ANNUAL REPORT 2016
Sourcing the raw materials
of the future
CONTENTS
2
4
6
9
12
14
17
35
36
70
73
The Company
Lithium and the Market
Authier Project
Western Australian Lithium
East Kimberley Graphite Project
Itabela Project
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
ASX Information
Corporate Directory
Sayona Mining Limited I Annual Report 2016
1
THE COMPANY
The Company’s strategy is
to change the world and
power the future by
sourcing and developing
the raw materials essential
for lithium-ion battery
production.
East Kimberley Graphite
Pilbara Lithium
Mt Edon Lithium
Lithium development
Lithium exploration
Graphite exploration
2
Authier Lithium
The Company’s focus is on
sourcing and developing
projects capable of supplying
the raw materials required to
construct lithium-ion batteries
for use in the rapidly growing
new and green technology
sectors.
This was achieved by:
!
the acquisition of the Authier lithium project in Canada;
! securing a package of lithium prospective exploration
!
tenements in Western Australia; and
the entry into the large flake graphite market by securing a
large ground position in the East Kimberley region of
Western Australia.
The coming year will see the Sayona entering into a new era
of growth, by completing the:
! Authier pre-feasibility study and drilling;
! Western Australian lithium exploration;
! East Kimberley graphite drilling; and
! Active corporate development initiatives.
More detailed Company and project information is contained
in the Directors’ Report section of the Annual Report.
Sayona Mining Limited I Annual Report 2016
3
LITHIUM
Lithium-Ion Battery Market
is Expected to Reach
$46.21 billion
worldwide, by 2022
1.
Electric Vehicles
EV SALES
735,000
157,000
DRIVEN BY
4 MILLION
2004
2010
2020 (proj.)
Li BATTERY
MEGA-FACTORY
TO
TRIPLE
2
BY
2020
4
THE MARKET AND IT’S DRIVERS
SMART GRIDS
use Li-Ion Batteries to
adjust to fluctuations
in demand
2. Smart Grids
Projected global sales of Li-Ion batteries
for use in smart grids
$72million
2012
$5.98billion
2020
3. Consumer Electronics
e
m
u
o
V
l
l
i
a
t
e
R
)
s
t
i
n
U
n
o
i
l
l
i
M
(
3,000
2,500
2,000
1,500
1,000
500
50
2013 2014 2015 2016 2017 2018 2019 2020
Wearable Electronics
Laptops
Tablets
Smartphones
Sayona Mining Limited I Annual Report 2016
5
OPERATIONS
Authier Project
On 1 May 2016, the
Company entered into a
binding term sheet with
Glen Eagle Resources Inc.
to acquire 100 per cent of
the Authier project in
Quebec, Canada for CAD$4
million. The acquisition was
completed on 20 July 2016,
following a successful
$7.1 million capital raising.
James Bay
Authier Lithium Project
CANADA
Val-d’Or
Quebec Lithium
La Tuque
Quebec
N
50
100km
Maniwaki
Montreal
40km
0
6
The key attractions of the Authier lithium project acquisition, include:
! Extensively drilled - mineralisation hosted in a spodumene-bearing pegmatite intrusion with more than
15,000 metres of drilling in 123 holes;
! Simple deposit - 825 metres long with an average thickness of 25 metres dipping at 40 degrees, amenable
to low-cost, open-cut mining techniques;
! Defined resources (see figure below), with the potential for expansion through further drilling;
! Simple metallurgy - extensive metallurgical testing and flowsheet designed to produce a 5-6% Li20
concentrate at an 85% metallurgical recovery;
! Well studied - a NI43-101 Technical Report – Preliminary Economic Assessment – completed in 2013,
demonstrated the technical and commercial viability of developing the deposit, and selling lithium
concentrates;
! Excellent infrastructure – situated 45 kilometres from mining support services, and links to road and rail
networks, including the Quebec export port; and
! Large sunk cost – significant investment in drilling, geophysics and development studies.
Subsequent to the end of the financial year, an independent JORC Mineral Resource estimate, totalling
9.12 million tonnes containing 87,302 tonnes of Li2O was reported, assuming a 0.5% Li20 cut-off grade.
Tonnes
(Mt)
Grade
(Li20)
Contained
(Li20)
2.08
0.95%
19,730
5.16
0.97%
50,092
1.88
0.93%
17,480
Total
9.12Mt
0.96% Li2O
87,302
Contained Li2O
Sayona Mining Limited I Annual Report 2016
7
The Company’s strategy going forward,
includes:
!
!
and
Exploration
to
target expanding the existing mineral
resources;
further drilling
Identifying other resources
tenement package and in the
surrounding district to potentially
expand the scale of the project; and
in the
! Studying options for
improving the
project economics
including,
metallurgical optimisation and
downstream processing options.
Planned Activity
! A metallurgical study to provide new
data for process engineering studies;
! A process engineering study to identify
enhancements and optimisation of the
process flow-sheet, and to estimate
the capital and operating costs;
! A resource definition and extension
drilling program, including an updated
JORC mineral resource estimate;
! Commence work environmental and
mining lease permits; and
! Preparation of a Pre-Feasibility Study.
8
Western Australian Lithium
The Company has secured a package of lithium prospective
exploration tenements in Western Australia. The projects
have excellent regional infrastructure, and are close to the
Asian markets for downstream processing and battery
manufacturing.
Broome
Pilbara
Lithium Project
Port Hedland
Exmouth
Pilgangoora
Lithium Deposit
N
Mount Edon
Lithium Project
Geraldton
Mt Magnet
PERTH
Greenbushes
Lithium Mine
Kalgoorlie
Mount Marion
Lithium Deposit
Cattlin Creek
Lithium Mine
Esperance
250km
Albany
Sayona Mining Limited I Annual Report 2016
9
Pilbara Lithium Project,
Pilgangoora district
The project area comprises one granted exploration licence
and seven applications. The areas host tantalum
mineralisation within complex rare metal pegmatites. This
class of fractionated pegmatite includes prospective lithium-
cesium-tantalum (“LCT”) pegmatites, and especially albite-
spodumene pegmatites, the target for the Company’s high
grade lithium exploration strategy.
The projects have had little or no past lithium focussed
exploration and the Company is encouraged that its initial
reconnaissance work has been positive, identifying lithium
minerals and geochemistry indicative of fractionated rare
metal pegmatites.
N
Port Hedland
ELA 45/4716
E 45/2364
ELA 45/4775
Resource - 80Mt @ 1.26% Li2O
Resource - 36Mt @ 1.05% Li2O
ELA 47/3475
ELA 45/4703
Pilgangoora
Pilgangoora
Lithium Project
Lithium Project
Wodgina Mine
Wodgina Mine
Moolyella
Moolyella
ELA 45/4738
Resource - 23Mt @ 1.39% Li2O
ELA 45/4813
Resource - 16Mt @ 1.08% Li2O
ELA 45/4726
LEGEND
Sayona tenement
Road
Lithium target
20km
10
Mount Edon Project
The project area comprises two granted exploration licences. They cover the southern portion of the Paynes
Find greenstone belt, South Murchison, which are host to an extensive swarm of pegmatites. The pegmatites
have not previously been assessed for their lithium potential but have been variably prospected and mined for
tantalum, mainly within an excised mining lease.
The Company is exploring the project for its potential to host the albite – spodumene class of rare metal
pegmatite, similar to other greenstone hosted occurrences in the Yilgarn.
Over 70 pegmatites have been identified during reconnaissance mapping, spread out over a 4km zone. Others
are present further to the north and west but outcrop in these areas is poor and these systems are poorly
defined at present.
A total of 95 pegmatite rock samples have been collected during reconnaissance work and have returned a
peak assay of 1.57% Li2O.
Planned Activity
! Completion of a tenement wise mapping and sampling program;
! Channel sampling of identified pegmatite systems;
! Drilling of targets
Mount Edon Lithium Project
E 59/2055
Airstrip
t h
P e r
LEGEND
Sayona tenement
Road
Pegmatite
Newly identified Pegmatite
Lithium minerals occurrence
Historic drill hole
5km
N
E 59/2092
Historic drilling
- Anomalous Lithium
Sayona Mining Limited I Annual Report 2016
11
East Kimberley Graphite Project
The project area comprises
one granted exploration
licence and three separate
tenement applications,
subject to two option-to-
purchase agreements.
The project area is located
within the East Kimberley
region of Western Australia,
240 kilometres south of
Wyndham Port and 220
kilometres south-south-west
of the regional centre,
Kununurra.
The project covers 278 km2 and prior to the Company commencing
work, had not previously been explored for its graphite potential.
The East Kimberley project offers an attractive entry into the graphite
market:
! Proven district for high carbon purity, large flake graphite;
! The Kimberley region is a proven province for high purity, large flake
graphite.
! The significant scale (up to 20 kilometres strike extent) of the
Corkwood graphite target identified from geological and geophysical
anomalies, and initial RC drilling program;
! Situated in a well-established mining district, 240 kilometres south of
an export port at Wyndham;
! The region has excellent infrastructure including roads, airports, and
labour;
! First world country with stable tax and royalties, and mining law; and
! Low cost entry via tenement applications and option-to-purchase
agreements.
N
W.A.
Wyndham
Kununurra
East Kimberley Project
100km
)
Close to
Asian
Markets
N.T.
12
During the year, the Company drilled 33 reverse circulation holes totalling 2,949 metres in six prospect areas
within the Corkwood tenements. Every hole intersected visual flake graphite mineralisation, with significant
zones of over 50 metre downhole widths in several holes.
The drilling program identified graphite mineralization over 7 kilometres within the 25 kilometre strike extent of
the Corkwood geochemical and geophysical anomaly.
Highlights from the drilling program, included:
! Delineation of broad zones of shallow flake graphite mineralisation, including;
" 16m @ 5.03% Total Graphitic Carbon (TGC) from 13m in SKRC006, Windrush,
" 22m @ 3.8% TGC from 9m in SKRC008, Windrush,
" 36m @ 3.39% TGC from 7m in SKRC015, Snowbird,
" 54m @ 3.05% TGC from14m in SKRC016, Snowbird,
" 109m @ 1.84% TGC from 22m in SKRC017, Flying Ant,
! Mineralisation is open at depth and along strike;
! Assays up to 12.2% TGC;
! Mineralisation from surface, with shallow dip and good geometry, characteristics amenable to low cost
open-cut mining; and
! Visible coarse graphite - graphite study underway to help characterise the quality of the mineralisation.
Planned Activity
! Diamond drilling to obtain metallurgical information and to provide graphite concentrate for off take
evaluation;
! Drill testing of priority targets identified from VTEM survey over application areas;
! Identification of those areas with larger graphite flake size – high purity and or grade/ thickness; and
! Further test work to determine the grade, recovered flake size, purity of the graphite and its suitability for
high technology use.
Sayona Mining Limited I Annual Report 2016
13
Itabela Project
In August 2015, the
Company signed an option-
to-purchase contract with
Brasil Grafite S.A. (“Brasil
Grafite”) for the Itabela
graphite project in Brazil.
The Itabela graphite project,
comprises 13 exploration
permits with a total area of
13,316 hectares.
During the initial option period, the Company’s due diligence activities
confirmed the potential for Itabela to be established as a near-term,
globally competitive, low capital and operating cost development
opportunity. However, the Company concluded that further drilling was
required to validate historical drilling data to complete a resource
estimate and scoping study.
The Company subsequently agreed to amend the option-to-purchase
terms in December 2015. The new agreement extended the option
period to 30 June 2016 and provided for an exercise payment of US$1.5
million on exercise of the option and further payments based on
delineating JORC resources. The new agreement provided a closer
alignment of resource definition success with the future payment
schedules.
Following an extensive exploration program in early 2016, drilling was
unable to define a resource of sufficient scale to meet the Company’s
financial return objectives. Coupled with the moderation in graphite
concentrate prices, the Company was not able to negotiate suitable new
contractual terms to justify extending the purchase option. The
Company withdrew from the project in August 2016.
Reference to Previous ASX Releases
Certain Information relating to Mineral Resources, Exploration Targets and Exploration Data associated with the
Company’s projects in this Annual Report has been extracted from the following ASX Announcements:
! Authier JORC Mineral Resource Estimate, 5 July 2016.
! Lithium Identified In First Sampling Program at Mt Edon, 4 May 2016
! Corkwood Drilling – Broad Zones of Mineralisation, 17 February 2016
Copies of these reports are available to view on the Sayona Mining Limited website www.sayonamining.com.au.
These reports were issued in accordance with the 2012 Edition of the JORC Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves. The Company confirms that it is not aware of any
new information or data that materially affects the information included in the original market announcement.
The Company confirms that the form and context in which the Competent Person’s findings are presented have
not been materially modified from the original market announcement
14
Tenement
E59/2092
E59/2055
E45/2364
ELA45/4703
E45/4716
ELA45/4726
ELA47/3475
ELA45/4738
ELA45/4775
E80/4511
ELA80/4949
ELA80/4959
ELA80/4968
2116146
2116154
2116155
2116156
2183454
2183455
2187651
2192470
2192471
2194819
2195725
2219206
2219207
2219208
2219209
2240226
2240227
2247100
2247101
Tenement Schedule
Name
Mt Edon
Mt Edon West
Tabba Tabba
Status
Granted
Granted
Granted
Interest in Tenement
80%
100% (pegmatite minerals)
Rights to 100% of pegmatite minerals
Tabba Tabba East
Application
Red Rock
West Wodgina
Friendly Creek
Cooglegong
Carlindie
Western Iron
Corkwood
Killarney
Keller
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Authier claim
Application
Application
Application
Application
Application
100%
100%
100%
100%
100%
100%
Granted
100% (Graphite)
Application
Application
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sayona Mining Limited I Annual Report 2016
15
THE COMPANY’S STRATEGY IS
TO POSITION ITSELF TO POWER
THE FUTURE BY SOURCING AND
DEVELOPING THE RAW MATERIALS
ESSENTIAL FOR LITHIUM-ION
BATTERY PRODUCTION
16 DIRECTORS’ REPORT
Your Directors present their report on the consolidated entity (group) consisting of Sayona Mining
Limited and its controlled entities for the financial year to 30 June 2016. The information in the
following operating and financial review and the remuneration report forms part of this directors’
report for the financial year ended on 30 June 2016 and is to be read in conjunction with the following
information.
DIRECTORS
The Directors of the Company during or since the end of the financial year are listed below. During
the year there were 12 meetings of the full Board of Directors. The meetings attended by each
Director were
DIRECTOR
D.C. O’Neill
P.A. Crawford
A. C. Buckler
J. S. Brown
ELIGIBLE TO
ATTEND
12
12
12
12
ATTENDED
12
12
12
12
The Company does not have an Audit Committee. The role of the Audit Committee has been
assumed by the full Board. The size and nature of the Company’s activities does not justify the
establishment of a committee at this time.
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
The names and qualifications of current Directors are summarised as follows
Dennis C O’Neill
Director (Executive)
Qualifications
Bachelor of Science - Geology
Experience
Board member since 2000. Over 40 years experience in exploration
project and corporate management. He has held positions with a
number of Australian and multinational exploration companies and has
managed exploration programs in a diverse range of commodities and
locations.
Interest in Shares
70,255,241 ordinary shares; 6,000,000 options
Directorships in Other
Listed Companies
Altura Mining Limited
Former directorships in
last 3 years
Nil
Paul A Crawford
Director (Executive) & Company Secretary
Qualifications
Experience
Bachelor of Business – Accountancy; CPA; Master of Financial
Management; Graduate Diploma in Business Law; Graduate Diploma in
Company Secretarial Practice.
Board member since 2000. 35 years of commercial experience,
including various technical and management roles within the minerals,
industries. Principal of his own corporate
coal and petroleum
consultancy
firm, providing accounting, corporate governance,
business advisory and commercial management services.
Interest in Securities
83,884,678 ordinary shares; 5,351,852 options.
Directorships in Other
Listed Companies
Nil
Former directorships in
last 3 years
ActivEX Limited
Sayona Mining Limited I Annual Report 2016 17
DIRECTORS’ REPORT
Allan C Buckler
Director (Non-Executive)
Qualifications
Experience
Certificate in Mine Surveying and Mining, First Class Mine Managers
Certificate and a Mine Surveyor Certificate issued by the Queensland
Government’s Department of Mines
Appointed to the Board on 5 August 2013. Over 35 years experience in
the mining industry and has taken lead roles in the establishment of
several leading mining and port operations in both Australia and
Indonesia. Significant operations such as PT Adaro Indonesia, PT
Indonesia Bulk Terminal and New Hope Coal Australia have been
developed under his leadership.
Interest in Securities
83,081,394 ordinary shares; 7,000,000 options
Directorships in Other
Listed Companies
Altura Mining Limited, Interra Resources Limited
Former directorships in
last 3 years
Nil
James S Brown
Director (Non-Executive)
Qualifications
Graduate Diploma in Mining from University of Ballarat
Experience
Appointed to the Board on 12 August 2013. Over 25 years experience in
the coal mining industry in Australia and Indonesia, including 22 years
at New Hope Corporation. He was appointed as Managing Director of
Altura in September 2010. His coal development and operations
experience includes the New Acland and Jeebropilly mines in South
East Queensland, the Adaro and Multi Harapan Utama operations in
Indonesia and Blair Athol in the Bowen Basin in Central Queensland.
Interest in Securities
2,048,295 ordinary shares; 5,800,000 options
Directorships in Other
Listed Companies
Altura Mining Limited
Former directorships in
last 3 years
Nil
DIVIDENDS
No dividends were declared or paid during the financial year.
18
DIRECTORS’ REPORT
SHARE OPTIONS
At the date of this report the unissued ordinary shares of Sayona Mining Limited under option are as
follows:
Grant Date
Expiry Date
8 July 2015
8 July 2015
14 August 2015
31 December 2016
30 June 2017
30 December 2016
4 September 2015 30 December 2016
7 September 2015 30 December 2016
25 November 2015
20 July 2016
17 August 2016
30 June 2017
30 December 2016
30 December 2016
15 September 2016 30 December 2016
Exercise
Price
1.0 cents
1.5 cents
3.0 cents
3.0 cents
3.0 cents
3.0 cents
3.0 cents
3.0 cents
3.0 cents
No. under Option
6,000,000
6,000,000
60,792,722
30,563,700
8,032,781
18,500,000
35,269,822
18,457,727
82,644,749
266,261,501
Options holders do not have any rights to participate in any issue of shares or other interests of the
Company or any other entity.
There have been no options granted over unissued shares or interests of any controlled entity within
the Group during or since the end of the reporting period.
For details of options issued to directors and executives as remuneration, refer to the remuneration
report.
During the year ended 30 June 2016, the following ordinary shares of Sayona Mining Limited were
issued on the exercise of options granted.
Options
Employee Option Plan
Grant Date
8 July 2015
Listed Options
14 August 2015
Directors
25 November 2015
Exercise Price
Number of Options
0.5 cents
3.0 cents
3.0 cents
6,000,000
11,516,667
1,500,000
No amounts are unpaid on any shares.
CONTINUED OPERATIONS & FUTURE FUNDING
The financial statements have been prepared on a going concern basis which contemplates that the
group will continue to meet its commitments and can therefore continue normal business activities
and the realisation of assets and settlement of liabilities in the ordinary course of business.
The ability of the group to execute its currently planned activities requires the group to raise
additional capital within the next 12 months. Because of the nature of its operations, the Directors
recognise that there is a need on an ongoing basis for the group to regularly raise additional cash
funds to fund future exploration activity and meet other necessary corporate expenditure.
Accordingly, when necessary, the group investigates various options for raising additional funds
which may include but is not limited to an issue of shares, a farm-out of an interest in one or more
exploration tenements or the sale of exploration assets where increased value has been created
through previous exploration activity.
At the date of this financial report, the group has commenced a number of these initiatives as may be
evidenced in Note 24 Events after balance sheet date. As a result, the Directors have concluded that
the current circumstances may cast significant doubt regarding the group’s ability to continue as a
going concern and therefore the group may be unable to realise its assets and discharge its liabilities
in the normal course of business. Nevertheless, after taking into account the various funding options
available, the Directors have a reasonable expectation that the group will be successful with future
fund raising initiatives and, as a result, will have adequate resources to fund its future operational
Sayona Mining Limited I Annual Report 2016 19
DIRECTORS’ REPORT
requirements and for these reasons they continue to adopt the going concern basis in preparing the
financial report.
The financial report does not include adjustments relating to the recoverability or classification of
recorded asset amounts or to the amounts or classification of liabilities that might be necessary
should the company not be able to continue as a going concern.
INDEMNIFICATION OF DIRECTORS AND AUDITORS
The consolidated group has paid insurance premiums to indemnify each of the Directors against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of Director of the Company, other than conduct involving a
wilful breach of duty in relation to the Company The contracts include a prohibition on disclosure of
the premium paid and nature of the liabilities covered under the policy.
The Company has not given an indemnity or entered into any agreement to indemnify, or paid or
agreed to pay insurance premiums in respect of any person who is or has been an auditor of the
Company or a related body corporate during the year and up to the date of this report.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf
of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations
Act 2001 is attached.
Non-Audit Services
There were no non-audit services provided by the Company’s auditors in the current or previous
financial year.
20
OPERATING AND FINANCIAL REVIEW
PRINCIPAL ACTIVITY
The consolidated group’s principal activity during the financial year has been the identification,
acquisition and evaluation of mineral exploration assets, focusing on lithium and graphite. During the
period the Company undertook exploration activity on a number of projects.
There were no significant changes in these activities during the financial year.
BUSINESS MODEL AND OBJECTIVES
The Company’s primary objective is to provide shareholders with satisfactory returns.
This is to be achieved through implementation of the Company’s business model of identifying,
evaluating and developing its portfolio of exploration assets.
Operating Results
The entity’s consolidated operating loss for the financial year after applicable income tax was
$2,511,415 (2015: $566,530). Exploration and evaluation expenditure during the year totalled
$2,712,521 (2015: $310,394).
Review of Operations
During the year, the Company focused on sourcing and developing projects capable of supplying the
raw materials required to construct lithium-ion batteries for use in the rapidly growing new and green
technology sectors.
This has entailed:
•
•
•
the strategic entry into the large flake graphite market by securing a large ground position in
the East Kimberley region of Western Australia, together with the Itabela Graphite project in
Brazil;
securing a package of lithium prospective exploration tenements in Western Australia; and
the acquisition of the Authier lithium project in Canada.
The market for large and jumbo flake graphite is highly concentrated and potential synthetic graphite
substitutes are comparatively very expensive to produce. Both the US and EU Governments have
classified graphite as a “critical material” for industrial and national security purposes.
Lithium is a high-value product which is anticipated to be in tight supply as the demand for lithium-ion
batteries continues to experience transformational growth due to use in the new green technology
sectors.
East Kimberley, Western Australia
The Kimberley region is a proven province for high purity, large flake graphite.
The project area is located within the East Kimberley region of Western Australia, 240 kilometres
south of Wyndham Port and 220 kilometres south-south-west of the regional centre, Kununurra.
The project includes one granted tenement and three separate tenement applications, subject to two
option-to-purchase agreements. The project covers 278 km2 and has not previously been explored
for its graphite potential
Terms of the two option-to-purchase agreements, include:
• Attgold Pty Ltd (“Attgold”) – Sayona paid Attgold $5,000 on signing and a further $30,000 on 4
August 2015. Sayona is required to issue shares to the value of $170,000 to acquire a 100%
interest in tenement E80/4949 and other tenement applications. Sayona issued shares to the
value of $50,000 on 7 September 2016 and is required to issue shares to the value of $120,000
in January 2017.
Sayona Mining Limited I Annual Report 2016 21
OPERATING AND FINANCIAL REVIEW
• Western Iron Pty Ltd (“Western Iron”) – Sayona paid Western Iron $5,000 on signing and
$200,000 in January 2016 to exercise its option to acquire 100% of the graphite interests in
tenement E80/4511. Western Iron retains a 1% gross production royalty. Western Iron also
retains a back-in right to the nickel, copper and iron mineralisation by the payment of $100,000
by January 2017.
During the year, the Company drilled 33 reverse circulation holes totalling 2,949 metres in six
prospect areas within the Corkwood tenements. Every hole intersected visual flake graphite
mineralisation, with significant zones of over 50 metre downhole widths in several holes, including an
intercept of 64 metres. Some holes also intercepted multiple horizons of graphite mineralization.
The drilling program identified graphite mineralization over 7 kilometres within the 25 kilometre strike
extent of the Corkwood geochemical and geophysical anomaly.
Highlights from the drilling program, included:
• Delineation of broad zones of shallow flake graphite mineralisation, including;
o 16m @ 5.03% Total Graphitic Carbon (TGC) from 13m in SKRC006, Windrush,
o 22m @ 3.8% TGC from 9m in SKRC008, Windrush,
o 36m @ 3.39% TGC from 7m in SKRC015, Snowbird,
o 54m @ 3.05% TGC from14m in SKRC016, Snowbird,
o 109m @ 1.84% TGC from 22m in SKRC017, Flying Ant,
• Mineralisation is open at depth and along strike;
• Assays up to 12.2% TGC;
• Mineralisation from surface, with shallow dip and good geometry, characteristics amenable to
low cost open-cut mining; and
• Visible coarse graphite - graphite study underway to help characterise the quality of the
mineralisation.
Petrographic study has been undertaken on drill material from the Snowbird, Windrush and Firefly
prospects. Rock fragments, sieved from the drill cuttings were examined as well as the finer
powdered rock which comprises the bulk of the drill sample.
The RC drilling method has resulted in many of the graphite flakes being broken into smaller pieces
and diamond drilling will be required to finalise the actual flake size distribution. Observations give
encouragement that the project is host to high value coarse flake graphite. Diamond drilling is being
planned to gain metallurgical information and to provide graphite concentrate for off take evaluation.
The Company has also completed flotation test work on both surface and RC chip samples. The best
flotation results were achieved in surface rocks from the Snowbird prospect, where a floatation
concentrate grade of 96.2% TGC was achieved, with 43% above 180 mesh size. The metallurgical
results provide encouragement that the Corkwood coarse flake graphite can deliver a high purity
graphite concentrate using simple flotation technology.
Itabela, Brazil
In August 2015, the Company signed an option-to-purchase contract with Brasil Grafite S.A. (“Brasil
Grafite”) for the advanced Itabela graphite project in Brazil.
Brasil Grafite is a privately owned Brazilian exploration and development company which owns 100%
of the Itabela graphite project, comprising 13 exploration permits with a total area of 13,316 hectares.
Sayona has signed a four-month, exclusive binding term sheet to acquire the Itabela project.
During the initial option period, the Company’s due diligence activities confirmed the potential for
Itabela to be established as a near-term, globally competitive, low capital and operating cost
development opportunity. However, the Company concluded that further drilling was required to
validate historical drilling data to complete a resource estimate and scoping study.
The Company subsequently agreed to amend the option-to-purchase terms with Brasil Graphite on
30 November 2015. The new agreement extended the option period to 30 June 2016 and provided
for an exercise payment of US$1.5 million on exercise of the option and further payments based on
22
OPERATING AND FINANCIAL REVIEW
delineating JORC resources. The new agreement provided a closer alignment of resource definition
success with the future payment schedules.
Following an extensive exploration program in early 2016, drilling was unable to define a resource of
sufficient scale to meet the Company’s financial return objectives. Coupled with the moderation in
graphite concentrate prices, the Company was not able to negotiate suitable new contractual terms
to justify extending the purchase option. The Company withdrew from the project after spending
A$1,055,123.
Western Australian Lithium Projects
During the second half of the year, the Company secured a package of lithium prospective
exploration tenements in Western Australia. The projects have excellent regional infrastructure, and
are close to the Asian markets for downstream processing and battery manufacturing.
Western Australia is a premium lithium province with world-class, high-grade lithium deposits
associated with rare metal pegmatites. The Company has secured two regional project areas
covering a total 1,065 square kilometres as part of its strategic move into lithium exploration.
Pilbara Lithium Project, Pilgangoora district
The project areas host tantalum mineralisation within complex rare metal pegmatites. This class of
lithium-cesium-tantalum (“LCT”) pegmatites, and
fractionated pegmatite
especially albite-spodumene pegmatites, the target for the Company’s high grade lithium exploration
strategy.
includes prospective
The projects have had little or no past lithium focussed exploration and the Company is encouraged
that its initial reconnaissance work has been positive, identifying lithium minerals and geochemistry
indicative of fractionated rare metal pegmatites.
Tabba Tabba Area - E45/2364 (pegmatite rights only) and ELA45/4703.
The Tabba Tabba project, located north of Pilgangoora is prospective for spodumene bearing
pegmatites, similar to those located at Pilgangoora and Mount Cassiterite at Wodgina.
Sayona has focused its exploration over granted E45/2364, where it has an option to acquire 100% of
the pegmatite rights. The tenement covers a 10 km strike extent of the greenstone stratigraphy to the
south of the Tabba Tabba tantalum mine and has not been explored for its lithium potential in the
past.
Within E45/2364 and adjoining ELA45/4703 the Company has carried out geochemical orientation
with collection of a total 69 pegmatite rock samples, 88 soil samples and 11 stream samples.
Results define three new zones of anomalous pegmatites within greenstone, (maximum 357ppm
tantalum, 428ppm cesium and 3,000ppm rubidium). The peak lithium value in sampling is 387ppm
Li2O. The Company is encouraged by the discovery of previously unidentified target rare metal
pegmatites within the project area.
A second trend of pegmatites and geochemical anomalism, marginal to granite along the Tabba
Tabba shear, has also been noted by explorers to the south west and remains to be systematically
sampled. Historic stream sampling in this area recorded up to 5,000ppm tantalum and 1,700ppm tin.
A large number of target areas have been identified for systematic follow up exploration.
Red Rock Area - ELA45/4716, ELA45/4775
The Red rock project (415km2), is located to the east of Tabba Tabba and covers the northern
extension of the Pilgangoora belt, securing the Red Rock pegmatite as well as greenstone remnants
and old dredging claim areas, indicative of past tin-tantalum prospecting.
A new application ELA45/4775 was made following processing of magnetic and radiometric data.
This work suggests remnant greenstone lithologies adjacent to a favourable granite contact may host
lithium prospective pegmatites. The bedrock geology is obscured over much of the application area.
The Company intends applying its developing exploration methodology to identify those areas of
highest prospectivity.
Sayona Mining Limited I Annual Report 2016 23
OPERATING AND FINANCIAL REVIEW
Cooglegong Area - (ELA45/4738)
The Cooglegong project is a new application for the quarter. It covers 140 km2 of the northern part of
the Shaw River tin field, an area of historic tin mining. The area is host to albite pegmatites
associated with younger, post tectonic granite with lithium potential.
First pass geological traversing and broad spaced sampling (75 pegmatite samples collected) has
identified a large number of pegmatites. Assay results define three areas of elevated Ta-Rb-Cs-Nb,
indicative of more fractionated, rare metal pegmatite. The maximum lithium result of 166ppm Li2O is
also elevated. Further reconnaissance and detailed sampling over the three target areas is planned.
Wodgina Area - (Friendly Creek, ELA47/3475 and West Wodgina ELA45/4726)
The project areas at Friendly Creek (ELA47/3475) and West Wodgina (ELA45/4726) cover 339km2,
and secure areas of past tin and tantalum prospecting activity. The bedrock rare metal pegmatite
hosts have not been subject to modern exploration or assessment for their lithium potential. The
project areas show similarities with the tin pegmatites at Mt Cassiterite in the Wodgina field which
host spodumene bearing albite pegmatites, the Company’s target exploration focus.
Mount Edon Project
Mount Edon covers the southern portion of the Paynes Find greenstone belt, South Murchison, which
are host to an extensive swarm of pegmatites. The pegmatites have not previously been assessed for
their lithium potential but have been variably prospected and mined for tantalum, mainly within an
excised mining lease.
The Mt Edon pegmatites range from simple microcline feldspar dominated occurrences to evolved
rare metal albite types, mineralised with tantalum niobium and lithium. The Company is exploring the
project for its potential to host the albite – spodumene class of rare metal pegmatite, similar to other
greenstone hosted occurrences in the Yilgarn.
Pegmatites range from five metres to over 100 metres in surface width, arranged in swarms of up to 1
kilometre in strike extent. The pegmatites have variable outcrop and are in part obscured by
colluvium.
Over 70 pegmatites have been identified during reconnaissance mapping, spread out over a 4km
zone. Others are present further to the north and west but outcrop in these areas is poor and these
systems are poorly defined at present.
A total of 95 pegmatite rock samples have been collected during reconnaissance work and have
returned a peak assay of 1.57% Li2O. The pegmatites also contain anomalous tantalum, rubidium
and cesium, indicative of rare metal pegmatites. Other anomalous lithium results nearby define a
400metre wide package of pegmatites which is a high priority target.
Rubidium assays to 2.6% Rb have been returned in association with lithium and cesium. Since
rubidium is radiogenic, high-quality airborne radiometrics data has been reprocessed to help identify
minerals with rubidium that occur in association with lithium mineralisation. This data is being used
as a low-cost exploration methodology to cover the large project area, but is only effective in areas of
outcrop.
Authier Lithium Project – Canada
In May 2016 the Company announced it had entered into a binding term sheet to acquire 100 per
cent of the Authier lithium deposit in Quebec, subject to completion of a 60-day due diligence,
Canada. The Company subsequently arranged a three week extension for completion of the
acquisition to 21 July 2016 to allow the vendor to satisfy Canadian regulatory requirements.
The project area comprises 19 mineral claims totalling 653 hectares, and extends 3.4 kilometres in an
east-west, and 3.1 kilometres in a north-south direction, respectively. It is situated 45 kilometres
northwest of the city of Val d’Or, a major mining service centre in the, Province of Quebec. The
project is easily accessed by a rural road network connecting to a national highway a few kilometres
east of the project site.
24
OPERATING AND FINANCIAL REVIEW
The deposit is hosted in a spodumene-bearing pegmatite intrusion. The deposit is 825 metres long,
striking east-west, with an average thickness of 25 metres, minimum 4 metres and maximum 55
metres, dipping at 40 degrees to the north. The deposit is modelled down to 200 metres depth.
The project has more than 15,000 metres of drilling in 123 diamond holes, and 2,143 assay samples.
The project was initially drilled between 1991 and 1999, and then by the vendor between 2010 and
2012.
The project has been subject to two metallurgical test work programs in 1999 and 2012. Bumigeme
Inc, processing consultants, conducted metallurgical testing on a 40 tonne sample and produced
Li20 concentrate grades between 5.78% and 5.89% at metallurgical recoveries between 67.52% and
70.19%, with an average head assay of 1.14%Li20. At an average head grade of 1.35%Li20, test work
demonstrated a recovery of 75% and a concentrate grade of 5.96% Li20. In 2012, Glen Eagle
completed further metallurgical testing and designed a flow sheet based on the concept of producing
a 5-6% Li20 concentrate at an 85% recovery rate using conventional processing routes.
Subsequent to the end of the quarter, part of its due diligence on the proposed Authier acquisition, an
independent JORC Mineral Resource estimate, totalling 9.12 million tonnes containing 87,302 tonnes
of Li2O was reported. The Company has independently undertaken a detailed audit of all the available
data to verify the previous work and convert the foreign estimate to a JORC 2012 compliant Mineral
Resource estimate, tabulated below at a 0.5% Li20 cut-off grade.
The key attractions of the Authier lithium project acquisition, include:
• Extensively drilled - mineralisation hosted in a spodumene-bearing pegmatite intrusion with
more than 15,000 metres of drilling in 123 holes;
• Simple deposit - 825 metres long with an average thickness of 25 metres dipping at 40
degrees, amenable to low-cost, open-cut mining techniques;
• Defined resources – foreign measured and indicated resources totalling 74,000 tonnes of
contained Li20, with demonstrated economic viability. Additional inferred resources total 14,899
tonnes Li20 - see Appendix A for details and cautionary statement;
• Simple metallurgy - extensive metallurgical testing and flowsheet designed to produce a 5-6%
Li20 concentrate at an 85% metallurgical recovery;
o Well studied - a NI43-101 Technical Report – Preliminary Economic Assessment –
completed in 2013, demonstrated the technical and commercial viability of developing the
deposit, and selling lithium concentrates;
o Excellent infrastructure – situated 45 kilometres from mining support services, and links to
road and rail networks, including the Quebec export port; and
o Large sunk cost – significant investment in drilling, geophysics and development studies.
Subsequent to the end of the quarter, the Company completed the Authier due diligence and entered into
formal transaction documents for the CAD$4 million acquisition of the Authier lithium Project. The
acquisition was completed on the 20 July 2016.The Company’s strategy going forward, includes:
• Exploration and further drilling to target expanding the existing mineral resources;
•
Identifying other resources in the tenement package and in the surrounding district to potentially
expand the scale of the project; and
• Studying options for improving the project economics including, metallurgical optimisation and
downstream processing options.
Corporate
In July 2016 the Company appointed Mr Corey Nolan as Chief Executive Officer. Mr Nolan is an
experienced public company director and senior executive with more than 23 years’ experience in
advisory, commercial and business development roles focused on the acquisition, funding, and
development of resource projects.
Sayona Mining Limited I Annual Report 2016 25
OPERATING AND FINANCIAL REVIEW
During August and September 2015, the Company completed a fully underwritten, accelerated rights
offer to raise $2.6 million. The terms of the capital raising, included:
• a 1 for 4 entitlement offer at an issue price of $0.025 per share;
• 1 free attaching option, exercisable at $0.03 and expiring 30 December 2016, for every new
share applied for;
•
•
the placement of 1,224,115 shares and listed options in respect of underwriting
oversubscriptions; and
the issue of 1,603,522 shares and 6,808,666 listed options in part settlement of raising
management and underwriting fees.
FINANCIAL POSITION
At 30 June 2016, the Company's Statement of Financial Position shows total assets of $1,637,562, of
which $62,603 was cash, total liabilities of $303,893 and net assets of $1,333,669. Committed
exploration & evaluation expenditure in the next 12 months totals $193,651.
In July 2016, the Company announced its intention to undertake a private placement of shares and
an underwritten, accelerated non-renounceable rights issue to raise up to $7.1 million. The initial
placement was completed on 22 July 2016 and the rights issue was completed on 17 August 2016. A
further placement of $600,000 was subject to shareholder approval at a general meeting of
shareholders held on 7 September 2016.
Refer to significant events after balance date in this report and note 24 in the financial report for
details of the Company’s capital raising activity since the end of the financial year.
The Directors believe that the group is in a stable financial position.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes during the year include:
• On 7 July 2015, the Sayona East Kimberley Pty Ltd entered into an Option and Sale Agreement
with Western Iron Ore Pty Ltd ("Western") to acquire 100% of the graphite interest in tenement
E80/4511. The Company exercised its option on 6 January 2016 by paying $200,000.
• On 4 August 2015, the Company entered into a four-month, exclusive binding term sheet to
acquire the Itabela graphite project. The Company subsequently agreed to amend the Option-
to-Purchase terms with Brasil Graphite in December 2015. The new agreement extended the
option period to 30 June 2016. Following an extensive exploration program in early 2016,
drilling was unable to define a resource of sufficient scale to meet the Company’s financial
return objectives. The Company could not negotiate suitable new contractual terms to justify
extending the purchase option.
• On 5 August 2015, the Company announced its intention to undertake an accelerated non-
renounceable rights issue to raise up to $2.57 million. The rights issue entailed a 1 for 4
entitlement offer at an issue price of $0.025 per share, together with 1 free attaching option,
exercisable at $0.03 and expiring 30 December 2016, for every new share applied for.
• On 14 August 2015, the Company completed the accelerated component of the rights issue,
issuing 72,320,000 new shares and listed options to raise $1,808,000.
• On 4 September 2015, the Company completed the underwritten retail component of the rights
issue raising $764,092.
• On 9 September 2015, the Company issued 1,224,116 shares and listed options as a
placement in respect of underwriting oversubscriptions.
• On 9 September 2015, the Company issued 1,603,522 shares and 6,808,666 listed options in
part settlement of raising management and underwriting fees.
• On 1 May 2016, the Company entered into a binding term sheet with Glen Eagle Resources Inc
to acquire 100 per cent of the Authier project in Quebec, Canada for CAD$4 million. The
agreement was subject to the satisfactory completion of a 60-day due diligence period. In June
2016 the parties agreed to a three week extension of the due diligence period. The acquisition
was completed on 20 July 2016.
26
OPERATING AND FINANCIAL REVIEW
SIGNIFICANT EVENTS AFTER BALANCE DATE
Key events since balance date have been:
• On 7 July 2016 a 100% owned, foreign subsidiary company, Sayona Quebec Inc was
incorporated in Quebec, Canada.
• The Company issued 6,250 shares on 8 July 2016 and 4,361 shares on 20 July 2016 at $0.03
per share, pursuant to the exercise of options.
• On 10 July 2016, the Group entered into a Mineral Claim Purchase Agreement with Glen Eagle
Resources Inc to acquire the Authier graphite tenements in Quebec Canada. Purchase cost of
the project was CAD4,000,000. The acquisition was completed on 20 July 2016.
• On 15 July 2016, the Company announced its intention to undertake an accelerated non-
renounceable rights issue to raise up to $2.9 million. The rights issue entailed a 1 for 5
entitlement offer at an issue price of $0.027 per share, together with 1 free attaching option,
exercisable at $0.03 and expiring 30 December 2016, for every 2 share applied for.
• On 18 July 2016, the Company undertook a private placement of 133,067,264 shares and
66,533,638 listed options to raise $3,592,816. The terms of the placement included the grant of
1 free attaching option, exercisable at $0.03 and expiring 30 December 2016, for every new 2
shares applied for. The allotment of the options gained shareholder approval at a General
Meeting of the Company held on 7 September 2016.
• On 22 July 2016, the Company completed the accelerated component of the rights issue,
issuing 70,539,643 ordinary shares and 35,269,822 listed options to raise $1,904,570.
• On 5 August, the Company entered into a new Heads of Agreement with Attgold Pty Ltd,
varying the terms of the option exercise component of the original Heads entered into on 6
February 2015. The new agreement extends the option payment terms from a one off payment
of $170,000 payable in August 2016 to split payment of $50,000 in September 2016, which was
settled by issuing shares in the Company, and a further $120,000 payable in January 2017. The
payments are to be made in equivalent value of shares in Sayona Mining Limited. The
Company issued 1,851,852 shares on 7 September 2016 in settlement of the first payment.
• On 17 August 2016, the Company completed the underwritten retail component of the rights
issue raising $996,682 by issuing 36,915,413 ordinary shares and 18,457,727 options.
• On 7 September 2016, the Company issued 22,222,222 shares and 11,111,111 listed options
to raise $600,000.
• On 7 September 2016, the Company issued 5,000,000 listed options pursuant to shareholder
approval, in part settlement of raising management and underwriting fees.
• On 7 September 2016, the Company issued 1,851,852 ordinary shares as consideration for
part acquisition of a mineral tenement in Western Australia.
Other than as set out in this report and the attached financial statements no matters or circumstances
have arisen since 30 June 2016, which significantly affect or may significantly affect the operations of
the Company, the results of those operations, or the state of affairs of the Company in subsequent
financial years.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
During the year, the Company has focused on sourcing and developing the raw materials required to
construct lithium-ion batteries for use in the rapidly growing new and green technology sectors The
Company has assembled a portfolio of exploration and development assets to help achieve this
outcome.
The Company’s strategic focus is on the exploration, evaluation and potential for development of
these assets. The assets range from early stage exploration to advanced projects with potential for
advancement to production.
To achieve these outcomes the Company is likely to require additional capital. The form of this
funding is currently undetermined and likelihood of success unknown. Consequently it is not possible
at this stage to predict future results of the activities.
Sayona Mining Limited I Annual Report 2016 27
OPERATING AND FINANCIAL REVIEW
Business Risks
The following exposure to business risks may affect the Group’s ability to achieve the objectives
outlined above:
• exploration and evaluation success on individual projects;
•
•
the ability to raise additional funds in the future; and
the Group’s ability to identify and acquire an interest in additional projects, if required.
ENVIRONMENTAL REGULATION
The Company’s operations are subject to environmental regulation under the
Commonwealth and the States of Western Australia.
law of the
The Directors monitor the Company’s compliance with environmental regulation under law, in relation
to its exploration activities. The Directors are not aware of any compliance breach arising during the
year and up to the date of this report.
28
REMUNERATION REPORT
REMUNERATION POLICY
The Company’s remuneration policy ordinarily seeks to align Director and executive objectives with
those of shareholders and the business, while at the same time recognising the development stage of
the Company and the criticality of funds being utilised to achieve development objectives. The Board
believes that the current policy has been appropriate and effective in achieving a balance of
objectives.
The Board’s policy for determining the nature and amount of remuneration for KMP of the
consolidated group is based on the following:
• The remuneration policy is to be developed and approved by the Board.
• KMP may receive a base salary, superannuation, fringe benefits, options and performance
incentives.
• The remuneration structure for KMP is based on a number of factors including length of
service, particular experience of the individual concerned and overall performance of the
group.
• Performance incentives are generally only paid once predetermined key performance
indicators (KPIs) have been met.
•
Incentives paid in the form of options or rights are intended to align the interests of the KMP
and company with those of the shareholders.
• The Board reviews KMP packages annually by reference to the consolidated group’s
performance, executive performance and comparable information from industry sectors.
the
forecast growth of
The performance of KMP is measured against criteria agreed annually with each party and is based
the consolidated group, project milestones and
predominantly on
shareholders’ value. All bonuses and incentives must be linked to predetermined performance
criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses
and options. Any change must be justified by reference to measurable performance criteria. The
policy is designed to attract the highest calibre of executives possible and reward them for
performance results leading to long-term growth in shareholder wealth.
All remuneration paid to KMP is valued at the cost to the company and expensed.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The Board collectively 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 the annual general
meeting.
KMP are also entitled and encouraged to participate in the employee share and option arrangements
to align directors’ interests with shareholders’ interests.
Options granted under the arrangement do not carry dividend or voting rights. Each option is entitled
to be converted into one ordinary share once the interim or final financial report has been disclosed
to the public and is measured using a binomial lattice pricing model which incorporates all market
vesting conditions.
KMP or closely related parties of KMP are prohibited from entering into hedge arrangements that
would have the effect of limiting the risk exposure relating to their remuneration.
In addition, the Board’s remuneration policy prohibits directors and KMP from using the Company’s
shares as collateral in any financial transaction, including margin loan arrangements.
ENGAGEMENT OF REMUNERATION CONSULTANTS
The Company does not engage remuneration consultants.
PERFORMANCE BASED REMUNERATION
KPIs are set annually, in consultation with KMP. The measures are specifically tailored to the area
each individual is involved in and has a level of control over. The KPIs target areas the Board believes
Sayona Mining Limited I Annual Report 2016 29
REMUNERATION REPORT
hold greater potential for group expansion and shareholder value, covering financial and non-
financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures
for the Group and relevant industry standards.
RELATIONSHIP BETWEEN REMUNERATION POLICY AND COMPANY PERFORMANCE
The remuneration policy has been tailored to increase goal congruence between shareholders,
directors and executives. Two methods have been applied to achieve this aim. The first is a
performance based bonus based on KPIs and the second, is the issue of options to executives and
directors to encourage the alignment of personal and shareholder interests. The Company believes
this policy has been effective in increasing shareholder wealth over recent years.
The following table shows some key performance data of the Company for the last 3 years, together
with the share price at the end of the respective financial years.
2014
2015
2016
Exploration expenditure ($)
126,620
310,394
2,712,521
Exploration tenements (no. including applications)
0
4
14
Net assets ($)
Share Price at Year-end ($)
Dividends Paid ($)
1,359,031
822,501
1,333,669
0.0028
0.0009
0.0287
NIL
NIL
NIL
EMPLOYMENT DETAILS OF MEMBERS OF KEY MANAGEMENT PERSONNEL
The following table provides employment details of persons who were, during the financial year,
members of KMP of the consolidated group. The table also illustrates the proportion of remuneration
that was performance and non-performance based and the proportion of remuneration received in
the form of options.
Key
Managemen
t Personnel
Position held at 30
June 2016 &
change during
period
Contract
Details
D O'Neill
Executive Director
P Crawford
Executive Director
Company Secretary
A Buckler
Non-executive
Director
J Brown
Non-executive
Director
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
Proportion of Remuneration:
Related to
performanc
e
Not related to
performance
Total
Options
Salary & Fees
26%
74%
100%
26%
74%
100%
53%
47%
100%
53%
47%
100%
30
REMUNERATION REPORT
Key
Managemen
t Personnel
Position held at 30
June 2016 &
change during
period
Contract
Details
C Nolan
Chief Executive
Officer appointed 1
July 2015
No fixed term, 3
months’ notice
to terminate.
Employment Contract of Chief Executive Officer
Proportion of Remuneration:
Related to
performanc
e
Not related to
performance
Total
Options
Salary & Fees
2%
98%
100%
The Company entered into a contract for service with Mr Corey Nolan, Chief Executive Officer on 1
July 2015. His contract has no fixed term.
The Company may terminate the Chief Executive Officer's contract by giving 3 months’ notice. In the
case of serious misconduct the Company can terminate employment at any time. The contract
provides for annual review of the compensation value. The terms of this agreement are not expected
to change in the immediate future.
CHANGES IN DIRECTORS AND EXECUTIVES SUBSEQUENT TO YEAR-END
There have been no changes to Directors or executives since the end of the financial year.
REMUNERATION EXPENSE DETAILS
The remuneration of each Director and Chief Executive Officer of the Company during the year was
as following table. Amounts have been calculated in accordance with Australian Accounting
Standards.
2016
Short term benefits
Key
Management
Personnel
Salary
& Fees
Non-Cash
Benefits
D O'Neill
91,324
P Crawford (1)
100,000
A Buckler (2)
J Brown
C Nolan
30,000
30,000
176,365
427,689
-
-
-
-
-
-
Equity
Settled
Options
Post-
employment
superannuation
Long
term
benefits
34,366
34,366
34,366
34,366
4,493
141,957
8,676
0
0
0
15,438
24,114
-
-
-
-
-
-
Total
134,366
134,366
64,366
64,366
196,296
593,760
(1) Represents payments made to Sirod Pty Ltd, an entity controlled by Mr Paul Crawford, to
provide accounting, company secretarial and other services.
(2) Represents payments made to Shazo Holdings Pty Ltd, an entity controlled by Mr Allan Buckler,
to provide technical services.
No payments were made to Directors or Chief Executive Officer of the Company during the previous
year.
SECURITIES RECEIVED THAT ARE NOT PERFORMANCE-RELATED
No members of KMP may receive securities that are not performance-based as part of their
remuneration package.
SHARE BASED PAYMENTS
The terms and conditions relating to options granted as remuneration to KMP during the year are as
follows:
Sayona Mining Limited I Annual Report 2016 31
REMUNERATION REPORT
KMP
Grant
Date
Grant
Value
Reason
for
Grant
Note 1
Percentage
Vested/Paid
in Year
Note 2
Percentage
Forfeited
in Year
Percentage
Remaining
Unvested
C Nolan 8.07.2015 $1,765
C Nolan 8.07.2015 $1,333
C Nolan 8.07.2015 $1,396
(a)
(a)
(a)
100%
100%
100%
D O'Neill 25.11.2015 $34,366
(b)
100%
P
Crawford
A
Buckler
25.11.2015 $34,366
(b)
100%
25.11.2015 $34,366
(b)
100%
J Brown 25.11.2015 $34,366
(b)
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Expiry
Date for
Vesting
or
Payment
Value
Range of
Future
Payments
30.06.16 $0-$30,000
31.12.16 $0-$60,000
30.06.17 $0-$90,000
30.06.17
30.06.17
30.06.17
30.06.17
$0-
$150,000
$0-
$150,000
$0-
$150,000
$0-
$150,000
Note 1(a) The options have been granted to CEO Mr Nolan as part of the Group’s incentive and
motivation strategy for the recruitment and retention of key executives. Options vested
immediately on grant date.
Note 1(b) The options were granted to Directors pursuant to shareholder approval at the 2015 Annual
General Meeting.
No options or shares were granted as remuneration in the 2015 year.
The options entitle the holder to one ordinary share in the Company for each option held. Option
values at grant date were determined using the binomial valuation method.
There have not been any alterations to the terms or conditions of any grants since grant date.
Grant Details
Exercised
Lapse
d
KMP
Balance
1 July
2015
Issued
Date
No.
Value
$
No.
Value
$
No.
Balance
30 June 2016
Note 1 Note 2 Note 3
C Nolan
C Nolan
C Nolan
D O'Neill
P Crawford
A Buckler
J Brown
-
-
-
-
-
-
-
8.07.15 6,000,000
1,765 6,000,000
8.07.15 6,000,000
1,333
8.07.15 6,000,000
1,396
25.11.15 5,000,000
25.11.15 5,000,000
25.11.15 5,000,000
25.11.15 5,000,000
34,36
6
34,36
6
34,36
6
34,36
6
1,76
5
-
-
-
-
-
-
1,500,000
45,000
-
-
-
-
-
-
-
-
-
-
-
-
6,000,000
6,000,000
5,000,000
3,500,000
5,000,000
5,000,000
32
REMUNERATION REPORT
KMP
Balance
30 June
2016
Vested
Unvested
Exercisable
Unexercisable
Total
Total
No.
No.
No.
No.
No.
C Nolan
D O'Neill
P Crawford
A Buckler
J Brown
12,000,000
12,000,000
5,000,000
3,500,000
5,000,000
5,000,000
5,000,000
3,500,000
5,000,000
5,000,000
-
-
-
-
-
12,000,000
5,000,000
3,500,000
5,000,000
5,000,000
-
-
-
-
-
Note 1 The fair value of options granted as remuneration and shown in the table above has been
determined in accordance with Australian Accounting Standards and will be recognised as an
expense over the relevant vesting period to the extent that conditions necessary for vesting
are satisfied.
Note 2 All options exercised resulted in the issue of ordinary shares in Sayona Mining Limited on a
1:1 basis. All persons exercising option paid the applicable exercise price.
Note 3 The value of options have been exercised during the year as shown in the table above was
determined as at the time of the exercise.
DESCRIPTION OF OPTIONS ISSUED AS REMUNERATION
Details of options granted by Sayona Mining Limited as remuneration to those KMP listed in the
previous table are as follows:
Grant Date
Entitlement on
Exercise
Dates
Exercisable
Exercise
Price
Value per
Option at
Grant Date
Amount
Paid/Payable
by Recipient
8.07.2015
8.07.2015
8.07.2015
25.11.2015
1:1
share
1:1
share
1:1
share
1:1
share
ordinary
ordinary
ordinary
ordinary
30.06.2016
0.5 cents
0.02941 cents
31.12.2016
1.0 cents
0.02221 cents
30.06.2017
1.5 cents
0.02326 cents
30.06.2017
3.0 cents
0.68733 cents
Option values have been determined using the binomial lattice pricing model.
-
-
-
-
KMP SHAREHOLDINGS
The number of ordinary shares held by each KMP of the Group during the financial year is as follows:
Key Management
Personnel
Balance
1 July 2015
Remun-
eration
67,255,241
73,180,974
81,081,394
1,248,295
-
-
-
-
-
-
Exercise
of
Options
Other
Changes
Balance
30 June
2016
1,000,000
2,000,000
70,255,241
4,250,000
2,750,000
80,180,974
-
-
2,000,000
83,081,394
800,000
2,048,295
6,000,000
-
6,000,000
222,765,904
- 11,250,000
7,550,000
241,565,904
D O'Neill
P Crawford
A Buckler
J Brown
C Nolan
Total
Sayona Mining Limited I Annual Report 2016 33
REMUNERATION REPORT
OTHER EQUITY-RELATED KMP TRANSACTIONS
There were no other transactions involving equity instruments apart from those described in the
tables above relating to options.
OTHER TRANSACTIONS WITH KMP AND/OR THEIR RELATED PARTIES
There were no other transactions conducted between the Group and KMP or their related parties,
other than those disclosed above, that were conducted other than in accordance with normal
employee, customer or supplier relationships on terms no more favourable than those reasonably
expected under arm’s length dealings with unrelated persons.
The Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a
resolution of the Board of Directors.
Dennis O’Neill
Director
Signed: 30 September 2016
Brisbane, Queensland
Paul Crawford
Director
34
Auditor’s Independence Declaration
Under Section 307C of the Corporations Act 2001
To the Directors of Sayona Mining Limited and Controlled Entities
As lead auditor for the audit of Sayona Mining Limited for the year ended 30 June 2016, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
i.
the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
ii.
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Sayona Mining Limited and the entities it controlled during the
year.
Nexia Brisbane Audit Pty Ltd
A M Robertson
Director
Date: 30 September 2016
Sayona Mining Limited I Annual Report 2016 35
Financial Statements
2016
CONTENTS
Statement of Profit and Loss and
Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Director’s Declaration
Independent Auditor’s Report
37
38
39
40
41
66
67
36
SAYONA MINING LIMITED
ABN 26 091 951 978
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2016
Consolidated Group
Note
2016
$
2015
$
Revenue and other income
2
42,764
55,219
Administrative expenses
Occupancy costs
Exploration expenditure expensed during year
Net loss on financial asset at fair value through profit and loss
Loss before income tax
Tax expense
(1,200,601)
(40,562)
(230,484)
(39,201)
(1,273,785)
(39,231)
(310,394)
(41,670)
(2,511,415)
(566,530)
-
-
3
3
3
4
Loss for the year
(2,511,415)
(566,530)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
when specific conditions are met:
Items that will not be reclassified to profit or loss:
Other comprehensive income for the year
-
-
-
-
-
-
Total comprehensive income or (loss) attributable to
members
(2,511,415)
(566,530)
Earnings per Share:
Basic and diluted earnings per share (cents per share)
6
(0.50)
(0.14)
Dividends per share (cents per share)
-
-
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2016 37
SAYONA MINING LIMITED
ABN 26 091 951 978
STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation asset
Consolidated Group
Note
2016
$
2015
$
8
9
10
11
12
13
62,603
36,886
78,462
14,850
737,545
13,059
117,693
6,296
192,801
874,593
6,025
1,438,736
1,534
-
Total Non-Current Assets
1,444,761
1,534
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
1,637,562
876,127
14
15
284,183
19,710
53,626
-
Total Current Liabilities
303,893
53,626
TOTAL LIABILITIES
303,893
53,626
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
1,333,669
822,501
16
17
52,945,695
146,959
(51,758,985)
50,069,511
(4,527,230)
(44,719,780)
TOTAL EQUITY
1,333,669
822,501
The accompanying notes form part of these financial statements.
38
SAYONA MINING LIMITED
ABN 26 091 951 978
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2016
Note
Share
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Option
Reserve
Total
$
$
$
$
$
Consolidated Group
Balance at 1 July 2014
50,039,511
(44,153,250)
(4,527,230)
-
1,359,031
Loss attributable to members
of the entity
Other comprehensive income
for the year
Total comprehensive income
for the year
-
-
-
(566,530)
-
(566,530)
Shares issued during the year
Transaction costs
16
30,000
-
-
-
-
-
-
-
-
Balance at 30 June 2015
50,069,511
(44,719,780)
(4,527,230)
-
(566,530)
-
-
-
(566,530)
-
-
-
30,000
-
822,501
-
(2,511,975)
-
-
-
(2,511,975)
-
-
(2,511,975)
-
-
(2,511,975)
-
-
-
-
-
(4,527,230)
4,527,230
(4,527,230)
4,527,230
-
-
-
-
Loss attributable to members
of the entity
Other comprehensive income
for the year
Total comprehensive income
for the year
Other
Reserve transferred to retained
earnings
Total other
Transactions with owners in
their capacity as owners
Shares issued during the year
Transaction costs
Share based payments
16
23
3,083,284
(207,100)
-
Total transactions with owners
2,876,184
-
-
-
-
-
-
-
-
- 146,959
3,083,284
(207,100)
146,959
- 146,959
3,023,143
Balance at 30 June 2016
52,945,695
(51,758,985)
- 146,959
1,333,669
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2016 39
SAYONA MINING LIMITED
ABN 26 091 951 978
STATEMENT OF CASH FLOWS
for the year ended 30 June 2016
Consolidated Group
Note
2016
$
2015
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
(2,137,423)
26,361
(571,486)
21,123
Net cash provided by (used in) operating activities
18
(2,111,062)
(550,363)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Capitalised exploration expenditure
Proceeds from settlement of deferred sale consideration
12
(6,328)
(1,418,736)
-
-
227,660
Net cash provided by (used in) investing activities
(1,425,064)
227,660
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
Proceeds from issue of shares
Costs associated with share & option issues
-
(127,652)
3,023,196
(162,012)
-
-
Net cash provided by (used in) financing activities
2,861,184
(127,652)
Net increase (decrease) in cash held
(674,942)
(450,355)
Cash at beginning of financial year
737,545
1,201,357
Effect of exchange rates on cash holdings in foreign
currencies
-
(13,457)
Cash at end of financial year
8
62,603
737,545
The accompanying notes form part of these financial statements.
40
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Sayona Mining Limited and Controlled
Entities (the “consolidated group” or “group”).
The separate financial statements of the parent entity, Sayona Mining Limited, have not been presented within
this financial report as permitted by the Corporations Act 2001.
Financial information for Sayona Mining Limited as an individual entity is included in Note 26.
The financial statements have been authorised for issue as at the date of the Directors' Declaration.
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and
International Financial Reporting Standards as issued by the International Accounting Standards Board. The
Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material
accounting policies adopted in the preparation of these financial statements are presented below and have been
consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are
based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities.
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Sayona
Mining Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent
controls. The parent controls an entity when it 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 over the entity. A list of the subsidiaries
is provided in Note 27.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the
Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued
from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on
transactions between group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have
been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted
by the Group.
Continued Operations & Future Funding
The financial statements have been prepared on a going concern basis which contemplates that the group will
continue to meet its commitments and can therefore continue normal business activities and the realisation of
assets and settlement of liabilities in the ordinary course of business.
The ability of the group to execute its currently planned activities requires the group to raise additional capital
within the next 12 months. Because of the nature of its operations, the Directors recognise that there is a need on
an ongoing basis for the group to regularly raise additional cash funds to fund future exploration activity and meet
other necessary corporate expenditure. Accordingly, when necessary, the group investigates various options for
raising additional funds which may include but is not limited to an issue of shares, a farm-out of an interest in one
or more exploration tenements or the sale of exploration assets where increased value has been created through
previous exploration activity.
At the date of this financial report, the group has commenced a number of these initiatives as may be evidenced
in Note 24 Events after balance sheet date. As a result, the Directors have concluded that the current
circumstances may cast significant doubt regarding the group’s ability to continue as a going concern and
therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of
business. Nevertheless, after taking into account the various funding options available, the Directors have a
reasonable expectation that the group will be successful with future fund raising initiatives and, as a result, will
have adequate resources to fund its future operational requirements and for these reasons they continue to adopt
the going concern basis in preparing the financial report.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Sayona Mining Limited I Annual Report 2016 41
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
Continued Operations & Future Funding (continued)
The financial report does not include adjustments relating to the recoverability or classification of recorded asset
amounts or to the amounts or classification of liabilities that might be necessary should the company not be able
to continue as a going concern.
Income Tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax
expense/(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax
liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant taxation
authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well unused tax losses.
Current and deferred income tax expense/(income) is charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the
asset is realised or the liability is settled and their measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable
items of property, plant and equipment measured at fair value and items of investment property measured at fair
value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of
the asset will be recovered entirely through sale.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that
it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint
ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary
difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred
tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
Property, Plant & Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation
and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the
estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable
amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the
impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when
impairment indicators are present.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net
cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash
flows have been discounted to their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or
loss during the financial period in which they are incurred.
42
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the
consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are
depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements. The depreciation rates used for plant and equipment are in the range between 20% and 40%.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are recognised in profit or loss in the period in which they arise.
Exploration and Development Expenditure
Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area
of interest. These costs are only capitalised to the extent that they are expected to be recovered through the
successful development of the area or where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which
the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine
the appropriateness of continuing to capitalise costs in relation to that area of interest.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life
of the area according to the rate of depletion of the economically recoverable reserves.
The term "Joint Operation" has been used to describe "farm-in" and "farm-out" arrangements.
Where the company has entered into joint operation agreements on its areas of interest, the earn-in contribution
by the joint operation partner is offset against expenditure incurred. Earn-in contributions paid, or expenditure
commitments incurred by the company to acquire a joint venture interest are expensed when incurred up to the
time an interest is acquired.
Restoration Costs
The company currently has no obligation for any restoration costs in relation to discontinued operations, nor is it
currently liable for any future restoration costs in relation to current areas of interest. Consequently, no provision
for restoration has been deemed necessary.
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
charged as expenses in the periods in which they are incurred. Incentives under operating leases are recognised
as a liability and amortised on a straight-line basis over the life of the lease term.
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be
impaired. The assessment will include consideration of external and internal sources of information. If such an
indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell
and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its
recoverable amount is recognised immediately in profit or loss.
Where it is not possible to estimate the recoverable amount of an individual asset the Group estimates the
recoverable amount of the cash generating unit to which the asset belongs.
Interests in Joint Arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture where
unanimous decisions about relevant activities are required.
The only joint operations the Group has entered into are "farm-in" and "farm-out" arrangements as discussed in
note 1 under Exploration and Development Assets.
Sayona Mining Limited I Annual Report 2016 43
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis
after initial recognition, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an
orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the
measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to the characteristics of the
specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are
determined using one or more valuation techniques. These valuations techniques maximise, to the extent
possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie
the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a
market, the most advantageous market available to the entity at the end of the reporting period (ie the market that
maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after
taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability to use
the asset in its highest and best use or to sell it to another market participant that would use the asset in its
highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based
payment arrangements) may be valued, where there is no observable market price in relation to the transfer of
such financial instrument, by reference to observable market information where such instruments are held as
assets. Where this information is not available, other valuation techniques are adopted and, where significant, are
detailed in the respective note to the financial statements.
Financial Instruments
Initial Recognition and Measurement
Financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual
provisions of the instrument. This is equivalent to the date that the Group commits itself to either the purchase or
sale of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is
classified "at fair value through profit or loss" in which case transactions are expensed to profit or loss
immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method,
or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative
amortisation of the difference between that initial amount and the maturity amount calculated using the effective
interest method.
Classification and Subsequent Measurement (continued)
The effective interest method is used to allocate interest income or interest expense over the relevant period and
is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction
costs and other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the
contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability.
Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a
consequential recognition of an income or expense item in profit or loss.
44
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
The Group does not designate any interests in subsidiaries as being subject to the requirements of Accounting
Standards specifically applicable to financial instruments.
i. Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose
of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to
avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed
by key management personnel on a fair value basis in accordance with a documented risk management or
investment strategy. Such assets are subsequently measured at fair value with changes in carrying amount being
included in profit or loss.
ii. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or
loss through the amortisation process and when the financial asset is derecognised.
iii. Available-for-sale investments
Available-for-sale investments are non-derivative financial assets that are either designated as such or that are not
classified in any of the other categories. They comprise investments in the equity of other entities where there is
neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with any remeasurements other than impairment losses and foreign
exchange gains and losses recognised in other comprehensive income. When the financial asset is
derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive
income is reclassified into profit or loss.
Available-for-sale financial assets are classified as non-current assets when they are not expected to be sold
within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as
current assets.
vi. Financial Liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is
derecognised.
Impairment
A financial asset (or group of financial assets) is deemed to be impaired if, and only if, there is objective evidence
of impairment as a result of one or more events (a "loss event") having occurred, which has an impact on the
estimated future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the
instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss
immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is
reclassified to profit or loss at this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a
group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal
payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or
economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is
used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible
measures of recovery, if management establishes that the carrying amount cannot be recovered by any means,
at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired
financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.
Sayona Mining Limited I Annual Report 2016 45
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated,
the Group recognises the impairment for such financial assets by taking into account the original terms as if the
terms have not been renegotiated so that the loss events that have occurred are duly considered.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset. Financial liabilities are derecognised when the related obligations are
either discharged, cancelled or expire. The difference between the carrying value of the financial liability
extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-
cash assets or liabilities assumed, is recognised in profit or loss.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian
dollars which is the parent entity’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-
monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss, 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 other
comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive
income otherwise the exchange difference is recognised in the profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian
dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in
the statement of financial position. The cumulative amount of these differences is reclassified into profit or loss in
the period in which the operation is disposed of.
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are
benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of
the annual reporting period in which the employees render the related service, including wages, salaries and sick
leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the
obligation is settled.
46
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Employee Benefits (continued)
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised
as a part of current trade and other payables in the statement of financial position. The Group’s obligations for
employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of
financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled
wholly within 12 months after the end of the annual reporting period in which the employees render the related
service. Other long-term employee benefits are measured at the present value of the expected future payments to
be made to employees. Expected future payments incorporate anticipated future wage and salary levels,
durations of service and employee departures and are discounted at rates determined by reference to market
yields at the end of the reporting period on government bonds that have maturity dates that approximate the
terms of the obligations. Any remeasurements for changes in assumptions of obligations for other long-term
employee benefits are recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement
of financial position, except where the Group does not have an unconditional right to defer settlement for at least
12 months after the end of the reporting period, in which case the obligations are presented as current provisions.
Equity Settled Compensation
The Group operates an employee share and option plan. Share-based payments to employees are measured at
the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-
employees are measured at the fair value of goods or services received or the fair value of the equity instruments
issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at
the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair
value of options is determined using the binomial lattice pricing model. The number of shares and options
expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised
for services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are
reported within short-term borrowings in current liabilities in the statement of financial position.
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.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the
reporting period.
Issued Capital
Ordinary shares are classified as equity. Transaction costs (net of tax, where the deduction can be utilised) arising
on the issue of ordinary shares are recognised in equity as a reduction of the share proceeds received.
Where share application monies have been received, but the shares have not been allotted, these monies are
shown as a payable in the statement of financial position.
Share options are classified as equity and issue proceeds are taken up in the option reserve. Transaction costs
(net of tax where the deduction can be utilised) arising on the issue of options are recognised in equity as a
reduction of the option proceeds received. When these options are exercised, the relevant balance in the reserve
is transferred to issued capital.
Sayona Mining Limited I Annual Report 2016 47
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue and Other Income
Interest revenue is recognised using the effective interest method. All revenue is stated net of the amount of
goods and services tax.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows
included in receipts from customers or payments to suppliers.
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid
at the end of the reporting period. The balance is recognised as a current liability with amounts normally paid
within 30 days of recognition of the liability.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Earnings per Share (EPS)
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the parent entity,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for any bonus elements in ordinary shares issued during
the year.
Diluted earnings per share
Diluted earnings per ordinary share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
Adjusting Events
The weighted average number of shares outstanding during the period and for all periods presented are adjusted
for events, other than the conversion of potential ordinary shares that have changed the number of ordinary
shares outstanding without a corresponding change in resources.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgments incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the group.
Key Estimates:
Impairment - general
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific
to the Group that may be indicative of impairment triggers. No impairment has been recognised for the year.
48
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Critical Accounting Estimates and Judgement (continued)
Key Judgments:
Exploration and evaluation expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be
recoverable or where the activities have not reached a stage that permits a reasonable assessment of the
existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the
directors are of the continued belief that such expenditure should not be written off since feasibility studies in
such areas have not yet concluded. During the year exploration and evaluation expenditure totalled $2,712,521,
of which $1,273,785 was written-off and $1,438,736 was capitalised. Capitalised expenditure at the end of the
reporting period is $1,438,736.
Going Concern
Refer to comments in Note 1 on Continued Operations and Future Funding.
New Accounting Standards for Application in Future Periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the
Group, together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods
beginning on or after 1 January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below)
and includes revised requirements for the classification and measurement of financial instruments, revised
recognition and derecognition requirements for financial instruments and simplified requirements for hedge
accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification
of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected
credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that
are not held for trading in other comprehensive income.
Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial
instruments, it is impracticable at this stage to provide a reasonable estimate of such impact.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117:
Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard include:
-
-
-
-
-
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12
months of tenure and leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss
and unwinding of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial measurement of the
lease liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and
instead account for all components as a lease; and
additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening
equity on the date of initial application.
The directors are of the view that any impact is immaterial to the Group's financial statements.
Sayona Mining Limited I Annual Report 2016 49
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 2: REVENUE AND OTHER INCOME
Interest received from unrelated parties
Foreign exchange gains
Gain on disposal of controlled entity
Total revenue and other income
NOTE 3: LOSS FOR THE YEAR
Loss before income tax include the following specific expenses:
(i) Expenses:
Included in expenses are the following items:
Net loss on financial asset at fair value through profit and loss
Rental expense on operating lease
Depreciation
(ii) Significant Revenue and Expenses
The following significant revenue and expense items are relevant in
explaining the financial performance:
2016
$
26,361
15,843
560
42,764
2015
$
21,123
34,096
-
-
55,219
39,231
36,851
1,837
41,670
35,427
2,497
Exploration & evaluation expenditure expensed during the year
(1,273,785)
(310,394)
NOTE 4: INCOME TAX EXPENSE
(a) The prima facie tax on loss from ordinary activities is reconciled
to the income tax as follows:
2016
$
2015
$
Prima facie tax payable on loss from ordinary activities before income
tax at 30% (2015: 30%). (Australian domestic rate)
(753,593)
(169,959)
Adjust for tax effect of:
Tax losses and temporary differences not brought to account
Non-allowable items
Income tax expense attributable to entity
Weighted average effective tax rate
445,111
308,482
172,905
(2,946)
-
-
0.00%
0.00%
(b) Deferred tax assets and liabilities not brought to account, the net benefit
of which will only be realised if the conditions for deductibility set out in Note
1 occur:
Temporary differences
Tax losses - Revenue
Tax losses - Capital
Net unbooked deferred tax asset
171,196
6,160,656
6,736,405
8,288
5,494,181
6,736,405
13,068,257
12,238,874
The Company has unconfirmed, Australian carry forward losses for revenue of $20,535,521 (2015: $18,286,618)
and for capital of $22,454,683 (2015: $22,454,683).
The tax benefits will only be obtained if the conditions in note 1 are satisfied; the economic entity derives future
assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the
losses to be realised and if the economic entity continues to comply with the conditions for deductibility imposed
by the relevant tax legislation.
50
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the remuneration report contained in the directors report for details of the remuneration paid or payable
to each member of the Group's key management personnel (KMP) and other information for the year ended 30
June 2016.
(a) The names of key management personnel of the Group who have held office during the financial year are:
Key Management Personnel
Position
Dennis O’Neill
Paul Crawford
Allan Buckler
James Brown
Corey Nolan
Managing Director
Director - Executive
Director - Non-executive
Director - Non-executive
Chief Executive Officer
(b) The totals of remuneration paid to KMP of the Company and Group during the year are as follows:
2016
$
313,824
24,113
-
141,959
479,896
2015
$
-
-
-
-
-
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Short-term employee benefits
These amounts include fees and benefits paid to the directors.
Post-employment benefits
These amounts are the superannuation contributions made during the year.
Other long-term benefits
These amounts represent long service benefits accruing during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as
measured by the fair value of the option, rights and shares granted on grant date.
NOTE 6: EARNINGS PER SHARE
2016
No.
2015
No.
The earnings figures used in the calculation of both the basic EPS
and the dilutive EPS are the same as the profit or (loss) in the
statement of profit or loss and other comprehensive income.
Weighted average number of ordinary shares outstanding during the
year used in the calculation of basic EPS
503,822,436
408,625,220
Weighted average number of options outstanding.
-
-
Weighted average number of ordinary shares and potential ordinary
shares outstanding during the year used in the calculation of diluted
EPS
503,822,436
408,625,220
Options to acquire ordinary shares in the parent company are the only securities considered as potential ordinary
shares in determination of diluted EPS. These securities are not presently dilutive and have been excluded from
the calculation of diluted EPS.
Sayona Mining Limited I Annual Report 2016 51
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 6: EARNINGS PER SHARE (continued)
Ordinary shares issued after 30 June 2016 that significantly change
the number of ordinary shares outstanding
Options on ordinary shares issued after 30 June 2016 that
significantly change the number of ordinary shares outstanding
2016
$
2015
$
264,607,005
136,372,292
-
-
NOTE 7: AUDITORS' REMUNERATION
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial reports
- other assurance services
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Cash at bank and on hand
26,700
-
28,400
-
26,700
28,400
52,253
10,350
127,195
610,350
62,603
737,545
The effective interest rate on short-term bank deposits was 1.25% (2015:
2.25%). These deposits have an average maturity of 60 days. A short-term
deposit of $10,000 is secured against a bank guarantee for $10,000 (Refer
note 20).
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash flow is
reconciled to items in the statement of financial position as follows:
Cash and cash equivalents
62,603
737,545
NOTE 9: TRADE AND OTHER RECEIVABLES
Current (unsecured):
Other Debtors
36,886
13,059
36,886
13,059
The Group has no significant concentration of credit risk exposure to any party.
NOTE 10: OTHER FINANCIAL ASSETS
Current:
Financial assets at fair value through profit and loss (a)
78,462
117,693
(a) These assets comprise ASX listed shares in Kimberley Diamonds
Limited, received as part of settlement of the Company's deferred
sale consideration for its former Lerala diamond mine.
Shares are held for trading for the purposes of short-term profit taking.
Changes in fair value are included in profit or loss.
52
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 11: OTHER ASSETS
Current:
Prepayments
NOTE 12: PLANT & EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Reconciliation of the carrying amounts for property, plant and
equipment:
Balance at the beginning of year
Additions
Depreciation expense
Carrying amount at the end of year
2016
$
2015
$
14,850
6,296
11,500
(5,475)
5,172
(3,638)
6,025
1,534
1,534
6,328
(1,837)
4,031
-
(2,497)
6,025
1,534
NOTE 13: EXPLORATION AND EVALUATION ASSET
Exploration and evaluation expenditure carried forward in respect of areas of interest are:
Exploration and evaluation phase - company interest 100% (a)
Exploration and evaluation phase - subject to joint operation (b)
2015
$
2016
$
1,362,774
75,962
1,438,736
(a) Movement in exploration and evaluation expenditure:
Non-Joint Operation
Opening balance - at cost
Capitalised exploration expenditure
Carrying amount at end of year
-
1,362,774
1,362,774
-
-
-
-
-
-
(b) Movement in exploration and evaluation expenditure:
Subject to Joint Operation
Opening balance - at cost
Capitalised exploration & evaluation expenditure
Carrying amount at end of year
-
75,962
75,962
-
-
-
Recoverability of the carrying amount of exploration assets is dependent on the successful exploration and
development of projects, or alternatively, through the sale of the areas of interest.
Sayona East Kimberley Graphite Pty Ltd
In July 2015 the Company entered into a Tenement Option and Sale Agreement with Western Iron Pty Ltd to
acquire 100% of the graphite interests in tenement E80/4511. Sayona paid Western Iron $5,000 on signing and
$200,000 on 6 January 2016 to exercise its option. Western Iron is entitled to receive a 1% gross production
royalty. Western Iron retains a Back-in option to the nickel, copper and iron mineralisation by the payment of
$100,000 within 12 months of completion date.
During the year, $1,097,836 was expended and capitalised on this project.
Sayona Mining Limited I Annual Report 2016 53
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 13: EXPLORATION AND EVALUATION ASSET (continued)
Sayona Lithium Pty Ltd
Mt Edon
On 4 February 2016, the Company entered into a binding heads of agreement with Mr Bruce Legendre to acquire
a 100% interest in Western Australian mineral tenement E59/2092.
The agreement provided for:
- an initial payment of $15,000 and issue of 1,000,000 fully paid ordinary shares in the parent entity to acquire
80% of the tenement;
- a 3 year option to acquire the remaining 20% for $100,000; and
-
the vendor retains a 1% net smelter royalty on lithium production.
The agreement also provided the vendor with the right to explore for and develop other non-lithium commodity
extraction within the Tenement during the option period.
The Company has acquired the initial 80% interest. During the year, $75,962 was expended and capitalised on
this tenement.
Mt Edon West
On 17 March 2016, the Company entered into a binding heads of agreement with Attgold Pty Ltd to acquire a
100% interest in Western Australian mineral tenement E59/2055. Consideration for the acquisition was $15,000
payable at completion of a 7 day due diligence period.
The agreement also provided the vendor with an exclusive right to explore for, extract and sell (in accordance
with the terms of grant of the Tenement) any non-lithium containing materials within the Tenement.
During the year, $54,824 was expended and capitalised on this tenement.
Authier Lithium Project
On 1 May 2016, the Company entered into a binding term sheet with Glen Eagle Resources Inc to acquire 100
per cent of the Authier project in Quebec, Canada for CAD$4 million. The agreement was subject to the
satisfactory completion of a 60-day due diligence period. The Company paid Glen Eagle CAD$50,000 for full
exclusivity to the Authier project during the due diligence period.
In June 2016 the parties agreed to a three week extension of the due diligence period until 21 July 2016. The
Company paid Glen Eagle a further CAD$25,000 for the extension.
NOTE 14: TRADE AND OTHER PAYABLES
Current:
Trade creditors
Sundry creditors and accrued expenses
Total trade & other payables (unsecured)
2016
$
2015
$
185,721
98,462
38,126
15,500
284,183
53,626
Financial liabilities at amortised cost classified as trade and other payables:
Financial liabilities as trade and other liabilities (refer Note 21)
284,183
53,626
NOTE 15: PROVISIONS
Current:
Provision for annual leave
Opening balance
Additional provisions
Amounts used
Balance at year end
19,710
-
19,710
-
19,710
-
-
-
-
-
54
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 16: ISSUED CAPITAL
2016
$
2015
$
Fully paid ordinary shares
52,945,695
50,069,511
Ordinary shares issued during the year
Balance at the beginning of the reporting period
Shares issued during the year:
24 December 2014, ordinary shares at $0.005 each
14 August 2015, ordinary shares at $0.025 per share, in the
institutional component of the rights issue.
4 September 2015, ordinary shares $0.025 per share in the
retail component of the rights issue.
7 September 2015, ordinary shares at $0.025 per share as a
placement in respect of underwriting oversubscriptions.
7 September 2015, ordinary shares at $0.025 per share in part
settlement of capital raising fees.
21 March 2016 ordinary shares at $0.02 per share in part
settlement of tenement acquisition.
23 May 2016 ordinary shares at $0.03 per share following
exercise of options.
30 May 2016 ordinary shares at $0.03 per share following
exercise of options.
25 June 2016 ordinary shares at $0.03 per share following
exercise of options.
26 June 2016 ordinary shares at $0.03 per share following
exercise of options.
No.
No.
411,534,809 405,534,809
6,000,000
72,320,000
30,563,700
1,224,115
1,603,522
1,000,000
8,516,667
3,000,000
6,000,000
1,500,000
-
-
-
-
-
-
-
-
-
Balance at reporting date
537,262,813 411,534,809
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held. At shareholders' meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands.
The company does not have authorised capital or par value in respect of its issued shares.
Options on issue are as follows:
2016
No.
2015
No.
(i) Unlisted employee and officer options
Balance at beginning of reporting period
Granted
Exercised
Balance at reporting date
(ii) Listed options
Balance at beginning of reporting period
Granted
Exercised
Balance at reporting date
-
38,000,000
(7,500,000)
30,500,000
-
110,916,481
(11,516,667)
99,399,814
-
-
-
-
-
-
-
-
Sayona Mining Limited I Annual Report 2016 55
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 16: ISSUED CAPITAL (continued)
Capital management policy
Exploration companies such as Sayona Mining are funded by share capital during exploration and a combination
of share capital and borrowings as they move into the development and operating phases of their business life.
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate
long-term shareholder value and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market.
There are no externally imposed capital requirements.
There have been no changes in the strategy adopted by management to control the capital of the Group since
the prior year.
NOTE 17: RESERVES
Foreign currency translation reserve
The foreign currency translation reserve recorded exchange differences arising on translation of a foreign
controlled subsidiary.
Following the de-registration of DiamonEx (USA) Limited during the period, the Group no longer controls any
foreign subsidiaries. Consequently the balance of the foreign currency translation reserve was reclassified to
retained earnings in accordance with AASB 10: Consolidated Financial Statements.
Options reserve
The options reserve records amounts recognised as expenses on valuation of employee share options, equity
based payments for services and the net proceeds from the issue of entitlement options to all shareholders.
NOTE 18: CASH FLOW INFORMATION
(a)
Reconciliation of Cash Flow from Operations with Loss from
Ordinary Activities after Income Tax:
Loss from ordinary activities after income tax
Non-cash flows in profit from ordinary activities:
Gain on disposal of controlled entity
Depreciation
Share based payments
Loss on financial asset at fair value through profit and loss
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in prepayments
(Decrease)/Increase in creditors and accruals
(Increase)/Decrease in provisions
Cash flows from operations
(b) Non-cash Financing and Investing Activities
2016
$
2015
$
(2,511,415)
(566,530)
(560)
1,837
141,959
39,231
(23,827)
(8,554)
230,557
19,710
(2,111,062)
-
2,497
-
41,670
(6,598)
(1,132)
(20,270)
-
(550,363)
On 8 July 2015, the Company granted 18,000,000 options with various exercise conditions to Mr Nolan as
remuneration. Options expire progressively, with 6,000,000 expiring on each of 30 June 2016, 31 December 2016
and 30 June 2017.
56
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 18: CASH FLOW INFORMATION (continued)
During the period, 104,107,815 options were granted as part of the issue of shares under an entitlement offer.
These options are exercisable at $0.03 each and expire on 31 December 2016. The options are listed on the
Australian Securities Exchange.
In addition, 1,603,522 shares and 6,808,666 options were granted as part settlement of the underwriting and
management fees associated with the entitlement offer. These options are exercisable at $0.03 each and expire
on 31 December 2016. The options are listed on the Australian Securities Exchange.
On 25 November 2015, the Company granted a total of 20,000,000 options to Directors of the Company as
remuneration. The options are exercisable at $0.03 each and expire on 30 June 2017.
On 21 March 2016 the Company issued 1,000,000 new shares at $0.02 per share to Mr Bruce Legendre in part
settlement to acquire a 100% interest in Western Australian mineral tenement E59/2092.
During the previous year, 6,000,000 shares were issued at $0.005 each to settle director fees outstanding from
prior years.
NOTE 19: RELATED PARTY TRANSACTIONS
(a) The Group's main related parties are as follows:
Key Management Personnel:
Any persons having authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, including any director (whether executive or non-executive) of the Group, are considered key
management personnel.
(b) Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions, no more favourable than
those available to other parties unless otherwise stated.
During the year, the parent entity engaged Sirod Pty Ltd, an entity controlled by Mr Paul Crawford, a director of
the company, to provide accounting, company secretarial and other services. Fees of $100,000 were incurred
during the period (2015: nil). $20,000 was owed by the company at 30 June (2015: nil).
During the year, the parent entity engaged Shazo Holdings , an entity controlled by Mr Allan Buckler, a director of
the company, to provide technical services. Fees of $30,000 were incurred during the period (2015: nil). This
amount was owed by the company at 30 June (2015: nil).
During the year, the Company granted a total of 20,000,000 options to Directors of the Company as
remuneration. The options are exercisable at $0.03 each and expire on 30 June 2017.
During the previous year, 3,000,000 shares were issued at $0.005 each ($15,000) to each of Messrs O'Neill and
Crawford to settle director fees outstanding from prior years.
NOTE 20: COMMITMENTS
(a) Operating lease commitments
Non-cancellable operating leases contracted for but not recognised
in the financial statements:
Not later than 1 year
Between 1 year and 5 years
Total commitment
2016
$
2015
$
9,369
-
9,369
37,116
9,369
46,485
The property lease is a non-cancellable lease for the Brisbane office. The lease terminates on 30 September
2016. A new lease has not been executed at 30 June 2016.
Sayona Mining Limited I Annual Report 2016 57
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 20: COMMITMENTS (continued)
The lease is supported by a bank guarantee for $10,000. The bank guarantee is in turn supported by a charge
over a term deposit of $10,000. Refer Note 8.
(b) Exploration commitments
The entity must meet minimum expenditure commitments on granted exploration tenements to maintain those
tenements in good standing. If the relevant mineral tenement is relinquished the expenditure commitment also
ceases.
The following commitments exist at balance date but have not been
brought to account.
Not later than 1 year
Between 1 year and 5 years
Total commitment
NOTE 21: FINANCIAL RISK MANAGEMENT
2016
$
2015
$
193,651
203,562
30,000
170,000
397,213
200,000
The Group’s financial instruments mainly comprises cash balances, listed investments, receivables and payables.
The main purpose of these financial instruments is to provide finance for group operations.
The totals for each category of financial instruments, measured in accordance with AASB 139: Financial
Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements
are detailed in the table outlining financial instruments composition and maturity analysis in part (b) of Note 21.
Financial Risk Management Policies
The Board of the company meets on a regular basis to analyse exposure and to evaluate treasury management
strategies in the context of the most recent economic conditions and forecasts.
The Board has overall responsibility for the establishment and oversight of the company's risk management
framework. Management is responsible for developing and monitoring the risk management policies.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market
risk, consisting of interest rate risk, foreign exchange risk and equity price risk. These risks are managed through
monitoring of forecast cashflows, interest rates, economic conditions and ensuring adequate funds are available.
(a) Credit Risk
Credit risk arises from exposures to deposits with financial institutions and sundry receivables.
Credit risk is managed and reviewed regularly by the Board. It arises from exposures to joint venture partner
receivables and through deposits with financial institutions. The Board monitors credit risk by actively assessing
the rating quality and liquidity of counter parties:
-
-
only banks and financial institutions with an ‘A’ rating are utilised; and
all joint venture partners are rated for credit worthiness taking into account their size, market position and
financial standing.
The carrying amount of cash and cash equivalents recorded in the financial statements represent the Company's
maximum exposure to credit risk. Refer Note 8.
58
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
(b) Liquidity Risk
Liquidity risk is the risk that the company will not be able meet its financial obligations as they fall due. This risk is
managed by ensuring, to the extent possible, that there is sufficient liquidity to meet liabilities when due, without
incurring unacceptable losses or risking damage to the Company's reputation.
The Board manages liquidity risk by sourcing long-term funding, primarily from equity sources, rather than from
borrowing.
Financial liability and financial asset maturity analysis
The table below reflects an undiscounted contractual maturity analysis for financial assets and financial liabilities
and reflects management's expectations as to the timing of termination and realisation of financial assets and
liabilities.
1 year or
less
$
1 to 2
years
$
More than 2
years
Total
$
$
Consolidated Group
2016
Financial assets
Cash & cash equivalents (i)
Receivables (ii)
Held for trading instruments
Financial liabilities
Payables (ii)
62,603
36,886
78,462
177,951
284,183
284,183
Net cash outflow on financial instruments
(106,232)
2015
Financial assets
Cash & cash equivalents (i)
Receivables (ii)
Held for trading instruments
Financial liabilities
Payables (ii)
Net cash inflow on financial instruments
1 to 2
years
$
1 year or
less
$
737,545
13,059
117,693
868,297
53,626
53,626
814,671
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,603
36,886
78,462
177,951
284,183
284,183
-
(106,232)
More than 2
years
$
-
-
-
-
-
-
-
Total
$
737,545
13,059
117,693
868,297
53,626
53,626
814,671
(i) Floating interest with a weighted average effective interest rate of 1.25% (2015: 2.25%)
(ii) Non-interest bearing
(c) Market Risks
(i) Interest Rate Risk
The Group's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a
result of changes in market interest rates, arises in relation to the company's bank balances.
This risk is managed through the use of variable rate bank accounts.
Sayona Mining Limited I Annual Report 2016 59
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
(ii) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from currency movements,
primarily in respect of the US Dollar. No derivative financial instruments are employed to mitigate the exposed
risks. This is the Group's current policy and it is reviewed regularly, including forecast movements in these
currencies by the senior executive team and the Board.
These foreign exchange risks arose from
- Cash held in US dollars.
- US dollar denominated supplier services.
The Group's exposure to foreign currency risk at the reporting date
was as follows:
Cash and cash equivalents
Net exposure
(iii) Other price risk
USD
2016
3,300
USD
2015
88,741
3,300
88,741
Other price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency risk) of securities
held.
The risk is concentrated in one company in the mining industry.
(d) Sensitivity analysis
If the spot Australian Dollar rate weakened / strengthened by 5 percent against the US Dollar, with all other
variables held constant, the Group's post-tax result for the year would have been $211 higher / lower (2015:
$5,773).
The Group has performed sensitivity analysis relating to its exposure to interest rate risk. At year end, the effect on
profit and equity as a result of a 1% change in the interest rate, with all other variables remaining constant would
be +/- $626 (2015: $7,375).
At year end, if the equity price of the held for trading investments strengthened/weakened by 10 percent, the
effect on profit and equity would have been -/+ $7,846 (2015: $11,769).
(e) Fair Values
The aggregate fair values and carrying amounts of financial assets and liabilities are disclosed in the statement of
financial position and notes to the financial statements. Fair values are materially in line with carrying values, due
to the short term nature of all these items. Refer to note 27 for detailed disclosures regarding the fair value
measurement of the Group's financial assets and financial liabilities.
NOTE 22: CONTINGENT LIABILITIES
There were no material contingent liabilities at the end of the reporting period.
NOTE 23: SHARE BASED PAYMENTS
On 8 July 2015, the Company granted 18,000,000 options with various exercise conditions to Mr Nolan as
remuneration. The value of these options has been expensed and an amount of $4,493 has been credited to the
Option Reserve. Options expire progressively, with 6,000,000 expiring on each of 30 June 2016, 31 December
2016 and 30 June 2017. On 25 June 2016 6,000,000 options were exercised by Mr Nolan.
During the period, 104,107,815 options were granted as part of the issue of shares under an entitlement offer.
These options are exercisable at $0.03 each and expire on 31 December 2016. The options are listed on the
Australian Securities Exchange.
60
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 23: SHARE BASED PAYMENTS (continued
In addition, 1,603,522 shares and 6,808,666 options were granted as part settlement of the underwriting and
management fees associated with the entitlement offer. These options are exercisable at $0.03 each and expire
on 31 December 2016. The options are listed on the Australian Securities Exchange. The value of these options
has been treated as a non-cash cost of issue of the placement of shares. An amount of $5,000 has been credited
to the Option Reserve.
On 25 November 2015, the Company granted a total of 20,000,000 options to Directors of the Company as
remuneration. The value of these options has been expensed and an amount of $137,466 has been credited to
the Option Reserve. These options are exercisable at $0.03 each and expire on 30 June 2017. On 26 June 2016
1,500,000 options were exercised.
On 21 March 2016 the Company issued 1,000,000 new shares at $0.02 per share to Mr Bruce Legendre in part
settlement to acquire a 100% interest in Western Australian mineral tenement E59/2092.
Except as indicated, all of the above options were on issue at the end of the reporting period.
All Company options granted are over ordinary shares in Sayona Mining Limited, which confer a right of one
ordinary share per option. The options hold no voting or dividend rights. Options issued under share based
payment arrangements are summarised as:
2016
2015
Options issued under employee share
based payment arrangements are
summarised as:
Outstanding at beginning of the period
Granted
Forfeited
Exercised
Expired
Outstanding at period end
Number of
Options
No
-
38,000,000
-
7,500,000
-
30,500,000
Weighted
Average
Exercise
Price
$
Number of
Options
No
Weighted
Average
Exercise
Price
$
-
0.021
-
0.010
-
0.023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercisable & vested at period end
30,500,000
0.023
The weighted average remaining contractual life of options at year-end was 0.7 years. The weighted average fair
value of those equity instruments determined by reference to market price was $0.0023.
The Company established the Sayona Mining Limited Employees and Officers Share Option Plan on 26
November 2014. All members become eligible to participate at the discretion of the Board. Options forfeit one
month after the holders ceases to be employed by the Company.
At reporting date, the options granted to key management personnel under the Share Option Plan are:
Granted 8 July 2016
Granted 25 November 2016
Options
18,000,000
20,000,000
The weighted average fair value of options granted during the year was $0.02. These values were calculated
using a binomial option valuation model, applying the following assumptions:
Weighted average exercise price
Expected share price volatility
Weighted average life of option
Expected dividends
Risk-free interest rate
2.1 cents
100.0%
1.2 years
nil
2.00%
These shares were issued as compensation to key management personnel of the Group. Further details are
provided in the Directors' Report.
Sayona Mining Limited I Annual Report 2016 61
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 24: EVENTS AFTER BALANCE SHEET DATE
Key events since the end of the financial year have been:
(i)
(ii)
On 7 July 2016 a 100% owned, foreign subsidiary company, Sayona Quebec Inc was incorporated in
Quebec, Canada.
The Company issued 6,250 shares on 8 July 2016 and 4,361 shares on 20 July 2016 at $0.03 per share,
pursuant to the exercise of options.
(iii) On 10 July 2016, the Group entered into a Mineral Claim Purchase Agreement with Glen Eagle
Resources Inc to acquire the Authier graphite tenements in Quebec Canada. Purchase cost of the project
was CAD4,000,000. The acquisition was completed on 20 July 2016.
(iv) On 15 July 2016, the Company announced its intention to undertake an accelerated non-renounceable
rights issue to raise up to $2.9 million. The rights issue entailed a 1 for 5 entitlement offer at an issue price
of $0.027 per share, together with 1 free attaching option, exercisable at $0.03 and expiring 30 December
2016, for every 2 share applied for.
(v)
On 18 July 2016, the Company undertook a private placement of 133,067,264 shares and 66,533,638
listed options to raise $3,592,816. The terms of the placement included the grant of 1 free attaching
option, exercisable at $0.03 and expiring 30 December 2016, for every new 2 shares applied for. The
allotment of the options gained shareholder approval at a General Meeting of the Company held on 7
September 2016.
(vi) On 22 July 2016, the Company completed the accelerated component of the rights issue, issuing
70,539,643 ordinary shares and 35,269,822 listed options to raise $1,904,570. See (v) above.
(vii) On 5 August, the Company entered into a new Heads of Agreement with Attgold Pty Ltd, varying the
terms of the option exercise component of the original Heads entered into on 6 February 2015. The new
agreement extends the option payment terms from a one off payment of $170,000 payable in August
2016 to split payment of $50,000 in September 2016 and a further $120,000 payable in January 2017.
The payments are to be made in equivalent value of shares in Sayona Mining Limited. The Company
issued 1,851,852 shares on 7 September 2016 in settlement of the first payment.
(viii) On 17 August 2016, the Company completed the underwritten retail component of the rights issue raising
$996,682 by issuing 36,915,413 ordinary shares and 18,457,727 options. See (v) above.
(ix) On 7 September 2016, the Company issued 22,222,222 shares and 11,111,111 listed options to raise
$600,000 pursuant to shareholder approval.
(x)
On 7 September 2016, the Company issued 5,000,000 listed options pursuant to shareholder approval,
in part settlement of raising management and underwriting fees.
(xi) On 7 September 2016, the Company issued 1,851,852 ordinary shares as consideration for part
acquisition of a mineral tenement in Western Australia.
This financial report was authorised for issue on 30 September 2016 by the Board of Directors.
NOTE 25: JOINT ARRANGEMENTS
The Group has entered into joint arrangements with the following parties. Joint arrangements are in the form of
options to acquire mineral tenements. Refer to note 13 for more information about the arrangements.
Sayona Lithium Pty Ltd
On 4 February 2016, the Company entered into a binding heads of agreement with Mr Bruce Legendre to acquire
a 100% interest in Western Australian mineral tenement E59/2092.
The agreement provides for an initial payment of $15,000 and issue of 1,000,000 fully paid ordinary shares in the
parent entity to acquire 80% of the tenement with a further 3 year option to acquire the remaining 20% for
$100,000.
The Group holds an 80% interest in the project at 30 June 2016. Under the agreement, the vendor is entitled to
receive a 1% gross production royalty and is entitled to explore for and develop other non-lithium commodity
within the Tenement during the option period.
62
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 25: JOINT ARRANGEMENTS (continued)
On 17 March 2016, the Company entered into a binding heads of agreement with Attgold Pty Ltd to acquire the
pegmatite interest in Western Australian mineral tenement E59/2364. The Company paid $15,000 for a 1 year
option to acquire the interest.
Consideration on exercising the option is $80,000. The agreement also provides for the vendor to retain a 1% net
smelter royalty on lithium production.
The Group held no interest in the project at 30 June 2016.
NOTE 26: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Sayona Mining Limited. This information has been prepared
using consistent accounting policies as presented in note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Option Reserve
Accumulated losses
Total equity
2016
$
2015
$
1,421,418
216,144
875,153
1,534
1,637,562
876,687
303,893
-
53,626
-
303,893
53,626
52,945,695
146,959
(51,758,985)
50,069,511
-
(49,246,450)
1,333,669
823,061
Statement of Profit or Loss and Other Comprehensive Income
Total loss for the year
Total other comprehensive income
(2,323,416)
-
(566,530)
-
Total comprehensive loss for the year
(2,323,416)
(566,530)
Guarantee
In October 2013, the parent company entered into an operating lease in relation to office space. The lease is
supported by a bank guarantee for $10,000. The bank guarantee is in turn supported by a charge over a term
deposit of $10,000, refer note 8.
Contingent Liabilities
There are no material contingent liabilities at the end of the reporting period.
NOTE 27: INTERESTS IN SUBSIDIARIES
Information about principal subsidiaries
Sayona Lithium Pty Ltd, incorporated in Australia. The parent entity holds 100% (2015: 100%) of the ordinary
shares of the entity, carried at nil recoverable amount. The company changed its name from Lake Exploration Pty
Ltd on 29 February 2016.The company holds options to acquire and tenement applications for lithium tenements
in Western Australia.
Sayona East Kimberley Pty Ltd, incorporated in Australia on 18 June 2015. The parent entity holds 100% of the
ordinary shares of the entity, carried at recoverable amount of $1. The company holds options on graphite
tenements in Western Australia.
Sayona Mining Limited I Annual Report 2016 63
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 27: INTERESTS IN SUBSIDIARIES (continued)
Sayona International Pty Ltd, incorporated in Australia on 29 April 2016. The parent entity holds 100% of the
ordinary shares of the entity, carried at recoverable amount of $1. The company was established to hold overseas
projects acquired by the Group. No assets were held by the entity at 30 June 2016.
These subsidiaries have share capital consisting solely of ordinary shares which are held directly by the Group.
There are no significant restrictions over the Group's ability to access or use assets and settle liabilities of the
Group.
Disposal of controlled entity
On 1 July 2015, the parent entity voluntarily dissolved its 100% owned subsidiary, DiamonEx (USA) Limited. The
total gain recognised in respect of the disposal amounted to $560 and was recognised in profit or loss as part of
other income.
NOTE 28: FAIR VALUE MEASUREMENT
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after
initial recognition:
-
financial assets held for trading.
The Group does not subsequently measure any liabilities at fair value on a non-recurring basis.
Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value
hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level
that an input that is significant to the measurement can be categorised into as follows:
Level 1
Level 2
Level3
Measurements based on quoted
prices (unadjusted) in active
markets for identical assets or
liabilities that the entity can
access at the measurement
date.
Measurements based on inputs
other than quoted prices included
in Level 1 that are observable for
the asset or liability, either directly
or indirectly.
Measurements based on
unobservable inputs for the
asset or liability.
The Group does not measure any assets or liabilities at fair value using Level 2 or Level 3 inputs.
Valuation Techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is
available to measure fair value. As the Group only has one financial asset measured at fair value using Level 1
inputs, it adopts a Market approach valuation that uses prices and other relevant information generated by market
transactions for identical or similar assets.
The following tables provide the fair values of the Group’s assets and liabilities measured and recognised on a
recurring basis after initial recognition and their categorisation within the fair value hierarchy:
30 June 2016
(Level
2)
$
(Level
3)
$
(Level
1)
$
30 June 2015
(Level
2)
$
(Level
1)
$
(Level
3)
$
Recurring fair value
measurements
Held for trading financial assets
78,462
-
-
117,693
-
-
64
SAYONA MINING LIMITED
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 28: FAIR VALUE MEASUREMENT (continued)
Disclosed Fair Value Measurements
The following table provides the level of the fair value hierarchy within which the disclosed fair value
measurements are categorised in their entirety and a description of the valuation technique and inputs used:
Description
Note
Fair Value
Hierarchy
Level
Valuation Technique(s)
Inputs Used
Assets:
Shares in listed
companies
10
1
Closing quoted bid
prices
Closing quoted bid
prices
NOTE 29: SEGMENT REPORTING
The Group operates internationally, in the mineral exploration industry. Segment reporting is based on the whole
of entity. Geographical segment information is as follows:
Primary Reporting: Geographical Segments
Australia
Overseas
Consolidated
Group
2016
2015
2016
2015
2016
2015
$
$
$
$
$
$
42,764
55,219
42,764
55,219
-
-
-
-
42,764 55,219
42,764 55,219
(1,456,292) (566,530) (1,055,123)
- (2,511,415) (566,530)
-
-
-
-
-
-
(1,456,292) (566,530) (1,055,123)
- (2,511,415) (566,530)
REVENUE
Revenue
Total revenue from ordinary
activities
RESULT
Profit/(loss) from ordinary
activities before income tax
expense
Income tax expense
Profit/(loss) from ordinary
activities after income tax expense
ASSETS
Segment assets
1,427,448
876,127
210,114
- 1,637,562
876,127
LIABILITIES
Segment liabilities
283,954
53,626
19,939
-
303,893 53,626
There were no transfers between segments reflected in the revenues, expenses or result above. The pricing of
any intersegment transactions is based on market values.
Segment accounting policies are consistent with the economic entity.
NOTE 30: COMPANY DETAILS
The registered office and principal place of business is:
Sayona Mining Limited
283 Given Terrace
Paddington Queensland 4064
Sayona Mining Limited I Annual Report 2016 65
DIRECTORS’ DECLARATION
The directors of the company declare that:
1.
The attached financial statements and notes are in accordance with the Corporations Act 2001
and:
(a)
comply with Australian Accounting Standards which, as stated in accounting policy
Note 1 to the financial statements, constitutes compliance with International Financial
Reporting Standards (IFRS); and
(b) give a true and fair view of the financial position as at 30 June 2016 and of the
performance of the consolidated group for the year ended on that date.
2.
3.
In the directors' opinion there are reasonable grounds to believe that the company will be able
to pay its debts as and when they become due and payable; and
The directors have been given the declarations by their Chief Executive Officer and Chief
Finance Officer required by section 259A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Dennis O’Neill
Director
Paul Crawford
Director
Dated this: 30 th day of September 2016
66
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SAYONA MINING LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Sayona Mining Limited (“the company”),
which comprises the consolidated statement of financial position as at 30 June 2016, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the company and
the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility 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 is free from material misstatement, whether due to fraud or
error. In Note 1 the directors also state, in accordance with Accounting Standard AASB 101:
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards (IFRS).
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards require
that we comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial report, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial report in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Sayona Mining Limited I Annual Report 2016 67
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF SAYONA MINING LIMITED (continued)
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the
Corporations Act 2001, provided to the directors of Sayona Mining Limited as attached to the
directors’ report, has not changed as at the date of this auditor’s report.
Opinion
In our opinion:
a.
the financial report of Sayona Mining Limited is in accordance with the Corporations Act
2001, including:
i.
ii.
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
Emphasis of Matter – Continued Operations and Future Funding
Without qualifying our opinion, we draw attention to Note 1 in the financial report which states that
the company’s ability to execute its planned exploration and evaluation activities and meet other
necessary corporate expenditure is dependent on the company’s ability to raise additional funds.
The matters set forth in Note 1 indicate the existence of a material uncertainty that may cast
significant doubt over the company’s ability to continue as a going concern and therefore, the
company may be unable to realise its assets and discharge its liabilities in the normal course of
business and at the amounts stated in the financial report.
As set out in the note the directors have prepared the financial report on a going concern basis.
Report on the Remuneration Report
We have audited the remuneration report included in pages 15 to 19 of the directors’ report for the
year ended 30 June 2016. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with s 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.
68
Auditor’s Opinion
In our opinion the remuneration report of Sayona Mining Limited for the year ended 30 June 2016
complies with s 300A of the Corporations Act 2001.
Nexia Brisbane Audit Pty Ltd
AM Robertson
Director
Level 28, 10 Eagle Street
Brisbane, QLD, 4000
Date: 30 September 2016
Sayona Mining Limited I Annual Report 2016 69
ASX INFORMATION
Following is additional information required by the ASX Limited and not disclosed elsewhere in this
report. The information is provided as at 7 October 2017.
1.
Shareholding:
Twenty Largest Holders - Ordinary Shares
Number of
Shares Held
% of
Total
Shares
1. P Point Pty Ltd
2. Terryjoy Pty Ltd
3. Cropanly Pty Ltd
4. EM Enterprises (Qld) Pty Ltd
5. Ms Yun Cong Ye + Ms Min Hua Huang
6. Popeye Investments Pty Ltd
7. Mr Gary Jiarui Zhou
8. HSBC Custody Nominees (Australia) Limited
9.
K.M. Fitzpatrick & Associates Pty Ltd
10. Mr Samuel Kah Teck Ng
11. Ms Fei Fan Song + Ms Min Hua Huang
12. Mr John Michael Moore
13. Kabila Investments Pty Limited
14.
Mr Robert Veitch + Mrs Elaine Veitch
15. Melbourne Capital Limited
16. Rookharp Investments Pty Ltd
17.
CPS Control Systems Pty Limited
18. Netwealth Investments Limited
19.
Mr John Frank Bosca + Mr Joseph Bosca + Mr Peter Antonio
Bosca
20. Finn Air Holdings Pty Ltd
80,755,813
80,755,813
79,384,678
68,052,816
37,037,037
18,518,519
13,373,885
13,022,311
12,962,963
11,383,485
11,111,111
10,036,486
9,129,700
9,115,200
8,785,760
8,037,037
7,408,000
6,920,000
6,360,000
6,296,297
10.07
10.07
9.90
8.49
4.62
2.31
1.67
1.62
1.62
1.42
1.39
1.25
1.14
1.14
1.10
1.00
0.92
0.86
0.79
0.79
70
ASX INFORMATION
Twenty Largest Holders - Options
1. Ms Yun Cong Ye + Ms Min Hua Huang
2. Popeye Investments Pty Ltd
3. M & K Korkidas Pty Ltd
4. First Investment Partners Pty Ltd
5. Mr Yongcheng Tang
6.
7.
Mr Robert Veitch + Mrs Elaine Veitch
K.M. Fitzpatrick & Associates Pty Ltd
8. Mr Samuel Kah Teck Ng
9. Ms Fei Fan Song + Ms Min Hua Huang
10. Mr David Ariti
11. Rookharp Investments Pty Ltd
12. BNP Paribas Noms Pty Ltd
13. Melbourne Capital Limited
14.
CPS Control Systems Pty Limited
15. Bizzell Capital Partners Pty Ltd
16. Finn Air Holdings Pty Ltd
17. Mr Terence Patrick Farrell
18. Mr Jason John Stephens
19. Mr Stuart Kenneth Hardy
20. Miss Minbin Wu
Distribution of Shareholders Number:
Number of
Options
Held
18,518,519
9,259,260
8,515,000
8,500,000
7,750,000
% of
Total
Options
7.86
3.93
3.61
3.61
3.29
7,255,000
3.08
6,481,482
5,666,667
5,555,556
4,327,153
4,018,519
4,000,000
3,945,053
3,704,000
3,500,000
3,148,148
3,048,000
3,024,756
2,973,738
2,600,000
2.75
2.40
2.36
1.84
1.71
1.70
1.67
1.57
1.49
1.34
1.29
1.28
1.26
1.10
Category Number
(Size of Holding)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Ordinary Shares
(Number)
186
253
147
605
468
1659
Listed Options
(Number)
32
82
41
94
171
420
The number of shareholdings held in less than marketable parcels is 753.
Substantial shareholders:
Shareholder
P Point Pty Ltd
Terryjoy Pty Ltd
Cropanly Pty Ltd
EM Enterprises (Qld) Pty Ltd
Number of
Shares Held
80,755,813
80,755,813
79,384,678
68,052,816
% of Issued
Capital
10.07
10.07
9.90
8.49
Sayona Mining Limited I Annual Report 2016 71
ASX INFORMATION
Unlisted Securities:
The Company has 30,500,000 unlisted options on issue, held by 5 parties. Options are exercisable at
prices ranging from $0.01 to $0,03 and expiring between 30 December 2016 and 30 June 2017. All
options were granted under the Company’s employee incentive scheme.
Voting Rights:
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting has one vote on a show of hands.
There are no voting rights attaching to the Options, but voting rights as detailed above will attach to
the ordinary shares issued when the Options are exercised.
2.
Registers of securities are held at the following address:
Computershare Investor Services Pty Limited
117 Victoria Street
West End Qld 4101 Australia
3.
Securities Exchange Listing
Quotation has been granted for all the ordinary shares issued by the Company on all Member
Exchanges of the ASX Limited.
4.
Restricted Securities
The Company has no restricted securities on issue.
72
Sourcing the raw materials
of the future
CORPORATE DIRECTORY
ASX Code
Directors
SYA
Mr Dennis O’Neill – Managing Director
Mr Paul Crawford – Executive Director
Mr Alan Buckler – Non-executive Director
Mr James Brown – Non-executive Director
Registered Office
Company Secretary
Mr Paul Crawford
Auditors
Share Registry
Lawyers
Unit 68
283 Given Terace
Paddington Qld 4066
Ph: +61 7 3369 7058
Email: info@sayonamining.com.au
Website: www.sayonamining.com.au
Nexia Brisbane Audit Pty Ltd
Level 28, 10 Eagle Street
Brisbane Qld 4000
Ph: +61 7 3229 2022
Limited
Computershare Investor
Services Pty
117 Victoria Street
West End Qld 4101
Ph: 1300 787 272
GRT Lawyers
Level 2
400 Queen Street
BRISBANE QLD 4000
Ph: +61 7 3309 7000
Collin Biggers & Paisley
Level 35
1 Eagle Street
BRISBANE QLD 4000
Ph: +61 7 3002 8700
www.sayonamining.com.au
Sayona Mining Limited I Annual Report 2016 73
Suite 68
283 Given Terrace
Paddington QLD 4064
+61 7 3369 7058
info@sayonamining.com.au
www.sayonamining.com.au