAustralia and New Zealand Banking Group LimitedSHARE REGISTRYAustraliaLink Market Services LimitedQV1 Building Level 12, 250 St Georges Terrace Perth WA 6000Telephone: +61 1300 554 474Facsimile: +61 2 9287 0303United KingdomComputershare Investor Services PlcThe PavillionsBridgwater RoadBristol BS99 6ZZTelephone: +44 370 702 0000Message from the CEO 3Directors’ Report 5Consolidated Statement of Profit or Loss and other Comprehensive Income 35Consolidated Statement of Financial Position 36Consolidated Statement of Changes in Equity 37Consolidated Statement of Cash Flows 38Notes to and Forming Part of the Financial Statements 39Directors’ Declaration 70Auditor’s Independence Declaration 71Independent Auditor’s Report 72Corporate Governance 77Mineral Resources Statement 78ASX Additional Information 80DIRECTORSMr Ian Middlemas – ChairmanMr Tony Swiericzuk – Managing Director, CEOMr Bryn JonesMr Mark PearceCOMPANY SECRETARYMr Clint McGhieREGISTERED OFFICEGround Floor239 Adelaide TerracePerth WA 6000 AustraliaTelephone: +61 8 6559 5800Facsimile: +61 8 6559 5820LONDON OFFICE3C, 38 Jermyn StreetLondon SW1Y 6DN United KingdomTelephone: +44 207 478 3900Facsimile: +44 207 434 4450WEBSITEwww.so4.com.auSECURITIES EXCHANGE LISTINGAustralian Securities ExchangeASX Code: SO4 – Ordinary SharesLondon Stock Exchange (AIM)AIM Code: SO4 – Ordinary SharesNOMINATED ADVISERGrant Thornton UK LLP30 Finsbury SquareLondon EC2A 1AGAUDITORErnst & Young11 Mounts Bay Road Perth WA 6000BANKERSAustralia and New Zealand Banking Group LimitedSHARE REGISTRYAustraliaLink Market Services LimitedQV1 Building Level 12, 250 St Georges Terrace Perth WA 6000Telephone: +61 1300 554 474Facsimile: +61 2 9287 0303United KingdomComputershare Investor Services PlcThe PavillionsBridgwater RoadBristol BS99 6ZZTelephone: +44 370 702 0000Message from the CEO 3Directors’ Report 5Consolidated Statement of Profit or Loss and other Comprehensive Income 35Consolidated Statement of Financial Position 36Consolidated Statement of Changes in Equity 37Consolidated Statement of Cash Flows 38Notes to and Forming Part of the Financial Statements 39Directors’ Declaration 70Auditor’s Independence Declaration 71Independent Auditor’s Report 72Corporate Governance 77Mineral Resources Statement 78ASX Additional Information 80 DIRECTORSMr Ian Middlemas – ChairmanMr Tony Swiericzuk – Managing Director, CEOMr Bryn JonesMr Mark PearceCOMPANY SECRETARYMr Clint McGhieREGISTERED OFFICEGround Floor239 Adelaide TerracePerth WA 6000 AustraliaTelephone: +61 8 6559 5800Facsimile: +61 8 6559 5820LONDON OFFICE3C, 38 Jermyn StreetLondon SW1Y 6DN United KingdomTelephone: +44 207 478 3900Facsimile: +44 207 434 4450WEBSITEwww.so4.com.auSECURITIES EXCHANGE LISTINGAustralian Securities ExchangeASX Code: SO4 – Ordinary SharesLondon Stock Exchange (AIM)AIM Code: SO4 – Ordinary SharesNOMINATED ADVISERGrant Thornton UK LLP30 Finsbury SquareLondon EC2A 1AGAUDITORErnst & Young11 Mounts Bay Road Perth WA 6000BANKERSAustralia and New Zealand Banking Group LimitedSHARE REGISTRYAustraliaLink Market Services LimitedQV1 Building Level 12, 250 St Georges Terrace Perth WA 6000Telephone: +61 1300 554 474Facsimile: +61 2 9287 0303United KingdomComputershare Investor Services PlcThe PavillionsBridgwater RoadBristol BS99 6ZZTelephone: +44 370 702 0000Message from the CEO 3Directors’ Report 5Consolidated Statement of Profit or Loss and other Comprehensive Income 35Consolidated Statement of Financial Position 36Consolidated Statement of Changes in Equity 37Consolidated Statement of Cash Flows 38Notes to and Forming Part of the Financial Statements 39Directors’ Declaration 70Auditor’s Independence Declaration 71Independent Auditor’s Report 72Corporate Governance 77Mineral Resources Statement 78ASX Additional Information 80 DEAR SHAREHOLDERSI am very pleased to provide my first update on the Company’s progress during a period where we have transitioned from explorer to developer of the Lake Way Project, and face an exciting future ahead.Prior to joining Salt Lake Potash as CEO & Managing Director in November 2018, I was very aware of the emerging sulphate of potash (SOP) sector in Western Australia and had studied several of the proponents and their respective projects. A further deep dive into SO4’s work uncovered the high quality technical studies, business model and industry relationships that were established over the years that preceded me. I took little convincing that it was the best company to lead the development of the new Potash industry in Australia. SO4’s scalable multi-lake holdings in proximity to the Goldfields infrastructure was paramount in offering significant potential to achieve a fast pathway to production, costs savings and economies of scale.We have achieved a huge number of significant milestones during the year and have rapidly advanced the development of our first Project:Technical Studies for Commercial OperationIn June 2019, we completed our scoping study for a commercial scale 200ktpa SOP development at Lake Way. The study showed the Project generates exceptional economic returns with a low capital intensity, bottom quartile operating costs and sustainable operating life. The bankable feasibility study on a commercial operation will be completed and released in early October.Construction of first Commercial Scale Evaporation pondConstruction of the Train 1 Williamson Ponds at Lake Way, measuring 2.5km by 0.5km (125Ha) was completed in June 2019. This is the first commercial scale on-lake SOP evaporation pond system and has provided the team with invaluable data on construction and operations methodology, and costs. With the dewatering of the high-grade brine from the Williamson Pit progressing well, the Company has commenced the evaporation process for production of first harvest salts.Acquisition of Blackham TenementsA sensational deal that involves the acquisition of Blackham owned Lake Way tenements, process water sufficient to satisfy SO4s project needs, and the extinguishment of the Blackham Royalty on brine extracted from their tenements. This transaction provides significant benefits to the Lake Way Project and further supports the rapid progress towards first production in late 2020. The acquisition will provide material value through capital and operating savings to SO4 and also significantly de-risks the Project by providing ownership of project tenements and access to key infrastructure including water.Project FinancingA significant milestone for the company is our recently announced mandate with Taurus to provide up to USD$150 million in project financing for the Lake Way Project. Initial funds for early construction works and completion of the BFS are available for drawdown ahead of the main facility. We are delighted to have entered a long-term partnership with Taurus, with their commitment at this stage of our development being a strong endorsement of the Project and delivery team.“...HAVING ACHIEVED SIGNIFICANT SUCCESSES IT IS EXCITING TO AGAIN SHARE THE OPPORTUNITY TO DEVELOP ANOTHER OUTSTANDING PROJECT IN WA.”SO4 TeamWith the incredible positive attributes of the Lake Way Project, and expansion opportunity across the many lakes in the portfolio, SO4 has attracted a highly experienced construction and operations team. This is supporting the Company with its plan to rapidly develop Lake Way and future lakes in the SO4 portfolio. Having previously worked closely with many of the current SO4 team on project development and ramp up, and having achieved significant successes it is exciting to again share the opportunity to develop another outstanding project in WA.The next 12months will be pivotal to SO4 with many key work fronts rapidly progressing, including construction of the process plant and associated support infrastructure, completion of Stage 2 and 3 on-lake civil works and finalising permitting for the Project in line with our Project schedule.Having now been in my position for 11 months and with the achievement of so many significant milestones that have rapidly progressed the development at Lake Way, I remain convinced of SO4’s potential to lead the development of the SOP sector in Australia and be a major global fertiliser company. It is difficult for me to contain my enthusiasm about the development and construction journey that lies ahead over the coming 18 months. I would like to extend my appreciation to our shareholders for your support and I look forward to sharing success with you in the coming year.Yours sincerely,Tony SwiericzukCEO & Managing Director DEAR SHAREHOLDERSI am very pleased to provide my first update on the Company’s progress during a period where we have transitioned from explorer to developer of the Lake Way Project, and face an exciting future ahead.Prior to joining Salt Lake Potash as CEO & Managing Director in November 2018, I was very aware of the emerging sulphate of potash (SOP) sector in Western Australia and had studied several of the proponents and their respective projects. A further deep dive into SO4’s work uncovered the high quality technical studies, business model and industry relationships that were established over the years that preceded me. I took little convincing that it was the best company to lead the development of the new Potash industry in Australia. SO4’s scalable multi-lake holdings in proximity to the Goldfields infrastructure was paramount in offering significant potential to achieve a fast pathway to production, costs savings and economies of scale.We have achieved a huge number of significant milestones during the year and have rapidly advanced the development of our first Project:Technical Studies for Commercial OperationIn June 2019, we completed our scoping study for a commercial scale 200ktpa SOP development at Lake Way. The study showed the Project generates exceptional economic returns with a low capital intensity, bottom quartile operating costs and sustainable operating life. The bankable feasibility study on a commercial operation will be completed and released in early October.Construction of first Commercial Scale Evaporation pondConstruction of the Train 1 Williamson Ponds at Lake Way, measuring 2.5km by 0.5km (125Ha) was completed in June 2019. This is the first commercial scale on-lake SOP evaporation pond system and has provided the team with invaluable data on construction and operations methodology, and costs. With the dewatering of the high-grade brine from the Williamson Pit progressing well, the Company has commenced the evaporation process for production of first harvest salts.Acquisition of Blackham TenementsA sensational deal that involves the acquisition of Blackham owned Lake Way tenements, process water sufficient to satisfy SO4s project needs, and the extinguishment of the Blackham Royalty on brine extracted from their tenements. This transaction provides significant benefits to the Lake Way Project and further supports the rapid progress towards first production in late 2020. The acquisition will provide material value through capital and operating savings to SO4 and also significantly de-risks the Project by providing ownership of project tenements and access to key infrastructure including water.Project FinancingA significant milestone for the company is our recently announced mandate with Taurus to provide up to USD$150 million in project financing for the Lake Way Project. Initial funds for early construction works and completion of the BFS are available for drawdown ahead of the main facility. We are delighted to have entered a long-term partnership with Taurus, with their commitment at this stage of our development being a strong endorsement of the Project and delivery team.“...HAVING ACHIEVED SIGNIFICANT SUCCESSES IT IS EXCITING TO AGAIN SHARE THE OPPORTUNITY TO DEVELOP ANOTHER OUTSTANDING PROJECT IN WA.”SO4 TeamWith the incredible positive attributes of the Lake Way Project, and expansion opportunity across the many lakes in the portfolio, SO4 has attracted a highly experienced construction and operations team. This is supporting the Company with its plan to rapidly develop Lake Way and future lakes in the SO4 portfolio. Having previously worked closely with many of the current SO4 team on project development and ramp up, and having achieved significant successes it is exciting to again share the opportunity to develop another outstanding project in WA.The next 12months will be pivotal to SO4 with many key work fronts rapidly progressing, including construction of the process plant and associated support infrastructure, completion of Stage 2 and 3 on-lake civil works and finalising permitting for the Project in line with our Project schedule.Having now been in my position for 11 months and with the achievement of so many significant milestones that have rapidly progressed the development at Lake Way, I remain convinced of SO4’s potential to lead the development of the SOP sector in Australia and be a major global fertiliser company. It is difficult for me to contain my enthusiasm about the development and construction journey that lies ahead over the coming 18 months. I would like to extend my appreciation to our shareholders for your support and I look forward to sharing success with you in the coming year.Yours sincerely,Tony SwiericzukCEO & Managing Director DIRECTORS’ REPORT
(cid:3)
The Directors of Salt Lake Potash Limited present their report on the Consolidated Entity consisting of Salt Lake
Potash Limited (Company or Salt Lake Potash) and the entities it controlled at the end of, or during, the year
(cid:3)
ended 30 June 2019 (Consolidated Entity or Group).
OPERATING AND FINANCIAL REVIEW
Operations
Salt Lake Potash is the owner of nine large salt lakes in the Northern Goldfields Region of Western Australia. This
outstanding portfolio of assets has a number of important, favourable characteristics:
Over 3,300km2 of playa surface, with in-situ clays suitable for low cost on-lake pond construction;
Very large paleochannel hosted brine aquifers, with chemistry amenable to evaporation of salts for SOP
production, extractable from both low-cost trenches and deeper bores;
Excellent evaporation conditions;
Excellent access to transport, energy and other infrastructure in the Goldfields mining district;
Clear opportunity to reduce transport costs by developing lakes closer to infrastructure and by capturing
economies of scale; and
Potential for multi-lake production offers optionality and significant scale potential, operational flexibility, cost
advantages and risk mitigation from localised weather events.
Salt Lake Potash’s immediate focus is on the rapid development of the Lake Way Project, Wiluna. Lake Way’s
location and logistical advantages make it the ideal location for the Company’s first SOP operation.
The Company’s long term plan is to develop an integrated SOP operation, producing from a number (or all) of the
lakes. Salt Lake Potash will progressively explore each of the lakes with a view to estimating resources for each
Lake, and determining the development potential. Exploration of the lakes will be prioritised based on likely transport
costs, scale, permitting pathway and brine chemistry.
Figure 1: Location of Salt Lake Potash’s Portfolio of Assets
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DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
LAKE WAY PROJECT
Lake Way is located in the Northern Goldfields Region of Western Australia, less than 15km south of Wiluna. The
surface area of the Lake is over 270km2.
Salt Lake Potash holds five Exploration Licences (two granted and three under application) and one application for
a Mining Lease, covering most of Lake Way and select areas off-lake, including the paleochannel. The northern
end of the Lake is largely covered by a number of Mining Leases, held by Blackham Resources Limited, the owner
of the Wiluna Gold Mine. The Blackham tenements are now subject to a Sales Agreement where Salt Lake Potash
will acquire a package of strategic tenements and other key assets for the Lake Way Project.
Lake Way has a number of compelling advantages which make it an ideal site for Salt Lake Potash’s initial SOP
operation, including:
Existing Mining Leases provide advanced permitting pathway for early development activity, including the
first phase of the Lake Way evaporation ponds completed in June 2019.
Completion of the first phase of the Lake Way evaporation ponds is enabling the Company to dewater the
existing Williamson Pit. The pit contained an estimated 1.2 gigalitres (GL) of brine at the exceptional grade
of 25kg/m3 of SOP. This brine is the ideal starter feed for evaporation ponds, having already evaporated
from the normal Lake Way brine grade, which averages over 15kg/m3.
The high grade brines at Lake Way will result in lower capital and operating costs due to lower extraction
and evaporation requirements.
The presence of clays in the upper levels of the lake which are amenable to low cost, on-lake evaporation
pond construction.
The site has excellent freight solutions, being adjacent to the Goldfields Highway, which is permitted for
heavy haulage, quad trailer road trains to the railhead at Leonora and then direct rail access to both
Esperance and Fremantle Ports, or via other heavy haulage roads to Geraldton Port.
The Goldfields Gas Pipeline is adjacent to Salt Lake Potash’s tenements, running past the eastern side of
the Lake.
Acquisition of Strategic Tenement Package
In July 2019, Salt Lake Potash entered into a Sale Agreement with Blackham to acquire a package of tenements
and other key assets for the Lake Way Project.
Blackham and Salt Lake Potash have been cooperating on their respective projects in the Wiluna/Lake Way region
for the past 18 months. The Company was able to identify specific Blackham assets which provide synergies for
the Lake Way Project and material value to Salt Lake Potash.
Under the Sale Agreement which is expected to complete shortly, Salt Lake Potash will acquire the tenements
owned by Blackham that sit on the Northern end of Lake Way and to the East of the Goldfields highway (Figure 2).
Blackham agreed to provide immediate access to process water, and consent to the grant of new tenure over its
tenements to enable Salt Lake Potash to advance early works including camps and water infrastructure. Blackham
has also granted Salt Lake Potash an option to acquire a key borefield which will support the Lake Way Project.
The Brine Royalty granted to Blackham as part of the Split Commodity Agreement will be extinguished effective 30
June 2020.
Under the Sale Agreement, Salt Lake Potash paid total consideration of A$10 million and Blackham retains the gold
rights across the transferred tenements. The Company has also assumed rehabilitation obligation for all existing
disturbance on Lake Way.
Salt Lake Potash and Blackham also identified a mutual opportunity for Salt Lake Potash to utilise part of the pre-
strip material from Blackham’s proposed Williamson Pit development for the construction of the Company’s on-lake
evaporation ponds. Under the arrangement, Salt Lake Potash will contribute up to a A$10m towards the
performance of the pre-strip of the Williamson Pit, with pre-strip material directly applied towards the construction
of the bund walls of the on-lake evaporation ponds. This contribution forms part of the Project’s existing construction
capex and will be funded as part of project financing.
The acquisition is an important step in providing the Company with certainty over the timing and capital expenditure
required to bring the Lake Way Project into production.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
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6
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Figure 2: Lake Way Tenement Holdings
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(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
8
DIRECTORS’ REPORT (Continued) (cid:3) (cid:3)Salt Lake Potash Limited ANNUAL REPORT 2019 8 (cid:3)OPERATING AND FINANCIAL REVIEW (Continued) Scoping Study for Commercial Scale Development The Company completed a Scoping Study for the commercial scale development of its SOP project at Lake Way in June 2019. The Scoping Study demonstrated the potential for the Lake Way Project to support a low capital and operating cost operation on a commercial scale with the ability to support a long mine life:(cid:3)Lake Way Project to produce an estimated 200,000 tonnes per year of premium grade SOP (>52% K2O) High-grade SOP resource underpins long Mine Life of 20 years Low development capital requirements of approximately A$237m (US$166m) including a growth allowance of ~13% (A$32m) supported by the close proximity to infrastructure Exceptional economics with estimated project post-tax NPV8 of A$381m (pre-tax NPV8 of A$580m) and post-tax IRR of 27% (pre-tax IRR 33%) Steady state EBITDA of A$90m annually and average annual after tax cashflow of A$64m Strong cashflow and low capital cost result in early payback period of 3.2 years Construction complete on the first phase of Evaporation Ponds (the Williamson Ponds) which will support the dewatering of the Williamson Pit’s super saturated brine with an SOP grade of 25kg/m3 Plant commissioning expected Q4 2020 utilising salts from the Williamson Pit brine BFS currently underway with completion expected in early October 2019 to support project financing Salt Lake Potash has already significantly de-risked the commercial scale project through the early construction works on the first phase of the Evaporation Ponds (the Williamson Ponds). The de-watering of the Williamson Pit and commencement of evaporation will provide additional insight into the critical evaporation processes which in turn will further de-risk the Project. Scoping Study Results The Scoping Study was based on the Mineral Resource Estimate for the Lake Way Project reported in March 2019, comprising 8.2Mt of SOP calculated using Drainable Porosity (73 million tonnes of SOP using Total Porosity). The Scoping Study assumes a mine life of 20 years with plant commissioning in Q4 2020. The study mine plan, comprising a network of trenches and paleochannel bores, provides for a 200,000tpa production run rate. Table 1 provides a summary of production and cost figures for the Project. 9
Salt Lake Potash Limited ANNUAL REPORT 2019
DIRECTORS’ REPORT (Continued) (cid:3) (cid:3)Salt Lake Potash Limited ANNUAL REPORT 2019 9 (cid:3)Table 1: Lake Way Project Overview Lake Way Project Unit Estimated Value OPERATING AND CAPITAL COSTS LOM Cash Operating Costs FOB ex-Geraldton port A$/t $264 Mine Gate Operating Costs A$/t $184 Transport and handling A$/t $80 Capital Costs A$m $237 Direct Costs A$m $177 Indirect Costs & Growth A$m $60 FINANCIAL PERFORMANCE – LIFE OF PROJECT Price (FOB) US$/t $550 Exchange Rate US$/A$ 0.70 Discount Rate % 8 EBITDA A$m $90 Average Annual after-tax cash flow A$m $64 Post tax Internal Rate of Return (IRR) % 27 Post tax Net Present Value (NPV) @ 8% discount rate A$m $381 Pre-tax Internal Rate of Return (IRR) % 33 Pre-tax Net Present Value (NPV) @ 8% discount rate A$m $580 Short Payback period The low development capital requirements and significant margins received for the Lake Way Project provides a short payback period of just 3.2 years from first production. This will result in full repayment of development capital by 2024. Figure 3: Cumulative Cash Flow DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
KCl Addition Opportunity
The resource at Lake Way contains a significant excess of sulphate (SO4) which provides the opportunity for the
Company to explore value adding measures including a potassium chloride (KCl) reaction phase to the processing
stage. Preliminary work has shown significant benefits to the Lake Way Project through the inclusion of the KCl
reaction phase in the process, including a potential increase in annual production of SOP and subsequent
improvements in financial returns to shareholders. The Company is exploring this opportunity as part of the BFS for
the Lake Way Project including process testwork at Saskatchewan Research Council, which has confirmed that
high quality soluble SOP can be generated via the process flowsheet with the inclusion of KCl.
Robust Economics
The Study demonstrates that the Lake Way Project provides exceptional economics even under the most extreme
downside pricing scenarios. The breakeven pricing scenario is a significant 40+% decrease in price at US$323/t.
Table 2: Pricing Scenarios
SOP Price
NPV8
(post tax)
Breakeven
US$323/t
US$400/t
US$450/t
US$500/t
Base
US$550/t
US$600/t
US$650/t
-
A$130m
A$214m
A$298m
A$381m
A$465m
A$548m
Bankable Feasibility Study (BFS)
Having completed the successful Scoping Study, Salt Lake Potash subsequently commenced a BFS targeted for
completion in early October 2019. The Company appointed GR Engineering Services Limited (GRES, ASX:GNG)
as lead engineer for the BFS. GRES are working with a number of industry experts including Wood Saskatoon.
In parallel with work being undertaken on the BFS and utilising experience gained from the construction of the first
phase Evaporation Ponds, the Company is moving into a Front End Engineering Design (FEED).
Mineral Resource Estimate
In March 2019, the Company completed an extensive exploration program covering the remaining areas of Lake
Way and reported a ‘whole of lake’ Mineral Resource Estimate including the playa surface and the Paleochannel
aquifers of Lake Way.
The Mineral Resource Estimate of 73Mt is hosted within approximately 15 billion cubic metres of sediment ranging
in thickness from a few metres to over 100m, beneath 189km2 of Playa Lake surface including the paleochannel
basal sand unit of 20m thickness and 30km length.
The Mineral Resource Estimate for Lake Way is divided into resource classifications that are controlled by the host
geological units:
Lake Bed Sediment
Paleovalley Sediment
Paleochannel Basal Sands
The mineral resource estimate is summarised in Tables 3-5.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
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DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Table 3: Measured Resource
Total
Volume
Brine Concentration
Mineral Tonnage Calculated
from Total Porosity
Mineral Tonnage Calculated from
Drainable Porosity
K
Mg
SO4
Total
Porosity
Brine
Volume
SOP
Tonnage
Drainable
Porosity
Brine
Volume
SOP
Tonnage
(Mm3)
(kg/m3)
(kg/m3)
(Kg/m3)
(Mm3)
(Mt)
(Mm3)
(Mt)
North Lakebed
(0.4-8.0 m)
1,060
6.8
8.0
Williamson Pit
1.26
11.4
14.7
27.6
48.0
0.42
445
6.8
0.11
Total
6.8
117
1.26
1.8
0.03
1.83
Table 4: Indicated Resource
Total
Volume
Brine Concentration
Mineral Tonnage Calculated
from Total Porosity
Mineral Tonnage Calculated from
Drainable Porosity
K
Mg
SO4
Total
Porosity
Brine
Volume
SOP
Tonnage
Drainable
Porosity
Brine
Volume
SOP
Tonnage
(Mm3)
(kg/m3)
(kg/m3)
(Kg/m3)
(Mm3)
Basal Sands
(Paleochannel)
686
6.1
8.2
25.0
0.40
274
(Mt)
3.7
(Mm3)
15
103
(Mt)
1.4
Table 5: Inferred Resource
Total
Volume
Brine Concentration
Mineral Tonnage Calculated
from Total Porosity
Mineral Tonnage Calculated
from Drainable Porosity
K
Mg
SO4
Total
Porosity
Brine
Volume
SOP
Tonnage
Drainable
Porosity
Brine
Volume
SOP
Tonnage
(Mm3)
(kg/m3)
(kg/m3)
(Kg/m3)
(Mm3)
(Mt)
(Mm3)
(Mt)
South
Lakebed
(0.4-8.0 m)
Lakebed
(8m to Base)
Total
316
6.8
8.0
27.6
0.42
133
2.0
0.11
35
9,900
6.8
8.0
27.6
0.40
3,960
0.03
297
60.0
62.0
0.5
4.5
5.0
The northern section of Mineral Resource Estimate has been classified into a Measured category for the upper 8m
of lakebed sediments. The resources contained within the lakebed sediments below 8m, and the southern section
of the lake at all depths, are all classified in the Inferred category. The Paleochannel running along the eastern
boundary of the lake has been classified in the Indicated category.
Following completion of the first phase of the Lake Way evaporation ponds, the Company has commenced
dewatering the Williamson Pit brine, thus reducing this section of the resource. The Company expects to update
the Mineral Resource Estimate and report an Ore Reserve as part of the BFS.
11 Salt Lake Potash Limited ANNUAL REPORT 2019
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(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Civil Construction – On-Lake Infrastructure
Salt Lake Potash commenced construction of the first phase of the commercial scale SOP brine evaporation ponds
in March 2019 following receipt of the Part V works approval from the Department of Water and Environmental
Regulation (DWER). The first phase of ponds consisted of:
Two evaporation ponds;
o Kainite Harvest Pond 500m x 500m (25Ha); and
o Halite Pond 2,000m x 500m (100Ha);
A 3.4km long and 6-8m deep trench running parallel to the ponds, which will provide additional brine feed
into the pond network;
A 1.4km causeway from the Williamson Pit to the Kainite Harvest Pond; and
Associated piping and pumping infrastructure.
Construction of the evaporation ponds was completed in June 2019, and the trench was completed in July 2019.
The Company undertook a self-perform model for the delivery of the first phase of the Lake Way evaporation ponds.
This delivery model allowed a fast track mobilisation and cost effective execution of the works, whilst providing the
Company with critical hands on experience allowing testing and validating of various design criteria to de-risk the
future on-lake construction.
The first phase of evaporation ponds were designed to receive the 1.2GL of high-grade SOP brine from the
Williamson Pit mine, with de-watering of the pit now underway and is scheduled to complete in second half of 2019.
Given the super-saturated nature of the Williamson Pit brines, precipitation of salts started immediately upon
pumping into the evaporation pond. The Company will be able to harvest first salts from the Williamson Ponds
which are expected to be utilised as initial feed stock for the process plant commissioning.
Figure 4: First Phase of Lake Way Evaporation Ponds
(cid:3)
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DIRECTORS’ REPORT
(Continued)
(cid:3)
(cid:3)
Figure 5: Dewatering of Williamson Pit
Figure 6: 3.4km Trench providing additional brine to Lake Way Evaporation Ponds
13 Salt Lake Potash Limited ANNUAL REPORT 2019
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13
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Process Testwork
During the year, process testwork continued at Saskatchewan Research Council (SRC), the world leading potash
laboratory, processing salts harvested from the Lake Way evaporation trials.
SRC has recently completed a Pilot Plant operation that is representative of the proposed Lake Way Project process
flowsheet. The Pilot Plant operation included the addition of Potassium Chloride (KCl) to take advantage of the
excess sulphate that naturally occurs within the Lake Way brine.
Two separate Pilot Plant runs utilising 5 tonnes of salt harvested from Lake Way site evaporation trials were
completed, producing premium grade, highly water soluble SOP. The Total Solubility and Dissolution Rate indicate
that the product would be suitable for application in drip irrigation (otherwise known as fertigation) systems.
Table 6: Lake Way Pilot Plant 2 Composite Specifications
Potassium
Sulphate
Chloride
Insolubles
Total Solubility
Dissolution Rate
K2O
SO4
Cl
(g/100g H2O)
% in 1 minute
Specification
>53%
>55%
<0.1%
<0.1%
11.8
95%
The Pilot Plant runs successfully confirmed that high quality soluble SOP can be generated via the process
flowsheet with the inclusion of KCl. Importantly the positive results of the inclusion of the KCl within the process
flowsheet will provide significant benefits to the Lake Way Project by increasing the SOP output from an equivalent
volume of Lake Way brine. This can be achieved without significant changes to the processing equipment and no
material additional capital expenditure.
The outstanding results achieved from the Pilot Plant indicate that the product is comparable with other premium
grade soluble products on the market and supports Salt Lake Potash’s marketing strategy to supply into the
premium SOP market. The premium achievable for soluble grade SOP can be up to 20%1 above the standard
pricing.
The process flowsheet that has been developed and confirmed as part of the Pilot Plant test work, has been
incorporated in the Lake Way BFS which is scheduled for completion in early October 2019.
Native Title
In December 2018, the Company signed a Native Title Land Access and Brine Minerals Exploration Agreement
(the Agreement) with Tarlka Matuwa Piarku (Aboriginal Corporation) RNTBC (TMPAC) covering the Lake Way
Project area.
TMPAC entered into the Agreement with Salt Lake Potash on behalf of the Wiluna People who are the recognised
Native Title Holders of the land covering the Lake Way Project area. TMPAC also provided consent for the total
area required for the construction and operation of the initial Lake Way Ponds.
The Company is finalising negotiations with TMPAC to achieve a Native Title Mining Agreement to provide consent
to the grant of its mining lease and for the ongoing mining operation. The Native Title Mining Agreement is expected
to be finalised and signed in the coming months.
(cid:883)
(cid:3)(cid:6)(cid:21)(cid:24)(cid:3)(cid:22)(cid:18)(cid:19)(cid:3)(cid:16)(cid:131)(cid:148)(cid:141)(cid:135)(cid:150)(cid:3)(cid:22)(cid:150)(cid:151)(cid:134)(cid:155)(cid:3)(cid:16)(cid:131)(cid:155)(cid:3)(cid:884)(cid:882)(cid:883)(cid:891)(cid:3)
(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
14
14
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Approvals Advancing
During the year, the Company continued its engagement with all relevant regulatory authorities. Several key
approvals were granted, including:
The Department of Mines, Industry Regulation and Safety (DMIRS) approval of the Company’s Mining
Proposal and Project Management Plan for the first phase of the Lake Way evaporation ponds;
Final approval from the Department of Water and Environmental Regulation (DWER) for the Part V works
approval in March 2019, for construction and operation of the initial evaporation ponds for Lake Way and
de-watering of the Williamson Pit;
Decision by the Environmental Protection Authority (EPA) that the following development works for the
Project on the existing Mining Leases do not warrant formal assessment (Figure 7):
o Up to 757 hectares of on lake pond disturbance to allow the following activities;
o Up to 47 hectares of off lake disturbance to allow for a process plant for sulphate of potash
production and miscellaneous infrastructure including power and water.
Following the EPA decision, Salt Lake Potash has submitted the remaining approvals required for the next phase
of the Project, with a focus on the on-lake ponds and trenches to allow brine extraction and evaporation.
The Company has submitted a mining proposal and closure plan to the Department of Mines, Industry Regulation
and Safety (DMIRS) and the Works Approval to the Department of Water and Environmental Regulation (DWER)
for the next phase of the Project. The Company has also submitted Section 18 Notices to the Aboriginal Cultural
Materials Committee (ACMC) for Ministerial consent to use the land.
Obtaining these approvals will enable the Company to commence construction of this next phase of the project,
including significant areas of evaporation ponds and trenches. However, further approvals, including EPA approval
will be required for the full commercial scope of the Project.
Figure 7: Referral Area and Proposed Pond Layout
15 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
15
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Corporate
Project Funding Advanced
The Company has mandated Taurus Funds Management (Taurus) to provide US$150m staged project debt
financing for the Lake Way Project.
The arrangement with Taurus is an important step in progressing the development and financing of the Lake Way
Project. With recent equity raisings totalling A$27.65m, the staged project financing enables the Company to
complete the Bankable Feasibility Study (BFS), conclude the acquisition of strategic tenements from Blackham and
continue early construction works to advance the Lake Way Project prior to the drawdown of the main Project
Development Facility (PDF).
Stage 1 Facility of US$30m (c.A$42m)
The arrangement with Taurus is an important step in progressing the development and financing of the Lake Way
Project. The Stage 1 Facility has been partly drawn by the Company.
Project Development Facility (PDF) of US$150m (c.A$214m)
The PDF will be used for refinancing the Stage 1 Facility and for project development and working capital associated
with the development of the Lake Way Project. The PDF will become available upon completion of the BFS,
satisfaction of conditions precedent to the Lender’s satisfaction and final documentation. Conditions precedent are
customary for a project financing of this nature and include execution of financing agreements, satisfying the equity
requirement based upon a cost to complete analysis and offtake agreements being agreed.
Capital Raising
In November 2018, the Company completed a placement to existing and new institutional and sophisticated
investors in Australia and overseas for 31.0m new ordinary shares of the Company, to raise gross proceeds of
A$13.0m.
In June 2019, the Company completed a placement to strategic investors of 37.5m shares to raise gross proceeds
of A$20.25m. This placement was led by a consortium of cornerstone investors, including the founders of LionOre
Mining International as well as the key investors in Mantra Resources at its inception, who will collectively subscribe
for 26.4m shares to raise A$14.25m. LionOre was bought by Norilsk Nickel for US$6.3b in 2007, whilst Mantra
Resources was sold to Rosatom in 2010 for A$1.02b.
The Company’s largest shareholder, Lombard Odier, also subscribed for 11.1m shares to raise A$6.0m, further
confirming its continued support for Salt Lake Potash and the Lake Way Project.
These Placements are funding the ongoing construction of the Lake Way Project, including the development of on-
lake infrastructure, the payment of deposits on certain process plant long-lead items, completion of feasibility
studies, and general working capital.
In July 2019, the Company agreed to place a further 10.58m shares to Fidelity International to raise A$7.4m before
costs. The Placement completed in August 2019 and will fund the majority of the consideration to be paid for the
acquisition of the strategic tenement package from Blackham.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
16
16
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Key Appointments
Mr Tony Swiericzuk was appointed Managing Director and Chief Executive Officer (CEO), effective 5 November
2018.
Mr Swiericzuk is a Mining Engineer with outstanding credentials as a builder and operator of mining projects, having
recently been General Manager of the Fortescue Christmas Creek Mine from 2012 to 2017. He oversaw the
construction, commissioning and ramp-up of this project from 15Mtpa to 60Mtpa in his initial 2 year period, then
proceeded to optimise the operation and help drive FMG to become the world’s lowest cost iron ore producer.
Mr Swiericzuk has the ideal operating and commercial experience to rapidly deliver on the exceptional potential of
the Lake Way Project and the Company’s broader portfolio of assets.
The Company has also made a number of key project appointments during the year including Mr Peter Cardillo,
Project Director – Processing and NPI, Mr Lloyd Edmunds, Project Director – Civil, and Mr Stephen Cathcart,
Project Director – Technical. These appointments bring diversified technical, construction, operations, process
infrastructure experience to the Company as it rapidly moves through the project development phase.
Mr Shaun Day in the role of Chief Financial Officer. Mr Day will
Subsequent to year end, the Company appointed
be responsible for the delivery of the financial, commercial and strategic outcomes for Salt Lake Potash. In addition,
Mr Mark Wilde joined the Company as Director – Sales and Marketing, overseeing the Sales and Marketing
functions.
(cid:3)
Results of Operations
The net loss of the Consolidated Entity for the year ended 30 June 2019 was $26,896,121 (2018: net loss of
$11,327,108). This loss is mainly attributable to:
(i)
(ii)
(iii)
(iv)
Exploration and evaluation expenses of $12,745,503 (2018: $8,545,647) which are attributable to the
Group’s accounting policy of expensing exploration and development expenditure incurred by the Group
subsequent to the acquisition of the rights to explore and up to the successful completion of bankable
feasibility studies for each separate area of interest. During the year, the Company undertook significant
activity in rapidly advancing the Lake Way Project including, definition of whole of lake resource, site
evaporation testwork and process testwork, scoping study on the commercial scale operation and
commencement of a bankable feasibility study;
Pre-Development expenses of $8,513,313 (2018: Nil) relating the construction of the first phase of the
commercial scale SOP brine evaporation ponds at Lake Way. These development costs have been
expensed in accordance with the Group’s accounting policy of expensing exploration and development
expenditure incurred by the Group up to the successful completion of bankable feasibility studies;
Corporate and administrative expenses of $3,257,046 (2018: $1,081,738) attributable to the administration
of the Company and its operations, as well as corporate expenses including the Company’s dual listing on
ASX and AIM and investor relations activities. The Group’s administrative expenses have increased in 2019
to support the rapidly progressing development activities at Lake Way;
Non-cash share-based payment expenses of $2,302,081 (2018: $1,284,062) which are attributable to the
Group’s accounting policy of expensing the value (estimated using an option pricing model, and performance
rights valued using the underlying share price) of Incentive Securities issued to key employees and
consultants. The value is measured at grant date and recognised over the period during which the
option/rights holders become unconditionally entitled to the options and/or rights; and
(v)
Business development expenses of $865,860 (2018: $1,110,578) which are attributable to additional
business development activities required to support the growth and development of the Lake Way Project.
17 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
17
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Financial Position
At 30 June 2019, the Group had cash reserves of $19,304,075 (2018: $5,709,446). The Consolidated Entity is in a
strong financial position to conduct its current and planned development activities.
At 30 June 2019, the Group had net assets of $14,708,374 (2018: $7,019,989), an increase of 217% compared
with the previous year. The increase is a result of raising over $33.25m throughout the 12 month period, with each
raising being achieved at a higher share price than the previous.
Business Strategies and Prospects for Future Financial Years
The objective of the Group is to create long-term shareholder value through the discovery, exploration and
development of its projects. To date, the Group has not commenced production of any minerals. To achieve its
objective, the Group currently has the following business strategies and prospects:
(i) Complete a BFS for a commercial scale operation at Lake Way;
(ii) Commence construction of the next phase of on-lake infrastructure and Plant for the Lake Way Project;
(iii) Enter into offtake/product sales agreement for the sale of Lake Way SOP;
(iv) Finalise project development funding for the Lake Way Project;
(v) Develop an organic premium SOP product in conjunction with offtake partners and potential customers; and
(vi) Continue assessment and exploration across the Company’s multi lake portfolio.
All of these activities have inherent risk and the Board is unable to provide certainty of the expected results of these
activities, or that any or all of these likely activities will be achieved. The material business risks faced by the Group
that could have an effect on the Group’s future prospects, and how the Group manages these risks, include:
– As a result of the substantial expenditures involved in mine development projects, mine
Development Risks
developments are prone to material cost overruns versus budget. The capital expenditures and time required to
develop new mines are considerable and changes in cost or construction schedules can significantly increase both
the time and capital required to build the mine;
(cid:3)
(cid:3)
Operational risks – The planned schedule for production of harvest salts for the commissioning and ramp up of
the process plant are subject to operating risks that could impact the amount of harvest salts produced at its SOP
operations, delay availability of harvest salts or increase the cost of production for varying lengths of time. Such
difficulties include: changes or variations in hydrogeological conditions, weather conditions effecting evaporation
and/or recharge, or other conditions; mining, processing and loading equipment failures and unexpected
maintenance problems; limited availability or increased costs of mining, processing and loading equipment and
parts and other materials from suppliers; mine safety accidents; adverse weather and natural disasters; and a
shortage of skilled labour. If any of these or other conditions or events occur in the future, they may increase the
cost of mining or delay or halt planned commissioning, ramp up and production, which could adversely affect our
results of operations or decrease the value of our assets. The Group has in place a framework for the management
of operational risks and an insurance program which provides coverage for a number of these operating risks.
The Company’s activities will require further capital – The development of the Company’s projects will require
additional funding. The Company has recently mandated Taurus Funds Management to provide up to US$150m
staged project financing for the Lake Way Project. The Stage 1 Facility of US$30m is available to drawdown. The
Project Development Facility is subject to completion of the BFS and satisfaction of conditions precedent. Failure
to satisfy the conditions precedent to draw down on the Project Development Facility, may result in delaying the
development of the Company’s properties or even a loss of property interest. There can be no assurance that
additional capital or other types of financing will be available if needed or that, if available, the terms of such
financing will be favourable to the Company;
Native title and Aboriginal Heritage - There are areas of the Company’s projects, including Lake Way, over which
legitimate common law and/or statutory Native Title rights of Aboriginal Australians exist. Where Native Title rights
do exist, the Company must obtain consent of the relevant landowner to progress the exploration, development and
mining phases of its operations. Where there is an Aboriginal Site for the purposes of the Aboriginal Heritage Act
1972, the Company must obtain consents in accordance with the Act. The Company has established a framework
for obtaining required consents for the continuity of works, but in the event that it is unable to obtain these consents,
its activities may be adversely affected;
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
18
18
DIRECTORS’ REPORT
(Continued)
(cid:3)
OPERATING AND FINANCIAL REVIEW (Continued)
(cid:3)
Sulphate of Potash prices and foreign exchange – The price of potash and other commodities fluctuate and are
affected by numerous factors beyond the control of the Company. Future production, if any, from the Company’s
mineral properties will be dependent upon the price of potash and other commodities being adequate to make these
properties economic. The Company is engaging with potential customers with a view to entering binding offtake or
distribution or tolling agreements. Project financing facilities with Taurus Funds Management are denominated in
US dollars whilst many of the planned development and operational activities are denominated in Australian dollars.
The Company’s ability to fund these activities maybe adversely affected if the Australian dollar rises against the US
dollar;
The Company’s activities are subject to Government regulations and approvals – The development of the
Lake Way Project is subject to obtaining further key approvals from relevant government authorities. The Company
has an approvals schedule and a management team with significant experience in approvals required for mining
projects in Western Australia. A delay or failure to obtain required permits may affect the Company’s schedule or
ability to develop the project.
Any material adverse changes in government policies or legislation in Western Australia and Australia that affect
mining, processing, development and mineral exploration activities, income tax laws, royalty regulations,
government subsidies and environmental issues may affect the viability and profitability of any planned development
the Lake Way Project and other lakes in the Company’s portfolio. No assurance can be given that new rules and
regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could
adversely impact the Group’s mineral properties; and
Global financial conditions may adversely affect the Company’s growth and profitability – Many industries,
including the mineral resource industry, are impacted by these market conditions. Some of the key impacts of the
current financial market turmoil include contraction in credit markets resulting in a widening of credit risk,
devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a
lack of market liquidity. Due to the current nature of the Company’s activities, a slowdown in the financial markets
or other economic conditions may adversely affect the Company’s growth and ability to finance its activities. If these
increased levels of volatility and market turmoil continue, the Company’s activities could be adversely impacted and
the trading price of the Company’s shares could be adversely affected.
(cid:3)
EARNINGS PER SHARE
Basic and diluted loss per share
2019
Cents
2018
Cents
(13.74)
(6.47)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Consolidated Entity during the financial year were as follows:
(i)
(ii)
On 2 October 2018, the Company announced it had executed a Memorandum of Understanding (MOU) with
Sinofert for a long term offtake agreement for distribution into China.
On 5 November 2018, Mr Tony Swiericzuk commenced as Managing Director and Chief Executive Officer
(CEO) of Salt Lake Potash. Mr Swiericzuk replaced Mr Matthew Syme who moved to become a Non-
Executive Director.
(iii) On 9 November 2018, Salt Lake Potash announced it had completed a placement for A$13.0m at A$0.42
per share from a suite of new institutional and sophisticated.
(iv) On 6 March 2019, the Company was advised that it had received the final approval from the Department of
Water and Environmental Regulation (DWER) to construct the first phase of the Lake Way evaporation
ponds, which will enable Williamson Pit brine to be extracted and stored for evaporation.
(v)
On 6 June 2019, Salt Lake Potash announced it had completed a placement for A$20.25m at A$0.54 per
share to fund the Lake Way Construction including the development of on-lake infrastructure.
(vi) On 13 June 2019, Salt Lake Potash announced the results of a Scoping Study for a 200,000tpa commercial
scale Lake Way Project with a 20 year mine life.
19 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
19
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS (Continued)
(cid:3)
(vii) On 24 June 2019, the Company announced the commencement of commercial scale SOP Evaporation as
the construction of the first phase of the Lake Way evaporation ponds was complete, enabling dewatering
of the Williamson Pit.
SIGNIFICANT EVENTS AFTER BALANCE DATE
(i)
On 23 July 2019, Salt Lake Potash announced the acquisition of a strategic package of tenements and other
key assets for the Lake Way Project from Blackham Resources Limited. A placement to raise A$7.4m at
A$0.70 per share to fund the majority of the acquisition consideration was also announced.
(ii)
On 23 July 2019, Mr Matthew Syme resigned as Non-Executive Director.
(iii) On 5 August 2019, the Company announced that it had mandated Taurus Funds Management to provide
up to US$150m staged project financing for the Lake Way Project, and the Stage 1 Facility has been partly
drawn down.
Other than as noted above, as at the date of this report there are no matters or circumstances which have arisen
since 30 June 2019 that have significantly affected or may significantly affect:
the operations, in financial years subsequent to 30 June 2019, of the Consolidated Entity;
the results of those operations, in financial years subsequent to 30 June 2019, of the Consolidated Entity;
or
the state of affairs, in financial years subsequent to 30 June 2019, of the Consolidated Entity.
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
20
20
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
PRINCIPAL ACTIVITIES
(cid:3)
The principal activities of the Group during the financial year consisted of the exploration and development of
resource projects. No significant change in nature of these activities occurred during the year.
DIRECTORS
The names of the Group's Directors in office at any time during the financial year or since the end of the financial
year are:
Current Directors
Mr Ian Middlemas
Mr Tony Swiericzuk
Mr Mark Pearce
Mr Bryn Jones
Former Directors
Mr Matthew Syme
Chairman
Chief Executive Officer (CEO) & Managing Director (appointed 5 November 2018)
Non-Executive Director
Non-Executive Director
Non-Executive Director(1) (Resigned 23 July 2019)
(1) Mr Matthew Syme transitioned from the position of CEO & Managing Director, into the role of Non-Executive
Director on 5 November 2018.
Unless otherwise stated, Directors held their office from 1 July 2018 until the date of this report.
DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a
Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the
Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive
corporate and management experience, and is currently a Director with a number of publicly listed companies in
the resources sector.
Mr Middlemas was appointed a Director of the Company on 21 January 2010 and Chairman on 29 August 2014.
During the three year period to the end of the financial year, Mr Middlemas has held directorships in Constellation
Resources Limited (November 2017 – present), Apollo Minerals Limited (July 2016 – present), Paringa Resources
Limited (October 2013 – present), Berkeley Energia Limited (April 2012 – present), Prairie Mining Limited (August
2011 – present), Equatorial Resources Limited (November 2009 – present), Piedmont Lithium Limited (September
2009 – present), Sovereign Metals Limited (July 2006 – present), Odyssey Energy Limited (September 2005 –
present), Cradle Resources Limited (May 2016 – July 2019) and Syntonic Limited (April 2010 – June 2017).
Mr Tony Swiericzuk BEng (Hons), MBA, GAICD
CEO & Managing Director
Mr Swiericzuk is a Mining Engineer with outstanding credentials as a builder and operator of mining projects, having
recently been General Manager of the Fortescue Christmas Creek Mine from 2012 to 2017. He oversaw the
construction, commissioning and ramp-up of this project from 15Mtpa to 60Mtpa in his initial 2 year period, then
proceeded to optimise the operation and help drive Fortescue Metals Group Limited (FMG) to become the world’s
lowest cost iron ore producer.
In his initial years at FMG Mr Swiericzuk was General Manager Port Operations in Port Hedland and managed the
ramp up from 20Mtpa to 60Mtpa from 2009 to 2011.
(cid:3)
Mr Swiericzuk was appointed a Director of the Company on 5 November 2018. Mr Swiericzuk has not held any
other Directorships in the three year period up until the end of the financial year.
(cid:3)
21 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
21
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
DIRECTORS AND OFFICERS (Continued)
(cid:3)
Mr Mark Pearce B.Bus, CA, FCIS, FFin
Non-Executive Director
Mr Pearce is a Chartered Accountant and is currently a director of several listed companies that operate in the
resources sector. He has had considerable experience in the formation and development of listed resource
companies. Mr Pearce is also a Fellow of the Institute of Chartered Secretaries and Administrators and a Fellow
of the Financial Services Institute of Australasia.
Mr Pearce was appointed a Director of the Company on 29 August 2014. During the three year period to the end
of the financial year, Mr Pearce has held directorships in Apollo Minerals Limited (July 2016 – present), Constellation
Resources Limited (July 2016 – present), Prairie Mining Limited (August 2011 – present), Equatorial Resources
Limited (November 2009 – present), Sovereign Metals Limited (July 2006 – present), Odyssey Energy Limited
(September 2009 – August 2018) and Syntonic Limited
(September 2005 – present), Piedmont Lithium Limited
(April 2010 – October 2016).
Mr Bryn Jones BAppSc, MMinEng, FAusIMM
Non-Executive Director
(cid:3)
Mr Jones is a Chemical Engineer with over 20 years management experience in industrial processing in commercial
and mining operations around the world, including potash and phosphate projects.
Mr Jones was appointed a Director of the Company on 12 June 2017. During the three year period to the end of
the financial year, Mr Jones has held directorships in Uranium Equities Limited (September 2009 – present) and
Phosenergy Limited (July 2013 – present).
Mr Clint McGhie B.Com, CA, ACIS, FFin
Company Secretary
Mr McGhie is an experienced Chartered Accountant and Company Secretary who commenced his career at a large
international accounting firm and has since been involved with a number of ASX and AIM listed exploration and
development companies operating in the resources sector, including Apollo Minerals Limited, Berkeley Energia
Limited and Sovereign Metals Limited. Mr McGhie is also an Associate Member of the Governance Institute of
Australia (Chartered Secretary), and a Fellow of the Financial Services Institute of Australasia.
Mr McGhie was appointed Company Secretary of the Company on 10 August 2018.
DIRECTORS' INTERESTS
As at the date of this report, the Directors' interests in the securities of the Company are as follows:
Mr Ian Middlemas
Mr Tony Swiericzuk
Mr Mark Pearce
Mr Bryn Jones
Interest in securities at the date of this report
Ordinary Shares1
Incentive Options 2
Performance Rights 3
11,750,000
952,381
4,000,000
-
-
5,000,000
-
-
-
7,000,000
150,000
150,000
Notes:
1 Ordinary Shares means fully paid Ordinary Shares in the capital of the Company.
2 Incentive Options means an unlisted share option to subscribe for one Ordinary Share in the capital of the Company.
3 Performance Rights means Performance Rights issued by the Company that convert to one Ordinary Share in the capital of
the Company upon satisfaction of various performance conditions.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
22
22
DIRECTORS’ REPORT
(Continued)
(cid:3)
ENVIRONMENTAL REGULATION AND PERFORMANCE
(cid:3)
The Group's operations are subject to various environmental laws and regulations under the relevant government's
legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations
to achieve.
Instances of environmental non-compliance by an operation are identified either by external compliance audits or
inspections by relevant government authorities.
There have been no significant known breaches by the Group during the financial year.
DIVIDENDS
No dividends were paid or declared since the start of the financial year. No recommendation for payment of
dividends has been made.
SHARE OPTIONS, PERFORMANCE SHARES AND PERFORMANCE RIGHTS
(cid:3)
At the date of this report the following options and performance shares have been issued over unissued Ordinary
Shares of the Company:
750,000 Unlisted Options exercisable at $0.50 each on or before 29 April 2020;
1,000,000 Unlisted Options exercisable at $0.60 each on or before 29 April 2021;
250,000 Unlisted Options exercisable at $0.40 each on or before 30 June 2021;
500,000 Unlisted Options exercisable at $0.50 each on or before 30 June 2021;
750,000 Unlisted Options exercisable at $0.60 each on or before 30 June 2021;
400,000 Unlisted Options exercisable at $0.70 each on or before 30 June 2021;
9,375,000 Unlisted Options exercisable at $0.85 each on or before 30 June 2023;
1,700,000 Unlisted Options exercisable at $0.60 each on or before 1 November 2023;
2,750,000 Unlisted Options exercisable at $1.00 each on or before 1 November 2023;
3,000,000 Unlisted Options exercisable at $1.20 each on or before 1 November 2023;
9,000,000 Unlisted Options exercisable at $0.702 each on or before 4 August 2024;
7,500,000 ‘Class B’ Performance Shares on or before 31 December 2019;
10,000,000 ‘Class C’ Performance Shares on or before 12 June 2020; and
20,412,500 Performance Rights which are subject to various performance conditions to be satisfied prior to
the relevant expiry dates between 31 December 2019 and 1 November 2023.
(cid:3)During the year ended 30 June 2019, 750,000 Ordinary Shares were issued at $0.40 as a result of the exercise of
Unlisted Options. No Ordinary Shares have been issued as a result of the conversion of Performance Shares or
Rights during the year ended 30 June 2019. Subsequent to year end and until the date of this report, no Ordinary
Shares have been issued as a result of the exercise of Unlisted Options or conversion of Performance Shares or
Rights. On 6 August 2019, the Company issued 266,258 Ordinary Shares (subject to shareholder approval) to key
employees following the expiry of vested Performance Rights that were unable to be converted into Ordinary Shares
whilst the employees were in possession of inside information.
23 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
23
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED)
(cid:3)
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration
of Key Management Personnel (KMP) of the Group.
Details of Key Management Personnel
Details of the KMP of the Group during or since the end of the financial year are set out below:
Directors
Mr Ian Middlemas
Mr Tony Swiericzuk
Mr Matthew Syme
Mr Mark Pearce
Mr Bryn Jones
Chairman
Chief Executive Officer (CEO) & Managing Director (appointed 5 November 2018)
Non-Executive Director (resigned 23 July 2019)
Non-Executive Director
Non-Executive Director
(1) Mr Tony Swiericzuk was appointed to the position of CEO & Managing Director on 5 November 2018. At this
time, Mr Matthew Syme transitioned into the role of Non-Executive Director.
Other KMP
Mr Shaun Day
Mr Clint McGhie
Mr Stephen Cathcart
Mr David Maxton
Mr Sam Cordin
Chief Financial Officer (appointed 16 September 2019)
Company Secretary (appointed 10 August 2018)
Project Director – Technical (appointed 6 November 2018)
Chief Operating Officer (resigned 21 December 2018)
Company Secretary (resigned 10 August 2018)
Unless otherwise disclosed, the KMP held their position from 1 July 2018 until the date of this report.
Remuneration Policy
The Group’s remuneration policy for its KMP has been developed by the Board taking into account the size of the
Group, the size of the management team for the Group, the nature and stage of development of the Group’s current
operations, and market conditions and comparable salary levels for companies of a similar size and operating in
similar sectors. In addition to considering the above general factors, the Board has also placed emphasis on the
following specific issues in determining the remuneration policy for KMP:
(a)
the Group is currently focused on undertaking development activities for the Lake Way Project and
explorations of its other projects;
(b)
risks associated with developing resource companies whilst exploring and developing projects; and
(c) other than profit which may be generated from asset sales, the Company does not expect to be undertaking
profitable operations until sometime after the commencement of commercial production on any of its projects.
Executive Remuneration
The Group’s remuneration policy is to provide a fixed remuneration component and a performance based
component (short term incentive and long term incentive). The Board believes that this remuneration policy is
appropriate given the considerations discussed in the section above and is appropriate in aligning executives’
objectives with shareholder and business objectives.
Fixed Remuneration
Fixed remuneration consists of base salaries, as well as employer contributions to superannuation funds and other
non-cash benefits. Non-cash benefits may include provision of car parking and health care benefits.
Fixed remuneration is reviewed annually by the Board. The process consists of a review of company and individual
performance, relevant comparative remuneration externally and internally and, where appropriate, external advice
on policies and practices.
(cid:3)
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
24
24
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Executive Remuneration (Continued)
Performance Based Remuneration
The Group has adopted an incentive plan comprising the “Salt Lake Potash Performance Rights Plan” (the “Plan”)
to reward KMP and key employees for short and long-term performance. Shareholders approved the Plan at the
Company Annual General Meeting of Shareholders on 30 November 2016.
The Plan provides for the issuance of performance rights (“Performance Rights”) which, upon satisfaction of the
relevant performance conditions attached to the Performance Rights, will result in the issue of an Ordinary Share
for each Performance Right. Performance Rights are issued for no consideration and no amount is payable upon
conversion thereof.
To achieve its corporate objectives the Company needs to attract and retain its key staff, whether employees or
contractors. Grants made to eligible participants under the Plan will assist with the Company's employment strategy
and will:
(a)
(b)
(c)
(d)
enable the Company to recruit, incentivise and retain KMP and other eligible employees to assist with the
completion of feasibility studies, funding, construction and commissioning, and operations for the Lake Way
Project to achieve the Company’s strategic objectives;
link the reward of eligible employees with the achievement of strategic goals and the long term performance
of the Company;
align the financial interests of eligible participants of the proposed Plan with those of Shareholders; and
provide incentives to eligible employees of the Plan to focus on superior performance that creates
Shareholder value.
Performance Rights granted under the Plan to eligible participants will be linked to individual short-term service
based vesting conditions or the achievement by the Company of certain long-term performance conditions as
determined by the Board from time to time. These performance conditions must be satisfied in order for the
Performance Rights to vest. The Performance Rights also vest where there is a change of control of the Company.
Upon Performance Rights vesting, Ordinary Shares are automatically issued for no consideration. If a performance
condition of a Performance Right is not achieved by the expiry date then the Performance Right will lapse.
Performance Based Remuneration – Short Term Incentive
Executives may be entitled to receive Performance Rights with a short-term service based vesting condition as part
of their total remuneration package, reducing the cash component otherwise payable to attract and retain key
executives, and linking a component of their package to the performance of the Company. The performance
condition is service based linked to the ongoing employment during the vesting period. Eligible Executives are
granted short-term performance rights annually with the number of performance rights issued based on an agreed
dollar amount which is divided by the VWAP of the Company’s share price at the beginning of the financial year.
The Performance Rights vest at 30 June each year. For the year ended 30 June 2019, 266,258 short-term
performance rights were issued to KMP (2018: Nil). These short-term performance rights vested on 30 June 2019,
however the Company was unable to convert the performance rights prior to expiry due to closed period restrictions.
The Company has agreed, subject to Shareholder approval where necessary, to issue the KMP an equivalent
number of shares as they would otherwise have been entitled should the performance rights converted.
(cid:3)
Executives have previously been entitled to an annual cash incentive payment upon achieving various key
performance indicators (“KPI’s”), as set by the Board. Having regard to the current size, nature and opportunities
of the Company, the Board determined that these KPI’s would include measures such as successful
commencement and/or completion of exploration activities (e.g. commencement/completion of programs within
budgeted timeframes and costs), establishment of government relationships (e.g. establish and maintain sound
working relationships with government and officialdom), development activities (e.g. completion of infrastructure
studies and commercial agreements), operational activities (commissioning, reaching nameplate production),
corporate activities (e.g. recruitment of key personnel and representation of the company at international
conferences) and business development activities (e.g. corporate transactions and capital raisings). These
measures were chosen as the Board believe they represented the key drivers in the short and medium term success
of the Project’s development. On an annual basis, subsequent to year end, the Board assessed performance
against each individual executive’s KPI criteria.
25 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
25
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Executive Remuneration (Continued)
During the 2019 financial year, Mr Sam Cordin, the former Company Secretary, was issued 50,000 ordinary shares
in lieu of a cash bonus of $25,000 for the year ended 30 June 2018, amounting to 100% of the annual discretionary
bonus payable to him. The Shares were issued on 31 December 2018 as reward for past service. The fair value of
the share price on the date of issue was $0.46.
No cash bonuses are payable as at 30 June 2019 and no current KMP are entitled to an annual cash incentive
payment under their employment agreements.
Performance Based Remuneration – Long Term Incentive
During the current and prior financial year, Performance Rights were granted to certain KMP and other employees
and contractors with certain performance conditions that reward key staff upon the achievements of strategic goals
in relation to the Company’s Projects including: (a) completion of a positive BFS; (b) commencement of construction
activities; (c) completion of construction and commissioning activities; (d) achievement of steady state production
levels; (e) advancing schedules; (f) reducing project capital expenditure; (g) obtaining regulatory mining approvals
and licences; and (h) receiving project finance. No long-term performance rights vested during the year ended 30
June 2019.
In addition, the Board may issue incentive options where appropriate to some executives as a key component of
the incentive portion of their remuneration, in order to attract and retain the services of the executives and to provide
an incentive linked to the performance of the Company. The Board considers that each executive’s experience in
the resources industry will greatly assist the Company in progressing its projects to the next stage of development
and the identification of new projects. As such, the Board believes that the number of incentive securities (either
options or rights) granted to executives is commensurate to their value to the Company.
Incentive options granted to executives generally have exercise prices at or above the market share price at the
time of agreement. As such, incentive options granted to executives will generally only be of benefit if the executives
perform to the level whereby the value of the Company increases sufficiently to warrant exercising the incentive
options granted. Other than service-based vesting conditions, there are generally no additional performance criteria
on the incentive options granted to executives, as given the speculative nature of the Company’s activities and the
small management team responsible for its running, it is considered the performance of the executives and the
performance and value of the Company are closely related.
During the current financial year, incentive options and performance rights were granted to certain KMP to further
align shareholders interests with those of senior management and also aid in keeping intellectual property and
construction/production experience with the Company throughout this pivotal period in the lifecycle of Salt Lake.
The Company prohibits executives from entering into arrangements to limit their exposure to Incentive Options
granted as part of their remuneration package.
Non-Executive Director Remuneration
The Board’s policy is for fees to Non-Executive Directors to be no greater than market rates for comparable
companies for time, commitment and responsibilities. Given the current size, nature and risks of the Company,
Unlisted Options and Performance Rights may also be used to attract and retain Non-Executive Directors. The
Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on
market practice, duties and accountability. Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by
shareholders at a General Meeting. Director’s fees paid to Non-Executive Directors accrue on a daily basis. Fees
for Non-Executive Directors are not linked to the performance of the economic entity. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company and given the
current size, nature and opportunities of the Company, Non-Executive Directors may receive Unlisted Options or
Performance Rights in order to secure and retain their services.
Fees for the Chairman are presently $36,000 per annum (2018: $36,000) and fees for Non-Executive Directors’ are
presently set at $20,000 per annum (2018: $20,000). These fees cover main board activities only. Only Non-
Executive Directors may receive additional remuneration for other services provided to the Company, including but
not limited to, membership of committees. The Company prohibits Non-Executive Directors entering into
arrangements to limit their exposure to Unlisted Options and Performance Rights granted as part of their
remuneration package.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
26
26
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Relationship between Remuneration of KMP and Shareholder Wealth
During the Company’s current development phase of its business, the Board anticipates that the Company will
retain earnings (if any) and other cash resources for the development of the Lake Way Project and exploration of
its other resource projects. Accordingly, the Company does not currently have a policy with respect to the payment
of dividends and returns of capital. Therefore there was no relationship between the Board’s policy for determining,
or in relation to, the nature and amount of remuneration of KMP and dividends paid and returns of capital by the
Company during the current and previous four financial years.
The Board did not determine, and in relation to, the nature and amount of remuneration of the KMP by reference to
changes in the price at which shares in the Company traded between the beginning and end of the current and the
previous four financial years. Discretionary annual cash incentive payments are based upon achieving various non-
financial key performance indicators as detailed under “Performance Based Remuneration – Short Term Incentive”
and are not based on share price or earnings. However, as noted above, certain KMP may receive Performance
Rights with short-term service based vesting conditions, where the number of Performance Rights issued is
determined with reference to a dollar amount divided by the VWAP of the Company’s share price at the beginning
of the financial year. The value of this short-term incentive will increase or decrease in line with the Company’s
share price during the financial year. Further, Unlisted Options will generally will be of greater value to KMP in the
future if the value of the Company’s shares increases sufficiently to warrant exercising the Unlisted Options.
Relationship between Remuneration of KMP and Earnings
As discussed above, the Company is currently undertaking development activities for the Lake Way Project and
exploration of its other projects, and does not expect to be undertaking profitable operations (other than by way of
material asset sales, none of which is currently planned) until completion of construction, commissioning and ramp
up of the Lake Way Project, and sales of sulphate of potash produced. Accordingly the Board does not consider
earnings during the current and previous four financial years when determining, and in relation to, the nature and
amount of remuneration of KMP.
27 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
27
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Emoluments of Directors and Executives
Details of the nature and amount of each element of the emoluments of each Director and KMP of Salt Lake Potash
Limited are as follows:
Short-term Incentives
Salary &
fees
$
Cash
Incentive
Payments
$
2019
Directors
Mr Ian Middlemas
Mr Tony Swiericzuk 1
Mr Matthew Syme 2
Mr Mark Pearce
Mr Bryn Jones 3
Other KMP
Mr Clint McGhie 4
Mr Stephen Cathcart 5
Mr David Maxton 6
Mr Sam Cordin 7
Total
36,000
231,090
115,833
20,000
110,566
214,058
180,513
257,435
21,984
1,187,479
-
-
-
-
-
-
-
-
-
-
Non Cash
Benefits8
$
-
-
Post-
employment
benefits
$
Share-
based
payments
$
Perfor-
mance
related
%
Total
$
3,420
-
39,420
-
16,667
1,125,276
1,373,033
82%
7,159
11,004
(195,752)
(61,756)
-
-
-
-
-
-
1,900
1,900
1,599
6,136
23,499
118,602
21,523
16,586
13,656
62,205
297,786
277,108
474,207
-
271,091
1,516
(37,473)
(13,973)
7,159
88,172
1,239,099
2,521,909
-
7%
5%
21%
58%
-
-
Notes:
1 Mr Swiericzuk was appointed Managing Director and Chief Executive Officer effective 5 November 2018.
2 Mr Syme transitioned from Managing Director and Chief Executive Officer to Non-Executive Director effective 5 November 2018. He resigned as
a Non-Executive Director effective 23 July 2019.
3 Mr Jones received Director fees of $20,000 and consulting fees of $90,566 for additional services provided to the Company.
4 Mr McGhie was appointed Company Secretary effective 10 August 2018.
5 Mr Cathcart was appointed Project Director – Technical effective 6 November 2018.
6 Mr Maxton resigned as Chief Operating Officer effective 21 December 2018.
7 Mr Cordin resigned as Company Secretary effective 10 August 2018.
8 Non-cash benefits include life insurance premiums paid for Mr Syme.
Short-term Incentives
2018
Directors
Mr Ian Middlemas
Mr Matthew Syme
Mr Mark Hohnen 1
Mr Mark Pearce
Mr Bryn Jones 2
Other KMP
Mr David Maxton 3
Mr Sam Cordin
Total
Salary &
fees
$
36,000
250,000
8,452
20,000
160,574
65,000
150,000
690,026
Cash
Incentive
Payments
$
Non
Cash
Benefits4
$
Post-
employment
benefits
$
Share-
based
payments
$
Perfor-
mance
related
%
Total
$
-
-
-
-
-
-
20,000
-
-
-
36,000
-
16,581
23,750
392,097
682,428
57%
-
-
-
-
-
-
1,900
1,900
-
8,452
29,749
51,649
33,991
196,465
-
58%
17%
6,175
-
71,175
-
16,150
139,557
325,707
49%
20,000
16,581
49,875
595,394 1,371,876
Notes:
1 Mr Hohnen resigned 1 December 2017.
2 Mr Jones received Director fees of $20,000 and consulting fees of $140,574 for additional services provided to the Company.
3 Mr Maxton was appointed Chief Operating Officer effective 12 April 2018.
4 Non-cash benefits include life insurance premiums paid for Mr Syme.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
28
28
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Options and Performance Rights Granted to KMP
Details of Incentive Options (Options) and Performance Rights (Rights) granted by the Company to each KMP of
the Group during the financial year are as follows:
Rights/
Options 1
Grant
Date
Vesting
Date
Exercise
Price
$
Expiry
Date
Grant
Date
Fair
Value 1
$
No.
Granted
No.
Vested
At 30
June
2019
Max
amount to
be
recognised
in future
years
2019
Directors
Mr Tony Swiericzuk Options
2-Nov-18 4-Nov-19 1-Nov-23
$0.60
$0.22 1,000,000
Mr Tony Swiericzuk Options
2-Nov-18 4-Nov-20 1-Nov-23
$1.00
$0.16 2,000,000
Mr Tony Swiericzuk Options
2-Nov-18 4-Nov-20 1-Nov-23
$1.20
$0.14 2,000,000
Mr Tony Swiericzuk
Rights
2-Nov-18
- 1-Nov-20
Mr Tony Swiericzuk
Rights
2-Nov-18
- 1-Nov-21
Mr Tony Swiericzuk
Rights
2-Nov-18
- 1-Nov-22
Mr Tony Swiericzuk
Rights
2-Nov-18
- 1-Nov-23
Mr Tony Swiericzuk
Rights
2-Nov-18 30-Jun-19 31-Jul-19
Other KMP
Mr Clint McGhie
Rights
31-Dec-18
- 1-Nov-20
Mr Clint McGhie
Rights
31-Dec-18
- 1-Nov-21
Mr Clint McGhie
Rights
31-Dec-18
- 1-Nov-22
Mr Clint McGhie
Rights
31-Dec-18
- 1-Nov-23
-
-
-
-
-
-
-
-
-
$0.47 1,500,000
$0.47 1,500,000
$0.47 2,000,000
$0.47 2,000,000
$0.46
200,000
$0.46
200,000
$0.46
200,000
$0.46
200,000
Mr Stephen Cathcart Options
31-Dec-18 6-Nov-19 1-Nov-23
$0.60
$0.21
50,000
Mr Stephen Cathcart Options
31-Dec-18 6-Nov-20 1-Nov-23
$1.00
$0.15
50,000
Mr Stephen Cathcart Options
31-Dec-18 6-Nov-20 1-Nov-23
$1.20
$0.13
50,000
$0.47
266,258 266,2586
-
-
-
-
-2
-3
-4
-5
75,785
213,880
186,977
473,219
550,479
785,479
816,384
-2
-3
-4
-5
-
-
-
-2
-3
-4
-5
67,183
75,927
80,114
82,571
25,717
32,512
37,784
100,775
113,890
120,171
123,856
Mr Stephen Cathcart Rights
31-Dec-18
- 1-Nov-20
Mr Stephen Cathcart Rights
31-Dec-18
- 1-Nov-21
Mr Stephen Cathcart Rights
31-Dec-18
- 1-Nov-22
Mr Stephen Cathcart Rights
31-Dec-18
- 1-Nov-23
Mr Stephen Cathcart Rights
31-Dec-18 30-Jun-19 30-Jun-19
Mr Stephen Cathcart Rights
31-Dec-18
- 31-Dec-21
Mr Stephen Cathcart Rights
31-Dec-18
- 31-Dec-21
-
-
-
-
-
-
-
$0.46
300,000
$0.46
300,000
$0.46
300,000
$0.46
300,000
$0.46
133,129 133,1296
-
$0.46
400,000
$0.46
400,000
-7
-8
153,613
153,613
Notes:
1 For details on the valuation of the Performance Rights or Options, including models and assumptions used, please refer to Note 18 to the financial
statements.
2 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Trench/Pond Construction
performance condition.
3 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Plant Construction performance
condition.
4 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Plant Commissioning performance
condition.
5 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Nameplate Capacity performance
condition.
6 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Short Term Incentives performance
condition.
7 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Advanced Schedule performance
condition.
8 Each Performance Right converts into one Ordinary Share of Salt Lake Potash Limited upon satisfaction of the Reduced Capex performance
condition.
29 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
29
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Options and Performance Rights Granted to KMP (Continued)
During the 2019 financial year, 399,387 Performance Rights held by KMP vested, and no Incentive Options held
by KMP vested. Details of the values of Incentive Options and Performance Rights (Securities) granted, exercised
or lapsed for each KMP of the Group during the 2019 financial year are as follows:
Securities
Granted
Rights/
Options
Value at
Grant Date 1
Securities
Exercised
Value at
Exercise
Date
Securities
Lapsed
Value at
Time of
Lapse
Value of
Securities
included in
Remuneration
for the Period
Percentage of
Remuneration
for the Period
that Consists
of Securities
$
$
$
$
%
2019
Directors
Mr Tony Swiericzuk
Options
815,000
Mr Tony Swiericzuk
Rights
3,412,479
Mr Matthew Syme
Mr Matthew Syme
Mr Mark Pearce
Mr Bryn Jones
Other KMP
Mr Clint McGhie
Options
Rights
Rights
Rights
-
-
-
-
Rights
368,000
Mr Stephen Cathcart
Options
157,800
Mr Stephen Cathcart
Mr Sam Cordin
Rights
Rights
981,239
-
-
-
142,500
-
-
-
-
-
-
-
Total
5,734,518
142,500
-
-
-
-2
-3
-4
-
-
-
-5
-
786,917
338,359
-
(195,752)
1,599
6,136
62,205
61,787
215,321
(62,473)
1,214,099
57%
25%
-
-
7%
5%
21%
13%
45%
-
Notes:
1 For details on the valuation of the Performance Rights, including models and assumptions used, please refer to Note 18 of the financial
statements.
2 During the 2019 financial year, 1,000,000 Performance Rights granted to Mr Syme in the 2017 financial year lapsed.
3 During the 2019 financial year, 50,000 Performance Rights granted to Mr Pearce in the 2017 financial year lapsed.
4 During the 2019 financial year, 50,000 Performance Rights granted to Mr Jones in the 2017 financial year lapsed.
5 During the 2019 financial year, 300,000 Performance Rights granted to Mr Cordin in the 2017 financial year and 100,000 Performance Rights
granted in the 2018 financial year lapsed.
(cid:3)
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
30
30
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Equity instruments held by KMP
Options and Performance Rights holdings of Key Management Personnel
2019
Directors
Mr Ian Middlemas
Mr Tony Swiericzuk
Held at
1 July
2018
Granted as
Remuneration
Options
Exercised/
Rights
Converted
Net Other
Change
Held at
30 June
2019
Vested and
exercise-
able at 30
June 2019
-
-
-
12,266,258
-
-
-
-
-
12,266,258
-
266,2583
Mr Matthew Syme
4,500,000
Mr Mark Pearce
Mr Bryn Jones
Other KMP
Mr Clint McGhie
Mr Stephen Cathcart
Mr David Maxton
200,000
200,000
-2
-
-
Mr Sam Cordin
800,000
-
-
-
800,000
3,133,129
-
-
(750,000)
(1,000,000)
2,750,000
1,750,000
-
-
-
-
-
-
(50,000)
(50,000)
150,000
150,000
-
-
-
-
-
(400,000)
800,000
3,133,129
-1
400,0001
-
133,1294
-
-
Total
5,700,000
16,199,387
(750,000)
(1,500,000)
19,649,387
2,149,387
Notes:
1 At date of resignation.
2 At date of appointment.
3 These Performance Rights have vested at 30 June 2019 but subsequently expired. The Company will seek shareholder approval to issue an
equivalent number of shares to Mr Swiericzuk
4 These Performance Rights have vested at 30 June 2019 but subsequently expired. The Company has issued an equivalent number of shares to
Mr Cathcart in August 2019.
Ordinary Shareholdings of Key Management Personnel
Held at
1 July 2018
Granted as
Remuneration
Options
Exercised/
Rights
Converted
Net Other
Change
Held at
30 June 2019
2019
Directors
Mr Ian Middlemas
11,000,000
Mr Tony Swiericzuk
Mr Matthew Syme
Mr Mark Pearce
Mr Bryn Jones
Other KMP
Mr Clint McGhie
Mr Stephen Cathcart
Mr David Maxton
Mr Sam Cordin
Total
-
4,500,000
4,000,000
-
300,0002
-2
-
400,000
20,200,000
-
-
-
-
-
-
-
-
-4
-
-
-
750,0003
952,3813
750,000
-
-
-
-
-
-
-
-
-
-
238,0953
-
-
11,750,000
952,381
5,250,000
4,000,000
-
300,000
238,095
-1
400,0001
750,000
1,940,476
22,890,476
Notes:
1 At date of resignation.
2 At date of appointment.
3 Participation in placement of Ordinary Shares.
4 Mr Cordin was granted 50,000 Ordinary Shares in lieu of $25,000 cash bonus after the date of his resignation.
31 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
31
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
REMUNERATION REPORT (AUDITED) (Continued)
(cid:3)
Employment Contracts with Directors and KMP
Mr Tony Swiericzuk, Chief Executive Officer, is an employee of the Company. He has an Executive Services
Agreement with a rolling annual term and can be terminated by the Company by giving three months’ notice. No
amount is payable in the event of termination for cause. Mr Swiericzuk receives a fixed remuneration component
of $350,000 per annum plus statutory superannuation. Mr Swiericzuk also receives a short term incentive comprised
of performance rights to the value of $200,000 per annum, as well as long term incentives identified in the
remuneration report.
Mr Bryn Jones, Non-Executive Director, has a consulting agreement with the Company, which provides for a
consultancy fee at the rate of $1,500 per day for management and technical services provided by Mr Jones.
Termination of the agreement can be made at any time without penalty or payment by giving four weeks’ notice. In
addition, Mr Jones also receives a fixed remuneration component of $20,000 per annum plus superannuation as
previously set by the Board for Non-Executive Directors.
Mr Matthew Syme, Non-Executive Director, had a consulting agreement with the Company, which provided for a
(cid:3)
consultancy fee at the rate of $1,500 per day for management services provided by Mr Syme. Termination of the
agreement could be made at any time without penalty or payment by giving four weeks’ notice. In addition, Mr Syme
also received the fixed remuneration component of $20,000 per annum plus superannuation as previously set by
the Board for Non-Executive Directors. Mr Syme resigned as a Non-Executive Director effective 23 July 2019.
Mr Shaun Day, Chief Financial Officer, is an employee of the Company. He has an Executive Services Agreement
with a rolling annual term and can be terminated by the Company by giving three months’ notice. No amount is
payable in the event of termination for cause. Mr Day receives a fixed remuneration component of $300,000 per
annum plus statutory superannuation. Mr Day is entitled to receive a short term incentive comprised of performance
rights to the value of $100,000 per annum, as well as long term incentive of 3 million incentive options and 3 million
performance rights.
(cid:3)
Mr Clint McGhie, Company Secretary, is an employee of the Company. The employment contract has a rolling
annual term and may be terminated by the Company by giving three months’ notice. No amount is payable in the
event of termination for cause. Mr McGhie receives a fixed remuneration component of $250,000 per annum plus
statutory superannuation and performance incentives as identified in the remuneration report.
Mr Stephen Cathcart, Project Director – Technical, is an employee of the Company. The contract has a rolling
annual term and may be terminated by the Company by giving three months’ notice. No amount is payable in the
event of termination for cause. Mr Cathcart receives a fixed remuneration component of $275,000 per annum plus
statutory superannuation. Mr Cathcart also receives a short term incentive comprised of performance rights to the
value of $100,000 per annum, as well as long term incentives identified in the remuneration report.
Key Management Personnel Loans
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2019
(2018: Nil).
(cid:3)Other Transactions
Apollo Group Pty Ltd, a Company of which Mr Mark Pearce is a Director and beneficial shareholder, was paid
$100,000 (2018: $150,000) for the provision of serviced office facilities, corporate and administration services until
the contract was terminated effective on 28 February 2019. The amount was based on a monthly retainer adjusted
for expended/consumed items at cost, due and payable in advance, with no fixed term, and was able to be
terminated by either party with one month’s notice. At 30 June 2019, Nil (2018: $25,000) was included as a current
liability in the Statement of Financial Position.
End of Remuneration Report
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
32
32
DIRECTORS’ REPORT
(Continued)
(cid:3)
DIRECTORS' MEETINGS
(cid:3)
The number of meetings of Directors held during the year and the number of meetings attended by each Director
was as follows:
Mr Ian Middlemas
Mr Matthew Syme
Mr Mark Pearce
Mr Bryn Jones
Mr Tony Swiericzuk
Board Meetings
Number eligible to attend
Number attended
3
3
3
3
2
3
3
3
3
2
There were no Board committees during the financial year. The Board as a whole currently performs the functions
of an Audit Committee, Risk Committee, Nomination Committee, and Remuneration Committee, however this will
be reviewed should the size and nature of the Company’s activities change.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has indemnified the directors of the Company for costs incurred, in their capacity as a director, for
which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of liability and the amount of the premium.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the end of the financial year.
NON-AUDIT SERVICES
Non-audit services provided by our auditors, Ernst and Young and related entities, are set out below. The Directors
are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act. The nature and scope of each type of non-audit service provided means
that auditor independence was not compromised.
Tax and other advisory services
2019
$
11,566
11,566
2018
$
8,188
8,188
PROCEEDINGS ON BEHALF OF THE COMPANY
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section
237 of the Corporations Act 2001.
33 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
33
(cid:3)
DIRECTORS’ REPORT
(Continued)
(cid:3)
AUDITOR'S INDEPENDENCE DECLARATION
(cid:3)
The lead auditor's independence declaration for the year ended 30 June 2019 has been received and can be found
on page 71 of the Directors' Report.
Signed in accordance with a resolution of the Directors.
Tony Swiericzuk
Chief Executive Officer
(cid:3)
27 September 2019
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
34
34
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
(cid:3)
Interest income
Research and Development Tax Incentive rebate
Exploration and evaluation expenses
Pre-Development expenses
Corporate and administrative expenses
Business development expenses
Share based payment expense
Loss before tax
Income tax expense
Loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or
loss:
Foreign currency translation differences reclassified to profit
or loss on disposal of controlled entity
Other comprehensive loss for the year, net of tax
Notes
3
4
30 June
2019
$
135,952
1,652,110
30 June
2018
$
238,208
456,709
(13,745,503)
(8,545,647)
(8,513,393)
-
(3,257,046)
(1,081,738)
(865,860)
(1,110,578)
(2,302,381)
(1,284,062)
(26,896,121)
(11,327,108)
-
-
(26,896,121)
(11,327,108)
-
-
-
-
Total comprehensive loss for the year
(26,896,121)
(11,327,108)
Basic and diluted loss per share attributable to the ordinary
equity holders of the company (cents per share)
14
(13.74)
(6.47)
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the
accompanying notes.
35 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
35
(cid:3)
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation expenditure
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Finance lease
Provisions
Total Current Liabilities
Non-Current Liabilities
Finance lease
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
30 June
2019
$
30 June
2018
$
(cid:3)
19,304,075
923,036
(cid:3)
5,709,446
227,273
20,227,111
5,936,719
763,566
2,276,736
3,040,302
23,267,413
535,344
2,276,736
2,812,080
8,748,799
7,709,590
1,620,527
19,030
79,368
11,829
57,462
7,807,988
1,689,818
39,166
711,885
751,051
38,992
-
38,992
8,559,039
1,728,810
14,708,374
7,019,989
5
6
7
8
9
10
10
11
12
155,917,578
123,501,153
4,273,967
2,105,886
(145,483,171)
(118,587,050)
14,708,374
7,019,989
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
36
36
(cid:3)
(cid:3)
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
(cid:3)
Contributed
Equity
Share- Based
Payment Reserve
Accumulated
Losses
$
$
$
Total Equity
$
Balance at 1 July 2018
123,501,153
2,105,886
(118,587,050)
7,019,989
Net loss for the year
Total comprehensive loss for
the year
-
-
Shares issued from placements
33,250,000
Shares issued on exercise of
options
Shares issued in lieu of fees
300,000
467,633
Share issue costs
(1,601,208)
-
-
-
-
-
-
Share based payment expense
-
2,168,081
(26,896,121)
(26,896,121)
(26,896,121)
(26,896,121)
-
-
-
-
-
33,250,000
300,000
467,633
(1,601,208)
2,168,081
Balance at 30 June 2019
155,917,578
4,273,967
(145,483,171)
14,708,374
Balance at 1 July 2017
123,484,561
821,824
(107,259,942)
17,046,443
Net loss for the year
Total comprehensive loss for
the year
Shares issued in lieu of fees
Share issue costs
-
-
18,476
(1,884)
-
-
-
-
Share based payment expense
-
1,284,062
(11,327,108)
(11,327,108)
(11,327,108)
(11,327,108)
-
-
-
18,476
(1,884)
1,284,062
7,019,989
Balance at 30 June 2018
123,501,153
2,105,886
(118,587,050)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
37 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
37
(cid:3)
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Payments to suppliers and employees
Exploration investment scheme received
R&D tax incentive received
Interest received
Note
30 June
2019
$
30 June
2018
$
(20,130,140)
(10,275,823)
-
1,652,110
144,043
30,000
456,709
242,852
Net cash outflow from operating activities
13(a)
(18,333,987)
(9,546,262)
Cash flows from investing activities
Payments for property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Lease payments
Payment of transaction costs from issue of shares
Net cash inflow/(outflow) from financing activities
(357,321)
(357,321)
(256,890)
(256,890)
33,550,000
(13,629)
(1,250,434)
32,285,937
-
(11,829)
(72,332)
(84,161)
Net increase/(decrease) in cash and cash equivalents held
13,594,629
(9,887,313)
Cash and cash equivalents at the beginning of the year
5,709,446
15,596,759
Cash and cash equivalents at the end of the year
5
19,304,075
5,709,446
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
38
38
(cid:3)
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1.
(cid:3)
The significant accounting policies adopted in preparing the financial report of Salt Lake Potash Limited (Salt Lake
or Company) and its consolidated entities (Consolidated Entity or Group) for the year ended 30 June 2019 are
stated to assist in a general understanding of the financial report.
Salt Lake is a Company limited by shares incorporated and domiciled in Australia whose shares are publicly traded
on the Australian Securities Exchange (ASX), and the AIM Market (AIM) of the London Stock Exchange.
The financial report of the Group for the year ended 30 June 2019 was authorised for issue in accordance with a
resolution of the Directors on 24 September 2019.
(a)
Basis of Preparation
The financial report is a general purpose financial report, which has been prepared in accordance with Australian
Accounting Standards (“AASBs”) and other authoritative pronouncements of the Australian Accounting Standards
Board (“AASB”) and the Corporations Act 2001. The Group is a for-profit entity for the purposes of preparing the
consolidated financial statements.
The financial report has been prepared on a historical cost basis. The financial report is presented in Australian
dollars.
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board.
Going concern
The consolidated financial statements have been prepared on a going concern basis which assumes the continuity
of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of
business.
For the year ended 30 June 2019, the Consolidated Entity incurred a net loss of $26,896,121 (2018: $11,327,108)
and experienced net cash outflows from operating and investing activities of $18,691,308 (2018: $9,803,152). As
at 30 June 2019, the Group had cash and cash equivalents of $19,304,075 (2018: $5,709,446) and net current
assets of $12,419,123 (2018: $4,246,901).
The Company has recently completed a successful Scoping Study for the commercial scale development of its
SOP project at Lake Way and is currently in the process of completing a Bankable Feasibility Study (BFS). The
Scoping Study supports a low capital and operating cost operation on a commercial scale with the ability to support
a long mine life. The Company has sufficient funds to meet currently committed expenditure but in order to progress
development and construction of the Lake Way Project, it will require additional funds.
In August 2019, the Company mandated Taurus Funds Management (Taurus) to provide US$150m staged project
financing for the Lake Way Project. The Stage 1 Facility documentation has been executed and conditions satisfied,
which has enabled the Company to commence drawing down on the initial facility of US$30m. The Project
Development Facility (PDF) for up to US$150m will be used for refinancing the Stage 1 Facility and for project
development and working capital associated with the development of the Lake Way Project. The PDF will become
available upon completion of the BFS and satisfaction of conditions precedent. Conditions precedent are customary
for a project financing of this nature and include execution of financing agreements, satisfying the equity
requirement based upon a Cost to Complete analysis and offtake agreements being finalised.
Based on the successful results of the Scoping Study, the Directors are confident that they will be able to agree
documentation and satisfy the conditions precedent to access the PDF to fund the ongoing development of the
Lake Way Project.
In addition, the Directors have been involved in a number of recent successful capital raisings for the Company and
for other listed resource companies, and accordingly, they are satisfied that they will be able to raise additional
capital when required to enable the Consolidated Entity to meet its obligations as and when they fall due, and
accordingly, consider that it is appropriate to prepare the financial statements on the going concern basis.
Should the Consolidated Entity be unable to access the PDF or raise additional capital or debt as and when
required, the Consolidated Entity would need to reduce operational expenditure to continue as a going concern. In
the event that the Consolidated Entity is unable to achieve the matters referred to above, uncertainty would exist
that may cast doubt on the ability of the Consolidated Entity to continue as a going concern.
39 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
39
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(a)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of Preparation (Continued)
These consolidated financial statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts, or to the amounts and classification of liabilities that might be necessary
should the Consolidated Entity be unable to continue as a going concern.
(b)
New Accounting Standards
Since 1 July 2018, the Consolidated Entity has adopted all Accounting Standards and Interpretations effective from
(cid:3)
1 July 2018. Other than the changes described below, the accounting policies adopted are consistent with those of
the previous financial year. The Consolidated Entity has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
The Consolidated Entity applied AASB 9 Financial Instruments (AASB 9) for the first time from 1 July 2018. A
discussion on the impact of the adoption of AASB 9 is included below.
Several other new and amended Accounting Standards and Interpretations applied for the first time from 1 July
2018. These did not have an impact on the consolidated financial statements of the Consolidated Entity and, hence,
have not been disclosed.
AASB 9 Financial Instruments
AASB 9 replaces parts of AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) bringing
(cid:3)
together all three aspects of the accounting for financial instruments: classification and measurement; impairment;
and hedge accounting. The accounting policies have been updated to reflect the application of AASB 9 for the
period from 1 July 2018 (refer to note 1(f)).
The Consolidated Entity has applied AASB 9 retrospectively, with the initial application date being 1 July 2018. The
cumulative impact of applying AASB 9 is recognised at the date of initial application as an adjustment to the opening
balance of retained earnings. The Consolidated Entity has elected not to adjust comparative information.
(i)
Classification and Measurement
On adoption of AASB 9, the Company classified financial assets and liabilities as subsequently measured at either
(cid:3)
amortised cost or fair value through profit and loss. The classification is based on two criteria; the Group’s business
model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of
principal and interest’ on the principal amount outstanding (the SPPI criterion). There were no changes in the
measurement of the Company’s financial instruments due to the change in classification of financial instruments.
At the date of initial application, existing financial assets and liabilities of the Group were assessed in terms of the
requirements of AASB 9. The assessment was conducted on instruments that had not been derecognised as at 1
July 2018.
There was no impact on the statement of comprehensive income or the statement of changes in equity on adoption
of AASB 9 in relation to classification and measurement of financial assets and liabilities. The following table
summarises the impact on the classification and measurement of the Group’s financial instruments at 1 July 2018:
Presented in statement of
financial position
Cash and cash equivalents
Trade and other receivables
Trade and other payables
AASB 139
Financial asset
at amortised cost
Financial asset
at amortised cost
Financial liability
at amortised cost
Original
carrying
amount under
AASB 139
$
New carrying
amount under
AASB 9
$
AASB 9
Amortised Cost
5,709,446
5,709,446
Amortised Cost
227,273
227,273
Amortised Cost
1,620,527
1,620,527
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
40
40
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(b)
(ii)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
New Accounting Standards (Continued)
Impairment
The adoption of AASB 9 has changed the Consolidated Entity’s accounting for impairment losses for financial
assets by replacing AASB 139’s incurred loss approach with a forward-looking expected credit loss (ECL) approach.
AASB 9 requires the Consolidated Entity to recognise an allowance for ECLs for all debt instruments not held at
fair value through profit or loss.
The Company’s receivables balance consists of GST refunds from the Australian Tax Office and interest
receivables from recognised Australian banking institutions. While cash and cash equivalents are also subject to
the impairment requirements of AASB 9, all bank balances are assessed to have low credit risk as they are held
with reputable financial institutions which have a credit rating of AA- (Standard & Poor’s) and above.
The loss allowances for financial assets are based on the assumptions about risk of default and expected loss
rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates
at the end of each reporting period. Given the Company’s receivables are from the Australian Tax Office and
recognised Australian banking institutions, the Company has assessed that the risk of default is minimal and as
such, no additional impairment loss has been recognised against these receivables as at 30 June 2019.
(c)
New and amended Accounting Standards and Interpretations not early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective have not been adopted by the Company for the reporting period ended 30 June 2019. Those which may
(cid:3)
be relevant to the Company are set out below. Other than as discussed for AASB 16, these are not expected to
have any significant impact on the Company’s financial statements.
Standard/Interpretation
AASB Interpretation 23, and relevant amending standards
Applicable date
of standard
Application date
for Group
1 January 2019
1 July 2019
AASB 2019-1 Conceptual Framework for Financial Reporting
1 January 2020
1 January 2020
AASB 2018-7 Definition of Material
1 January 2020
1 July 2020
AASB 16 Leases (AASB 16)
AASB 16 Leases will replace existing accounting requirements for leases under AASB 117 Leases (AASB 117).
Under current requirements, leases are classified based on their nature as either finance leases which are
recognised on the Statement of Financial Position, or operating leases, which are not recognised on the Statement
of Financial Position.
Under AASB 16, with the exception of short-term and low value leases, the Company’s accounting for operating
leases as a lessee will result in the recognition of a right-of-use (ROU) asset and an associated lease liability on
the Statement of Financial Position. The lease liability represents the present value of future lease payments. An
interest expense will be recognised on the lease liabilities and a depreciation charge will be recognised for the ROU
assets. There will also be additional disclosure requirements under the new standard.
The Company will initially apply AASB 16 on 1 July 2019, using the modified retrospective approach. Therefore,
the cumulative effect of adopting AASB 16 will be recognised as an adjustment to the opening balance of retained
earnings at 1 July 2019, with no restatement of comparative information.
When applying the modified retrospective approach to leases previously classified as operating leases under AASB
117, the Company can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on
transition. The Company will elect to use the exemptions proposed by the standard on lease contracts for which
the lease term ends within 12 months as of the date of initial application, and lease contracts for which the underlying
asset is of low value.
41 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
41
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(c)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
New and amended Accounting Standards and Interpretations not early adopted (Continued)
The Company is in the progress of assessing the impact of the new leases standard and the effect on the Group’s
financial statements. In summary, the impact of AASB 16 is to create a right-of-use asset and a lease liability. As a
result of a right-of-use asset and lease liability, depreciation expense and interest expense is expected to increase
and operating lease expense will reduce. In addition, the classification between cashflow from operating activities
and cash flow from financing activities will also change.
(d)
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at
30 June 2019 and the results of all subsidiaries for the year then ended.
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an
entity when the group 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.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Company.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-
consolidated from the date that control ceases. Intercompany transactions and balances, income and expenses
and profits and losses between Group companies, are eliminated.
(e)
Cash and Cash Equivalents
(cid:3)
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
(f)
Financial Assets
Pre 1 July 2018 policy
Classification
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as
either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or
available-for-sale investments, as appropriate. When financial assets are recognised initially they are measured at
fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction
costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and
appropriate, re-evaluates this designation at each financial year-end.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise when the Group provides money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in current assets, except for those with maturities greater than
twelve months after the reporting date which are classified as non-current assets. Loans and receivables are
included in receivables in the statement of financial position.
Loans and receivables are carried at amortised cost using the effective interest rate method.
Impairment
Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are known to be
uncollectible are written off when identified. An impairment allowance is recognised when there is objective
evidence that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor,
default payments or debts more than 60 days overdue are considered objective evidence of impairment. The
amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future
cash flows, discounted at the original effective interest rate.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
42
42
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(f)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial Assets (Continued)
Post 1 July 2018 policy
Financial assets are recognised when the entity becomes a party to the contractual provisions to the instrument.
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised
immediately in profit or loss.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging
instruments are classified into the following categories upon initial recognition:
amortised cost
fair value through profit or loss (FVPL)
equity instruments at fair value through other comprehensive income (FVOCI)
debt instruments at fair value through other comprehensive income
All income and expenses relating to financial assets that are recognised in profit or loss are presented within other
income or expenses respectively.
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order
to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and
are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
The Consolidated Entity’s financial assets at amortised cost include short term deposits and other receivables.
Impairment
The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all
the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. ECLs are
recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within
the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase
in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life
of the exposure, irrespective of the timing of the default (a lifetime ECL).
For receivables due in less than 12 months, the Group will recognise a loss allowance based on the financial asset’s
lifetime ECL at each reporting date. The Group will establish a provision matrix for these receivables that is based
on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment as sales from product eventuate or significant receivables come to hand.
The Group considers a financial asset in default when contractual payments are 60 days past due. However, in
certain cases, the Group may also consider a financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account
any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject
to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired.
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
43 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
43
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(g)
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant and Equipment
Recognition and measurement
All classes of property, plant and equipment are measured at historical cost.
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment
losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing
the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and
maintenance are recognised in the Statement of Profit or Loss and other Comprehensive Income as incurred.
(ii)
Depreciation and Amortisation
Depreciation is provided on a straight line basis on all property, plant and equipment.
Major depreciation and amortisation periods are:
Plant and equipment:
22- 40%
22- 40%
2019
2018
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at
each financial year end.
(iii) Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected from its use or disposal.
(h)
Exploration, Evaluation and Pre-Development Expenditure
Expenditure on exploration, evaluation and pre-development is accounted for in accordance with the 'area of
interest' method.
Exploration, evaluation and pre-development expenditure encompasses expenditures incurred by the Group in
connection with the exploration for and evaluation of mineral resources and early development activities before the
technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised, classified as
tangible or intangible, and recognised as an exploration and evaluation asset. Exploration and evaluation assets
are measured at cost at recognition and are recorded as an asset if:
a.
the rights to tenure of the area of interest are current; and
b.
at least one of the following conditions is also met:
the exploration and evaluation expenditures are expected to be recouped through successful development
and exploitation of the area of interest, or alternatively, by its sale; and
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration, evaluation and pre-development expenditure incurred by the Group subsequent to acquisition of the
rights to explore is expensed as incurred, up to and including costs associated with the preparation of a bankable
feasibility study.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
44
44
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(h)
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Exploration, Evaluation and Pre-Development Expenditure (Continued)
Impairment
Capitalised costs are reviewed each reporting date to establish whether an indication of impairment exists. If any
such indication exists, the recoverable amount of the capitalised costs is estimated to determine the extent of the
impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in previous years.
Where a decision is made to proceed with development, accumulated expenditure is tested for impairment and
transferred to development properties, and then amortised over the life of the reserves associated with the area of
interest once mining operations have commenced. Recoverability of the carrying amount of the exploration and
evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of
the respective areas of interest.
(i)
Payables
Liabilities are recognised for amounts to be paid in the future for goods and services received. Trade accounts
payable are normally settled within 30 days. Payables are carried at amortised cost.
(j)
Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Rehabilitation
The Group is required to decommission and rehabilitate mines or related assets at the end of their producing lives
to a condition acceptable to the relevant authorities. A rehabilitation provision is recognised when the Group has a
present obligation, whether legal or constructive, as a result of a past event.
The expected cost of any approved decommissioning or rehabilitation programme, discounted to its net present
value, is provided when the related environmental disturbance occurs. Until a decision to mine is made, the cost is
brought up front and expensed whether the rehabilitation activity is expected to occur over the life of the operation
or at the time of closure. Once a decision to mine is made, the rehabilitation cost will be capitalised and amortised
over the life of the operation and the increase in net present value of the provision for the expected cost is included
in financing expenses. Expected decommissioning and rehabilitation costs are based on the discounted value of
the estimated future cost of the detailed plans prepared. Where there is a change in the expected decommissioning
and restoration costs, the value of the provision and any related asset are adjusted and the effect is recognised in
the profit or loss on a prospective basis over the remaining life of the operation.
The estimated costs of the rehabilitation are reviewed annually and adjusted as appropriate for changes in
legislation, technology or other circumstances. Cost estimates are not reduced by potential proceeds from the sale
of assets or from plant/site clean up at closure.
The ultimate cost of rehabilitation is uncertain and costs can vary in response to many factors including changes to
the relevant legal requirements, the emergence of new rehabilitation techniques or experience at other sites. The
expected timing of expenditure can also change. Changes to any of the estimates could result in significant changes
to the level of provisioning required, which would in turn impact future financial results.
In recognising the amount of rehabilitation obligation at each reporting date, judgement is made on the extent of
rehabilitation that the Group is responsible for at each reporting date.
(k)
Interest Income
Interest income is recognised as it accrues in profit or loss, using the effective interest method, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross
carrying amount of the financial asset.
45 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
45
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(l)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised using the full liability method for temporary differences at the tax
rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are
enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts
of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made
for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset
or liability is recognised in relation to these temporary differences if they arose on goodwill or in a transaction, other
than a business combination, that at the time of the transaction did not affect either accounting profit or taxable
profit or loss.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against tax liabilities and the deferred tax liabilities relate to the same taxable entity and the same taxation
authority.
Tax consolidation
Salt Lake Potash Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax
liabilities, except for any deferred tax assets resulting from unused tax losses and tax credits, which are immediately
assumed by the Company. The current tax liability of each group entity is then subsequently assumed by the
Company. The tax consolidated group has entered a tax sharing agreement whereby each company in the Group
contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax
consolidated group.
(m) Employee Entitlements
Provision is made for the Group's liability for employee benefits arising from services rendered by employees to
balance date. Employee benefits that are expected to be settled within 12 months have been measured at the
amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits expected to be
settled later than 12 months after the year end have been measured at the present value of the estimated future
cash outflows to be made for those benefits.
(n)
Earnings per Share
Basic earnings per share (EPS) is calculated by dividing the net profit attributable to members of the Company for
the reporting period, after excluding any costs of servicing equity, by the weighted average number of Ordinary
Shares of the Company, adjusted for any bonus issue.
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs
associated with dilutive potential Ordinary Shares and the effect on revenues and expenses of conversion to
Ordinary Shares associated with dilutive potential Ordinary Shares, by the weighted average number of Ordinary
Shares and dilutive Ordinary Shares adjusted for any bonus issue.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
46
46
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(o)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(p)
Acquisition of Assets
A group of assets may be acquired in a transaction which is not a business combination. In such cases the cost is
allocated to the individual identifiable assets (including intangible assets that meet the definition of and recognition
criteria for intangible assets in AASB 138 Intangible Assets) acquired and liabilities assumed on the basis of their
relative fair values at the date of purchase.
(q)
Impairment of Non-Current Assets
The Group assesses at each reporting date whether there is an indication that a non-current asset may be impaired.
If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an
estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs
of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets and the asset's value in use
cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the
cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its
recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation
charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
(r)
Issued and Unissued Capital
Ordinary Shares are classified as equity. Issued and paid up capital is recognised at the fair value of the
consideration received by the Company.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
(s)
(i)
Foreign Currencies
Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian dollars
which is the Company's functional and presentation currency.
(cid:3)
47 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
47
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(s)
(ii)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign Currencies (Continued)
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-
monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction.
Exchange differences arising on the translation of monetary items are recognised in the Statement Profit or Loss
and other Comprehensive Income, except where deferred in equity as a qualifying cash flow or net investment
hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent
that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the other
Comprehensive Income.
(iii)
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group's
presentation currency are translated as follows:
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
items of equity are translated at the historical exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign
currency translation reserve in the statement of financial position. These differences are recognised in the
Statement of Profit or Loss and other Comprehensive Income in the period in which the operation is disposed.
(t)
Share-Based Payments
Equity-settled share-based payments are provided to officers, employees, consultants and other advisors. These
share-based payments are measured at the fair value of the equity instrument at the grant date. Fair value of options
is determined using the Binomial option pricing model. Further details on how the fair value of equity-settled share
based payments has been determined can be found in Note 18.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on
the Company's estimate of equity instruments that will eventually vest. At each reporting date, the Company revises
its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment
to the share based payments reserve.
Equity-settled share-based payments may also be provided as consideration for the acquisition of assets or
provision of services. Where Ordinary Shares are issued, the transaction is recorded at fair value based on the
quoted price of the Ordinary Shares at the date of issue. The acquisition is then recorded as an asset or expensed
in accordance with accounting standards.
(u)
Use and Revision of Accounting Estimates, Judgements and Assumptions
The preparation of the financial report requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amounts recognised in the financial statements are
described in the following notes:
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
48
48
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1.
(cid:3)
(u)
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use and Revision of Accounting Estimates, Judgements and Assumptions (Continued)
Exploration and Evaluation Expenditure (Note 8)
The future recoverability of exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related area of interest itself or, if not, whether it
successfully recovers the related exploration and evaluation asset through sale.
To the extent that exploration and evaluation expenditure is determined not to be recoverable in the future,
profits and net assets will be reduced in the period in which this determination is made.
(ii) Mine Rehabilitation (Note 10)
The Group assesses its mine rehabilitation provision in accordance with the accounting policy stated in Note
1(j). In determining an appropriate level of provision, consideration is given to the expected future costs to
be incurred, the timing of those future costs and the estimated level of inflation. The ultimate rehabilitation
costs are uncertain, and cost estimates can vary in response to many factors, including estimates of the
extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as
compared to the inflation rates, and changes in discount rates. The expected timing of expenditure can also
change. These uncertainties may result in future actual expenditure differing from the amounts currently
provided. Therefore, significant estimates and assumptions are made in determining the provision for mine
rehabilitation. As a result, there could be significant adjustments to the provisions established which would
affect future financial results. The provision at reporting date represents management’s best estimate of the
present value of the future rehabilitation costs required.
(iii)
Share-Based Payments (Note 18)
The assessed fair value at grant date of options granted as share-based payments during the period was
determined using a binomial option pricing model that takes into account the exercise price, the price of the
underlying share at grant date, the life of the option, the volatility of the underlying share, the risk-free rate
and expected dividend payout and any applicable vesting conditions. Management was required to make
assumptions and estimates in order to determine the inputs into the binomial option pricing model. The
assessed fair value at grant date of performance rights granted as share-based payments during the period
was determined as at the date of grant based on the underlying share price.
2.
SEGMENT INFORMATION
The Consolidated Entity operates in one operating segment, being mineral exploration in Australia. This is the basis
on which internal reports are provided to the Directors for assessing performance and determining the allocation of
resources within the Consolidated Entity.
(cid:3)
49 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
49
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
EXPENSES
3.
(cid:3)
Note
2019
$
2018
$
(a)
Depreciation included in statement of comprehensive
income
Depreciation of plant and equipment
7
193,630
75,031
(b)
Employee benefits expense (including KMP)
Salaries and wages
Superannuation expense
Share-based payment expense
Total employment expenses included in profit or loss
4.
INCOME TAX
18
3,618,088
1,942,801
304,812
2,168,081
6,090,981
176,466
1,284,062
3,403,329
(a)
Recognised in the statement of comprehensive income
Current income tax
Current income tax benefit in respect of the current year
Deferred income tax
Deferred income tax
Income tax expense reported in the statement of Profit or Loss and
other Comprehensive income
2019
$
2018
$
-
-
-
-
-
-
(b)
Reconciliation between tax expense and accounting loss
before income tax
Accounting loss before income tax
(26,896,121)
(11,327,108)
At the domestic income tax rate of 30.0% (2018: 27.5%)
(8,068,836)
(3,114,955)
Expenditure not allowable for income tax purposes
Income not assessable for income tax purposes
Capital allowances
Change in tax rate
Adjustment in respect of current income tax of previous years
691,952
(491,903)
(380,363)
(780,158)
770,554
511,763
(125,595)
-
-
(3,447)
Deferred tax assets not brought to account
8,258,754
2,732,234
Income tax expense/(benefit) reported in the statement of Profit or
Loss and other Comprehensive income
-
-
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
50
50
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
INCOME TAX (Continued)
4.
(cid:3)
(c)
Deferred Tax Assets and Liabilities
Deferred income tax at 30 June relates to the following:
Deferred Tax Liabilities
Accrued income
Exploration and evaluation assets
Deferred tax assets used to offset deferred tax liabilities
Deferred Tax Assets
Accrued expenditure
Provisions
Capital allowances
Tax losses available for offset against future taxable income
Deferred tax assets used to offset deferred tax liabilities
Deferred tax assets not brought to account
2019
$
2018
$
3,370
47,137
(50,507)
-
9,900
213,566
463,242
16,974,847
(50,507)
4,833
43,209
(48,042)
-
21,813
-
243,070
9,183,494
(48,042)
(17,611,048)
(9,400,335)
-
-
The benefit of deferred tax assets not brought to account will only be brought to account if:
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised;
the conditions for deductibility imposed by tax legislation continue to be complied with; and
no changes in tax legislation adversely affect the Group in realising the benefit.
Deferred tax assets have not been recognised in respect to tax losses because it is not probable that future taxable
profit will be available against which the Group can utilise the benefits.
Tax Consolidation
The Company and its wholly-owned Australian resident entities have formed a tax consolidated group and are
therefore taxed as a single entity. The head entity within the tax consolidated group is Salt Lake Potash Limited.
5.
CASH AND CASH EQUIVALENTS
Cash on hand and at bank
Deposit on call
2019
$
2018
$
19,177,455
126,620
19,304,075
1,596,390
4,113,056
5,709,446
The Group has assessed the credit risk on cash and cash equivalents using the life time expected credit losses
method and concluded that the probability of default is insignificant.
51 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
51
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
TRADE AND OTHER RECEIVABLES
6.
(cid:3)
Accrued interest
GST and other receivables
2019
$
11,231
911,805
923,036
2018
$
17,572
209,701
227,273
Other receivables are non-interest bearing. There are no past due nor impaired receivables at 30 June 2019. GST
receivables are due from the ATO. The Group has assessed the probability of default as low and the expected
credit loss is insignificant.
7.
PROPERTY, PLANT AND EQUIPMENT
(a)
Plant and Equipment
Gross carrying amount - at cost
Accumulated depreciation
Carrying amount at end of year, net of accumulated
depreciation
(b)
Reconciliation
Carrying amount at beginning of year, net of accumulated
depreciation
Additions
Depreciation charge
Carrying amount at end of year, net of accumulated
depreciation
Finance Leases
2019
$
2018
$
1,074,496
(310,930)
652,644
(117,300)
763,566
535,344
535,344
421,852
(193,630)
303,511
306,864
(75,031)
763,566
535,344
The carrying value of plant and equipment held under finance leases at 30 June 2019 was $58,196 (2018: $55,857).
Additions during the year include $21,004 (2018: Nil) of plant and equipment under finance lease.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
52
52
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
EXPLORATION AND EVALUATION EXPENDITURE
8.
(cid:3)
(a)
Areas of Interest
SOP Project
Carrying amount at end of year, net of impairment1
(b)
Reconciliation
Carrying amount at start of year
Impairment losses
Carrying amount at end of year net of impairment 1
2019
$
2018
$
2,276,736
2,276,736
2,276,736
2,276,736
2,276,736
2,276,736
-
-
2,276,736
2,276,736
Notes:
1 The ultimate recoupment of costs carried forward for exploration and evaluation is dependent on the successful development
and commercial exploitation or sale of the respective areas of interest.
SOP Project
Salt Lake holds a number of large salt lake brine projects (Projects) in Western Australia and the Northern Territory,
each having potential to produce highly sought after Sulphate of Potash (SOP) for domestic and international
fertiliser markets.
9.
TRADE AND OTHER PAYABLES
Trade creditors
Accrued expenses
Employee obligations
2019
$
5,111,915
2,326,553
271,122
7,709,590
2018
$
1,372,190
111,364
136,973
1,620,527
Terms and conditions of the above financial liabilities:
Trade payables are non-interest bearing and are normally settled on 30-day terms.
10. PROVISIONS
Current Provisions
Annual Leave
Non-Current Provisions
Mine Rehabilitation1
2019
$
2018
$
79,368
57,462
711,885
-
1Salt Lake has recognised the need to provide for the costs of rehabilitating the land at Lake Way associated with
the first phase of the Lake Way evaporation ponds up to and including 30 June 2019. As the Company currently
expenses items associated with AASB 6, the provision has been expensed until such point as the Company finalises
its decision to mine once the Bankable Feasibility Study is completed, at which point costs associated with the
project, including future rehabilitation costs, will be capitalised.
53 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
53
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
11. CONTRIBUTED EQUITY
(cid:3)
Share Capital
245,137,865 (30 June 2018: 175,049,596) Ordinary Shares
2019
$
2018
$
155,917,578
123,501,153
155,917,578
123,501,153
(a) Movements in Ordinary Shares During the Past Two Years Were as Follows:
(cid:3)
01-Jul-18
16-Nov-18
20-Nov-18
31-Dec-18
09-Jan-19
Opening Balance
Placement
Placement
Share issue 1
Placement
15-May-19
Exercise of options
14-Jun-19
18-Jun-19
18-Jun-19
Placement
Placement
Share issue1
Jul-18 to Jun-19 Share issue costs
30-Jun-19
Closing balance
01-Jul-17
18-Aug-17
Opening Balance
Share issue 1
Jul-17 to Jun-18 Share issue costs
30-Jun-18
Closing balance
Notes:
1 Shares issued to key consultants of the Company in lieu of fees.
(cid:3)
Number of
Ordinary Shares
Issue
Price
$
$
175,049,596
29,035,714
214,286
268,604
1,702,381
750,000
25,476,000
12,024,000
617,284
123,501,153
12,195,000
90,000
134,300
715,000
300,000
13,757,040
6,492,960
333,333
0.42
0.42
0.50
0.42
0.40
0.54
0.54
0.54
-
-
(1,601,208)
245,137,865
155,917,578
175,007,596
123,484,561
42,000
0.44
-
-
18,476
(1,884)
175,049,596
123,501,153
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
54
54
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
11. CONTRIBUTED EQUITY (Continued)
(cid:3)
(b)
Rights Attaching to Ordinary Shares:
The rights attaching to fully paid Ordinary Shares (Ordinary Shares) arise from a combination of the Company's
Constitution, statute and general law.
Ordinary Shares issued following the exercise of Unlisted Options in accordance with Note 12(c) or Performance
Shares in accordance with Note 12(d) or Performance Rights in accordance with Note 12(e) will rank equally in all
respects with the Company's existing Ordinary Shares.
Copies of the Company's Constitution are available for inspection during business hours at the Company's
registered office. The clauses of the Constitution contain the internal rules of the Company and define matters such
as the rights, duties and powers of its shareholders and directors, including provisions to the following effect (when
read in conjunction with the Corporations Act 2001 or the listing rules of the ASX and AIM (Listing Rules)).
(i)
Shares
The issue of shares in the capital of the Company and options over unissued shares by the Company is under the
control of the Directors, subject to the Corporations Act 2001, ASX Listing Rules and any rights attached to any
special class of shares.
(ii) Meetings of Members
Directors may call a meeting of members whenever they think fit. Members may call a meeting as provided by the
Corporations Act 2001. The Constitution contains provisions prescribing the content requirements of notices of
meetings of members and all members are entitled to a notice of meeting. A meeting may be held in two or more
places linked together by audio-visual communication devices. A quorum for a meeting of members is two
shareholders.
The Company holds annual general meetings in accordance with the Corporations Act 2001 and the Listing Rules.
(iii)
Voting
Subject to any rights or restrictions at the time being attached to any shares or class of shares of the Company,
each member of the Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of
members will be decided by a show of hands unless a poll is demanded. On a show of hands each eligible voter
present has one vote. However, where a person present at a general meeting represents personally or by proxy,
attorney or representative more than one member, on a show of hands the person is entitled to one vote only
despite the number of members the person represents.
On a poll each eligible member has one vote for each fully paid share held and a fraction of a vote for each partly
paid share determined by the amount paid up on that share.
(iv) Changes to the Constitution
The Company's Constitution can only be amended by a special resolution passed by at least three quarters of the
members present and voting at a general meeting of the Company. At least 28 days' written notice specifying the
intention to propose the resolution as a special resolution must be given.
(v)
Listing Rules
Provided the Company remains admitted to the Official List of the ASX, then despite anything in its Constitution, no
act may be done that is prohibited by the Listing Rules, and authority is given for acts required to be done by the
Listing Rules. The Company's Constitution will be deemed to comply with the Listing Rules as amended from time
to time.
(cid:3)
55 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
55
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
12. RESERVES
(cid:3)
Share-based payments reserve
(a)
(i)
Nature and Purpose of Reserves
Share-based payments reserve
Note
12(b)
2019
$
2018
$
4,273,967
4,273,967
2,105,886
2,105,886
The share-based payments reserve is used to record the fair value of Unlisted Options, Performance Rights and
Performance Shares issued by the Group.
(b) Movements in the share-based payments reserve during the past two years were as follows:
(cid:3)(cid:3)
Number of
Performance
Rights
Number of
Performance
Shares
Number of
Unlisted
Options
$
Opening Balance
5,400,000
22,500,000
4,400,000
2,105,886
Issue of Performance Rights
7,266,258
Issue of Incentive Options
Issue of Performance Rights
Cancellation/Expiry of
Performance Rights
Issue of Incentive Options
Expiry of Performance Shares
Exercise of Incentive Options
Cancellation of Performance
Rights
-
10,781,258
(2,352,500)
-
-
-
(150,000)
-
-
-
-
-
-
5,000,000
-
-
2,450,000
(5,000,000)
-
(750,000)
-
-
-
(984,383)
-
-
-
-
-
-
-
-
(32,273)
3,184,737
Jul-18 to Jun-19 Share based payments expense
-
30-Jun-19
Closing balance
20,945,016
17,500,000
11,100,000
4,273,967
Opening Balance
4,100,000
22,500,000
2,500,000
821,824
Performance Rights forfeited
(1,000,000)
Issue of unlisted options
Issue of unlisted options
-
-
Issue of Performance Rights
2,300,000
-
-
-
-
-
-
1,100,000
800,000
-
-
-
-
-
-
1,284,062
Jul-17 to Jun-18 Share based payments expense
-
30-Jun-18
Closing balance
5,400,000
22,500,000
4,400,000
2,105,886
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
56
56
01-Jul-18
02-Nov-18
02-Nov-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
15-May-19
30-Jun-19
01-Jul-17
23-Sep-17
28-Nov-17
22-Dec-17
22-Dec-17
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
12. RESERVES (Continued)
(cid:3)
(c)
Terms and Conditions of Unlisted Options
The Unlisted Options are granted based upon the following terms and conditions:
Each Unlisted Option entitles the holder to the right to subscribe for one Ordinary Share upon the exercise of
each Unlisted Option;
The Unlisted Options outstanding at the end of the financial year have the following exercise prices and expiry
dates:
- 750,000 Unlisted Options exercisable at $0.50 each on or before 29 April 2020;
- 1,000,000 Unlisted Options exercisable at $0.60 each on or before 29 April 2021;
- 250,000 Unlisted Options exercisable at $0.40 each on or before 30 June 2021;
- 500,000 Unlisted Options exercisable at $0.50 each on or before 30 June 2021;
- 750,000 Unlisted Options exercisable at $0.60 each on or before 30 June 2021;
- 400,000 Unlisted Options exercisable at $0.70 each on or before 30 June 2021;
- 1,700,000 Unlisted Options exercisable at $0.60 each on or before 1 November 2023;
- 2,750,000 Unlisted Options exercisable at $1.00 each on or before 1 November 2023; and
- 3,000,000 Unlisted Options exercisable at $1.20 each on or before 1 November 2023.
The Unlisted Options are exercisable at any time prior to the Expiry Date, subject to vesting conditions being
satisfied (if applicable);
Ordinary Shares issued on exercise of the Unlisted Options rank equally with the then Ordinary Shares of the
Company;
Application will be made by the Company to ASX and to the AIM market of the London Stock Exchange for
official quotation of the Ordinary Shares issued upon the exercise of the Unlisted Options;
If there is any reconstruction of the issued share capital of the Company, the rights of the Unlisted Option
holders may be varied to comply with the Listing Rules which apply to the reconstruction at the time of the
reconstruction; and
No application for quotation of the Unlisted Options will be made by the Company.
(d)
Terms and Conditions of Performance Shares
The Convertible Performance Shares (Performance Shares) were granted as part of the consideration to acquire
Australia Salt Lake Potash Pty Ltd on the following terms and conditions:
Each Performance Share will convert into one Ordinary Share upon the satisfaction, prior to the Expiry Date,
of the respective Milestone:
- 7,500,000 Performance Shares subject to Class B Milestone: The announcement by the Company to ASX
of the results of a positive Bankable Feasibility Study on all or part of the Project Licences; and
- 10,000,000 Performance Shares subject to Class C Milestone: The commencement of construction
activities for a mining operation on all or part of the Project Licences (including the commencement of
ground breaking for the construction of infrastructure and/or processing facilities) following a final
investment decision by the Board as per the project development schedule and budget in accordance with
the Bankable Feasibility Study, within five years from the date of issue.
Expiry Date means:
-
in relation to the Class B Performance Shares, 31 December 2019 (amended following Shareholder
approval on 11 June 2018); and
in relation to the Class C Performance Shares, 5 years from the date of issue (12 June 2020);
-
If the Milestone for a Performance Share is not met by the Expiry Date, the total number of the relevant class
of Performance Shares will convert into one Ordinary Share per holder;
The Company shall allot and issue Ordinary Shares immediately upon conversion of the Performance Shares
for no consideration;
57 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
57
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
12. RESERVES (Continued)
(cid:3)
(d)
Terms and Conditions of Performance Shares (Continued)
Ordinary Shares issued on conversion of the Performance Shares rank equally with the then Ordinary Shares
of the Company;
In the event of any reconstruction, consolidation or division into (respectively) a lesser or greater number of
securities of the Ordinary Shares, the Performance Shares shall be reconstructed, consolidated or divided in
the same proportion as the Ordinary Shares are reconstructed, consolidated or divided and, in any event, in
a manner which will not result in any additional benefits being conferred on the Performance Shareholders
which are not conferred on the Ordinary Shareholders;
The Performance Shareholders shall have no right to vote, subject to the Corporations Act;
No application for quotation of the Performance Shares will be made by the Company; and
The Performance Shares are not transferable.
(e)
Terms and Conditions of Performance Rights
The Performance Rights are granted based upon the following terms and conditions:
Each Performance Right automatically converts into one Ordinary Share upon vesting of the Performance
Right;
Each Performance Right is subject to performance conditions (as determined by the Board from time to time)
which must be satisfied in order for the Performance Right to vest;
The Performance Rights have the following expiry dates:
- 502,500 Performance Rights subject to the BFS Milestone expiring on 31 December 2019 (amended
following Shareholder approval on 11 June 2018);
- 1,227,500 Performance Rights subject to the Construction Milestone expiring on 30 June 2020; and
- 1,227,500 Performance Rights subject to the Production Milestone expiring on 30 June 2021.
- 3,452,500 Performance Rights subject to the Trench Construction Milestone expiring on 1 November 2020.
- 3,052,500 Performance Rights subject to the Plant Construction Milestone expiring on 1 November 2021.
- 3,550,000 Performance Rights subject to the Plant Commissioning Milestone expiring on 1 November
2022.
- 3,550,000 Performance Rights subject to the Nameplate Capacity Milestone expiring on 1 November 2023.
- 1,300,000 Performance Rights subject to the Schedule Advancement Milestone expiring on 31 December
2021.
- 1,300,000 Performance Rights subject to the Reduce Capex Milestone expiring on 31 December 2021.
- 250,000 Performance Rights subject to the Lake Way Approval Milestone expiring on 31 December 2019.
- 250,000 Performance Rights subject to the Lake Wells Milestone expiring on 31 December 2020.
- 750,000 Performance Rights subject to the Financing Milestone expiring on 30 June 2020.
- 532,516 Performance Rights subject to the Short Term Incentive Milestone expiring on 31 December 2019.
Ordinary Shares issued on conversion of the Performance Rights rank equally with the then Ordinary Shares
of the Company;
Application will be made by the Company to ASX AIM market of the London Stock Exchange for official
quotation of the Ordinary Shares issued upon conversion of the Performance Rights;
If there is any reconstruction of the issued share capital of the Company, the rights of the Performance Right
holders may be varied to comply with the Listing Rules which apply to the reconstruction at the time of the
reconstruction; and
No application for quotation of the Performance Rights will be made by the Company.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
58
58
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
13. STATEMENT OF CASH FLOWS
(cid:3)
(a)
Reconciliation of the Loss after Tax to the Net Cash Flows from Operations
2019
$
2018
$
Net loss for the year
(26,896,121)
(11,327,108)
Adjustment for non-cash income and expense items
Depreciation of plant and equipment
Share based payment expense
Shares issued in lieu of fees
FX movement on equity settled transactions
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Increase in provisions
193,630
2,168,081
134,300
(17,441)
(695,764)
6,025,910
753,418
75,031
1,284,062
18,476
-
84,784
280,212
38,281
Net cash outflow from operating activities
(18,333,987)
(9,546,262)
14. EARNINGS PER SHARE
The following reflects the income and share data used in the calculations
of basic and diluted earnings per share:
Net loss attributable to the owners of the Company used in calculating
basic and diluted earnings per share
(26,896,121)
(11,327,108)
2019
$
2018
$
Number of
Shares
2019
Number of
Shares
2018
Weighted average number of ordinary shares used in calculating basic
and diluted earnings per share
195,720,503
175,043,958
(a)
Non-Dilutive Securities
As at balance date, 11,100,000 Unlisted Options (which represent 11,100,000 potential Ordinary Shares),
17,500,000 Performance Shares (which represent 17,500,000 potential Ordinary Shares) and 20,945,016
Performance Rights (which represent 20,945,016 potential Ordinary Shares) were considered non-dilutive as they
would decrease the loss per share.
(b)
Conversions, Calls, Subscriptions or Issues after 30 June 2019
The Company has issued 10,849,115 Ordinary Shares and 18,375,000 Unlisted Options since 30 June 2019.
There have been no other conversions to, calls of, or subscriptions for Ordinary Shares or issues of potential
Ordinary Shares since the reporting date and before the completion of this financial report.
59 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
59
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
15. RELATED PARTIES
(cid:3)
(a)
Subsidiaries
Name
Ultimate parent entity:
Salt Lake Potash Limited
Subsidiaries of Salt Lake Potash Limited
Australia Salt Lake Potash Pty Ltd (ASLP)
Irve Holdings Pty Ltd
Two Lake Holdings Pty Ltd
SO4 Fertiliser Holdings Pty Ltd
Subsidiary of ASLP
Piper Preston Pty Ltd
Country of
Incorporation
% Equity Interest
2019
%
2018
%
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
-
-
-
100
(b)
Ultimate Parent
Salt Lake Potash Limited is the ultimate parent of the Group.
Transactions with Related Parties
(c)
(cid:3)
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note. Transactions with Key Management
Personnel, including remuneration, are included at Note 16.
16. KEY MANAGEMENT PERSONNEL
(a)
Details of Key Management Personnel
The KMP of the Group during or since the end of the financial year were as follows:
Directors
Mr Ian Middlemas
Mr Tony Swiericzuk
Mr Matthew Syme
Mr Mark Pearce
Mr Bryn Jones
Chairman
Chief Executive Officer (CEO) & Managing Director (appointed 5 November 2018)
Non-Executive Director (resigned 23 July 2019)
Non-Executive Director
Non-Executive Director
(1) Mr Tony Swiericzuk was appointed to the position of CEO & Managing Director on 5 November 2018. At this
time, Mr Matthew Syme transitioned into the role of Non-Executive Director.
Other KMP
Mr Shaun Day
Mr Clint McGhie
Mr Stephen Cathcart
Mr David Maxton
Mr Sam Cordin
Chief Financial Officer (appointed 16 September 2019)
Company Secretary (appointed 10 August 2018)
Project Director – Technical (appointed 6 November 2018)
Chief Operating Officer (resigned 21 December 2018)
Company Secretary (resigned 10 August 2018)
Unless otherwise disclosed, the KMP held their position from 1 July 2018 until the date of this report.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
(cid:3)
2019
$
2018
$
1,194,638
88,172
1,239,099
2,521,909
726,607
49,875
595,394
1,371,876
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
60
60
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
16. KEY MANAGEMENT PERSONNEL (Continued)
(cid:3)
(b)
Loans from Key Management Personnel
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2019
(2018: Nil).
(c)
Other Transactions
Apollo Group Pty Ltd, a Company of which Mr Mark Pearce is a Director and beneficial shareholder, was paid
$100,000 (2018: $150,000) for the provision of serviced office facilities, corporate and administration services until
the contract was terminated effective 28 February 2019. The amount was based on a monthly retainer adjusted for
expended/consumed items at cost, due and payable in advance, with no fixed term, and was able to be terminated
by either party with one month’s notice. At 30 June 2019, Nil (2018: $25,000) was included as a current liability in
the Statement of Financial Position.
17. PARENT ENTITY DISCLOSURES
(a)
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Contributed equity
Accumulated losses
Share Based Payments Reserve
Total equity
(b)
Financial Performance
Loss for the year
Total comprehensive loss
(c)
Other information
2019
$
2018
$
20,219,527
2,334,973
22,554,500
5,929,459
2,106,089
8,035,548
7,728,621
1,632,356
830,419
96,454
8,559,040
1,728,810
155,917,578
123,501,153
(146,196,085)
(119,300,301)
4,273,967
13,995,460
2,105,886
6,306,738
(26,895,784)
(11,329,214)
(26,895,784)
(11,329,214)
The Company has not entered into any guarantees in relation to its subsidiaries.
Refer to Note 21 for details of contingent assets and liabilities.
61 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
61
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
18. SHARE-BASED PAYMENTS
(cid:3)
(a)
Recognised Share-based Payment Expense
From time to time, the Group provides incentive Unlisted Options and Performance Rights to officers, employees,
consultants and other key advisors as part of remuneration and incentive arrangements. The number of options or
rights granted, and the terms of the options or rights granted are determined by the Board. Shareholder approval is
sought where required.
In the current and prior year, the Company has also granted shares in lieu of payments to key consultants in
accordance with the terms of engagement.
During the past two years, the following equity-settled share-based payments have been recognised:
2019
$
2018
$
Expenses arising from equity-settled share-based payment transactions
relating incentive options and performance rights
2,168,081
1,284,062
Expenses arising from equity-settled share-based payment transactions to
suppliers and consultants
134,300
18,476
Total share-based payments recognised during the year
2,302,381
1,302,538
(b)
Summary of Unlisted Options and Performance Rights Granted as Share-based Payments
The following Unlisted Options and Performance Rights were granted as share-based payments during the past
two years:
Series
Issuing Entity
Security
Type
Number
Grant Date
Expiry
Date
Exercise
Price
2019
Series 30
Salt Lake Potash Limited
Options
1,000,000
Series 31
Salt Lake Potash Limited
Options
2,000,000
Series 32
Salt Lake Potash Limited
Options
2,000,000
Series 33
Salt Lake Potash Limited
Options
Series 34
Salt Lake Potash Limited
Options
700,000
750,000
Series 35
Salt Lake Potash Limited
Options
1,000,000
Series 36
Salt Lake Potash Limited
Series 37
Salt Lake Potash Limited
Series 38
Salt Lake Potash Limited
Series 39
Salt Lake Potash Limited
Series 40
Salt Lake Potash Limited
Series 41
Salt Lake Potash Limited
Series 42
Salt Lake Potash Limited
Series 43
Salt Lake Potash Limited
Series 44
Salt Lake Potash Limited
Series 45
Salt Lake Potash Limited
Series 46
Salt Lake Potash Limited
Series 47
Salt Lake Potash Limited
Series 48
Salt Lake Potash Limited
Series 49
Salt Lake Potash Limited
Series 50
Salt Lake Potash Limited
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
Rights
266,258
1,500,000
1,500,000
2,000,000
2,000,000
266,258
1,982,500
1,582,500
1,550,000
1,550,000
1,300,000
1,300,000
250,000
250,000
750,000
2-Nov-18
2-Nov-18
2-Nov-18
31-Dec-18
31-Dec-18
31-Dec-18
2-Nov-18
2-Nov-18
2-Nov-18
2-Nov-18
2-Nov-18
2-Nov-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
1-Nov-23
1-Nov-23
1-Nov-23
1-Nov-23
1-Nov-23
1-Nov-23
31-Jul-19
1-Nov-20
1-Nov-21
1-Nov-22
1-Nov-23
31-Jul-19
1-Nov-20
1-Nov-21
1-Nov-22
1-Nov-23
31-Dec-21
31-Dec-21
31-Dec-19
31-Dec-20
30-Jun-20
$
0.6
1.0
1.2
0.6
1.0
1.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Grant
Date Fair
Value
$
0.219
0.159
0.139
0.206
0.148
0.129
0.460
0.470
0.470
0.470
0.470
0.460
0.460
0.460
0.460
0.460
0.460
0.460
0.460
0.460
0.460
(cid:3)
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
62
62
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
18. SHARE-BASED PAYMENTS (Continued)
(cid:3)
(b)
Summary of Unlisted Options and Performance Rights Granted as Share-based Payments (Cont.)
Series
Issuing Entity
(cid:3)
2018
Security
Type
Number
Grant
Date
Expiry
Date
Exercise
Price
Grant
Date Fair
Value
$
$
Series 20
Salt Lake Potash Limited
Options
250,000
22-Nov-17
30-Jun-21
Series 21
Salt Lake Potash Limited
Options
350,000
22-Nov-17
30-Jun-21
Series 22
Salt Lake Potash Limited
Options
500,000
22-Nov-17
30-Jun-21
Series 23
Salt Lake Potash Limited
Options
150,000
15-Dec-17
30-Jun-21
Series 24
Salt Lake Potash Limited
Options
250,000
15-Dec-17
30-Jun-21
Series 25
Salt Lake Potash Limited
Options
400,000
15-Dec-17
30-Jun-21
Series 26
Salt Lake Potash Limited
Rights
575,000
15-Dec-17
30-Jun-18
Series 27
Salt Lake Potash Limited
Rights
575,000
15-Dec-17
30-Jun-19
Series 28
Salt Lake Potash Limited
Rights
575,000
15-Dec-17
30-Jun-20
Series 29
Salt Lake Potash Limited
Rights
575,000
15-Dec-17
30-Jun-21
0.4
0.5
0.6
0.5
0.6
0.7
-
-
-
-
0.284
0.256
0.233
0.228
0.207
0.188
0.486
0.486
0.486
0.486
(c)
Summary of Unlisted Options and Performance Rights Granted as Share-based Payments
The following table illustrates the number and weighted average exercise prices (WAEP) of Unlisted Options
granted as share-based payments at the beginning and end of the financial year:
Unlisted Options
Outstanding at beginning of year
2019
Number
4,400,000
Granted by the Company during the year
7,450,000
Forfeited/cancelled/lapsed/exercised
Outstanding at end of year
Exercisable at end of year
(750,000)
11,100,000
3,650,000
2019
WAEP
$0.54
$0.99
$0.48
$0.84
$0.56
2018
Number
2,500,000
1,900,000
-
4,400,000
3,500,000
2018
WAEP
$0.51
$0.57
-
$0.54
$0.51
The following table illustrates the number and weighted average exercise prices (WAEP) of Performance Rights
granted as share-based payments at the beginning and end of the financial year:
Performance Rights
Outstanding at beginning of year
2019
Number
5,400,000
Granted by the Company during the year
18,047,516
Forfeited/cancelled/lapsed/expired
Outstanding at end of year
(2,502,500)
20,945,016
2019
WAEP
-
-
-
-
2018
Number
4,100,000
2,300,000
(1,000,000)
5,400,000
2018
WAEP
-
-
-
-
(d) Weighted Average Remaining Contractual Life
At 30 June 2019, the weighted average remaining contractual life of Unlisted Options on issue that had been granted
as share-based payments was 3.48 years (2018: 2.39 years) and of Performance Rights on issue that had been
granted as share-based payments was 2.42 years (2018: 1.75 years).
63 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
63
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
18. SHARE-BASED PAYMENTS (Continued)
(cid:3)
(e)
Range of Exercise Prices
At 30 June 2019, the range of exercise prices of Unlisted Options on issue that had been granted as share-based
payments was $0.60 to $1.20 (2018: $0.40 to $0.70). Performance Rights have no exercise price.
(f) Weighted Average Fair Value
The weighted average fair value of Unlisted Options granted as share-based payments by the Group during the
year ended 30 June 2019 was $0.161 (2018: $0.231) and of Performance Rights granted as share-based
payments was $0.463 (2018: $0.486).
(g)
Option and Performance Right Pricing Models
The fair value of the equity-settled share options granted is estimated as at the date of grant using the Binomial
option valuation model taking into account the terms and conditions upon which the Unlisted Options were granted.
The fair value of Performance Rights granted is estimated as at the date of grant based on the underlying share
price (being the five day volume weighted average share price prior to issuance).
The table below lists the inputs to the valuation model used for share options and Performance Rights granted by
the Group in the current and prior year:
2019
Inputs
Options
Exercise price
Grant date share price
Dividend yield 1
Volatility 2
Risk-free interest rate
Grant date
Expiry date
Expected life of option 3
Fair value at grant date
Inputs
Options
Exercise price
(cid:3)
Grant date share price
Dividend yield 1
Volatility 2
Risk-free interest rate
Grant date
Expiry date
Expected life of option 3
Fair value at grant date
Series 30
Series 31
Series 32
$0.60
$0.470
-
70%
2.32%
2-Nov-18
1-Nov-23
5.00 years
$0.219
$1.00
$0.470
-
70%
2.32%
2-Nov-18
1-Nov-23
5.00 years
$0.159
$1.20
$0.470
-
70%
2.32%
2-Nov-18
1-Nov-23
5.00 years
$0.139
Series 33
Series 34
Series 35
$0.60
(cid:3)
$0.460
-
70%
2.10%
31-Dec-18
1-Nov-23
4.84 years
$0.206
$1.00
(cid:3)
$0.460
-
70%
2.10%
31-Dec-18
1-Nov-23
4.84 years
$0.148
$1.20
(cid:3)
$0.460
-
70%
2.10%
31-Dec-18
1-Nov-23
4.84 years
$0.129
Notes:
1 The dividend yield reflects the assumption that the current dividend payout will remain unchanged.
2 The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not
necessarily be the actual outcome.
3 The expected life of the options is based on the expiry date of the options as there is limited track record of the early exercise
of options.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
64
64
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
18. SHARE-BASED PAYMENTS (Continued)
(cid:3)
(g)
Option and Performance Right Pricing Models (Continued)
Inputs
Series 36
Series 37
Series 38
Series 39
Series 40
Milestones
Performance Rights
Exercise price
Grant date share
price
Grant date
Expiry date
Expected life 1
Fair value at grant
date 2
Short Term
Incentive
Trench/Pond
Construction
Plant
Construction
Plant
Commissioning
Nameplate
Capacity
-
(cid:3)
$0.470
-
(cid:3)
$0.470
-
(cid:3)
$0.470
-
(cid:3)
$0.470
-
(cid:3)
$0.470
2-Nov-18
31-Jul-19
2-Nov-18
1-Nov-20
2-Nov-18
1-Nov-21
2-Nov-18
1-Nov-22
2-Nov-18
1-Nov-23
0.74 years
2.00 years
3.00 years
4.00 years
5.00 years
$0.470
$0.470
$0.470
$0.470
$0.470
Inputs
Series 41
Series 42
Series 43
Series 44
Series 45
Milestones
Performance Rights
Exercise price
Grant date share
price
(cid:3)
Grant date
Expiry date
Expected life 1
Fair value at grant
date 2
Short Term
Incentive
Trench/Pond
Construction
Plant
Construction
Plant
Commissioning
Nameplate
Capacity
-
(cid:3)
$0.460
-
(cid:3)
$0.460
-
(cid:3)
$0.460
-
(cid:3)
$0.460
-
(cid:3)
$0.460
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Jul-19
1-Nov-20
1-Nov-21
1-Nov-22
1-Nov-23
0.58 years
1.84 years
2.84 years
3.84 years
4.84 years
$0.460
$0.460
$0.460
$0.460
$0.460
Inputs
Series 46
Series 47
Series 48
Series 49
Series 50
Milestones
Performance Rights
Exercise price
Grant date share
price
(cid:3)
Grant date
Expiry date
Expected life 1
Fair value at grant
date 2
Advanced
Schedule
Reduced
Capex
Lake Way
Application
Lake Wells
Application
Financing
Milestone
-
(cid:3)
$0.460
-
(cid:3)
$0.460
-
(cid:3)
$0.460
-
(cid:3)
$0.460
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-21
31-Dec-21
31-Dec-19
31-Dec-20
3.00 years
3.00 years
1.00 years
2.00 years
$0.460
$0.460
$0.460
$0.460
-
(cid:3)
$0.460
31-Dec-18
30-Jun-20
1.50 years
$0.460
Notes:
1 The expected life of the Performance Rights is based on the expiry date of the performance rights as there is limited track
record of the early conversion of performance rights.
2 The fair value of Performance Rights granted is estimated as at the date of grant based on the underlying share price (being
the closing share price at the date of issuance).
65 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
65
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
19. AUDITORS’ REMUNERATION
(cid:3)
The auditor of Salt Lake Potash Limited is Ernst and Young.
Amounts received or due and receivable by Ernst and Young for:
- an audit or review of the financial report of the entity and any other
entity in the consolidated group
-
tax and other advisory services
2019
$
29,854
11,566
41,420
2018
$
25,000
8,188
33,188
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(a)
Overview
The Group's principal financial instruments comprise receivables, payables, finance leases, cash and short-term
deposits. The main risks arising from the Group's financial instruments are credit risk, liquidity risk and interest rate
risk. The Group’s financial assets and liabilities are held at amortised cost.
This note presents information about the Group's exposure to each of the above risks, its objectives, policies and
processes for measuring and managing risk, and the management of capital. Other than as disclosed, there have
been no significant changes since the previous financial year to the exposure or management of these risks.
The Group manages its exposure to key financial risks in accordance with the Group's financial risk management
policy. Key risks are monitored and reviewed as circumstances change (e.g. acquisition of a new project) and
policies are revised as required. The overall objective of the Group's financial risk management policy is to support
the delivery of the Group's financial targets whilst protecting future financial security.
Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows,
the Group does not enter into derivative transactions to mitigate the financial risks. In addition, the Group's policy
is that no trading in financial instruments shall be undertaken for the purposes of making speculative gains. As the
Group's operations change, the Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. The Board reviews and agrees policies for managing the Group's financial risks as summarised below.
(b)
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other
receivables.
There are no significant concentrations of credit risk within the Group. The carrying amount of the Group's financial
assets represents the maximum credit risk exposure, as represented below:
Financial assets
Cash and cash equivalents
Trade and other receivables
2019
$
2018
$
19,304,075
923,036
20,227,111
5,709,446
227,273
5,936,719
With respect to credit risk arising from cash and cash equivalents, the Group's exposure to credit risk arises from
default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. Where
possible, the Group invests its cash and cash equivalents with banks that are rated the equivalent of investment
grade and above. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and
the aggregate value of transactions concluded is spread amongst approved counterparties.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
66
66
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(cid:3)
(b)
Credit Risk (Continued)
The Group does not have any significant customers and accordingly does not have significant exposure to bad or
doubtful debts.
Trade and other receivables comprise interest accrued and GST refunds due. Where possible the Consolidated
Entity trades only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing
basis with the result that the Group’s exposure to bad debts is not significant. At 30 June 2019, none (2018 none)
of the Group’s receivables are past due.
(c)
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board's
(cid:3)
approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to
meet its liabilities when due. At 30 June 2019 and 2018, the Group had sufficient liquid assets to meet its financial
obligations.
The contractual maturities of financial liabilities, including estimated interest payments, are provided below. There
are no netting arrangements in respect of financial liabilities.
≤6 Months
6-12 Months
$
$
1-5 Years
≥5 Years
Total
$
$
$
2019
Group
Financial Liabilities
Finance lease
9,515
Trade and other payables
7,709,590
7,719,105
2018
Group
Financial Liabilities
Finance lease
5,914
Trade and other payables
1,620,527
1,626,441
(d)
Interest Rate Risk
9,515
-
9,515
39,166
-
39,166
5,915
-
5,915
38,992
-
38,992
-
-
-
-
-
-
58,196
7,709,590
7,767,786
50,821
1,620,527
1,671,348
The Group did not have any long-term borrowing or long term deposits as at 30 June 2019 (2018: Nil), which would
expose it to significant cash flow interest rate risk.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
(e)
Capital Management
The Group defines its Capital as total equity of the Group, being $14,708,374 as at 30 June 2019 (2018:
$7,019,989). The Group manages its capital to ensure that entities in the Group will be able to continue as a going
concern while financing the development of its projects through primarily equity based financing. The Board's policy
is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. Given the stage of development of the Group, the Board's objective is to minimise
debt and to raise funds as required through the issue of new shares.
The Group is not subject to externally imposed capital requirements.
There were no changes in the Group's approach to capital management during the year. During the next 12 months,
the Group will continue to explore project financing opportunities, primarily consisting of additional issues of equity.
67 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
67
(cid:3)
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(cid:3)
(f)
Fair Value
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
At 30 June 2019 and 30 June 2018, the carrying value of the Group’s financial assets and liabilities approximate
their fair value.
21. CONTINGENT ASSETS AND LIABILITIES
(i)
Contingent Assets
The Group has undertaken research and development (R&D) activities during the years ended 30 June 2018 and
30 June 2019. It is expected that these activities will be eligible for an R&D tax incentive paid by the Australian
Taxation Office. Whilst the Company is yet to quantify the claim in respect of these years, it anticipates lodging
claims prior to 31 December 2019 and recognising the tax incentive as revenue upon receipt.
As at the date of this report, no other contingent assets had been identified in relation to the 30 June 2019 financial
year.
(ii)
Contingent Liability
As at the date of this report, no contingent liabilities had been identified in relation to the 30 June 2019 financial
year.
22. COMMITMENTS
Management have identified the following material commitments for the consolidated group as at 30 June 2019 and
30 June 2018:
Finance Lease commitments
Within one year
Later than one year but not later than five years
Operating Lease commitments
Within one year
Later than one year but not later than five years
(cid:3)
2019
$
19,030
39,166
58,196
2019
$
2018
$
11,829
38,992
50,821
2018
$
169,346
66,680
236,026
200,018
113,416
313,434
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
68
68
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
22. COMMITMENTS (Continued)
(cid:3)
Exploration commitments
Within one year
Later than one year but not later than five years
2019
$
2018
$
5,193,242
4,713,776
9,907,018
1,896,500
-
1,896,500
23. EVENTS SUBSEQUENT TO BALANCE DATE
(i)
On 23 July 2019, Salt Lake Potash announced the acquisition of a strategic package of tenements and other
key assets for the Lake Way Project from Blackham Resources Limited. A placement to raise A$7.4 million
at $0.70 per share to fund the majority of the acquisition consideration was also announced.
(ii)
On 23 July 2019, Mr Matthew Syme resigned as Non-Executive Director.
(iii) On 5 August 2019, the Company announced that it had mandated Taurus Funds Management to provide
up to US$150m staged project financing for the Lake Way Project, and the stage 1 Facility has been partly
drawn down.
Other than as above, as at the date of this report there are no matters or circumstances which have arisen since
30 June 2019 that have significantly affected or may significantly affect:
the operations, in financial years subsequent to 30 June 2019, of the Consolidated Entity;
the results of those operations, in financial years subsequent to 30 June 2019, of the Consolidated Entity;
or
the state of affairs, in financial years subsequent to 30 June 2019, of the Consolidated Entity.
69 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
69
(cid:3)
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Salt Lake Potash Limited:
(cid:3)
1.
In the opinion of the Directors:
(a)
the attached financial statements, notes and the additional disclosures included in the Directors'
report designated as audited, are in accordance with the Corporations Act 2001, including:
(i)
(ii)
section 296 (compliance with accounting standards and Corporations Regulations 2001); and
section 297 (gives a true and fair view of the financial position as at 30 June 2019 and of the
performance for the year ended on that date of the consolidated group); and
(b)
subject to matters stated in note 1(a), there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and payable.
The attached financial statements are in compliance with International Financial Reporting Standards, as
stated in note 1(a) to the financial statements.
The Directors have been given a declaration required by section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2019.
2.
3.
On behalf of the Board
Tony Swiericzuk
Chief Executive Officer
(cid:3)
27 September 2019
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
70
70
AUDITOR'S INDEPENDENCE DECLARATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Salt Lake Potash
Limited
As lead auditor for the audit of the financial report of Salt Lake Potash Limited for the financial year
ended 30 June 2019, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Salt Lake Potash Limited and the entities it controlled during the
financial year.
Ernst & Young
T S Hammond
Partner
27 September 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:CT:SLP:015
71 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
71
(cid:3)
INDEPENDENT AUDITOR’S REPORT
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Salt Lake Potash Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Salt Lake Potash Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2019, the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, notes
to the financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(a) in the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate the
existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue
as a going concern. Our opinion is not modified in respect of this matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:CT:SLP:016
Salt Lake Potash Limited ANNUAL REPORT 2019
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72
72
INDEPENDENT AUDITOR’S REPORT
(cid:3)
(Continued)
(cid:3)
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but 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, we have determined the matters described below to be the key audit matters to be
communicated in our report. For each matter below, our description of how our audit addressed the
matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1. Exploration and evaluation assets
Why significant
How our audit addressed the key audit matter
As disclosed in Note 8, the Group held exploration and
evaluation expenditure assets of $2,276,736 as at 30
June 2019.
The carrying value of exploration and evaluation
expenditure assets is assessed for impairment by the
Group when facts and circumstances indicate that the
exploration and evaluation assets may exceed their
recoverable amount.
The determination as to whether there are any
indicators to require an exploration and evaluation
asset to be assessed for impairment, involves a
number of judgements including whether the Group
has tenure, intends to perform ongoing exploration
and evaluation activity and whether there is sufficient
information for a decision to be made that the area of
interest is not commercially viable. During the year,
the Group determined that there had been no
indicators of impairment.
Given the size of the balance and the judgmental
nature of impairment indicator assessments
associated with exploration and evaluation assets, we
consider this a key audit matter.
In performing our procedures, we:
• Considered the Group’s right to explore in the relevant
exploration area, which included obtaining and
assessing supporting documentation such as license
agreements and correspondence with relevant
government agencies
• Considered the Group’s intention to carry out further
exploration and evaluation activity in the relevant
exploration area, which included an assessment of the
Group’s cash flow forecast model and discussions with
senior management as to the intentions and strategy of
the Group
• Assessed recent exploration and evaluation activity in
the relevant licence area to determine if there are any
negative indicators that would suggest a potential
impairment of the asset, and
• Assessed the adequacy of the disclosure included in the
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:CT:SLP:016
73 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
73
(cid:3)
INDEPENDENT AUDITOR’S REPORT
(cid:3)
(Continued)
(cid:3)
(cid:3)
2. Share-based payments
Why significant
How our audit addressed the key audit matter
As disclosed in Note 18, in the current year, the Group
granted share-based payment awards in the form of
performance rights and options. The awards vest
subject to the achievement of vesting conditions.
In determining the share-based payments expense, the
Group uses assumptions in respect of the achievement
of future non-market performance conditions.
Due to the complexity and judgmental estimates used
in determining the valuation of the share-based
payments and vesting period, we considered the
Group’s calculation of the share-based payments
expense to be a key audit matter.
For awards granted or vesting during the year, in
performing our procedures, we:
• Assessed the methodology used by the Group to
determine the fair value of the award
• Assessed, with the assistance of valuation specialists,
the assumptions used in the Group’s fair value
determination including the share price of the
underlying equity, volatility, grant date, dividend yield,
expected life and performance conditions
• Assessed the vesting period assumptions and
probability of achievement
• Tested that the expense was recognised over the
vesting period, and
• Assessed the adequacy of the disclosure included in the
financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2019 Annual Report, 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, with the exception of the Remuneration Report and
our related assurance opinion.
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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:CT:SLP:016
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
74
74
INDEPENDENT AUDITOR’S REPORT
(cid:3)
(Continued)
(cid:3)
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
►
►
►
►
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:CT:SLP:016
75 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
75
(cid:3)
INDEPENDENT AUDITOR’S REPORT
(cid:3)
(Continued)
(cid:3)
(cid:3)
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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 audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Salt Lake Potash Limited for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
T S Hammond
Partner
Perth
27 September 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TH:CT:SLP:016
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
76
76
CORPORATE GOVERNANCE
(cid:3)
(cid:3)
The Company believes corporate governance is a critical pillar on which business objectives and, in turn,
shareholder value must be built. The Board of Salt Lake has adopted a suite of charters and key corporate
(cid:3)
governance documents which articulate the policies and procedures followed by the Company.
These documents are available
the Company’s website,
www.so4.com.au/corporate-governance/.These documents are reviewed at least annually to address any changes
in governance practices and the law.
the Corporate Governance section of
in
The Company’s 2019 Corporate Governance Statement, which is current as at 30 June 2019 and has been
approved by the Company’s Board, explains how Salt Lake complies with the ASX Corporate Governance Council’s
‘Corporate Governance Principles and Recommendations – 3rd Edition’ in relation to the year ended 30 June 2019.
The Corporate Governance Statement is available in the Corporate Governance section of the Company’s website,
www.so4.com.au/corporate-governance/ and will be lodged with ASX (and other exchanges the Company has a
listing on) together with an Appendix 4G at the same time that this Annual Report is lodged.
In addition to the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations
– 3rd Edition’ the Board has taken into account a number of important factors in determining its corporate
governance policies and procedures; including the:
relatively simple operations of the Company, which currently only undertakes mineral exploration and
development activities;
cost verses benefit of additional corporate governance requirements or processes;
size of the Board;
Board’s experience in the resources sector;
organisational reporting structure and number of reporting functions, operational divisions and employees;
relatively simple financial affairs with limited complexity and quantum;
relatively moderate market capitalisation and economic value of the entity; and
direct shareholder feedback.
77 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
77
(cid:3)
MINERAL RESOURCES STATEMENT
(cid:3)
(cid:3)
Salt Lake Potash’s Mineral Resource Statement as at 30 June 2019 is reported by Lake, all of which are located in
Western Australia. To date, no Ore Reserves have been reported for these deposits.
Annual Review of Mineral Resources
In July 2018, the Company reported its maiden resource covering the Blackham tenements at Lake Way. A
significant extension of the Mineral Resource Estimate at Lake Way was subsequently announced in March 2019
following completion of an exploration program across the ‘whole of the lake’’. The Mineral Resource Estimate for
Lake Way is divided into resource classifications that are controlled by the host geological units:
Lake Bed Sediment
Paleovalley Sediment
Paleochannel Basal Sands
In April 2019, the Joint Ore Reserves Committee (JORC) adopted the AMEC Brine Guidelines requiring that the
principal porosity measurement for brine Minerals Resource Estimate is the specific yield (Sy) or drainable porosity.
Brines by their nature are not a static resource as they are subject to groundwater movement, dilution and
concentration over time. Accordingly, the Company believes that reporting both total and drainable porosity allows
the reflection of this dynamic resource environment, including the consideration of the recharge and physical
diffusion impacts on the mine plan and production output. The Lake Way Mineral Resource Estimate is reported in
accordance with the AMEC Brine Guidelines.
The Company has previously reported a resource estimate for the Lake Wells Project using total porosity
measurement. The Lake Wells resource is no longer able to be reported following the adoption of the AMEC Brine
Guidelines by JORC as further work is required to enable the Company to report the resource estimate using
drainable porosity. Accordingly, the previous resource estimate for Lake Wells is not reported in this Annual Review
of Mineral Resources as at 30 June 2018 or 30 June 2019.
30 June 2019
Lake Way
Measured
North Lakebed
(0.4-8.0 m)
Williamson Pit
Sub-Total
Indicated
Basal Sands
(Paleochannel)
Inferred
South Lakebed
(0.4-8.0 m)
Lakebed
(8m to Base)
(cid:3)
Total
Volume
Brine Concentration
Mineral Tonnage Calculated
from Total Porosity
Mineral Tonnage Calculated
from Drainable Porosity
K
Mg
SO4
Total
Porosi
-ty
Brine
Volume
SOP
Tonnage
Drainable
Porosity
Brine
Volume
SOP
Tonnage
(Mm3)
(kg/m3)
(kg/m3)
(Kg/m3)
(Mm3)
(Mt)
(Mm3)
(Mt)
1,060
1.26
6.8
11.4
8.0
14.7
27.6
48.0
0.42
445
6.8
6.8
0.11
117
1.26
1.8
0.03
1.83
686
6.1
8.2
25.0
0.40
274
3.7
15
103
1.4
316
9,900
6.8
6.8
8.0
8.0
Sub-Total
27.6
27.6
0.42
133
2.0
0.40
3,960
Total
60.0
62.0
72.5
0.11
0.03
35
297
0.5
4.5
5.0
8.23
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
78
78
MINERAL RESOURCES STATEMENT
(cid:3)
(Continued)
(cid:3)
Governance
(cid:3)
The Company engages external consultants and Competent Persons (as determined pursuant to the JORC Code
2012) to prepare and estimate the Mineral Resources. Management and the Board review these estimates and
underlying assumptions for reasonableness and accuracy. The results of the Mineral Resource estimates are then
reported in accordance with the requirements of the JORC Code 2012 and other applicable rules (including ASX
Listing Rules).
Where material changes occur during the year to the project, including the project’s size, title, exploration results or
other technical information, previous resource estimates and market disclosures are reviewed for completeness.
The Company reviews its Mineral Resources as at 30 June each year. A revised Mineral Resource estimate will be
prepared as part of the annual review process where a material change has occurred in the assumptions or data
used in previously reported Mineral Resources. However, there are circumstances where this may not be possible
(e.g. an ongoing drilling programme), in which case a revised Mineral Resource estimate will be prepared and
reported as soon as practicable.
Competent Person Statement – Mineral Resource Statement
The information in this Mineral Resource Statement that relates to Mineral Resources is based on, and fairly
represents, information compiled by Mr Ben Jeuken, a Competent Person, who is a member Australian Institute of
Mining and Metallurgy. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting
company. Mr Jeuken 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 Jeuken has approved the Mineral Resource Statement as a whole and consents to its inclusion in the form and
context in which it appears.
(cid:3)
79 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
79
(cid:3)
ASX ADDITIONAL INFORMATION
(cid:3)
(cid:3)
(cid:3)
TWENTY LARGEST HOLDERS OF LISTED SECURITIES
1.
(cid:3)
The names of the twenty largest holders of listed securities as at 31 August 2019 are listed below:
Name
COMPUTERSHARE CLEARING PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
ARREDO PTY LTD
ARGONAUT SECURITIES (NOMINEES) PTY LTD
HOWITT MGMT PTY LTD
MR NEIL DAVID IRVINE
ELLISON (WA) PTY LTD
ARLINGTON INVESTMENT HOLDINGS LIMITED
MR MARK STUART SAVAGE
AWJ FAMILY PTY LTD
HOPETOUN CONSULTING PTY LTD
MR TERRY PATRICK COFFEY & HAWKES BAY NOMINEES LIMITED
AEGEAN CAPITAL PTY LTD
AROIDA INVESTMENTS PTY LTD
PILLING & CO STOCKBROKERS LTD
ROSEBERRY HOLDINGS PTY LTD
ARGONAUT SECURITIES (NOMINEES) PTY LTD
APOLLO GROUP PTY LTD
Total Top 20
Others
Total Ordinary Shares on Issue
Number of
Ordinary Shares
Percentage of
Ordinary Shares
54,256,532
35,245,178
13,968,993
11,882,741
11,750,000
6,641,300
4,620,001
4,000,000
3,980,000
3,960,000
3,600,000
3,020,000
3,000,000
2,290,889
2,107,749
2,019,177
2,018,721
2,000,000
2,000,000
2,000,000
174,361,281
81,625,699
255,236,980
21.26
13.81
5.47
4.66
4.60
2.60
1.81
1.57
1.56
1.55
1.41
1.18
1.18
0.90
0.83
0.79
0.79
0.78
0.78
0.78
68.31
31.69
100.00
2.
DISTRIBUTION OF EQUITY SECURITIES
An analysis of numbers of holders of listed securities by size of holding as at 31 August 2019 is listed below:
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
More than 100,000
Totals
Ordinary Shares
Number of
Shareholders
Number of
Ordinary Shares
1,108
494
227
409
165
2,403
321,470
1,225,421
1,800,145
16,125,730
235,764,214
255,236,980
There were 901 holders of less than a marketable parcel of Ordinary Shares.
3.
VOTING RIGHTS
See Note 11(b) of the Notes to the Financial Statements.
(cid:3)
Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
80
80
ASX ADDITIONAL INFORMATION
(Continued)
(cid:3)
(cid:3)
(cid:3)
SUBSTANTIAL SHAREHOLDERS
4.
(cid:3)
Substantial holders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are as follows:
Distribution
Lombard Odier Asset Management (Europe) Limited
FIL Limited
5.
UNQUOTED SECURITIES
Performance Shares
Number of
Ordinary Shares
35,047,501
21,756,973
Holder
JBJF Management Pty Ltd
Mr Aharon Arakel & Mrs Ida Arakel
Howitt MGMT Pty Ltd
Others (less than 20%)
Total
Total holders
Performance Shares Subject to
Bankable Feasibility Study
Milestone (Class B) expiring
31-Dec-19
(cid:3)
2,550,000
2,475,000
2,310,000
165,000
7,500,000
4
Performance Shares Subject to
Construction Milestone (Class
C) expiring
12-Jun-20
(cid:3)
3,400,000
3,300,000
3,080,000
220,000
10,000,000
4
Unlisted Options
Holder
Hopetoun Consulting Pty
Ltd
JJB Advisory Limited
Mr Sapan Ghai
Mr Hannes Huster
Others (less than 20%)
Total
Total holders
Unlisted Options
(cid:3)
Holder
Mr Tony Swiericzuk
Others (less than 20%)
Total
Total holders
Unlisted Options
exercisable
at $0.50
Unlisted Options
exercisable
at $0.60
Unlisted Options
exercisable
at $0.40
Unlisted Options
exercisable
at $0.50
Unlisted Options
exercisable
at $0.60
Unlisted Options
exercisable
at $0.70
29-Apr-20
29-Apr-21
30-Jun-21
30-Jun-21
30-Jun-21
30-Jun-21
750,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
-
750,000
1,000,000
250,000
1
1
1
350,000
100,000
-
50,000
500,000
3
-
-
250,000
150,000
-
500,000
150,000
100,000
-
750,000
400,000
3
2
Unlisted Options exercisable
at $0.60
Unlisted Options exercisable
at $1.00
Unlisted Options exercisable
at $1.20
01-Nov-23
01-Nov-23
01-Nov-23
1,000,000
700,000
1,700,000
4
2,000,000
750,000
2,750,000
4
2,000,000
1,000,000
3,000,000
4
As at 31 August 2019, there are 20,412,500 Performance Rights issued under an employee incentive scheme.
6.
ON-MARKET BUY BACK
There is currently no on-market buyback program for any of Salt Lake Potash Limited's listed securities.
81 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
81
(cid:3)
ASX ADDITIONAL INFORMATION
(Continued)
(cid:3)
(cid:3)
(cid:3)
EXPLORATION INTERESTS
7.
(cid:3)
Summary of Exploration and Mining Tenements held as at 31 August 2019
Project
Status
License Number
Interest (%) 31-Aug-19
Western Australia
Lake Way
Central
East
South
South
South
West
Central
Lake Wells
Central
South
North
Outer East
Single Block
Outer West
North West
West
East
South West
South
South Western
South
Central
Lake Ballard
West
East
North
South
South East
South East
South East
South East
South
South
East
North
Lake Irwin
West
Central
East
North
Central East
South
North West
South West
Lake Minigwal
West
East
Central
Central East
South
South West
Lake Marmion
North
Central
South
West
West
Lake Noondie
North
Central
South
West
East
Lake Barlee
North
Central
South
Lake Raeside
North
Lake Austin
North
West
East
South
South West
Lake Moore
Central
Northern Territory
Lake Lewis
South
North
(cid:3)
Granted
Application
Granted
Application
Application
Application
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
Application
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
Application
Application
Application
Granted
Granted
Granted
E53/1878
E53/2057
E53/1897
E53/2059
E53/2060
L53/208
M53/1102
E38/2710
E38/2821
E38/2824
E38/3055
E38/3056
E38/3057
E38/3124
L38/262
L38/263
L38/264
L38/287
E38/3247
M38/1278
E38/3380
E29/912
E29/913
E29/948
E29/958
E29/1011
E29/1020
E29/1021
E29/1022
E29/1067
E29/1068
E29/1069
E29/1070
E37/1233
E39/1892
E38/3087
E37/1261
E38/3113
E39/1955
E37/1260
E39/1956
E39/1893
E39/1894
E39/1962
E39/1963
E39/1964
E39/1965
E29/1000
E29/1001
E29/1002
E29/1005
E29/1069
E57/1062
E57/1063
E57/1064
E57/1065
(cid:3)
E36/932
(cid:3)
(cid:3)
E30/495
E30/496
E77/2441
(cid:3)
E37/1305
(cid:3)
E21/205
E21/206
E58/529
E58/530
E58/531
E59/2344
EL 29787
EL 29903
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(cid:3)
100%
(cid:3)
100%
(cid:3)
100%
(cid:3)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Salt Lake Potash Limited ANNUAL REPORT 2019
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ASX ADDITIONAL INFORMATION
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COMPETENT PERSONS STATEMENTS
8.
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The information in this report that relates to Mineral Resources is extracted from the announcement entitled
‘Significant High-Grade SOP Resource Delineated at Lake Way’ dated 18 March 2019. This announcement is
available to view on www.so4.com.au. The information in the original ASX Announcement that related to Mineral
Resources was based on, and fairly represents, information compiled by Mr Ben Jeuken, who is a member
Australasian Institute of Mining and Metallurgy (AusIMM) and a member of the International Association of
Hydrogeologists. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company.
Mr Jeuken 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’. Salt
Lake Potash confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcement and, in the case of estimates of Mineral Resources, that all material
assumptions and technical parameters underpinning the estimates in the relevant market announcement continue
to apply and have not materially changed. Salt Lake Potash Limited 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.
The information in the Annual Report that relates to Process Testwork Results is extracted from the announcement
entitled ‘Premium Grade Water Soluble Sulphate of Potash Produced from Lake Way Salts’ dated 18 September
2019. This announcement is available to view on www.so4.com.au. The information in the original ASX
Announcement that related to Process Testwork Results was based on, and fairly represents, information compiled
by Mr Bryn Jones, BAppSc (Chem), MEng (Mining) who is a Fellow of the AusIMM. Mr Jones is a Director of Salt
Lake Potash Limited. Mr Jones 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'. Salt Lake Potash Limited confirms that it is not aware of any new information or data that materially
affects the information included in the original market announcement. Salt Lake Potash Limited 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.
The information in the Annual Report that relates to the Process Plant, Non-Process Infrastructure and Capital and
Operating Costs is extracted from the report entitled ‘Exceptional Economics of Commercial Scale Development at
Lake Way’ dated 13 June 2019. This announcement is available to view on www.so4.com.au. The information in
the original ASX Announcement that related to Process Plant, Non-Process Infrastructure and Capital and
Operating Costs was based on, and fairly represents information compiled by Mr Peter Nofal, who is a fellow of
AusIMM. Mr Nofal is employed by Wood, an independent consulting company. Mr Nofal 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’. Salt Lake Potash Limited confirms that it
is not aware of any new information or data that materially affects the information included in the original market
announcement. Salt Lake Potash Limited 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.
9.
PRODUCTION TARGET
The Lake Way 200ktpa Production Target stated in this presentation is based on the Company’s Scoping Study as
released to the ASX on 13 June 2019. The information in relation to the Production Target that the Company is
required to include in a public report in accordance with ASX Listing Rule 5.16 and 5.17 was included in the
Company’s ASX Announcement released on 13 June 2019. The Company confirms that the material assumptions
underpinning the Production Target referenced in the 13 June 2019 release continue to apply and have not
materially changed.
83 Salt Lake Potash Limited ANNUAL REPORT 2019
Salt Lake Potash Limited ANNUAL REPORT 2019
83
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ASX ADDITIONAL INFORMATION
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10. FORWARD LOOKING STATEMENTS
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This report contains ‘forward-looking information’ that is based on the Company’s expectations, estimates and
projections as of the date on which the statements were made. This forward-looking information includes, among
other things, statements with respect to pre-feasibility and bankable feasibility studies, the Company’s business
strategy, plans, development, objectives, performance, outlook, growth, cash flow, projections, targets and
expectations, mineral reserves and resources, results of exploration and related expenses. Generally, this forward-
looking information can be identified by the use of forward-looking terminology such as ‘outlook’, ‘anticipate’,
‘project’, ‘target’, ‘potential’, ‘likely’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘would’, ‘could’, ‘should’,
‘scheduled’, ‘will’, ‘plan’, ‘forecast’, ‘evolve’ and similar expressions. Persons reading this news release are
cautioned that such statements are only predictions, and that the Company’s actual future results or performance
may be materially different. Forward-looking information is subject to known and unknown risks, uncertainties and
other factors that may cause the Company’s actual results, level of activity, performance or achievements to be
materially different from those expressed or implied by such forward-looking information. Forward-looking
information is developed based on assumptions about such risks, uncertainties and other factors set out herein,
including but not limited to the risk factors set out in Schedule 2 of the Company’s Notice of General Meeting and
Explanatory Memorandum dated 8 May 2015.
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Salt Lake Potash Limited ANNUAL REPORT 2019
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ABN 98 117 085 748SALT LAKE POTASH LTD ANNUAL REPORT 2019GROW WITH US.ASX/AIM: SO4 Ground Floor 239 Adelaide TerracePerth WA 6000, Australia Tel. +61 8 6559 5800Email: info@SO4.com.auSO4.COM.AUANNUAL REPORT