More annual reports from Sayona Mining Limited:
2023 ReportANNUAL REPORT 2017
SOURCING
THE RAW MATERIALS
OF THE FUTURE
CONTENTS
2
The Company
3
4
10
Lithium
and the Market
Authier Project
Western Australian
Lithium
12
East Kimberley
Graphite Project
16
Directors’ Report
29
Auditor’s
Independence
Declaration
30
67
Financial Statements
ASX Information
69
Corporate Directory
Sayona Mining Limited I Annual Report 2017 1
THE COMPANY
East Kimberley Graphite
Mt Edon Lithium
Authier Lithium
Pilbara Lithium
Lithium development
Lithium exploration
Graphite exploration
The Company’s strategy is to source and develop projects capable of
supplying the raw materials required to construct lithium-ion batteries
for use in the rapidly growing new and green technology sectors.
In 2017, the Company’s key objectives and
achievements included:
The coming year will see the Company entering into a
new era of growth, by completing
! The Updated Pre-Feasibility Study for Authier
which incorporates the new JORC Mineral
Resource reported in May 2017, significantly
improved metallurgical results, and a number of
other optimisation programs including,
geotechnical and dilution studies;
! Reporting of an updated JORC Ore Reserve;
! Commencement of the Definitive Feasibility Study;
! Finalisation of environmental studies and
advancement of permitting activities.
! Finalisation of the Authier lithium project
acquisition in Canada;
! Completion of two drilling programs and
expansion of the JORC Mineral Resources;
! Completion of the Authier Pre-Feasibility Study
(“PFS”);
! Reporting of a maiden Authier JORC Ore Reserve;
! Updating the Authier base-line environmental
study and permitting activities;
! Development studies to advance the Authier
project towards production; and
! Expanding the Company’s package of lithium
prospective exploration tenements in Western
Australia including a small drilling program at
Mallina.
2
LITHIUM AND THE MARKET
$78 billion
70%
20 million
22 %
300%
Estimated worth of the global
Li battery market by 2025
Li batteries estimated share of the
$112 billion global battery market
by 2025
Projected EV sales by 2030
(up from 566,000 in 2014)
Li battery market growth rate
per annum until 2025
Global lithium (LCE) demand
increase over the next 10 years
Sayona Mining Limited I Annual Report 2017 3
OPERATIONS
Authier Project
Authier Lithium Project Acquisition
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. As part of its
initial due diligence on the proposed acquisition, an independent JORC Mineral Resource estimate was
prepared and is tabulated below.
Authier JORC Mineral Resource Estimate (0.5% Li O cut-off grade)
2
Category
Measured
Indicated
Inferred
Total
Million tonnes
2.08
5.16
1.88
9.12
Grades Li O2
0.95%
Contained Li O2
19,730
0.97%
0.93%
0.96%
50,092
17,480
87,302
Authier Project Overview
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. The mineral claims are located over Crown
Lands.
The Authier project is situated 45 kilometres northwest of the city of Val d’Or, a major mining service centre in
the, Province of Quebec. Val d’Or is located approximately 466 kilometres north-east of Montreal. The project is
easily accessed by a rural road network connecting to a national highway a few kilometres east of the project
site.
Val d’Or and other nearby cities have experienced mining work forces and other mining related support
services. Nearby infrastructure includes:
! 5 kilometres by dirt road to a sealed highway connecting to Val d’Or and export ports;
! 5 kilometres from an electricity grid supplied by hydro-electric power; and
! 20 kilometres to rail facilities connecting to an export port.
4
CANADA
-78° W
-76° W
-74° W
-72° W
Authier Lithium Project
N
Rouyn-
Noranda
Cu
48° N
Val-d'Or
Quebec Lithium
La Tuque
Nemaska Lithium
Maniwaki
Tros-Rivieres
46° N
0
50
100km
Montreal
Grande Anse
48° N
Quebec
Becancour
46° N
-78° W
-76° W
Ottawa
-74° W
-72° W
USA
The deposit is hosted in a spodumene-bearing pegmatite intrusion. The Authier deposit is defined through more
than 20,000 metres of drilling and is 1,100 metres long, striking east-west, with an average thickness of
30 metres, minimum 4 metres and maximum 55 metres, dipping at 40 degrees to the north. The current pit
optimisation has the mineralisation extending down to 200 metres depth but the deposit remains open in all
directions.
The Authier deposit will be mined
by open cut methods enhanced by
the shallow and thick nature of the
mineralisation, allowing
spodumene ore to be processed
from the commencement of
mining. The PFS demonstrated a
LOM strip ratio of 6:1 (waste to ore)
providing a low mining cost. The
Company believes with further
drilling it can expand the size of the
resource, provide better definition
of the orebody, and lower the
overall waste to ore ratio.
Sayona Mining Limited I Annual Report 2017 5
The flow sheet is a conventional
crush, grind and flotation plant
capable of processing 700,000 tpa of
ore feed to produce a 6% Li O 2
concentrate suitable for feedstock to
lithium carbonate conversion plants.
Activities During 2017
Following the acquisition, the Company’s primary strategy was to focus on completing the studies required to
commence the development of the project. Authier is a near-term development project and cash-flow
generation opportunity. The Company believes it will create significant share value-uplift potential for
shareholders as the project is advanced towards development.
The primary focus of the work programs was to expand the JORC Mineral Resource, update metallurgical test
work, and the preparation of a Pre-Feasibility Study.
During September - November 2016, the Company completed a 4,000 metre drilling program aimed at
expanding the size and grade of the JORC Mineral Resource. The significantly expanded Mineral Resource
estimate is tabulated below. The contained lithium dioxide Mineral Resource has increased by 68% from 87,302
tonnes to 146,700 tonnes compared to the July 2016 JORC Mineral Resource estimate. The average grade
increased from 0.96% Li O to 1.07% Li O, and 86% of the contained Mineral Resource is categorised within the
Measured and Indicated Mineral Resource categories.
2
2
Authier JORC Mineral Resources Estimate (0.5% Li O cut-off grade)
2
Category
Measured
Indicated
Inferred
Total
Million tonnes
4.72
7.13
1.90
13.74
Grades Li O2
1.03%
Contained Li O2
48,519
1.10%
1.05%
1.07%
78,280
19,901
146,700
6
Following the resource upgrade, the Company completed a PFS to assess the development potential of the
project. The PFS confirmed the technical and financial viability of constructing a simple, low-strip ratio, open-cut
mining operation and processing facility producing spodumene concentrate. The positive PFS demonstrates
the opportunity to create substantial long-term sustainable shareholder value at a low capital cost.
Authier Lithium Project PFS Highlights
Description
Average Annual Ore Feed to the Plant
Annual Average Spodumene Production
Life-of-Mine and processing operations
Life-of-Mine Strip Ratio
Average Spodumene Price based on 5.75% Li20
Development Capital Costs
Total Life of Mine Capital Costs
Total Net Revenue (real terms)
Total Project EBITDA (real terms)
Units
tonnes
tonnes
years
waste to ore
US$/tonne
C$ million
C$ million
C$ million
C$ million
Average Life of Mine Cash Costs (Montreal Port FOB basis)
C$/tonne
Net Present Value (real terms @ 8% discount rate)
C$ million
Pre-Tax Internal Rate of Return
Project Payback Period
Exchange Rate
%
years
CAD:USD
Results
700,000
99,000
13/15
6:1
515
66
113
978
449
367
140
39
2.2
0.76
The positive PFS is considered sufficient to determine, in accordance with the JORC Code 2012, that a subset
of the Measured and Indicated Mineral Resource be classified as Ore Reserves – see table below.
Authier JORC Mineral Reserve Estimate (0.45% Li O cut-off grade)
2
Category
Million tonnes
Proven Reserve
Probable Reserve
Total Reserves
4.9
5.3
10.2
Grades Li O2
0.97%
Contained Li O2
47,821
1.06%
1.02%
55,904
103,725
Sayona Mining Limited I Annual Report 2017 7
Subsequent to the completion of the PFS, the Company committed to a further 4,100 metres of drilling at
Authier to expand the JORC Resource. The contained lithium oxide Mineral Resource increased by 21% from
146,700 tonnes to 177,212 tonnes compared to the November 2016 estimate. The Measured and Indicated
Mineral Resource categories represent 88% of the total Mineral Resource estimate.
Authier JORC Mineral Resources Estimate (0.45% Li O cut-off grade)
2
Category
Measured
Indicated
Inferred
Total
Million tonnes
5.62
9.57
2.21
17.40
Grades Li O2
1.01%
Contained Li O2
56,762
1.03%
0.99%
1.02%
98,571
21,879
177,212
Planned Activities for 2018
The Company is now working on a number of work programs to progress and expand the project value,
including hydrogeological, geotechnical, and metallurgical assessments. Following completion of the programs,
the February 2017 Pre-Feasibility Study will be updated, and a new Ore Reserve statement published. This will
form the basis of the Definitive Feasibility Study which the Company will anticipate completing in 2018. In
addition, the Company is advancing its permitting activities including, the environmental and Mining Lease
approvals.
8
KEY ATTRACTIONS OF THE
AUTHIER LITHIUM PROJECT
Advanced, near term
development potential
The Company is targeting completion of a Definitive Feasibility
Study in early 2018, and first production in 2019 to capitalise on the
high price lithium concentrate pricing forecast over the next five
years. In parallel, studies on producing a premium value-added
lithium carbonate product are progressing.
Pre-Feasibility Study
demonstrating technical
and economic viability
PFS completed in February 2017 demonstrating strong investment
case for a low capital expenditure and operating cost project
selling lithium concentrates. PFS results include pre-tax NPV8 of
C$140 million, IRR 39% and payback 2.2 years, based on a start
capital expenditure of C$66 million.
Maiden Ore Reserve
JORC Ore Reserves totalling 10.2Mt @ 1.02% Li20 based on a
JORC Mineral Resource of 13.75Mt @ 1.07% Li20 at 0.5% Li20 cut-
off grade.
JORC Resource
expanded
In May 2017, based on 4,100 metres of new drilling, the JORC
Mineral Resource was expanded to 17.4Mt @ 1.02% Li20.
PFS optimisation
program underway
An updated PFS is being prepared based on the expanded JORC
Resource, and metallurgical and geotechnical optimisations
programs.
Simple deposit and
processing
Resources defined in one spodumene bearing pegmatite based on
20,000 metres of diamond drilling. Deposit amenable to low-cost
open pit mining techniques. Processing based on a conventional
crush, grind and flotation flowsheet.
Excellent infrastructure
Situated in close proximity to mining support services, low-cost
electricity, gas, and road networks to export ports.
Sayona Mining Limited I Annual Report 2017 9
Western Australian Lithium Projects
Western Australia is a premium lithium province with world-class, high-grade lithium deposits associated with
rare metal pegmatites.
N
Port Hedland
Exmouth
Pilgangoora Lithium Deposit
Pilbara
Lithium Project
WESTERN
AUSTRALIA
Mt Magnet
Geraldton
Mount Edon
Lithium Project
PERTH
Kalgoorlie
Mount Marion
Lithium Deposit
Greenbushes
Lithium
Deposit
Cattlin Creek
Lithium Deposit
Esperance
250km
Albany
10
Pilbara lithium tenements
Sayona’s Pilbara tenements and the Great Sandy Option tenements are prospective for spodumene and work is
planned to systematically explore for complex rare metal pegmatites, the source of spodumene.
The Company has a total of 17 tenements in the Pilbara Region, covering a total area of 1,918 km . Of these, 9
(871km2) were acquired through a joint venture deal with Great Sandy whereby Sayona could acquire an 80%
interest, with the Mallina Project – E47/2983, being the flagship project. The remaining 8 tenements cover a total
of 1,047 km and can be divided into 6 project areas; Tabba-Tabba, Cooglegong, Moolyella, Wodgina, Friendly
Creek and Red Rock / Carlindie. Of these, Tabba-Tabba is the most advanced with work there having identified
3 new complex pegmatites.
2
2
Port Hedland
E 45/2364
ELA 45/4716
ELA 45/4727
N
E 47/2983
ELA 47/3475
ELA 45/4703
Pilgangoora
Pilgangoora
Lithium Project
Lithium Project
Wodgina
Wodgina
Mine
Mine
ELA 45/4775
ELA 45/4721
Moolyella
Moolyella
ELA 45/4700
ELA 45/4787
ELA 45/4788
ELA 45/4723
ELA 45/4813
ELA 45/4726
LEGEND
Sayona tenement
Great Sandy Option
tenement
Road
Rail
ELA 45/4738
ELA 45/4687
EL 46/1103
0
25
50km
During the period, the primary focus of the exploration activities was at the Mallina project. The Company
identified a number of pegmatite systems through surface mapping and sampling. During March 2017, 1, 343
metres of drilling was completed. At each target, drilling intersected pegmatite but of relatively low grade. The
eastern group of pegmatites returned the broadest zones of pegmatite, with up to 19 metres downhole width
(recorded in SMRC001). The pegmatites have been variably altered by silicification, which results in zones of
green, fine grained silica rich replacement pegmatite. Ongoing work is aimed at identifying higher-grade
pegmatite systems in the area.
Sayona Mining Limited I Annual Report 2017 11
Mt Edon lithium 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% Li O. Further soil and rock geochemistry is required to generate drilling targets.
2
East Kimberley Graphite Project
In 2015, the Company announced a strategic entry into the large flake graphite market by securing a large
ground position in the East Kimberley region of Western Australia. The Kimberley region is a proven province for
high purity, large flake graphite.
The East Kimberley project offers an attractive entry into the graphite market:
! Proven district for high carbon purity, large flake graphite;
! 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.
The East Kimberley project 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 Company’s East Kimberley project includes one granted tenement and three separate tenement
applications, the project covers 278 km and comprises two areas, Keller and Corkwood. These areas have
never been previously explored for their graphite potential. Sayona has 100% of the graphite interests across 4
tenements in the East Kimberley, following the completion of 2 option-to-purchase agreements.
2
12
Historical drilling in 2015 by the Company has 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.
During 2017, the Company’s primary activities were focused on its lithium projects. However, the Company
believes that the Corkwood has considerable value and seeking partners to explore and develop the project.
The next phase of development would include the following work programs:
! 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 2017 13
Tenement Schedule
Tenement
Name
Status
E59/2092
Mt Edon
Granted
E59/2055
Mt Edon West
Granted
E45/2364
Tabba Tabba
Granted
ELA45/4703
Tabba Tabba East
Application
E45/4716
ELA45/4726
ELA47/3475
ELA45/4738
ELA45/4775
E80/4511
ELA80/4949
ELA80/4959
ELA80/4968
ELA45/4813
Red Rock
Application
West Wodgina
Application
Friendly Creek
Application
Cooglegong
Carlindie
Application
Application
Western Iron
Granted
Corkwood
Killarney
Keller
Moolyella
Great Sandy Pty Ltd Option
E47/2983
E46/1103
E45/4687
E45/4721
E45/4727
E45/4787
E45/4788
E45/4700
E45/4723
Mallina
Dorringtons
White Springs
Mt Edgar
Mt Edgar
Mt Edgar
Mt Edgar
Mt Edgar
Mt Edgar
14
Interest at
Beginning of
Quarter
80%, with rights to
100% of pegmatite
minerals
80% (of pegmatite
minerals)
Rights to 100% of
pegmatite minerals
Interest at
End of
Quarter
80%, with rights to
100% of pegmatite
minerals
80% (of pegmatite
minerals)
Rights to 100% of
pegmatite minerals
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Option Rights to 80%
Application
Application
Application
Application
Granted
Granted
Application
Application
Application
Application
Application
Application
Application
Authier, Canada
Claim Number
Registered Holder
Registration date
Expiration Date
Area
(hectares)
2116146
2116154
2116155
2116156
2183454
2183455
2187651
2192470
2192471
2194819
2195725
2219206
2219207
2219208
2219209
2240226
2240227
2247100
2247101
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
Sayona Mining Limited
8/08/2007
8/08/2007
8/08/2007
8/08/2007
2/06/2009
2/06/2009
2/09/2009
22/10/2009
22/10/2009
19/11/2009
27/11/2009
22/04/2010
22/04/2010
22/04/2010
22/04/2010
9/07/2010
9/07/2010
23/08/2010
23/08/2010
7/08/2017
7/08/2017
7/08/2017
7/08/2017
1/06/2017
1/06/2017
1/09/2017
21/10/2017
21/10/2017
18/11/2017
26/11/2017
21/04/2018
21/04/2018
21/04/2018
21/04/2018
8/07/2018
8/07/2018
22/08/2018
22/08/2018
43.24
42.88
42.87
42.86
42.85
42.84
21.39
21.08
21.39
42.82
29.03
5.51
17.06
55.96
42.71
42.71
42.71
42.75
53.77
Sayona Mining Limited I Annual Report 2017 15
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 2017. 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 2017 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 13 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
13
13
13
13
ATTENDED
13
13
13
13
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
Experience
Bachelor of Science - Geology
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
range of
commodities and locations.
in a diverse
Interest in Shares
71,593,477 ordinary shares
Directorships in other
listed entities during the 3
years prior to current year
Altura Mining Limited
Paul A Crawford
Director (Executive) and Company Secretary
Qualifications
Experience
Bachelor of Business – Accountancy; CPA; Master of Financial
Management; Graduate Diploma in Business Law; Graduate Diploma
in Company Secretarial Practice.
technical and management roles within
Board member since 2000. 39 years of commercial experience,
the
including various
industries. Principal of his own
minerals, coal and petroleum
corporate consultancy
firm, providing accounting, corporate
governance, business advisory and commercial management
services.
Interest in Securities
89,001,236 ordinary shares.
Directorships in other
listed entities during the 3
years prior to current year
Nil
16
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
85,963,747 ordinary shares.
Directorships in other
listed entities during the 3
years prior to current year
Altura Mining Limited, Interra Resources Limited
James S Brown
Director (Non-Executive)
Qualifications
Experience
Graduate Diploma in Mining from University of Ballarat
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.
Directorships in other
listed entities during the 3
years prior to current year
Altura Mining Limited
DIVIDENDS
No dividends were declared or paid during the financial year.
SHARE OPTIONS
At the date of this report there were no unissued ordinary shares of Sayona Mining Limited under option.
Options holders do not have any rights to participate in any issue of shares or other interests of the
Company or any other entity.
Movements in listed options and unlisted employee options are set out in the state of affairs section of this
report, and Note 16 of the financial report.
For details of options previously issued to directors and executives as remuneration, refer to the
remuneration report.
Sayona Mining Limited I Annual Report 2017 17
DIRECTORS’ REPORT
During the year ended 30 June 2017, the following ordinary shares of Sayona Mining Limited were issued
on the exercise of options granted:
Options
Grant Date
Exercise Price
Number of Shares Issued
Listed Options
Listed Options
Listed Options
Employee Option Plan
Listed Options
Director Options
Employee Option Plan
08 July 16
19 July 16
10 October 16
30 December
16
11 January 17
30 June 17
30 June 17
0.030
0.030
0.030
0.010
0.030
0.030
0.015
6,250
4,361
94,064
6,000,000
43,660,320
1,500,000
6,000,000
There was $90,000 unpaid at 30 June 2017 relating to options exercised.
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.
18
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 in Australia and Canada.
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 $2,570,538
(2016: $2,511,975). Tenement acquisition, exploration and evaluation expenditure during the year totalled
$7,109,318 (2016: $2,712,521).
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 acquisition of the Authier lithium project in Canada;
•
• development studies to advance the Authier project towards production; and
• expanding a package of lithium prospective exploration tenements in Western Australia.
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.
Authier, Canada
During the year, the Company completed the acquisition of the Authier lithium project in Canada.
As part of its initial due diligence on the proposed acquisition, an independent JORC Mineral Resource
estimate was prepared and is tabulated below.
Authier JORC Mineral Resources Estimate (0.5% Li20 cut-off grade)
Category
Measured
Indicated
Inferred
Total
Million Tonnes
Grades Li20
Contained Li20
2.08
5.16
1.88
9.12
0.95%
0.97%
0.93%
0.96%
19,730
50,092
17,480
87,302
Following the acquisition, the Company’s primary strategy was to focus on completing the studies required
to commence the development of the project. Authier is a near-term development project and cash-flow
generation opportunity. The Company believes it will create significant share value-uplift potential for
shareholders as the project is advanced towards development.
The primary focus of the work programs included further drilling to expand the JORC Mineral Resource,
metallurgical test work and the preparation of a Pre-Feasibility Study (“PFS”).
In the second half of 2016, the Company completed a 4,000 metre drilling program aimed at expanding the
size and grade of the JORC Mineral Resource. The significantly expanded Mineral Resource estimate is
tabulated below. The contained lithium dioxide Mineral Resource has increased by 68% from 87,302 tonnes
to 146,700 tonnes compared to the July 2016 JORC Mineral Resource estimate. The average grade has
increased from 0.96% Li20 to 1.07% Li2O, and 86% of the contained Mineral Resource is categorised within
the Measured and Indicated Mineral Resource categories.
Sayona Mining Limited I Annual Report 2017 19
OPERATING AND FINANCIAL REVIEW
Authier JORC Mineral Resources Estimate (0.5% Li20 cut-off grade)
Category
Measured
Indicated
Inferred
Total
Tonnes (Mt) Grades Li20
Contained Li20
4.72
7.13
1.90
13.75
1.03%
1.10%
1.05%
1.07%
48,519
78,280
19,901
146,700
Following the resource upgrade, the Company completed a PFS to assess the development potential of the
project. The PFS confirmed the technical and financial viability of constructing a simple, low-strip ratio,
open-cut mining operation and processing facility producing spodumene concentrate. The positive PFS
demonstrates the opportunity to create substantial long-term sustainable shareholder value at a low capital
cost.
Authier Lithium Project PFS Highlights
Description
Average Annual Ore Feed to the Plant
Annual Average Spodumene Production
Life-of-Mine and processing operations
Life-of-Mine Strip Ratio
Average Spodumene Price based on 5.75% Li20
Development Capital Costs
Total Life of Mine Capital Costs
Total Net Revenue (real terms)
Total Project EBITDA (real terms)
Average Life of Mine Cash Costs (Montreal Port FOB basis)
Net Present Value (real terms @ 8% discount rate)
Pre-Tax Internal Rate of Return
Project Payback Period
Exchange Rate
Unit
tonnes
tonnes
years
waste to ore
US$/tonne
C$ million
C$ million
C$ million
C$ million
C$/tonne
C$ million
%
years
CAD:USD
Results
700,000
99,000
13/15
6:1
515
66
113
978
449
367
140
39
2.2
0.76
The positive PFS is considered sufficient to determine, in accordance with the JORC Code 2012, that a
subset of the Measured and Indicated Mineral Resource (please see ASX announcement “Authier Lithium
Project JORC Resource Significantly Expanded”, 23 November 2016) be classified as Ore Reserves – see
table below.
Category
Proven Reserve
Probable Reserve
Total Reserves
Authier JORC Ore Reserve Estimate (0.45% Li20 cut-off grade)
Tonnes (Mt)
Grades (%Li20)
Contained Li20
4.9
5.3
10.2
0.97%
1.06%
1.02%
47,821
55,904
103,725
Note: The Ore Reserve estimate is based on the details published in a separate ASX release “Authier Maiden JORC
Ore Reserves”, 16 February 2017.
Subsequent to the completion of the PFS, the Company committed to a further 4,100 metres of drilling at
Authier to expand the JORC Resource. The contained lithium oxide Mineral Resource has increased by 21%
from 146,700 tonnes to 177,212 tonnes compared to the November 2016 estimate. The Measured and
Indicated Mineral Resource categories represent 88% of the total Mineral Resource estimate.
20
OPERATING AND FINANCIAL REVIEW
Category
Measured
Indicated
Inferred
Total
Authier JORC Mineral Resources Estimate (0.45% Li20 cut-off grade)
Tonnes (Mt)
Grades %Li20
Contained Li20
5.62
9.57
2.21
17.40
1.01%
1.03%
0.99%
1.02%
56,762
98,571
21,879
177,212
Following the completion of a Pre-feasibility Study in February 2017, the Company has adopted a
0.45% Li20 cut-off grade compared to the 0.5% Li20 cut-off used in historical resource estimates.
The Company is now working on a number of work programs to progress and expand the project value,
including hydrogeological, geotechnical, and metallurgical assessments. Following completion of the
programs, the February 2017 Pre-Feasibility Study will be updated, and a new Ore Reserve statement
published. This will form the basis of the Definitive Feasibility Study which the Company will anticipate
completing in 2018. In addition, the Company is advancing its permitting activities including, the
environmental and mining lease approvals.
Western Australian Lithium Projects
Western Australia is a premium lithium province with world-class, high-grade lithium deposits associated
with rare metal pegmatites. Sayona’s Pilbara tenements and the Great Sandy Option tenements are
prospective for spodumene and work is planned to systematically explore for complex rare metal
pegmatites, the source of spodumene.
The Company has a total of 17 tenements in the Pilbara Region, covering a total area of 1918km2. Of these,
9 (871km2) were acquired through a joint venture deal with Great Sandy whereby Sayona could acquire an
80% interest, with the Mallina Project – E47/2983, being the flagship project. The remaining 8 tenements
cover a total of 1047km2 and can be divided into 6 project areas; Tabba-Tabba, Cooglegong, Moolyella,
Wodgina, Friendly Creek and Red Rock / Carlindie. Of these, Tabba-Tabba is the most advanced with work
there having identified 3 new complex pegmatites.
During the period, the primary focus of the exploration activities was at the Mallina project. The Company
identified a number of pegmatite systems through surface mapping and sampling. During March 2017, 1,
343 metres of drilling was completed. At each target drilling intersected pegmatite but of relatively low
grade. The eastern group of pegmatites returned the broadest zones of pegmatite, with up to 19 metres
downhole width (recorded in SMRC001). The pegmatites have been variably altered by silicification, which
results in zones of green, fine grained silica rich replacement pegmatite. Ongoing work is aimed at
identifying higher-grade pegmatite systems in the area.
East Kimberley Graphite Project
No work was completed during the period.
FINANCIAL POSITION, CONTINUED OPERATIONS AND FUTURE FUNDING
At 30 June 2017, the Company's Statement of Financial Position shows total assets of $9,411,035, of which
$1,216,054 was cash, total liabilities of $549,092 and net assets of $8,861,943. Committed exploration &
evaluation expenditure in the next 12 months totals $300,632.
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
Sayona Mining Limited I Annual Report 2017 21
OPERATING AND FINANCIAL REVIEW
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. The Directors
have concluded that in the current circumstances there exists a significant uncertainty that may cast 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 fundraising 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.
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.
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:
• During the period from 19 July to 15 September 2016, the Company completed a private placement
and fully underwritten, accelerated rights offering to raise $7.0 million. The terms of the capital raising,
included:
- a private placement of 133,067,264 shares at an issue price of $0.027 per share and 66,533,638
free attaching options, exercisable at $0.03 and expiring 30 December 2016 ;
- a 1 for 5 entitlement offer at an issue price of $0.027 per share, resulting in the issue of
107,455,056 new shares;
- 1 free attaching option, exercisable at $0.03 and expiring 30 December 2016, for every 2 shares
applied for;
- a placement, pursuant to shareholder approval of 22,222,222 shares at an issue price of $0.027
per share and 11,111,111 free attaching options, exercisable at $0.03 and expiring 30 December
2016; and
-
the issue of 5,000,000 listed options in part settlement of raising management and underwriting
fees.
• On 15 September 2016, the Company issued 1,851,852 shares at an issue price of $0.027 per share
and 3,000,000 shares on 12 December 2016 at an issue price of $0.025 per share in settlement of
commitments under tenement acquisition agreements.
• During the year, 43,764,995 listed options exercisable at 3 cents were exercised by option holders.
Proceeds of $1,309,810 were received by the Company. The remaining 192,007,117 listed options
expired on the 30 December 2016.
• On 30 December 2016, 6,000,000 unlisted employee options were exercised at 1 cent, raising
$60,000. An additional 6,000,000 unlisted employee options were exercised at 1.5 cent, raising
$90,000 on 30 June 2017.
• On 11 January 2017, the Company issued 19,000,000 fully paid shares, at an issue price of $0.03 per
share in respect of the partial underwriting of the exercise of listed share options, raising $570,000. A
further 1,710,000 fully paid shares at an issue price of $0.03 was issued in settlement of underwriting
fees.
• On 22 February 2017, the Company made the final payment of $120,000 in relation to the Heads of
Agreement with Attgold Pty Ltd, covering a number of East Kimberley graphite tenements. The
payment was settled through the issue of 3,750,000 of shares in Sayona Mining Limited.
• On 22 May 2017, the Company issued 47,371,469 fully paid shares, at an issue price of $0.017 to
raise $805,315, pursuant to an underwritten Share Purchase Plan.
• On 25 May 2017, the Company issued 40,863,882 fully paid shares, at an issue price of $0.017 to
raise $694,686 as the underwritten component of the Share Purchase Plan.
22
OPERATING AND FINANCIAL REVIEW
SIGNIFICANT EVENTS AFTER BALANCE DATE
The Company continues to examine further funding sources for Group operations.
No other matters or circumstances have arisen since 30 June 2017, 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 will continue to be 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.
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 law in Australia and Canada.
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.
PREVIOUS DISCLOSURE - 2012 JORC CODE
Certain Information relating to Mineral Resources, Exploration Targets and Exploration Data associated with
the Company’s projects
following ASX
Announcements:
this Directors’ Report has been extracted
from
the
in
•
•
•
•
•
Authier Lithium Project JORC Significantly Expanded, 23 November, 2016
Authier Project Pre-Feasibility Study, 16 February 2017
Authier Maiden JORC Ore Reserve, 16 February 2017
Mallina Drilling Program Completed, 17 July 2017
Authier JORC Mineral Resource Significantly Expanded, 14 June 2017
these
reports are available
Copies of
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.
to view on
Sayona Mining Limited I Annual Report 2017 23
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 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 performance of KMP is measured against criteria agreed annually with each party and is based
predominantly on the forecast growth of the consolidated group, project milestones and 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 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.
24
REMUNERATION REPORT
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 Group for the last 3 years, together with the
share price at the end of the respective financial years.
Exploration expenditure ($)
Exploration tenements (no. including applications)
Net assets ($)
Share Price at Year-end ($)
Dividends Paid ($)
2015
310,394
4
822,501
0.0009
NIL
2016
2,712,521
14
1,333,669
0.0287
NIL
2017
7,109,318
25
8,861,943
0.015
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 2017 &
change during
period
Contract Details
Proportion of Remuneration:
Related to
performanc
e
Not related to
performance
Options
Salary & Fees
Total
D O'Neill
Executive Director
P Crawford
Executive Director
Company Secretary
A Buckler
Non-executive
Director
J Brown
Non-executive
Director
C Nolan
Chief Executive
Officer
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
No
fixed
months’ notice
terminate.
term, 3
to
-
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Employment Contract of Chief Executive Officer
The Company entered into a contract for service with Mr Corey Nolan, Chief Executive Officer on 1 July
2015.
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.
Sayona Mining Limited I Annual Report 2017 25
REMUNERATION REPORT
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.
2017
Short term benefits
Key
Management
Personnel
D O'Neill
P Crawford (1)
A Buckler (2)
J Brown (3)
C Nolan
Salary
& Fees
Non-Cash
Benefits
109,589
120,000
60,000
67,500
228,311
585,400
-
-
-
-
-
-
2016
Short term benefits
Key
Management
Personnel
D O'Neill
P Crawford (1)
A Buckler (2)
J Brown (3)
C Nolan
Salary
& Fees
Non-Cash
Benefits
91,324
100,000
30,000
30,000
176,365
427,689
-
-
-
-
-
-
Equity
Settled
Options
Post-
employment
superannuation
Long
term
benefits
-
-
-
-
-
-
10,411
-
-
-
21,689
32,100
-
-
-
-
-
-
Equity
Settled
Options
Post-
employment
superannuation
Long
term
benefits
34,366
34,366
34,366
34,366
4,493
141,957
8,676
-
-
-
15,438
24,114
-
-
-
-
-
-
Total
120,000
120,000
60,000
67,500
250,000
617,500
Total
134,366
134,366
64,366
64,366
196,296
593,760
(1) Represents payments made to Cambridge Business & Corporate Services, an entity controlled by Mr
Paul Crawford, to provide directorial and corporate financial services.
(2) Represents payments made to Shazo Holdings Pty Ltd, an entity controlled by Mr Allan Buckler, to
provide directorial and exploration services.
(3) Represents fees accrued but not paid at year end, to Mr James Brown.
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
No options were granted as remuneration to KMP during the year.
The terms and conditions relating to options granted as remuneration to KMP during the previous year are
as follows:
26
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
8.07.2015 $1,765
C Nolan
8.07.2015 $1,333
C Nolan
8.07.2015 $1,396
C Nolan
D O'Neill
25.11.2015 $34,366
P Crawford 25.11.2015 $34,366
A Buckler 25.11.2015 $34,366
25.11.2015 $34,366
J Brown
(a)
(a)
(a)
(b)
(b)
(b)
(b)
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Expiry
Date for
Vesting
or
Payment
30.06.16
31.12.16
30.06.17
30.06.17
30.06.17
30.06.17
30.06.17
Value Range of
Future
Payments
$0-$30,000
$0-$60,000
$0-$90,000
$0-$150,000
$0-$150,000
$0-$150,000
$0-$150,000
Note 1(a) The options were 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.
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.
Movements in option holdings in the current year are:
Grant Details
Exercised
Lapsed
KMP
Balance
1 July
2016
Issued
Date
No.
Value
$
No.
Value $
No.
Balance
30 June 2016
Note 1 Note 2 Note 3
C Nolan
6,000,000
8.07.15 6,000,000
1,333
C Nolan
6,000,000
8.07.15 6,000,000
1,396
D O'Neill
5,000,000
25.11.15 5,000,000
P Crawford 3,500,000
25.11.15 5,000,000
A Buckler
5,000,000
25.11.15 5,000,000
J Brown
5,000,000
25.11.15 5,000,000
34,36
6
34,36
6
34,36
6
34,36
6
6,000,00
0
6,000,00
0
1,333
1,396
-
-
-
-
5,000,000
1,500,000
10,310 2,000,000
-
-
-
-
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.
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 exercised during the year as shown in the table above was determined as at
the time of the exercise.
Sayona Mining Limited I Annual Report 2017 27
REMUNERATION REPORT
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
25.11.2015
1:1
share
1:1
share
1:1
share
ordinary
ordinary
ordinary
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 th e binomial 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 2016
Remun-
eration
Exercise of
Options (*)
Other
Changes
(**)
Balance
30 June
2017
D O'Neill
P Crawford
A Buckler
J Brown
C Nolan
Total
70,255,241
80,180,974
83,081,394
2,048,295
6,000,000
241,565,904
-
-
-
-
-
-
750,000
588,236
71,593,477
3,351,852
5,468,410
89,001,236
2,000,000
882,353
85,963,747
-
-
2,048,295
12,000,000
(2,800,000)
15,200,000
18,101,852
4,138,999 263,806,755
*Remuneration options and listed options
** Share trades and participation in share issues
OTHER EQUITY-RELATED KMP TRANSACTIONS
There were no other transactions involving equity instruments apart from those described in the tables
above relating to options and shares.
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: 12 September 2017
Brisbane, Queensland
Paul Crawford
Director
28
Auditor’s Independence Declaration
Under Section 307C of the Corporations Act 2001
To the Directors of Sayona Mining Limited
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2017 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
N D Bamford
Director
Date: 12 September 2017
Sayona Mining Limited I Annual Report 2017 29
FINANCIAL STATEMENTS
2017
30 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
32
33
34
35
36
61
62
Sayona Mining Limited I Annual Report 2017 31
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2017
Revenue and other income
Administrative expenses
Exploration expenditure expensed during year
Remuneration Expense
Foreign exchange losses
Occupancy costs
Net loss on financial asset at fair value through profit and
loss
Loss before income tax
Tax expense
Loss for the year
Other comprehensive income
Consolidated Group
Note
2017
$
2016
$
2
3
3
3
4
14,539
42,764
(1,039,795)
(723,893)
(655,701)
(34,553)
(52,673)
(577,242)
(1,273,785)
(623,919)
-
(40,562)
(78,462)
(39,231)
(2,570,538)
(2,511,975)
-
-
(2,570,538)
(2,511,975)
Items that will be reclassified subsequently to profit or
loss when specific conditions are met:
-
Exchange differences on translating foreign operations
(125,752)
Items that will not be reclassified to profit or loss:
Other comprehensive income for the year
-
(125,752)
-
-
-
-
Total comprehensive income or (loss) attributable to
members
(2,696,290)
(2,511,975)
Earnings per Share:
Basic and diluted earnings per share (cents per share)
6
(0.31)
(0.50)
Dividends per share (cents per share)
-
-
The accompanying notes form part of these financial statements.
32
STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
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
2017
$
2016
$
8
9
10
11
12
13
1,216,054
321,259
-
42,264
62,603
36,886
78,462
14,850
1,579,577
192,801
7,297
7,824,161
6,025
1,438,736
Total Non-Current Assets
7,831,458
1,444,761
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Total Current Liabilities
9,411,035
1,637,562
14
15
502,821
46,271
284,183
19,710
549,092
303,893
TOTAL LIABILITIES
549,092
303,893
NET ASSETS
8,861,943
1,333,669
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
16
17
63,165,259
(125,752)
(54,177,564)
52,945,695
146,959
(51,758,985)
8,861,943
1,333,669
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2017 33
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2017
Consolidated Group
Share
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Option
Reserve
Total
$
$
$
$
$
Balance at 1 July 2015
50,069,511
(44,719,780)
(4,527,230)
-
-
-
-
-
(2,511,975)
-
(2,511,975)
-
-
-
(4,527,230)
4,527,230
(4,527,230)
4,527,230
-
-
-
-
-
-
822,501
(2,511,975)
-
(2,511,975)
-
-
Loss attributable to members of
the entity
Other comprehensive income for
the year
Total comprehensive income for
the year
Other transfers
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
Total transactions with owners
2,876,184
16
23
3,083,284
(207,100)
-
-
-
-
-
-
-
-
-
-
-
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
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
-
-
(2,570,538)
-
-
(125,752)
-
-
(2,570,538)
(125,752)
-
(2,570,538)
(125,752)
-
(2,696,290)
-
-
151,959
151,959
- (151,959)
- (151,959)
-
-
Shares issued during the year
Transaction costs
Share based payments
16 10,968,353
(748,789)
-
23
Total transactions with owners
10,219,564
-
-
-
-
-
-
-
-
-
-
5,000
10,968,353
(748,789)
5,000
5,000
10,224,564
Balance at 30 June 2017
63,165,259
(54,177,564)
(125,752)
-
8,861,943
The accompanying notes form part of these financial statements.
34
STATEMENT OF CASH FLOWS
for the year ended 30 June 2017
Consolidated Group
Note
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
(2,379,033)
14,539
(2,137,423)
26,361
Net cash provided by (used in) operating activities
18
(2,364,494)
(2,111,062)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Capitalised exploration expenditure
12
13
(8,342)
(6,436,177)
(6,328)
(1,418,736)
Net cash provided by (used in) investing activities
(6,444,519)
(1,425,064)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share and option issues
10,672,053
(709,589)
3,023,196
(162,012)
Net cash provided by (used in) financing activities
9,962,464
2,861,184
Net increase (decrease) in cash held
1,153,451
(674,942)
Cash at beginning of financial year
62,603
737,545
Effect of exchange rates on cash holdings in foreign
currencies
-
-
Cash at end of financial year
8
1,216,054
62,603
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2017 35
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 and 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. The Directors
have concluded that in the current circumstances, there exists a significant uncertainty that may cast doubt
over the Group's ability to continue as a going concern. 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.
The financial report does not include any 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.
36
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 and 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.
Sayona Mining Limited I Annual Report 2017 37
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, where the Group has right of tenure, 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 Group 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 Group 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.
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.
38
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
The Group does not designate any interests in subsidiaries as being subject to the requirements of
Accounting Standards specifically applicable to financial instruments.
Sayona Mining Limited I Annual Report 2017 39
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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. 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.
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).
Financial Instruments (continued)
Impairment
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.
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.
40
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Foreign Currency Transactions and Balances (continued)
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;
-
-
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
income and expenses are translated at average exchange rates for the period; and
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.
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.
Sayona Mining Limited I Annual Report 2017 41
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 fair value of options is
determined using a binomial 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.
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.
42
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Key Judgments:
Exploration and evaluation expenditure (Note 13):
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
$7,109,318, of which $723,893 was written-off and $6,385,425 was capitalised. Capitalised expenditure at the
end of the reporting period is $7,824,425.
Going Concern:
Refer to comments in Note 1 on Continued Operations and Future Funding.
Sayona Mining Limited I Annual Report 2017 43
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Standards for Application in Future Periods
Accounting Standards and Interpretations issued by the AASB that are relevant to the Group, but not yet
mandatorily applicable, 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).
New Accounting Standards for Application in Future Periods (continued)
The Standard will be applicable retrospectively 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 directors currently anticipate that the adoption of AASB 9 will have no significant impact on the Group’s
financial instruments.
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 currently of the view that any impact is immaterial to the financial statements.
NOTE 2: REVENUE AND OTHER INCOME
Interest received from unrelated parties
Foreign exchange gains
Gain on disposal of controlled entity
2017
$
14,539
-
-
2016
$
26,361
15,843
560
-
Total revenue and other income
14,539
42,764
44
Notes to the Financial Statements
for the financial year ended 30 June 2016
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
Foreign exchange loss
Depreciation
(ii) Significant Revenue and Expenses
The following significant revenue and expense items are relevant in
explaining the financial performance:
2017
$
2016
$
78,462
38,504
34,553
7,070
39,231
36,851
-
1,837
Exploration and evaluation expenditure expensed during the year
(723,893)
(1,273,785)
NOTE 4: INCOME TAX EXPENSE
(a) The prima facie tax on loss from ordinary activities is reconciled to the
income tax as follows:
Prima facie tax payable on loss from ordinary activities before
income tax at 27.5% (2016: 30%).
(706,898)
(753,593)
Adjust for tax effect of:
Exploration expenditure capitalised
Other deductible costs (net)
Other non-deductible costs (net)
Tax
account
Income tax expense attributable to entity
losses and temporary differences not brought to
(511,369)
(54,152)
-
(283,876)
-
344,476
1,272,419
-
692,993
-
Weighted average effective tax rate (nil due to tax losses)
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
188,823
6,902,060
6,175,038
13,265,921
171,196
6,160,656
6,736,405
13,068,257
The Group has unconfirmed carry forward losses for revenue of $25,098,400 (2016: $20,535,521) and for
capital of $22,454,683 (2016: $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.
Sayona Mining Limited I Annual Report 2017 45
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 (including
equity interests) for the year ended 30 June 2017.
(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:
Short-term remuneration
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Short-term remuneration
2017
$
585,400
32,101
-
-
617,501
2016
$
427,689
24,114
-
141,957
593,760
These amounts include salary, 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
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
Weighted average number of options outstanding
826,212,422 503,822,436
-
-
Weighted average number of ordinary shares and potential
ordinary shares outstanding during the year used in the
calculation of diluted EPS
826,212,422 503,822,436
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.
46
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 2017 that significantly
change the number of ordinary shares outstanding
Options on ordinary shares issued after 30 June 2017 that
significantly change the number of ordinary shares outstanding
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
2017
No.
2016
No.
- 264,607,005
- 136,372,292
2017
$
2016
$
34,000
-
26,700
-
34,000
26,700
155,704
1,060,350
52,253
10,350
1,216,054
62,603
The effective interest rate on short-term bank deposits was 2.16% (2016:
1.25%). These deposits have an average maturity of 80 days.
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
1,216,054
62,603
NOTE 9: TRADE AND OTHER RECEIVABLES
Current (unsecured):
Other Debtors
321,259
36,886
Other debtors includes $210,931 of GST/VAT amounts due from the
Australian and Canadian taxation authorities, which represents a significant
concentration of credit risk to the Group. Other debtors include $90,000 due
from a KMP member. All other debtor amounts are considered recoverable.
NOTE 10: OTHER FINANCIAL ASSETS
Current:
Financial assets at fair value through profit and loss (a)
-
78,462
(a) These assets comprise 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. During the year, Kimberley Diamonds Limited was de-listed from the ASX and the investment
has been fair valued to nil.
Sayona Mining Limited I Annual Report 2017 47
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 11: OTHER ASSETS
Current:
Prepayments
NOTE 12: PLANT AND 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
NOTE 13: EXPLORATION AND EVALUATION ASSET
Exploration &evaluation expenditure carried forward in respect
of areas of interest are:
Exploration and evaluation phase - group interest 100% (a)
Exploration and evaluation phase - subject to joint
operation (b)
2017
$
2016
$
42,264
14,850
19,842
(12,545)
11,500
(5,475)
7,297
6,025
6,025
8,342
(7,070)
1,534
6,328
(1,837)
7,297
6,025
7,697,147
1,362,774
127,014
75,962
7,824,161
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
6,334,373
-
1,362,774
7,697,147
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
51,052
-
75,962
127,014
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.
Movements during the year on exploration & evaluation assets included $6,207,579 on the Authier Lithium
project in Canada (which includes CAD$4.0million to acquire the project). A further $177,846 has been
expended on existing projects.
During the year, the Group also expended $723,893 on investigating and/or sourcing other projects. Of that
total, $170,000 was settled by issue of 5,601,852 ordinary shares in the company.
Commitments in respect of exploration projects are set out in note 20. In addition, the Group has options on
projects as set out in Note 25, and as follows:
48
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 13: EXPLORATION AND EVALUATION ASSET (continued)
Authier Lithium Project
On 16 March 2017, the Company entered into an option-to-purchase agreement to acquire a tenement to the
east of the company's Authier project in Quebec, Canada. The option to purchase CDC2187652 is
exercisable anytime in the next five years, by making payments including CAD$25,000 on signing, $5,000 on
each anniversary between years two to five, and CAD$75,000 on exercise of the option.
NOTE 14: TRADE AND OTHER PAYABLES
Current:
Trade creditors
Sundry creditors and accrued expenses
Total trade and other payables (unsecured)
Financial liabilities at amortised cost classified as trade and
other payables:
2017
$
2016
$
272,242
230,579
185,721
98,462
502,821
284,183
Financial liabilities as trade and other liabilities (refer Note
21)
502,821
284,183
NOTE 15: PROVISIONS
Current:
Provision for employee entitlements
46,271
19,710
Opening balance
Additional provisions
Amounts used
Balance at year end
NOTE 16: ISSUED CAPITAL
Fully paid ordinary shares
Ordinary shares issued during the year
Balance at the beginning of the reporting period
Shares issued during the prior year:
Shares issued during the current year:
8 July 2016, issue new shares at $0.03 each following exercise
of options.
19 July 2016, issue new shares at $0.03 each following exercise
of options.
19 July 2016, issue new shares at $0.027 each as a placement.
20 July 2016, issue new shares at $0.027 each in the
institutional component of the rights issue.
17 August 2016, issue new shares $0.027 each in the retail
component of the rights issue.
15 September 2016, issue new shares at $0.027 each as a
placement.
15 September 2016, issue new shares at $0.027 each in part
settlement of tenement acquisition.
19,710
26,561
-
46,271
-
19,710
-
19,710
63,165,259
52,945,695
No.
No.
537,239,846 411,511,842
125,728,004
6,250
4,361
133,067,264
70,539,643
36,915,413
22,222,222
1,851,852
-
-
-
-
-
-
-
Sayona Mining Limited I Annual Report 2017 49
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 16: ISSUED CAPITAL (continued)
2017
No.
2016
No.
10 October 2016, issue new shares at $0.03 each following
exercise of options.
12 December 2016, issue new shares at $0.025 each in relation
to the acquisition of a tenement.
30 December 2016, issue new shares at $0.01 each following
exercise of options.
11 January 2017, issue new shares at $0.03 each following
exercise of options.
11 January 2017, issue new shares at $0.03 each in relation to
the underwriting of options exercise.
11 January 2017, issue new shares at $0.03 each as settlement
of underwriting fees.
22 February 2017, issue new shares at $0.032 each as part
settlement of tenement acquisition.
22 May 2017, issue new shares at $0.017 each pursuant to a
share purchase plan.
25 May 2107, issue new shares at $0.017 each as the
underwritten component of a share purchase plan.
30 June 2017, issue new shares at $0.03 each following
exercise of options.
30 June 2017, issue new shares at $0.015 each following
exercise of options.
Balance at reporting date
94,064
3,000,000
6,000,000
43,660,320
19,000,000
1,710,000
3,750,000
47,371,469
40,863,882
1,500,000
-
-
-
-
-
-
-
-
-
-
6,000,000
-
974,796,586 537,239,846
The July 2016 rights issue was on the basis of 1 share for every 5 shares held.
The May 2017 share purchase plan allowed shareholders to apply for shares up to a maximum amount of
$15,000.
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. The prior year
opening share number of 411,511,842 has been adjusted by 22,967 shares, representing a conversion error
in the 2014 share consolidation.
Options on issue are as follows:
(i) Unlisted employee and officer options
Balance at beginning of reporting period
Granted
Exercised
Expired
Balance at reporting date
(ii) Listed options
Balance at beginning of reporting period
Granted
Exercised
Expired
Balance at reporting date
2017
No.
2016
No.
30,500,000
-
(13,500,000)
(17,000,000)
-
-
38,000,000
(7,500,000)
-
30,500,000
99,399,814
-
136,372,298 110,916,481
(43,764,995)
(192,007,117)
-
(11,516,667)
-
99,399,814
50
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 (see Note 1).
Capital management policy (continued)
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.
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
2017
$
2016
$
(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:
(2,570,538)
(2,511,975)
Gain on disposal of controlled entity
Depreciation
Share based payments - exploration and corporate
Option reserve
Loss on financial asset at fair value through profit and
-
7,070
187,100
-
(560)
1,837
141,959
-
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
78,462
39,231
(284,373)
(27,414)
218,638
26,561
(2,364,494)
(23,827)
(8,554)
231,117
19,710
(2,111,062)
On 15 September 2016, 5,000,000 options were granted in consideration for underwriting fees. These
options were exercisable at $0.03 each and expired on 30 December 2016.
Sayona Mining Limited I Annual Report 2017 51
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 18: CASH FLOW INFORMATION (continued)
On 15 September 2016, 1,851,852 new shares were issued to Attgold Pty Ltd in part settlement to acquire a
100% interest in Western Australian mineral tenements E80/4949, E80/4959, E80/4968 and E80/4511.
On 12 December 2016, 3,000,000 new shares were evenly issued to both Richard Faucher Consulting Inc
and Kiwi Financial Corporation as payment of fees in relation to acquisition of a tenement.
On 11 January 2017, 1,710,000 shares were issued to SMSF Specialists SA in consideration of fees relating
to corporate services and underwriting fees.
(c) Non-cash Financing and Investing Activities (continued)
On 22 February 2017, 3,750,000 new shares were issued to Attgold Pty Ltd in final settlement to acquire a
100% interest in Western Australian mineral tenements E80/4949, E80/4959, E80/4968 and E80/4511.
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 (see Note 6).
(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 Cambridge Business and Corporate Services, an entity controlled
by Mr Paul Crawford, a director of the company, to provide directorial and corporate financial services. Fees
of $120,000 were incurred during the period (2016: $100,000). $10,000 was owed by the company at 30 June
(2016:$20,000).
During the year, the parent entity engaged Shazo Holdings Pty Ltd, an entity controlled by Mr Allan Buckler, a
director of the company, to provide directorial and exploration technical services. Fees of $60,000 were
incurred during the period (2016:$30,000). $15,000 was owed by the company at 30 June (2016: $30,000).
NOTE 20: COMMITMENTS
(a) Operating lease commitments
2017
$
2016
$
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
-
-
-
9,369
-
9,369
The property lease was a non-cancellable lease for the Brisbane office. The lease terminated on 30
September 2016. A new lease has not been executed at 30 June 2017. The guarantee has subsequently
been cancelled.
(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.
52
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 20: COMMITMENTS (continued)
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
2017
$
2016
$
300,632
-
193,651
203,562
300,632
397,213
The Group’s financial instruments mainly comprises cash balances, 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 (Notes 8 and
9).
Credit risk is managed and reviewed regularly by the Board. The Board monitors credit risk by actively
assessing the rating quality and liquidity of counter parties.
The carrying amount of cash and receivables recorded in the financial statements represent the Group's
maximum exposure to credit risk. Concentration of credit risk is set out in note 21(c) and Note 9.
(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 Group'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.
Sayona Mining Limited I Annual Report 2017 53
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
Consolidated Group
2017
Financial assets
Cash and cash equivalents (i)
Receivables (ii)
Held for trading instruments
Financial liabilities
Payables (ii)
Net cash flow on financial
instruments
2016
Financial assets
Cash and cash equivalents (i)
Receivables (ii)
Held for trading instruments
Financial liabilities
Payables (ii)
Net cash flow on financial
instruments
1 year or
less
$
1 to 2
years
$
More than 2
years
$
Total
$
1,216,054
321,259
-
1,537,313
502,821
502,821
1,034,492
1 year or
less
$
62,603
36,886
78,462
177,951
284,183
284,183
(106,232)
-
-
-
-
-
-
-
1 to 2
years
$
More than 2
years
$
-
-
-
-
-
-
-
-
-
-
-
-
-
1,216,054
321,259
-
1,537,313
502,821
502,821
-
1,034,492
Total
$
62,603
36,886
78,462
177,951
284,183
284,183
-
-
-
-
-
-
-
(106,232)
(i) Floating interest with a weighted average effective interest rate of 2.16% (2016: 1.25%)
(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.
(ii) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from currency
movements, primarily in respect of the CAD and 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 CAD and US dollars.
- CAD and US dollar denominated receivables and payables.
54
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
The Group's exposure to foreign currency risk at the reporting
date was as follows:
Cash and cash equivalents
Receivables
Payables
Net exposure
Cash and cash equivalents
Net exposure
(iii) Other price risk
CAD
2017
21,764
186,427
(29,716)
178,475
CAD
2016
-
-
USD
2017
7,333
-
(15,780)
(8,447)
USD
2016
3,300
3,300
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 (see Note 10).
(d) Sensitivity analysis
If the spot Australian Dollar rate strengthened/weakened 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 $549 higher / lower (2016:
$211).
If the spot Australian Dollar rate strengthened/weakened by 5 percent against the Canadian Dollar, with all
other variables held constant, the Group's post-tax result for the year would have been $9,174 higher / lower
(2016: nil).
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 +/- $12,161 (2016: $626).
(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
Options
On 20 July 2016, 35,269,822 options were granted as part of the rights issue to institutional investors. These
options were exercisable at $0.03 each and expired on 30 December 2016.
On 17 August 2016, 18,457,727 options were granted as part of the rights issue to retail investors. These
options were exercisable at $0.03 each and expired on 30 December 2016.
On 15 September 2016, 11,111,111 options were granted as part of a placement. These options were
exercisable at $0.03 each and expired on 30 December 2016.
On 15 September 2016, 66,533,638 options were granted as part of a placement subject to shareholder
approval. These options were exercisable at $0.03 each and expired on 30 December 2016.
Sayona Mining Limited I Annual Report 2017 55
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 23: SHARE BASED PAYMENTS (continued)
On 15 September 2016, 5,000,000 options were granted in consideration for underwriting fees. These
options were exercisable at $0.03 each and expired on 30 December 2016.
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 employee share
based payment arrangements are
summarised as:
Outstanding at beginning of the period
Granted
Forfeited
Exercised
Expired
Outstanding at period end
Exercisable and vested at period end
2017
2016
Weighted
Average
Exercise
Price
$
Number of
Options
No
Weighted
Average
Exercise
Price
$
Number of
Options
No
30,500,00
0
-
-
0.023
-
-
38,000,00
-
-
0
-
0.021
-
13,500,00
0
0.014 7,500,000
0.010
17,000,00
0
-
-
0.030
-
-
30,500,00
0
0.023
30,500,00
0
0.023
-
-
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 the date of exercise, the weighted average share price was $0.03.
The weighted average fair value of options granted in 2016 was $0.0023, determined by reference to a
binomial option valuation method. The fair value of options granted represents the value of employee
services received over the vesting period.
Shares
On 15 September 2016, 1,851,852 new shares were issued to Attgold Pty Ltd in part settlement to acquire a
100% interest in Western Australian mineral tenements E80/4949, E80/4959, E80/4968 and E80/4511.
On 12 December 2016, 3,000,000 new shares were evenly issued to both Richard Faucher Consulting Inc
and Kiwi Financial Corporation as payment of fees in relation to acquisition of a tenement.
On 11 January 2017, 1,710,000 shares were issued to SMSF Specialists SA in consideration of fees relating
to corporate services and underwriting fees.
On 22 February 2017, 3,750,000 new shares were issued to Attgold Pty Ltd in final settlement to acquire a
100% interest in Western Australian mineral tenements E80/4949, E80/4959, E80/4968 and E80/4511.
The value of the shares issue was determined by reference to market price.
NOTE 24: EVENTS AFTER BALANCE SHEET DATE
The company continues to examine further funding sources for Group operations.
There have been no other key events since the end of the financial year.
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.
56
Notes to the Financial Statements
for the financial year ended 30 June 2016
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 2017. 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.
On 4 February 2017, the Company entered into an option agreement with Great Sandy Pty Ltd to acquire a
number of tenements in the Pilgangoora lithium district of Western Australia.
The option provides for the Company to acquire an 80% interest in all the tenements by making staged
payments in cash or shares, at Great Sandy’s election, of $300,000 within 12 months and a further $300,000
within 24 months of the agreement date. If Sayona makes the second payment within 18 months of the
agreement date, the second payment is reduced to $200,000. The Agreement also provides for a free
carrying of Grant Sandy to decision to mine. Great Sandy can elect to convert the 20% interest to a 2% gross
smelter royalty. Sayona is required to undertake minimum expenditure of $100,000 within the first 12 months.
The Group held no interest in the project at 30 June 2017.
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
Statement of Profit or Loss and Other Comprehensive Income
Total loss for the year
Total other comprehensive income
Total comprehensive loss for the year
Guarantee
2017
$
2016
$
7,414
1,421,418
216,144
9,378,892
1,637,562
516,949
-
303,893
-
516,949
303,893
63,165,259
-
(54,303,316)
52,945,695
146,959
(51,758,985)
8,861,943
1,333,669
2,544,331
-
2,323,416
-
2,544,331
2,323,416
The parent company no longer has a bank guarantee in relation to the office space. The lease is now on a
month-by-month basis.
Contingent Liabilities
There are no material contingent liabilities at the end of the reporting period.
Sayona Mining Limited I Annual Report 2017 57
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 27: INTERESTS IN SUBSIDIARIES
Information about principal subsidiaries
Sayona Lithium Pty Ltd, incorporated in Australia on 4 September 1986. The parent entity holds 100% of the
ordinary shares of the entity. 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. The company holds options on graphite tenements in Western Australia.
Sayona International Pty Ltd, incorporated in Australia on 29 April 2016. The parent entity holds 100% of the
ordinary shares of the entity. The company was established to hold overseas projects acquired by the Group.
No assets were held by the entity at 30 June 2017.
Sayona Quebec Inc, incorporated in Canada on 7 July 2016. The parent entity holds 100% of the ordinary
shares of the entity. The company was established to hold overseas projects acquired by the Group. The
company holds the Authier lithium project at 30 June 2017.
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.
Each subsidiary's principal place of business is also its country of incorporation, and year ends coincide with
the parent company.
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 other assets or 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.
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.
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:
58
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 28: FAIR VALUE MEASUREMENT (continued)
30 June 2017
(Level 1)
(Level 2)
(Level 3)
$
$
$
Recurring fair value measurements
Held for trading financial assets
-
-
-
30 June 2016
(Level 1)
(Level 2)
(Level 3)
$
$
$
Recurring fair value measurements
Held for trading financial assets
78,462
-
-
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 other
companies
10
2
Market approach using
recent observable financial
data.
Financial data and
share price.
During the year, this asset was reclassified from a level 1 fair value hierarchy to level 2.
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
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
Australia
Overseas
Consolidated Group
2017
$
2016
2017
2016
2017
$
$
$
$
2016
$
14,539
42,764
14,539
42,764
-
-
-
-
14,539
42,764
14,539
42,764
(2,536,48
7)
(1,456,29
2)
(34,051)
- (2,570,538
)
(1,456,292
)
-
-
-
-
-
-
(2,536,48
7)
(1,456,29
2)
(34,051)
(2,570,538
)
(1,456,292
)
-
Sayona Mining Limited I Annual Report 2017 59
Notes to the Financial Statements
for the financial year ended 30 June 2016
NOTE 29: SEGMENT REPORTING (continued)
ASSETS
Australia
Overseas
Consolidated Group
2017
$
2016
$
2017
2016
2017
$
$
$
2016
$
Segment assets
2,780,151 1,427,448 6,630,884 210,114 9,411,035 1,637,562
LIABILITIES
Segment liabilities
517,790
283,954
31,302
19,939
549,092
303,893
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
60
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 accoun ting 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 2017 and of the
performance of the consolidated group for the year ended on that date.
2.
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
3.
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: 12th day of September 2017
Sayona Mining Limited I Annual Report 2017 61
Independent Auditor’s Report to the Members of Sayona Mining Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Sayona Mining Limited (the Company and its Controlled
Entities (the Group)), which comprises the consolidated statement of financial position as at 30 June
2017, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion the accompanying financial report of Sayona Mining Limited is in accordance with the
Corporations Act 2001, including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require
that we comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance about whether the financial report is free from
material misstatement. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the company, as attached to the director’s report, has not changed as
at the date of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
62
Independent Auditor’s Report to the Members of Sayona Mining Limited (continued)
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 Group’s ability to execute its currently planned exploration and evaluation activities requires the
Group to raise additional capital. As set out in the note the directors have prepared the financial
report on a going concern basis.
Should the Group not be able to raise additional capital there exists a significant uncertainty that may
cast doubt over the Group’s ability to continue as a going concern. The financial report does not
include any adjustments relating to the recoverability or classification of recorded asset amounts or
to the amounts or classification of liabilities should this occur.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter
Carrying value of exploration and
evaluation assets
Refer to note 13 (exploration and
evaluation assets)
and
As at 30 June 2017 the carrying value of
exploration
is
$7,824,161. The Group’s accounting policy in
respect of exploration and evaluation assets is
outlined in Note 1.
evaluation
assets
This is a key audit matter due to the fact that
significant judgement is applied in determining
whether
the capitalized exploration and
evaluation assets meet the recognition criteria
set out
for and
in AASB6 Exploration
Evaluation of Mineral Resources.
How our audit addressed the key audit
matter
Our procedures included, amongst others:
• We obtained evidence as to whether the rights
to tenure of the areas of interest remained
current at balance date and as well as
confirming that rights to tenure are expected
to be renewed for tenements that will expire in
the near future;
• We obtained evidence of the future intention
for the areas of interest, including reviewing
future budgeted expenditure and related work
programs;
• We obtained an understanding of the status of
ongoing exploration programs, for the areas of
interest;
• We obtained evidence as to the assumptions
made by management in the determination of
the recoverable value of the asset.
Sayona Mining Limited I Annual Report 2017 63
Independent Auditor’s Report to the Members of Sayona Mining Limited (continued)
Other information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon. Our opinion on the financial report does
not cover the other information and accordingly we do not express any form of assurance conclusion
thereon. In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
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 gives a true and fair view and is free from material misstatement, whether due
to fraud or error. In preparing the financial report, the directors are responsible for assessing the
ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibility for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
64
Independent Auditor’s Report to the Members of Sayona Mining Limited (continued)
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Sayona Mining Limited I Annual Report 2017 65
Independent Auditor’s Report to the Members of Sayona Mining Limited (continued)
Report on the Remuneration Report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30
June 2017.
In our opinion, the Remuneration Report of Sayona Mining Limited for the year ended 30 June 2017
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Nexia Brisbane Audit Pty Ltd
N D Bamford
Director
Level 28, 10 Eagle Street
Brisbane QLD, 4000
Date: 12 September 2017
66
ASX INFORMATION
Following is additional information required by the ASX Limited and not disclosed elsewhere in this
report. The following information is provided as at 29 September 2017.
1.
Shareholding:
Distribution of Shareholders Number:
Category Number
(Size of Holding)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Ordinary Shares
(Number)
2,283
639
210
684
566
4,382
The number of shareholdings held in less than marketable parcels is 903.
Twenty Largest Holders - Ordinary Shares
1. P Point Pty Ltd
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