More annual reports from Sayona Mining Limited:
2023 ReportA N N U AL R EP O R T 2 0 1 9
PLUGGED INTO AN
ELECTRIC
FUTURE
PLUGGED INTO AN
ELECTRIC
FUTURE
CONTENTS
CONTENTS
2
3
4
8
10
The Company
Leadership Team
Tenement Schedule
19
Highlights
Authier Project
22
Resources and
Reserves
Managing
Director’s Report
13
Tansim Project
Directors’ Report
24
14
Western Australian
Lithium
37
Auditor’s Independence
Declaration
16
East Kimberley
Graphite Project
Financial Statements
38
74
77
ASX Information
Corporate Directory
2
3
The Company
Authier Project
Tenement Schedule
15
Highlights
Tansim Project
16
Resources and
Reserves
4
8
9
Western Australian
Lithium
19
Directors’ Report
13
East Kimberley
Graphite Project
31
Auditor’s Independence
Declaration
32
66
69
Financial Statements
ASX Information
Corporate Directory
2
3
4
The Company
Highlights
8
10
Leadership Team
19
Tenement Schedule
Authier Project
22
Resources and
Reserves
Managing
Director’s Report
13
Tansim Project
24
Directors’ Report
14
Western Australian
Lithium
37
Auditor’s Independence
Declaration
16
East Kimberley
Graphite Project
38
74
77
Financial Statements
ASX Information
Corporate Directory
Sayona Mining Limited I Annual Report 2019 1
Sayona Mining I Annual Report 2019 1 THE COMPANY
East Kimberley Graphite
Mt Edon Lithium
Tansim Lithium
Authier Lithium
Pilbara Lithium
Sayona is an emerging
lithium producer focused
on providing materials for
the construction of lithium-
ion batteries, an essential
component for the rapidly
growing renewable energy
technology sector.
A POSITIVE DEFINITIVE
FEASIBILITY STUDY…
DEMONSTRATED
AUTHIER’S POTENTIAL
AS A PROFITABLE AND
SUSTAINABLE NEW
LITHIUM MINE
Sayona Mining Limited (ASX:SYA) is
an emerging lithium producer
focused on providing materials for
the construction of lithium-ion
batteries, an essential component for
the rapidly growing renewable energy
technology sector.
The Company’s flagship
development is the Authier Lithium
Project in Québec, Canada. A
positive Definitive Feasibility Study
(DFS), completed in September
2018, demonstrated the project’s
potential as a profitable and
sustainable new lithium mine.
Québec is pursuing the development
of a complete lithium value chain,
from extraction to processing.
In the midst of current global trade
uncertainty, it is well positioned to
become a key hub of downstream
processing facilities to feed the North
American lithium-ion battery market.
Lithium development
Lithium exploration
Graphite exploration
Sayona also holds a portfolio of lithium
and graphite exploration projects in the
world-class Pilgangoora lithium district
of Western Australia.
The Company is backed by an
experienced board with a track record
of successful lithium project
development. This is supported by a
management team with global
experience in financing, developing
and managing major resource
projects.
Together, they have the expertise
necessary to drive the sustainable
development of Sayona’s projects and
to maximise stakeholder returns.
2 HIGHLIGHTS
HIGHLIGHTS
HIGHLIGHTS
Initial DFS confirms the project
DFS now being revised based
profitability with a projected pre-tax
NPV of CAD$184m (AUD$194m)
on increased daily
production levels of 2,600t
Ore Reserve for Authier
increased to 12.1 million tonnes
Authier permitting progressing
with launch of
Environmental Impact Study
Leadership team strengthened
with the appointment of a new
Managing Director in Australia
and CEO in Québec
Earn-in with Altura Mining to
develop WA lithium assets
Project pipeline advances with
positive drilling results from
Tansim Lithium Project (Canada)
& Mallina Project (Western Australia)
DFS now being revised based on optimised final production level
Ore Reserve for Authier
increased to 12.1 million tonnes
Leadership team strengthened
with the appointment of a new
Managing Director in Australia
and CEO in Québec
Project pipeline advances with
positive drilling results from
Tansim Lithium Project (Canada)
& Mallina Project (Western Australia)
DFS confirms the Authier
project profitability
with a projected
pre-tax NPV of
CAD$184m (AUD$194m)
Ore Reserve for
Authier increased to
12.1 million tonnes
Leadership team
strengthened with the
appointment of a new
Managing Director in Australia
and CEO in Québec
Project pipeline advances
with positive drilling results
from Tansim Lithium Project
(Canada) & Mallina Project
(Western Australia)
DFS confirms the Authier project
profitability with a projected pre-tax
NPV of CAD$184m (AUD$194m)
Ore Reserve for Authier
increased to 12.1 million tonnes
Leadership team strengthened
with the appointment of a new
Managing Director in Australia
and CEO in Québec
Project pipeline advances with
positive drilling results from
Tansim Lithium Project (Canada)
& Mallina Project (Western Australia)
Sayona Mining I Annual Report 2019 3 MANAGING DIRECTOR’S REVIEW
Dear Shareholder
The past year has seen significant
advances for Sayona as we
progress towards our target of
becoming a profitable and
sustainable lithium producer.
Significantly, our flagship Authier
Lithium Project in Québec, Canada
has become a highly strategic asset
amid the U.S.-China trade war and
an increasing focus by U.S.
lawmakers on the need to secure
supplies of strategic battery minerals
such as lithium.
This, together with the Québec’s
Government public and private
support of the province’s lithium
industry, has given Sayona’s
projects a tremendous boost.
Notably, this has included recent
comments by Québec’s Premier
Francois Legault, describing lithium
as a “jewel” that the province has
yet to exploit with a vision of
producing “100-per-cent Québec
batteries.”
Firstly however, looking back at
fiscal 2019, I would like to draw your
attention to some of the past year’s
highlights for our Company.
Positive DFS for Authier
Authier’s potential to become a
profitable and sustainable new
lithium mine was highlighted by the
definitive feasibility study (DFS)
released in September 2018.
While the DFS is now subject to
review based on the project’s
revised regulatory pathway, it
pointed towards positive outcomes
for all stakeholders.
For the local community, the new
mine could create around 150 jobs
in construction and 160 jobs in
operation, with Sayona giving priority
to local employment and suppliers.
It would also make a sizeable
economic contribution to Québec
and Canada, providing royalties and
other tax revenues for community
benefit, while also supporting
Québec’s strategy of developing a
complete lithium value chain.
Authier also benefits from Québec’s
excellent infrastructure, including
low-cost hydroelectric power,
extensive road and rail networks and
access to skilled labour, along with
its close proximity to major battery
markets in the United States.
However, any new mining project
cannot proceed without community
support and Authier is no exception.
In March 2019, the Québec
Environment Minister advised the
project would be subject to the
environmental impact assessment
and review procedures under the
BAPE (bureau d’audiences
publiques en environnement). This
compared to the previous regulatory
pathway, which specified a
maximum production threshold of
2,000 tonnes (t) per day.
For Sayona, this was a positive
outcome based on a number of
considerations. Significantly, the
DFS is now undergoing review
based on a higher daily production
limit of 2,600t, with an estimated
14-year mine life and annual
spodumene output of 115,000t (6%
Li O).
2
This 30 per cent increase in the daily
production rate now positions
Authier to take advantage of
potential downstream processing,
adding much greater value to the
project as shown by a previous
concept study.
The DFS review also allows Sayona
to further optimise the project, while
ensuring it meets community
expectations concerning
environmental protection.
An environmental impact
assessment released in May 2018
showed the project would have no
impact on the water quality of the
Esker Saint-Mathieu-Berry and this
will be further demonstrated by the
new environmental impact statement
(EIS) currently underway.
In addition, the extra review and
consultation procedures under the
BAPE process will help ensure
community acceptance, including
support from key stakeholders such
as local municipalities, landowners,
First Nation communities and others.
Sayona is committed to Québec’s
regulatory process and will continue
working hard to earn a social licence
to operate. Pending the necessary
approvals and financing,
construction could start as early as
2021 and mining operations in 2022.
4 Authier’s potential
to become a
profitable and
sustainable new
lithium mine was
highlighted by
the definitive
feasibility study
released in
September 2018.
Sayona Mining I Annual Report 2019 5 Project pipeline advances
Together with Authier, Sayona’s
project pipeline also advanced over
the past year in a positive sign for
future value creation.
In August 2018, Sayona announced
high-grade lithium assays from initial
reconnaissance sampling at the
Tansim Lithium Project, located 82
kilometres south-west of Authier.
Tansim comprises 139 mineral
claims covering 8,500 hectares and
is seen as prospective for lithium,
tantalum and beryllium.
In April 2019, drilling results
highlighted the potential for a new
lithium deposit, with 11 diamond drill
holes intersecting concentrations of
spodumene mineralisation. While at
an early stage, Tansim’s
prospectivity and its proximity to
Authier could make it a potentially
valuable addition to the Company’s
lithium portfolio.
2
Meanwhile, in Western Australia,
drilling at the Mallina Project showed
positive results including 4m @ 2.18
per cent Li O, including a peak
assay value of 3.18%. While further
drilling is required, the results
showed Mallina’s potential among
the Company’s other projects in the
world-class Pilgangoora lithium
district.
Post-balance date, in August 2019,
Sayona announced an earn-in
agreement with lithium producer
Altura Mining. Under the agreement,
Altura will spend $1.5 million on
exploration across the project
portfolio over a three-year period to
earn a 51 per cent interest.
With Sayona sharing common
directors with Altura, this agreement
is a truly win-win deal for both
companies. For Altura, it provides
access to a highly prospective
exploration portfolio, while for
Sayona, the Company can benefit
from any exploration upside while
focusing on its most advanced
project, Authier.
New management team
These are exciting times for Sayona
and the Company has received an
injection of fresh talent with a new
leadership team appointed in both
Australia and Canada.
In May 2019, Guy Laliberté was
appointed as Sayona Québec’s new
Chief Executive Officer, further
strengthening the Québec team
following the January appointment
of Serge Rouillier as Manager,
Sustainable Development.
Guy and Serge have a wealth of
experience both in Québec and
internationally and are playing a vital
role in enhancing Sayona’s
community engagement activities.
Sayona cut the ribbon on a new
office in the township of La Motte in
January 2019, opened by the mayor
and other dignitaries, as further
demonstration of the Company’s
commitment to the local community.
And post balance date, on July 1, I
was delighted to be appointed as
Sayona's new Australian based
Managing Director.
6 Shareholder support
Finally, I would like to thank
shareholders for their support amid
recent challenging market and
economic conditions.
Sayona’s Board and management
are fully aligned with shareholders’
interests and this was clearly shown
by our investment of nearly $1
million in a placement in conjunction
with a Shareholder Share Purchase
Plan (SPP). The SPP closed on 23
August, having secured, together
with the placement, some $1.9
million to advance the Company’s
key projects.
For shareholders, the year ahead
points to some major milestones for
Sayona, including the completion of
Authier’s revised DFS and further
advances in our project pipeline.
The Company also continues to
pursue other potential opportunities
to add value for shareholders.
Demand for lithium-ion batteries
continues to rise amid the revolution
in energy and transport, and with
analysts pointing to a looming
supply deficit for lithium in the early
to mid-2020s the outlook is highly
favourable.
Add to this the Company’s
experienced Board that has a track
record of successfully developing
resource projects around the world,
together with Sayona’s strategically
beneficial position in Québec and
the future looks very bright indeed.
On behalf of the Board, thank you
again to our shareholders,
employees, contractors, suppliers,
partners and all others connected
with Sayona for your support. I look
forward to meeting you and sharing
our vision of Sayona’s prosperous
future in lithium, the fast-growing
metal of the 21st century.
Yours sincerely
Brett Lynch
Managing Director
Sayona Mining I Annual Report 2019 7 LEADERSHIP TEAM
Sayona is backed by an
experienced Board with a proven
track record of taking mining
projects from exploration through
to development and final
production.
It is further supported by a new
leadership team in Québec with
global mining project development
capabilities and expertise in local
government, community and
stakeholder engagement.
The Company is now well-positioned
with an experienced executive team
in place to drive the development of
the Authier and Tansim projects in
Canada, and its lithium prospects in
Western Australia.
L to R James Brown, Dan O’Neill, Paul Crawford
8 Guy Laliberté
Chief Executive Officer, Sayona Québec
Guy is an experienced project
director and construction manager
in the mining and heavy industry
sector. Born in Québec, he has more
than 35 years’ project management
experience in major international
mining and construction projects.
The Authier development will be the
fourth open-pit mining project he
has led, either as project director or
construction manager. Guy joined
Sayona in May 2019.
Serge Rouillier
Manager Sustainable Development,
Sayona Québec
Serge is an experienced mining
executive, born in Québec and
skilled in stakeholder and
community engagement. Serge
joined Sayona in January 2019 and
is focused on ensuring community
and stakeholder views are reflected
in the Company’s development
plans for Authier.
Brett Lynch
Managing Director
Brett is an experienced mining
engineer, company director and
CEO with a strong background in
international mining and mining
related businesses. He has over 30
years’ experience in business
development and management with
a proven track record of delivering
shareholder value through
converting opportunities to
outcomes. Brett was appointed
Managing Director on 1 July 2019.
Paul Crawford
Executive Director & Company Secretary
Paul is an experienced company
secretary with qualifications in
accountancy, financial management
and business law. He has 40 years
of commercial experience, including
various technical and management
roles within the minerals, coal and
petroleum industries. Paul is the
principal of his own corporate
consultancy firm, providing
accounting, corporate governance,
business advisory and commercial
management services. He joined the
Board of Sayona in 2000.
Dan O’Neill
Non-Executive Director
Dan is an exploration geologist with
more than 40 years’ experience in
exploration project and corporate
management. He has held positions
with a number of Australian and
multinational exploration companies
and was a founding director of
lithium producer, Orocobre. Dan
joined the Board of Sayona in 2000
and was Managing Director until
July 2019. He is also a Non-
executive Director of Altura Mining
Limited.
James Brown
Non-Executive Director
James is a mining engineer with
extensive operational and
development experience in the coal
mining industry in Australia and
Indonesia, including 22 years with
New Hope Corporation. He was
appointed to the Sayona Board in
2013. James is also Managing
Director of Altura Mining Limited.
Alan Buckler
Non-Executive Director
Alan has over 45 years’ experience
in the mining industry and has been
directly responsible for the
commercialisation of several
projects in Australia and Indonesia,
from resource identification through
to production. He is a former
Director and Chief Operations
Officer of New Hope Corporation.
Alan joined the Sayona Board in
2013. He is also a Non-executive
Director of Altura Mining Limited.
Sayona Mining I Annual Report 2019 9
OPERATIONS
Authier Project
Sayona’s Authier Lithium Project
(Authier) is a hard rock spodumene
lithium deposit scheduled for
development as an open cut mine
initially producing a 6% Li O 2
spodumene concentrate, the source
of high grade, low contaminant
lithium carbonate.
An updated JORC Ore Mineral
Resource and Reserve statement,
reported in September 2018, has
identified a Total Resource of
N
Rouyn-
Noranda
Val-d'Or
identified a Total Resource of 20.94
million tonnes at 1.01% Li O, and a
Proved Reserve of 12.1 million
tonnes at 1.00% Li O*.
2
2
The key attraction of the project is its
near-term development potential.
The Company has completed a DFS
which confirmed the project’s
potential to become a sustainable
and profitable new lithium mine. This
was undertaken on the basis of a
daily production limit of 2,000 t,
as per the previously planned
regulatory pathway.
However, the DFS is now being
reviewed under a revised regulatory
pathway, as announced in March
2019. The new proposed daily
production limit of 2,600 t, a 30%
increase on the previous limit, will
position the project to pursue
downstream processing
opportunities.
Authier Lithium Project
CANADA
Tansim Lithium Project
Québec
100km
Authier Project location
* Refer Resources and Reserves, page 22
Ottawa
Montreal
USA
10 Sayona is focused on completing
the required environmental studies
and community engagement to
obtain all regulatory approvals.
The deposit at Authier is hosted in a
spodumene bearing pegmatite
intrusion and has been defined by
more than 31,000 metres of drilling.
Authier is located approximately 590
kilometres north-west of Montréal,
near the city of Val d’Or, a major
mining service centre, in the
province of Québec. The region has
a highly-skilled local workforce,
access to low-cost hydroelectric
power and excellent infrastructure
with established road and rail
facilities to export ports.
In December 2018, Sayona
announced its participation in a joint
study on the development of a
lithium‐ion battery industry in
Québec. The study will be carried
out with the financial support of the
Québec Ministry of Economy and
Innovation and other partners. It will
assess how Québec can leverage its
competitive advantages, including
its proximity to major markets, to
ensure the province is strategically
positioned to benefit from the clean
energy revolution that is driving
demand for lithium-ion battery
technology.
Definitive Feasibility Study
A DFS, completed in September
2018, confirmed Authier’s potential
as a profitable and sustainable new
lithium mine that will provide new
jobs and economic benefits for the
local community, and positive
outcomes for all stakeholders.
The new mine has the potential to
create 150 jobs in construction and
up to 160 jobs in operation, with the
Company giving priority to local
employment and suppliers.
The projected life of mine production
is 1.58 million tonnes of spodumene
concentrate. It will be mined by low-
cost 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 DFS clearly demonstrated the
viability of a mining and processing
operation, with the necessary
infrastructure in place to support the
development of the project.
Key findings of the DFS included:
! Pre-tax NPV of CAD$184.8
million and IRR 33.7% (real terms
at 8% discount rate);
! Annual average concentrate
production of 87,400 t at 6%
Li O;2
! Average annual revenue of
CAD$80 million;
! FOB Port cash costs of
CAD$482/t (US$366/t);
! Low start-up capital of CAD$89.9
million;
! LOM strip ratio of 6.9:1;
! 18-year mine life.
In March 2019, the Québec
Environment Minister announced the
project would be subject to the
environmental impact assessment
and review procedures under the
BAPE.
Subsequently, the Company
announced it would be seeking
approval, based on a sustainable
development approach, to process
in the order of 2,600 tonnes per day,
providing for an approximate mine
life of 14 years and estimated annual
average spodumene concentrate
production of around 115,000
tonnes at 6% Li O. Sayona is now
2
undertaking a review of its DFS
under these new parameters.
Permitting
When it was announced that the
Authier project would be subject to
the environmental impact
assessment and review procedures
under the BAPE, the Québec
Environment Minister said the
process would enable Sayona to
“present the environmental
protection measures likely to ensure
the acceptability of its project, both
socially and environmentally as well
as economically.”
Following the announcement,
Sayona decided to undertake further
community engagement and
environmental studies, including an
Environmental Impact Assessment
(EIA) as per Article 31.1 of the
Environment Quality Act.
Sayona had already completed an
Environmental Assessment Study for
the project, which showed it would
have no impact on the water quality
of the Esker Saint‐Mathieu‐Berry, a
local source of potable water, and
that any other impacts arising from
the operations would be minimal
after the application of mitigation
measures.
In May 2019, engineering
consultancy BBA was appointed to
review the original mine plan and the
2018 DFS in accordance with the
new approval process, and based
on the optimised production levels.
Sayona Mining I Annual Report 2019 11
Overall the BAPE permitting process
is expected to take up to 18 months.
Pending regulatory approval, the
construction process for Authier is
targeting commencement in 2021
with mining operations beginning in
2022.
Nation community, non-
governmental environmental
organisations and recreational
associations. The involvement of
stakeholders will continue
throughout the various project
stages.
In addition, the Company has been
engaging with the broader
community outside the immediate
project area. Meetings are
continuing with regional councils,
other mining companies,
government organisations and other
key business stakeholders in the
region.
To further strengthen Sayona’s
community engagement efforts, the
Company has opened an office in
La Motte, a municipality in close
proximity to the Authier project.
Community members are
encouraged to visit the office to
learn more about Sayona’s plans for
the sustainable development of the
proposed mine and the economic
benefits it can return to the region.
Environmental, Community
and First Nations
Sayona’s mining activities are
underpinned by a fundamental
premise based on a sustainable
development approach and respect
for the local communities and
environments in which it operates.
In June 2019, Sayona commenced
an environmental impact study (EIS)
for the Authier project. This is part of
the overall permitting process along
with public consultation and review,
ultimately leading to a ministerial
recommendation and government
decision. The 30-day public
consultation period began in mid-
June for comments on issues to be
addressed in the study. Sayona is
aiming to submit the EIS in late
2019.
During the year discussions were
held, and are continuing, with First
Nations Pikogan for an Economic
Benefits Agreement with the
Abitibiwinni community. The target is
to conclude and sign the final
agreement in Q4 2019.
An ongoing Community Relations
Program has been developed to
engage and inform local
stakeholders. This program includes
information sessions and
consultations with municipalities,
landowners, the Algonquine First
12 AUTHIER LITHIUM PROJECT DFS HIGHLIGHTS
Authier Lithium Project DFS Highlights
Description
Average Annual Ore Feed to the Plant
Annual Average Spodumene Production
Life-of-Mine
Life-of-Mine Strip Ratio
Average Spodumene Price
Initial 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 (Mine-gate)
Average Life of Mine Cash Costs (Montreal Port FOB)
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$/tonne
C$/tonne
C$ million
%
years
CAD:USD
Results
675,500
87,400
18
6.9:1
675
89.9
83.6
1,394
460
416
482
184.8
33.7
2.6
0.76
Tansim Project
Sayona has expanded its Canadian
lithium footprint with the staged
acquisition of the Tansim lithium
exploration project in Québec. The
Tansim project is located 82
kilometres south-west of Authier.
The project comprises 141 mineral
claims of 8,500 hectares and is
prospective for lithium, tantalum and
beryllium.
The priority targets at Tansim are
Viau-Dallaire and Viau. An 11-hole
drilling program was undertaken at
the Viau-Dallaire outcrop in February
2019. In April 2019, positive drilling
results were returned with
interceptions of variable
concentrations of spodumene
mineralisation, boosting the
prospects for an additional lithium
deposit within close proximity to
Authier. Follow-up drilling and test
work is being planned.
Also, in April, Sayona expanded the
Tansim project with the acquisition of
the Lac Simard lithium prospect, Val
d’Or, from a private company, Exiro
Minerals Corp (Exiro). Under the
agreement Sayona can acquire a
100% interest by making cash and
share payments and undertaking
work on the property over a three-
year period, with Exiro retaining a
2% net smelter return royalty.
Exploration at Tansim is being
closely coordinated with the local
First Nations group, Winneway Long
Point First Nation, which will provide
support services for future work
programs.
N
Rouyn-
Noranda
Val-d'Or
Authier Lithium Project
CANADA
Tansim Lithium Project
Québec
100km
Tansim Project location
Ottawa
Montreal
USA
Sayona Mining I Annual Report 2019 13 Western Australian Lithium Projects
Sayona’s leases in the Pilbara region
cover some 1806 sq km and are
centred in the world-class
Pilgangoora lithium district. They are
prospective for hard rock
spodumene pegmatite
mineralisation.
Wyndham
Broome
Port Hedland
N
Exmouth
Pilgangoora Lithium Deposit
Pilbara Lithium Project
WESTERN
AUSTRALIA
Mt Magnet
Geraldton
Mount Edon
Lithium Project
Kalgoorlie
Mount Marion
Lithium Deposit
PERTH
Greenbushes
Lithium
Deposit
Cattlin Creek
Lithium Deposit
250km
Esperance
Albany
14 Work during the year focussed on
continued systematic exploration of
this large tenement holding, which
has seen little past lithium
exploration. Results have advanced
the prospectivity of the package and
identified new fractionated
pegmatites, with drilling at Mallina
identifying new zones of spodumene
bearing pegmatite.
In January 2019, Sayona exercised
the Great Sandy Option and also
acquired the remaining tenement
equities, to give it a 100% ownership
over six tenements in the Pilbara,
including the Mallina project.
In August 2019, subsequent to year-
end, Sayona announced an earn-in
agreement with leading lithium
producer, Altura Mining Limited
(Altura).
Under the agreement, Altura will
spend AUD$1.5 million on
exploration across the project
portfolio over a three-year period to
earn a 51% interest. Sayona will
retain the right to contribute to
project evaluation and development.
This agreement with an established
and experienced lithium miner will
enable Sayona to advance the
potential of its Western Australian
exploration assets.
Port Headland
)
E 45/4703
Tabba Tabba East
E 47/3950
Mt Dove
ELA 47/3829
Deep Well
)
Mallina
E 45/2364
Tabba Tabba
E 45/5289
Strelley West
)
Goldsworthy
N
E 45/5288
Strelley
E 45/4775
Carlindie
)
Tabba Tabba
E 45/4716
Red Rock
Pilgangoora
Lithium Deposit
E 45/4700
Moolyella 2
Yarrie
)
E 45/4727
Moolyella 4
)
Talga Talga
E 47/2983
Mallina
Wodgina Lithium Mine
Mount Edgar
)
E 45/4721
Moolyella 3
E 47/3802
Friendly Creek
E 45/4726
West Wodgina
Pilbara Tenements
Hillside
)
E 45/4738
Cooglegong
E 46/1103
Dorringtons
0
25
50km
Sayona Mining I Annual Report 2019 15 Mallina Project
The Mallina Project is the most
advanced project in the Pilbara
portfolio. Multiple zones of newly
discovered spodumene pegmatites
have been identified within a
25 sq km area.
In October 2018, the Company
announced the completion of a 30-
hole RC drilling program totalling
2,225 metres. The drilling
intersected a varied suite of
pegmatite and aplite bodies of
variable dip, strike and thickness.
The identification of spodumene
pegmatite from surface and of good
intensity (to a maximum 3.18% Li O,
intersected from 1 to 2m in drill hole
SMRC040) provides encouraging
evidence that the project can host
economic grades of lithium
mineralisation.
2
There is considerable scope for
further drill testing, especially at the
Area C prospect where shallow
mineralisation is open at depth and
along strike to the north and south.
During the year the project was
awarded a state government grant
for a rebate on direct drilling costs.
Under this grant, Sayona received
$83,252 for the October drilling
program.
Tabba Tabba project
The Tabba Tabba Project, 40km
north of Pilgangoora, is located in an
area of historic tin and tantalum
mining. Spodumene pegmatite has
been identified in the immediate
region and the project provides
exposure to the area’s emerging
lithium prospectivity.
During the year, further pegmatites
and seven main geochemical
targets were defined at Tabba
Tabba. Planning for first pass drilling
of three of the pegmatite targets has
been completed and statutory
approvals for drilling obtained.
Additional exploration over the
broader tenement holding has
included rock sampling to identify
fractionated granites and pegmatites
for a more detailed assessment.
Moolyella and other Pilbara
project areas
The Moolyella Project is located east
of Marble Bar in an area where
lithium, tin and tantalum
mineralisation and spodumene
pegmatites are associated with the
intrusion of the Moolyella
monzogranite. Within the
Company’s Moolyella tenure (three
tenements covering 334 sq km) a
number of lithium-cesium-tantalum
albite pegmatites have been
identified.
2
Within the northern portion of
E45/4700 rock sampling of mica rich
pegmatite has returned up to 1.40%
Li O. Further exploration is planned
to follow up these encouraging
results, and to test more broadly the
prospective margins of the source
intrusions.
Reconnaissance style exploration
was also carried out over the
company’s other Pilbara tenure.
Mt Edon lithium project
The Mt Edon Project covers the
southern portion of the Paynes Find
greenstone belt, South Murchison,
and is host to an extensive swarm of
pegmatites.
Geochemistry to date has identified
a general westward increase in the
fractionation of the known
pegmatites. Field reconnaissance
has focussed around this western
target, identifying new areas of
pegmatites, as well as more detailed
mapping around a known lepidolite
occurrence to the east.
Further work is warranted to identify
if albite – spodumene pegmatites
are present in these areas.
East
Kimberley
Graphite
Project
Past exploration by Sayona has
identified graphite mineralisation
within a 25-kilometre strike extent of
the Corkwood geochemical and
geophysical anomaly.
During the year the first
reconnaissance of the southern
project area was undertaken. Up to
four graphitic horizons were
observed with units up to 30m wide
at surface. Sampling of graphite
gneiss returned assay results
ranging from 0.44% up to 8.01%
TGC (total graphitic carbon).
While Sayona’s primary activities are
focused on its lithium projects, the
Company believes that Corkwood
has considerable value and is
seeking partners to explore and
develop the project.
16 SAYONA INVESTMENT PROPOSITION
Authier is an advanced project
on track for development;
nearby Tansim is showing early
promise as emerging project.
Located in a first world country
with access to world-class,
low-cost infrastructure.
Profitable and sustainable
project based on 2018 DFS.
Opportunity to value-add Authier
concentrates; growing US and
global demand for lithium amid
battery revolution for cars & energy.
Board and management team
have a track record of delivering
projects around the world,
including lithium.
Québec’s premier promotes
lithium, eyeing 100%
Québec batteries.
Sayona Mining I Annual Report 2019 17 TENEMENT SCHEDULE
Western Australia
Tenement
Location
Interest in Tenement
E59/2092
E59/2055
E45/2364
E45/4703
E45/4716
E45/4726
E45/4738
E45/4775
E80/4511
E80/4949
E47/3802
E47/3950
ELA47/3829
ELA45/5288
ELA45/5289
E47/2983
E46/1103
E45/4721
E45/4727
E45/4700
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
Western Australia
80%, with rights to 100%
of pegmatite minerals
100%
(pegmatite minerals)
100%
(pegmatite minerals)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(pegmatite minerals)
100%
100%
100%
100%
18
Canada
Tenement
Location
Interest in
Tenement
Tenement
Location
Interest in
Tenement
2116146
2116154
2116155
2116156
2183454
2183455
2187651
2187652
2192470
2192471
2194819
2195725
2219206
2219207
2219208
2219209
2240226
2240227
2247100
2247101
2472424
2472425
2480180
2507910
1133877
2415443
2415444
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
Authier, Québec
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2436732
2436733
2436734
2438472
2438473
2438474
2438475
2438476
2438477
2438478
2438723
2440836
2440837
2440838
2440839
2440840
2440841
2440842
2440843
2440844
2440845
2440846
2440847
2440848
2440849
2440850
2440851
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
Sayona Mining I Annual Report 2019 19 Tenement
Location
Interest in
Tenement
Tenement
Location
Interest in
Tenement
2440852
2440853
2440854
2440855
2440856
2440857
2440858
2440859
2440860
2440890
2440891
2440892
2440893
2440894
2440895
2440896
2440897
2440898
2440899
2440900
2440901
2440902
2440903
2440907
2440908
2440909
2440919
2440920
2440925
2440930
2440935
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
2440936
2440991
2440992
2440993
2440994
2450758
2519251
2519252
2519253
2519254
2519255
2519256
2519257
2519258
2519259
2519260
2519261
2519262
2519263
2519264
2519265
2519266
2519267
2519268
2519269
2519270
2519271
2519272
2519273
2519274
2519275
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
50%
100%
100%
50%
50%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
20 Tenement
Location
Interest in
Tenement
Tenement
Location
Interest in
Tenement
2519307
2519308
2519309
2519310
2519311
2519312
2519313
2519314
2519315
2519316
2519317
2519318
2519319
2519320
2519321
2519322
2519323
2519324
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2519276
2519277
2519278
2519279
2519280
2519281
2519282
2519283
2519284
2519285
2519286
2519287
2519288
2519289
2519290
2519291
2519292
2519293
2519294
2519295
2519296
2519297
2519298
2519299
2519300
2519301
2519302
2519303
2519304
2519305
2519306
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
Tansim, Québec
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sayona Mining I Annual Report 2019 21 RESOURCES AND RESERVES
In September 2018, Sayona
announced updated Resource and
Reserve estimates for the Authier
project.
A DFS completed in September
2018 demonstrated the technical
and financial viability of constructing
an open-cut mining operation and
processing facility producing
spodumene concentrate.
The positive DFS 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 1.
The Authier project has been subject
to more than 31,000 metres of
drilling. Between 2010 and 2012
Glen Eagle, the previous tenement
holders, completed 8,990 metres of
diamond drilling in 69 diamond drill
holes (DDH) of which 7,959 metres
were drilled on the Authier deposit;
609 metres (five DDH) were drilled
on the northwest and 422 metres on
the south-southwest of the property.
Sayona has completed three phases
of drilling totalling more than 11,000
metres in 81 DDH. All the holes
completed by Sayona and included
in the Mineral Resource Estimate
have used standard DDH, HQ or NQ
core diameter size, using a standard
tube and bit. The drilling programs
have been subject to very robust
QA/QC procedures.
A revised independent JORC
Mineral Resource (2012) estimate
has been prepared and is outlined in
Table 2.
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 and all
material assumptions and technical
parameters continue to apply and
have not materially changed.
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
announcements.
Table 1:
Authier JORC Ore Reserve Estimate (0.55% Li 0 cut-off grade)
2
Category
Proven Reserve
Probable Reserve
Total Reserves
Tonnes (Mt)
Grades (% Li 0)2
Contained Li 0 (t)
2
6.10
6.00
12.10
0.99
1.02
1.00
60,390
61,200
121,590
Note: The Ore Reserve Estimate is inclusive of dilution and ore loss.
Table 2:
Authier JORC Mineral Resource Estimate (0.55% Li 0 cut-off grade)
2
Category
Measured Resource
Indicated Resource
Measured + Indicated Resource
Inferred Resource
Total Resource
Tonnes (Mt)
6.58
10.60
17.18
3.76
20.94
Grades (% Li 0)2
1.02
1.01
1.01
0.98
1.01
Contained Li 0 (t)
2
67,100
107,100
174,200
36,800
211,000
22
LITHIUM IS A JEWEL
FOR QUEBEC ...
IT WILL CREATE
100 PER CENT
QUEBEC
BATTERIES
(Québec Premier
Francois Legault,
quoted by the
Montreal Gazette,
19 August 2019)
Sayona Mining I Annual Report 2019 23 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 2019. 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 2019 and is to be read in conjunction with this
Directors’ Report.
DIRECTORS
The Directors of the Company during or since the end of the financial year are listed below. During
the year, there were 8 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
B. L. Lynch (appointed 1 July 2019)
ELIGIBLE TO
ATTEND
8
8
8
8
0
ATTENDED
8
8
8
8
0
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:
Brett L. Lynch
Qualifications
Experience
Managing Director
Company Director Diploma; Graduate Diploma of Business
(Accounting); Bachelor of Engineering (Mining) (Honours).
Appointed a Director on 1 July 2019. An experienced international
company director and CEO with a strong background in mining
and mining related businesses across Australia, Asia, USA, Russia
and emergent markets. Global executive and leadership
experience with a focus on commercial results and
owner/shareholder value. International business development
Manager with proven ability to translate opportunities to outcomes.
Interest in Shares
Directorships in other listed
entities during the 3 years
prior to current year
Nil
Nil
Paul A Crawford
Director (Executive) & Company Secretary
Qualifications
Experience
Bachelor of Business – Accountancy; CPA, Master of Financial
Management, Graduate Diploma in Business Law, Graduate
Diploma in Company Secretarial Practice.
Board member since 2000. Forty years of commercial experience,
including various technical and management roles within the
minerals, coal and petroleum industries. Principal of his own
corporate consultancy
firm, providing accounting, corporate
governance, business advisory and commercial management
services.
24
DIRECTORS’ REPORT
Interest in Securities
100,915,315 ordinary shares, 769,650 listed options and 1,162,790
unlisted options.
Directorships in other listed
entities during the 3 years
prior to current year
Nil
Dennis C O’Neill
Director (Non-Executive) (from 1 July 2019)
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 in a diverse
range of commodities and locations.
Interest in Shares
86,593,477 ordinary shares
Directorships in other listed
entities during the 3 years
prior to current year
Altura Mining Limited
Allan C Buckler
Director (Non-Executive)
Qualifications
Experience
Certificate
in Mine Surveying and Mining, First Class Mine
Manager’s 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
99,668,717 ordinary shares, 980,392 listed options and 872,093
unlisted options.
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 30 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
3,187,463 ordinary shares and 69,294 listed options
Directorships in other listed
entities during the 3 years
prior to current year
Altura Mining Limited
Sayona Mining I Annual Report 2019 25
DIRECTORS’ REPORT
DIVIDENDS
No dividends were declared or paid during the financial year.
SHARE OPTIONS
At the date of this report, the unissued ordinary shares of Sayona Mining Limited under option are as
follows:
Grant Date
Expiry Date
31 May 2018
23 August 2019
30 April 2020
23 July 2022
Exercise
Price
7.8 cents
3.0 cents
No. under
Option
120,242,589
63,611,528
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 and unlisted shareholder options, together with unlisted employee options are
set out in the state of affairs section of this report and Note 15 in the financial report.
During the year ended 30 June 2019, 200 listed options were exercised at an exercise price of $0.078
per share (options were issued on 31 May 2018). No person entitled to exercise the option had or has
any right by virtue of the option to participate in any share issue of any other body corporate.
There are no other options granted over unissued shares or interests in any Group entity during or
since the end of the year.
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.
PROCEEDING 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.
26
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. During the year, the
Company completed a definitive feasibility study on the Authier Project in Canada and 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 and development assets.
OPERATING RESULTS
The entity’s consolidated operating loss for the financial year after applicable income tax was
$2,225,651 (2018: $2,328,463). Tenement acquisition, exploration and evaluation expenditure during
the year totalled $5,919,690 (2018: $5,724,378).
REVIEW OF OPERATIONS
The Company’s primary focus during the year has been on completing the studies and seeking the
approvals required to commence the development of the Authier Lithium Project, including the
Definitive Feasibility Study. 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 advances towards development.
Authier, Canada
Sayona’s Authier Lithium Project (Authier) is a hard rock spodumene lithium deposit scheduled for
development as an open cut mine initially producing a 6% Li2O spodumene concentrate, the source
of high grade, low contaminant lithium carbonate.
The Company’s strategy is to initially develop Authier and sell lithium concentrates while it completes
the test work and feasibility study for a downstream processing facility producing lithium carbonate
and/or hydroxide.
JORC Mineral Resources Upgrade
In September 2018 Sayona announced updated Resource and Reserve estimates for the Authier
project (refer ASX Announcement 24 September 2018, “Boost for Authier Project as JORC Ore
Reserves Expand”).
An initial DFS, completed in September 2018, demonstrated the technical and financial viability of
constructing an open-cut mining operation and processing facility producing spodumene concentrate
(refer ASX Announcement 24 September 2018, “Positive Authier Definitive Feasibility Study Reaffirms
Potential of Sustainable New Lithium Mine”).
The positive DFS 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
1.
The Authier deposit has approximately 31,000 metres of drilling in 176 holes.
Sayona Mining I Annual Report 2019 27
OPERATING AND FINANCIAL REVIEW
Table 1– Authier JORC Ore Reserve Estimate (0.55% Li2O cut-off grade)
Category
Tonnes (Mt)
Grades (% Li2O)
Contained Li2O (t)
Proven Reserve
Probable Reserve
Total Reserves
6.10
6.00
12.10
0.99
1.02
1.00
60,390
61,200
121,590
Note: The Ore Reserve Estimate is inclusive of dilution and ore loss.
A revised independent JORC Mineral Resource (2012) estimate has been prepared and is outlined in
Table 2.
Table 2 – Authier JORC Mineral Resource Estimate (0.55% Li20 cut-off grade)
Category
Tonnes (Mt)
Grades (%Li20)
Contained Li20
Measured Resource
Indicated Resource
Mea. + Ind. Resource
Inferred Resource
Total Resource
6.58
10.60
17.18
3.76
20.94
Authier Definitive Feasibility Study
1.02
1.01
1.01
0.98
1.01
67,100
107,100
174,200
36,800
211,000
In September 2018, a Definitive Feasibility Study (DFS) was completed, confirming Authier’s potential
as a profitable and sustainable new lithium mine that will provide new jobs and economic benefits for
the local community and positive outcomes for all stakeholders.
Key findings of the DFS included:
• Pre-tax NPV of CAD$184.8 million and IRR 33.7% (real terms at 8% discount rate);
• Annual average concentrate production of 87,400 tonnes at 6% Li2O;
• Average annual revenue of CAD$80 million;
• FOB Port cash costs of CAD$482/t (US$366/t);
• Low start-up capital of CAD$89.9 million;
• LOM strip ratio of 6.9:1;
• 18-year mine life.
In March 2019 the Québec Environment Minister announced the project would be subject to the
environmental impact assessment and review procedures under the BAPE.
Subsequently, the Company announced it would be seeking approval, based on a sustainable
development approach, to process in the order of 2,600 tonnes per day, providing for an approximate
mine life of 14 years and estimated annual average spodumene concentrate production of around
115,000 tonnes at 6% Li2O. Sayona is now undertaking a review of its 2018 DFS under these new
parameters.
Permitting Process Update
When it was announced that the Authier project would be subject to the environmental impact
assessment and review procedures under the BAPE, Sayona commenced further community
engagement and environmental studies, including an Environmental Impact Assessment (EIA) as per
Article 31.1 of the Environment Quality Act. Sayona had already completed an Environmental
Assessment Study for the project, which showed it would have no impact on the water quality of the
Esker Saint-‐Mathieu-‐Berry, a local source of potable water, and that any other impacts arising from
the operations would be minimal after the application of mitigation measures.
28
OPERATING AND FINANCIAL REVIEW
In May 2019, engineering consultancy BBA was appointed to review the original mine plan and the
2018 DFS in accordance with the new approval process, and based on optimised production levels in
the order of 2,600 tonnes per day.
Environment, Community and First Nations
In June 2019, Sayona commenced an environmental impact study (EIS) for the Authier project. The
30-day public consultation period began in mid-June for comments on issues to be addressed in the
study. Sayona is aiming to submit the EIS in late 2019.
During the year discussions were held, and are continuing, with First Nations Pikogan for an
Economic Benefits Agreement with the Abitibiwinni community. The target is to conclude and sign the
final agreement in Q4 2019.
In addition, the Company has been engaging with the broader community outside the immediate
project area. Meetings are continuing with regional councils, other mining companies, government
organisations and other key business stakeholders in the region.
Tansim Exploration Project
The Tansim lithium project, also in Québec, is situated 82 kilometres south-west of Authier. The
project comprises 141 mineral claims of 85,000 hectares, and is prospective for lithium, tantalum, and
beryllium.
An 11-hole drilling program was undertaken at the Viau-Dallaire outcrop in February 2019. In April
2019, positive drilling results were returned with interceptions of variable concentrations of
spodumene mineralisation, boosting the prospects for an additional lithium deposit within close
proximity to Authier.
Also, in April, Sayona expanded the Tansim project with the acquisition of the Lac Simard lithium
prospect, Val d’Or from Exiro Minerals Corp (Exiro). Under the agreement Sayona can acquire a
100% interest by making cash and share payments and undertaking work on the property over a
three-year period, with Exiro retaining a 2% net smelter return royalty.
Western Australian Lithium Projects
Exploration tenure in Western Australia includes leases covering some 1,806 sq km in the world class
Pilgangoora lithium district.
In January 2019 Sayona exercised the Great Sandy Option and also acquired the remaining
tenement equities, to give it a 100% ownership over six tenements in the Pilbara, including the Mallina
project.
In August 2019, subsequent to year end, Sayona announced an earn-in agreement with leading
lithium producer, Altura Mining Limited (Altura). Under the agreement, Altura will spend AUD$1.5
million on exploration across the project portfolio over a three-year period to earn a 51% interest.
Sayona will retain the right to contribute to project evaluation and development.
Mallina Project
The Mallina project is the most advanced project in the Pilbara portfolio. Multiple zones of newly
discovered spodumene pegmatites have been identified within a 25 sq km area.
During the period the Company completed a 30-hole drilling program totalling 2,225 metres. The
drilling intersected a varied suite of pegmatite and aplite bodies of variable dip, strike and thickness.
The identification of spodumene pegmatite from surface and of good intensity (to a maximum 3.18%
Li2O) provided encouraging evidence that the project can host economic grades of lithium
mineralisation.
There is considerable scope for further drill testing, especially at the Area C prospect where shallow
mineralisation is open at depth and along strike to the north and south.
During the year the project was awarded a state government grant for a rebate on direct drilling costs.
Under this grant, Sayona received $83,252 for the October drilling program.
Sayona Mining I Annual Report 2019 29
OPERATING AND FINANCIAL REVIEW
Tabba Tabba Project
The Tabba Tabba project, 40km north of Pilgangoora, is located in an area of historic tin and tantalum
mining. Spodumene pegmatite has been identified in the immediate region and the project provides
exposure to the area’s emerging lithium prospectivity.
During the year, further pegmatites and seven main geochemical targets were defined at Tabba
Tabba. Planning for first pass drilling of three of the pegmatite targets has been completed and
statutory approvals for drilling obtained.
Additional exploration over the broader tenement holding has included rock sampling to identify
fractionated granites and pegmatites for a more detailed assessment.
Moolyella and Other Pilbara Project Areas
The Moolyella project is located east of Marble Bar in an area where lithium, tin and tantalum
mineralisation and spodumene pegmatites are associated with the intrusion of the Moolyella
monzogranite. Within the Company’s Moolyella tenure (three tenements covering 334 sq km) a
number of lithium-cesium-tantalum albite pegmatites have been identified.
Within the northern portion of E45/4700 rock sampling of mica rich pegmatite has returned up to
1.40% Li2O. Further exploration is planned to follow up these encouraging results, and to test more
broadly the prospective margins of the source intrusions.
Reconnaissance style exploration was also carried out over the Company’s other Pilbara tenure.
Mt Edon Lithium Project
The project covers the southern portion of the Paynes Find greenstone belt, South Murchison, and is
host to an extensive swarm of pegmatites.
Geochemistry to date has identified a general westward increase in the fractionation of the known
pegmatites. Field reconnaissance has focussed around this western target, identifying new areas of
pegmatites, as well as more detailed mapping around a known lepidolite occurrence to the east.
Further work is warranted to identify if albite – spodumene pegmatites are present in these areas.
East Kimberley Graphite Project
Past exploration by Sayona has identified graphite mineralisation within a 25-kilometre strike extent of
the Corkwood geochemical and geophysical anomaly.
During the year the first reconnaissance of the southern project area was undertaken. Up to four
graphitic horizons were observed with units up to 30m wide at surface. Sampling of graphite gneiss
returned assay results ranging from 0.44% up to 8.01% TGC (total graphitic carbon).
While Sayona’s primary activities are focused on its lithium projects, the Company believes that
Corkwood has considerable value and is seeking partners to explore and develop the project.
FINANCIAL POSITION, CONTINUED OPERATIONS AND FUTURE FUNDING
At 30 June 2019, the Company's Statement of Financial Position shows total assets of $22,208,323, of
which $1,822,133 was cash, total liabilities of $984,752 and net assets of $21,223,571.
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.
As set out in note 1 to the financial statements, the ability of the Group to execute its currently
planned activities requires the Group to raise additional capital within the next 12 months. The Group
currently has initiatives in place, including raising $1,890,000 in capital and entering into an Earn-in
Agreement in respect of certain of the Group’s exploration portfolio.
Over recent years the Group has focused on its exploration and evaluation of its assets to the point
where the Authier Lithium Project is subject to a definitive feasibility study, with the potential to
advance to development.
30
OPERATING AND FINANCIAL REVIEW
The Directors believe that the Group is in a strong and stable financial position to grow its current
operations.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes during the year include:
• On 24 January 2019, the Group acquired the final 20% interest under an option agreement with
Great Sandy Pty Ltd to acquire a number of tenements in the Pilgangoora lithium district of
Western Australia. On 18 December 2018, the Group made the second $300,000 payment
under the agreement to acquire an 80% interest in relevant tenements. Agreement was
subsequently reached to acquire the remaining interest through payment of $100,000 to Great
Sandy Pty Ltd. Settlement consisted of issuing 5,235,602 shares. The Group now holds 100%
unencumbered interest in the tenement package;
• On 6 March 2019, the Québec Environment Minister advised that the Authier project would be
subject to the environmental impact assessment and review procedures under the BAPE.
Subsequently the Company announced it would be seeking approval, based on a sustainable
development approach, to process in the order of 2,600 tonnes per day, providing for an
approximate mine life of 14 years and estimated annual average spodumene concentrate
production of around 115,000 tonnes at 6% Li2O. Sayona is now undertaking a review of its
DFS under these new parameters;
• On 24 June 2019 the Company initiated a Share Purchase Plan (SPP), giving eligible
shareholders the opportunity to subscribe for up to $15,000 worth of new shares. The offer also
included a free attaching unlisted option for every two new shares issued, exercisable at 3
cents and having an expiry date of 23 July 2022; and
• Other equity transactions completed in the year were the issue of a total of 1,806,477 shares for
acquisition of exploration tenements and the issue of 200 shares on conversion of share
options.
SIGNIFICANT EVENTS AFTER BALANCE DATE
• Mr Brett Lynch commenced as Managing Director of the Group on 1 July 2019;
• On 8 August 2019, the Company announced an Earn-‐in Agreement with lithium producer
Altura Mining Limited, over Sayona’s Western Australian lithium portfolio in the world-‐class
Pilgangoora lithium district. Under the agreement, Altura will spend $1.5 million on exploration
across the project portfolio over three years to earn a 51% interest, with Sayona retaining the
remaining project interest. Sayona retains the right to contribute to project evaluation and
development in the future to participate in the upside potential;
• On 14 August the Company announced that a placement would be undertaken to Directors,
management and a major shareholder to raise approximately $1.2 million. The placement will
be on the same terms as the SPP announced on 24 June 2019;
• On 23 August 2019, the Company issued 83,295,471 new shares at an issue price of $0.0086
each, and 41,647,702 free attaching options to applicants under the SPP announced on 24
June 2019. Options are exercisable at $0.03 each, expiring on 23 July 2022; and
• On 23 August 2019, the Company also issued 43,927,651 new shares at an issue price of
$0.0086 each, and 21,963,826 free attaching options to eligible parties under the placement
announced on 14 August 2019. Options are exercisable at $0.03 each, expiring on 23 July
2022. Shares and options have not been issued to Directors under the placement pending
shareholder approval at the Company’s annual general meeting.
No other matters or circumstances have arisen since 30 June 2019 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.
Sayona Mining I Annual Report 2019 31
OPERATING AND FINANCIAL REVIEW
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
During the year, the Company has focused on completing the studies required to commence the
development of the Authier project and initiate the permitting process. 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 advances towards development.
The Company’s strategic focus will continue to be on the development of Authier and the exploration
and evaluation its other assets. The assets range from early stage exploration to advanced projects
with potential for advancement to production.
To complete mine development at the Authier project, the Company is likely to require additional
funding. 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:
that the feasibility study and associated technical works will not achieve the results expected;
•
• all relevant approvals are obtained to conduct proposed operations;
• potential delays arising through the various stages to commissioning of the Authier and other
projects;
• exploration and evaluation success on individual projects; and
•
the ability to raise additional funds in the future.
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.
CORPORATE GOVERNANCE
Sayona’s Corporate Governance Statement
www.sayonamining.com.au/corporate-governance.
is available on
the Company’s website
32
REMUNERATION REPORT
REMUNERATION POLICY
The Company’s remuneration policy 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 Key Management
Personnel (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 the Company with those of the shareholders; and
• 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
forecast growth of the consolidated Group, project milestones and
predominantly on the
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 their interests with shareholders’ interests.
Options granted under incentive arrangements 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.
Sayona Mining I Annual Report 2019 33
REMUNERATION REPORT
PERFROMANCE 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.
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, subject to volatility
in commodity prices and financial markets.
The following table shows some key performance data of the Group for the last three years, together
with the share price at the end of the respective financial years.
2017
2018
2019
Exploration Expenditure ($)
7,109,318
5,724,378
5,919,690
Exploration Tenements (no. including
applications)
Net Assets ($)
Share Price at Year-end ($)
Dividends Paid ($)
25
40
185
8,861,943
22,680,722
21,223,571
0.015
Nil
0.040
Nil
0.008
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
Management
Personnel
Position held at 30
June 2019 &
change during the
year
D O'Neill
P Crawford
Executive Director.
Assumed role of
CEO from 31 July
2018
Executive Director
Company
Secretary
A Buckler
Non-Executive
Director
J Brown
Non-Executive
Director
Contract Details
No fixed term,
termination as
provided by
Corporations Act
No fixed term,
termination as
provided by
Corporations Act
No fixed term,
termination as
provided by
Corporations Act
No fixed term,
termination as
provided by
Corporations Act
Proportion of Remuneration:
Related to
performance
Not related to
performance
Options
Salary & Fees
Total
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
34
REMUNERATION REPORT
Employment Contract of Chief Executive Officer
During the year, the Chief Executive Officer responsibilities were assumed by Managing Director Mr
O’Neill. No formal contract is in place with Mr O’Neill. This is not expected to change in the immediate
future. Mr O’Neill resigned as CEO and Managing Director on 1 July 2019. Mr O’Neill remains a non-
executive director.
Mr Brett Lynch was appointed Chief Executive Officer of the Group on 1 July 2019. The Company has
entered into a contract of service with Mr Lynch.
Under the agreement, the Company may terminate the Chief Executive Officer's contract by giving
three months’ notice. In the case of serious misconduct the Company can terminate employment at
any time. If the Company terminates the agreement within the first twelve months of employment or in
the event of a change of control transaction involving the Company his employment is involuntarily
terminated without cause, Mr Lynch will be entitled to 12 months’ notice or payment in lieu of notice.
The contract provides for annual review of the compensation value. The terms of this agreement are
not expected to change in the immediate future.
CHANGES IN DIRECTORS AND EXECUTIVES SUBSEQUENT TO YEAR END
Mr Brett Lynch was appointed Managing Director on 1 July 2019.
There have been no other changes to Directors or executives since the end of the financial year.
REMUNERATION EXPENSE DETAILS (KMP)
The remuneration of each Director and Chief Executive Officer of the Company during the year is
detailed in the following table. Amounts have been calculated in accordance with Australian
Accounting Standards.
2019
Short term benefits
Key
Management
Personnel
D O'Neill
P Crawford
A Buckler (1)
J Brown
Salary
& Fees
Non-Cash
Benefits
273,972
273,972
75,000
75,000
697,944
-
-
-
-
-
2018
Short term benefits
Key
Management
Personnel
D O'Neill
P Crawford
A Buckler (1)
J Brown
C Nolan
Salary
& Fees
Non-Cash
Benefits
123,288
123,288
60,000
60,000
241,482
608,058
-
-
-
-
-
-
Equity
Settled
Options
Post-
employment
superannuation
Long
term
benefits
-
-
-
-
-
26,028
26,028
-
-
52,056
-
-
-
-
-
Equity
Settled
Options
Post-
employment
superannuation
Long
term
benefits
-
-
-
-
-
-
11,712
11,712
-
-
22,941
46,365
-
-
-
-
-
-
Total
300,000
300,000
75,000
75,000
750,000
Total
135,000
135,000
60,000
60,000
264,423
654,423
(1) Represents payments made to Shazo Holdings Pty Ltd, an entity controlled by Mr Allan Buckler,
to provide directorial and exploration technical services.
Sayona Mining I Annual Report 2019 35
REMUNERATION REPORT
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 current or previous year. KMP may hold
shareholder options acquired in their capacity as shareholders.
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 2018
Remun-
eration
Exercise of
Options (*)
Other
Changes (**)
Balance
30 June 2019
D O'Neill
P Crawford
A Buckler
J Brown
Total
86,593,477
98,440,535
97,924,530
3,187,463
286,146,005
-
-
-
-
-
-
-
-
-
-
*Remuneration options and shareholder options
** Share trades and participation in share issues
-
-
-
-
-
86,593,477
98,440,535
97,924,530
3,187,463
286,146,005
OTHER EQUITY-RELATED KMP TRANSACTIONS
Options held by KMP in their capacity as shareholders at 30 June 2019:
P Crawford
769,650 listed options
A Buckler
980,392 listed options
J Brown
69,294 listed options
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: 13 September 2019
Brisbane, Queensland
Paul Crawford
Director
36
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 2019 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: 13 September 2019
Sayona Mining I Annual Report 2019 37
FINANCIAL STATEMENTS
2018
24
38 CONTENTS
40
Statement of Profit
and Loss and
Comprehensive Income
41
Statement of
Financial Position
43
Statement of Cash Flows
42 Statement of
Changes in Equity
44
Notes to the Financial Statements
68
69
Director’s Declaration
Independent Auditor’s Report
Sayona Mining I Annual Report 2019 39 STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Consolidated Group
Note
2019
$
2018
$
Revenue and other income
2
124,098
79,288
Administrative expenses
Exploration expenditure expensed during year
Employee benefit expense
Foreign exchange losses
Occupancy costs
Loss before income tax
Tax expense
Loss for the year
(1,076,859)
(74,188)
(1,070,894)
(5,354)
(122,454)
(1,273,353)
(229,352)
(832,231)
(14,495)
(58,320)
3
4
(2,225,651)
(2,328,463)
-
-
(2,225,651)
(2,328,463)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
when specific conditions are met:
Exchange differences on translating foreign operations
642,979
106,478
Items that will not be reclassified subsequently to profit or
loss
-
-
Other comprehensive income/(loss) for the year
642,979
106,478
Total comprehensive income or (loss) attributable to
members
(1,582,672)
(2,221,985)
Earnings per Share:
Basic and diluted earnings per share (cents per share)
6
(0.13)
(0.17)
Dividends per share (cents per share)
-
-
The accompanying notes form part of these financial statements.
40
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation asset
Consolidated Group
Note
2019
$
2018
$
8
9
10
11
12
1,822,133
272,933
91,775
10,275,738
484,445
175,134
2,186,841
10,935,317
144,083
19,877,399
5,518
13,319,187
Total Non-Current Assets
20,021,482
13,324,705
TOTAL ASSETS
22,208,323
24,260,022
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
13
14
945,906
38,846
1,531,489
47,811
Total Current Liabilities
TOTAL LIABILITIES
984,752
1,579,300
984,752
1,579,300
NET ASSETS
21,223,571
22,680,722
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
15
16
79,309,022
623,705
(58,709,156)
79,183,501
(19,274)
(56,483,505)
21,223,571
22,680,722
The accompanying notes form part of these financial statements.
Sayona Mining I Annual Report 2019 41
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Consolidated Group
Share
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Option
Reserve
Total
$
$
$
$
$
Balance at 30 June 2017
63,165,259
(54,177,564)
(125,752)
-
8,861,943
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
capacity as owners
in their
-
-
(2,328,463)
-
- (2,328,463)
-
106,478
-
106,478
-
(2,328,463)
106,478
- (2,221,985)
-
-
22,522
22,522
-
(22,522)
-
(22,522)
-
-
Shares issued during the year
Transaction costs
Share based payments
15 17,578,853
(1,560,611)
-
22
Total transactions with owners
16,018,242
-
-
-
-
-
-
-
-
- 17,578,853
- (1,560,611)
22,522
22,522
22,522 16,040,764
Balance at 30 June 2018
79,183,501
(56,483,505)
(19,274)
- 22,680,722
Loss attributable to members of the
entity
Other comprehensive income for the
year
Total comprehensive income for the
year
Transactions with owners
capacity as owners
in their
-
-
(2,225,651)
-
- (2,225,651)
-
642,979
-
642,979
-
(2,225,651)
642,979
- (1,582,672)
Shares issued during the year
Transaction costs
Total transactions with owners
15
133,555
(8,034)
125,521
-
-
-
-
-
-
-
-
-
133,555
(8,034)
125,521
Balance at 30 June 2019
79,309,022
(58,709,156)
623,705
- 21,223,571
The accompanying notes form part of these financial statements.
42
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Consolidated Group
Note
2019
$
2018
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Sale of technical information
Interest received
Other income
(2,717,552)
-
114,238
9,860
(1,586,817)
12,500
66,788
-
Net cash provided by (used in) operating activities
17
(2,593,454)
(1,507,529)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Capitalised exploration expenditure
11
12
(144,051)
(5,713,891)
(4,862)
(5,207,482)
Net cash provided by (used in) investing activities
(5,857,942)
(5,212,344)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share and option issues
15
16
(8,034)
16,920,493
(1,142,251)
Net cash provided by (used in) financing activities
(8,018)
15,778,242
Net increase (decrease) in cash held
(8,459,414)
9,058,369
Cash at beginning of financial year
10,275,738
1,216,054
Effect of exchange rates on cash holdings in foreign
currencies
5,809
1,315
Cash at end of financial year
8
1,822,133
10,275,738
The accompanying notes form part of these financial statements.
Sayona Mining I Annual Report 2019 43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 25.
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.
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. At 30 June
2019, the Group had $1,521,794 of exploration commitments due within one year, in addition to other
ongoing corporate and operational expenditure. Net current assets of the Group at balance date total
$1,202,089.
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, initiatives undertaken by the Group include the raising of additional
$1,890,000 in capital and entering into an Earn-in Agreement in respect of certain of the Group's
exploration portfolio (refer note 23). In addition to these initiatives the Group plans to raise further
funds, however no formal arrangements are currently in place.
The Directors have concluded that in the current circumstances, there exists a material uncertainty
that may cast significant 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 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.
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. Subsidiaries are entities that 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 26.
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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 as 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, 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, 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.
Tax consolidation
The Company and its wholly-owned Australian resident entities have formed a tax-Consolidated
Group and are therefore taxed as a single entity from that date. The head entity within the tax-
consolidated Group is Sayona Mining Limited. Tax expense/income, deferred tax liabilities and
deferred tax assets arising from temporary differences of the members of the tax-consolidated Group
are recognised in the separate financial statements of the members of the tax-consolidated Group
using the “separate taxpayer within group” approach by reference to the carrying amounts in the
separate financial statements of each entity and the tax values applying under tax consolidation.
Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant
tax credits of the members of the tax-consolidated Group are recognised by the Company (as head
entity in the tax-consolidated Group). No tax funding arrangements are currently in place between the
entities in the tax-consolidated Group.
Sayona Mining I Annual Report 2019 45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, Plant and Equipment
Plant and equipment are measured on a 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.
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 4% 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.
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
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.
Financial Instruments
The Group has adopted the new accounting standard AASB 9 (financial instruments) with effect from
1 July 2018. As the Group's only receivables are GST/VAT recoveries and sundry items, adoption of
AASB 9 has no material impact on the financial statements and there are no adjustments to current or
prior period amounts.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions to the instrument. For financial assets, this is 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 transaction costs, except where the
instrument is classified “at fair value through profit or loss”, in which case transaction costs are
expensed to profit or loss immediately.
Classification and subsequent measurement
Financial liabilities
Financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and
of allocating interest expense in profit and loss over the relevant period. The effective interest rate is
the internal rate of return of the financial assets or liability. That is, it is the rate that exactly discounts
the estimated future cash flows through the expected life of the instrument to the net carrying amount
at initial recognition.
Sayona Mining I Annual Report 2019 47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets
Financial assets are subsequently measured at amortised cost.
Measurement is on the basis of two primary criteria:
-
-
the contractual cash flow characteristics of the financial asset; and
the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
–
–
the financial asset is managed solely to collect contractual cash flows; and
the contractual terms within the financial asset give rise to cash flows that are solely
payments of principal and interest on the principal amount outstanding on specified dates.
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability from
the statement of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (ie when the obligation in the contract is
discharged, cancelled or expires). An exchange of an existing financial liability for a new one with
substantially modified terms, or a substantial modification to the terms of a financial liability is treated
as an extinguishment of the existing liability and recognition of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the
asset is transferred in such a way that all the risks and rewards of ownership are substantially
transferred.
All of the following criteria need to be satisfied for the derecognition of a financial asset:
–
–
–
the right to receive cash flows from the asset has expired or been transferred;
all risk and rewards of ownership of the asset have been substantially transferred; and
the Group no longer controls the asset (ie the Group has no practical ability to make a
unilateral decision to sell the asset to a third party).
On derecognition of a financial asset measured at amortised cost, the difference between the asset's
carrying amount and the sum of the consideration received and receivable is recognised in profit or
loss.
Impairment
The Group recognises a loss allowance for expected credit losses, using the simplified approach
under AASB 9, which requires the recognition of lifetime expected credit loss at all times.
At each reporting date, the Group recognises the movement in the loss allowance as an impairment
gain or loss in the statement of profit or loss and other comprehensive income.
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 are the parent entity’s functional currency.
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-
end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income, otherwise the exchange difference is recognised in the profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the
Group’s presentation currency are translated as follows:
-
-
-
assets and liabilities are translated at year-end exchange rates prevailing at that reporting
date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the
transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than
Australian dollars are recognised in other comprehensive income and included in the foreign
currency translation reserve in the statement of financial position. The cumulative amount of these
differences is reclassified into profit or loss in the period in which the operation is disposed of.
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee
benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12
months after the end of the annual reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short-term employee benefits are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled.
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 I Annual Report 2019 49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 and
other short-term highly liquid investments with original maturities of three months or less.
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.
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. Amounts are initially recognised at
fair value, and subsequently measured at amortised cost.
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
The Group has adopted the new revenue accounting standard AASB 15 (revenue from contracts with
customers) with effect from 1 July 2018. As the Group's only revenue is interest and sundry income
items, adoption of AASB 15 has no material impact in the financial statements and there are no
adjustments to current or prior period amounts.
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
These accounting policies also apply in respect of the Group's Canada operations in relation to VAT.
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.
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.
Exploration and evaluation expenditure (Note 12):
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. For some areas of interest the Group has assessed the
Sayona Mining I Annual Report 2019 51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
existence of reserves and considers the expenditure is recoverable through successful development
of the area.
For other areas of interest exploration activity continues and the directors are of the belief that such
expenditure should not be written off since technical and feasibility studies in such areas have not yet
concluded.
Tax Losses Available (Note 4):
The availability of the Group's carry forward tax losses are based on estimates of tax deductibility of
exploration expenditure, and compliance with tax laws in Australia and Canada.
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 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.
AASB 16 will apply to the Group's premises lease, which is currently on a short-term month to month
basis. Assuming a two year lease tenure, the estimated value of the right-to-use asset and lease
liability is $79,200 and any impact on profit and loss is immaterial.
NOTE 2: REVENUE AND OTHER INCOME
Interest received from unrelated parties
Sale of technical information
Insurance refunds
Other income
2019
$
114,238
-
7,360
2,500
2018
$
66,788
12,500
-
-
Total revenue and other income
124,098
14,539
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 3: LOSS FOR THE YEAR
(i) Expenses:
Included in expenses are the following items:
Rental expense on operating lease
Foreign exchange loss
Depreciation
(ii) Significant Revenue and Expenses
2019
$
120,451
5,354
9,369
2018
$
55,996
14,495
6,641
The following significant revenue and expense items are relevant
in explaining the financial performance:
Exploration and evaluation expenditure expensed during the
year
(74,188)
(229,352)
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% (2018: 27.5%).
(612,054)
(640,327)
Adjust for tax effect of:
Exploration expenditure capitalised
Other deductible costs (net)
Other non-deductible costs (net)
Tax losses and temporary differences not brought to account
Income tax expense attributable to entity
Weighted average effective tax rate (nil due to tax losses)
(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
(166,935)
(350,531)
-
1,129,520
-
0.00%
(1,315,724)
-
334,667
1,621,384
-
0.00%
(619,807)
5,181,442
6,175,038
172,017
7,756,000
6,175,038
Net unbooked deferred tax asset
10,736,673
14,103,055
The Group has unconfirmed carry forward losses for revenue of $18,942,527 (2018: $28,203,636) and
for capital of $22,454,683 (2018: $22,454,683). Carry forward revenue losses have been revised in the
current year following a review of the eligibility of prior year Australian losses under carry forward loss
rules and the estimation of Canadian losses available.
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 I Annual Report 2019 53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 2019.
(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
Managing Director
Director - Executive
Director - Non-executive
Director - Non-executive
(b) The totals of remuneration paid to KMP of the Company and Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Short-term employee benefits
2019
$
697,944
52,056
-
-
750,000
2018
$
608,058
4,635
-
-
654,423
These amounts include salary, fees and paid leave benefits paid to the directors, or their related
entities (Note 18).
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
Weighted average number of ordinary shares and potential
ordinary shares outstanding during the year used in the
calculation of diluted EPS
2019
$
2018
$
1,718,318,957 1,333,621,930
-
-
1,718,318,957 1,333,621,930
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.
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 7: AUDITORS' REMUNERATION
Remuneration of the auditor 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
2019
$
2018
$
37,000
-
37,000
34,000
-
34,000
772,005
1,050,128
1,221,575
9,054,163
1,822,133
10,275,738
The effective interest rate on short-term bank deposits was 1.75%
(2018: 2.49%). These deposits have an average maturity of 88.63
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
1,822,133
10,275,738
NOTE 9: TRADE AND OTHER RECEIVABLES
Current (unsecured):
Other Debtors
Other debtors includes $271,273 (2018: $449,722) of GST/VAT
amounts due from the Australian and Canadian taxation
authorities, which represents a significant concentration of credit
risk to the Group.
NOTE 10: OTHER ASSETS
Current:
Deposits
Prepayments
272,933
484,445
272,933
484,445
2,281
89,494
91,775
2,154
172,980
175,134
Sayona Mining I Annual Report 2019 55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 11: 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
Foreign currency translation movement
Carrying amount at the end of year
NOTE 12: EXPLORATION AND EVALUATION ASSET
Exploration and 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)
2019
$
2018
$
172,701
(28,618)
144,083
5,518
144,051
(9,369)
3,883
144,083
24,728
(19,210)
5,518
7,297
4,862
(6,641)
-
5,518
19,111,142
766,257
19,877,399
12,712,550
606,637
13,319,187
(a) Movement in exploration and evaluation expenditure:
Non-Joint Operation
Opening balance - at cost
Capitalised exploration and evaluation expenditure
Transfer from joint operations
Foreign currency translation movement
Carrying amount at end of year
12,712,550
4,609,557
1,096,431
692,604
19,111,142
7,697,147
5,015,403
-
-
12,712,550
(b) Movement in exploration and evaluation expenditure:
Subject to Joint Operation
Opening balance - at cost
Capitalised exploration and evaluation expenditure
Transfer to joint operations
Foreign currency translation movement
Carrying amount at end of year
606,637
1,237,873
(1,096,431)
18,178
766,257
127,014
479,623
-
-
606,637
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 and evaluation assets included $4,164,921 (2018:
$4,769,829) on the Authier Lithium Project in Canada. A further $1,680,581 (2018: $725,197) has
been expended on existing and new projects. Of that total, $133,540 (2018: $80,000) was settled by
issue of 7,042,079 (2018: 1,869,159) ordinary shares in the Company.
Commitments in respect of exploration projects are set out in Note 19. In addition, the Group has
options on projects as set out in Note 24.
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 13: TRADE AND OTHER PAYABLES
Current (unsecured):
Trade creditors
Sundry creditors and accrued expenses
Total trade and other payables
Financial liabilities at amortised cost classified as trade and
other payables:
2019
$
2018
$
710,287
235,619
1,115,265
416,224
945,906
1,531,489
Financial liabilities as trade and other liabilities (refer Note 20)
945,906
1,531,489
NOTE 14: PROVISIONS
Current:
Provision for employee entitlements
Opening balance
Additional provisions
Amounts used
Balance at year end
NOTE 15: 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:
On 27 November 2018, new issue of shares at $0.078 per share
following a conversion of options.
On 27 November 2018, new issue of shares at $0.025 per share
in settlement of tenement acquisition.
On 24 January 2019, new issue of shares at $0.0191 per share
in settlement of tenement acquisition
On 23 April 2019, new issue of shares at $0.0160 per share in
settlement of tenement acquisition
Balance at reporting
date
38,846
47,811
47,811
48,056
(57,021)
46,271
39,632
(38,092)
38,846
47,811
2019
$
2018
$
79,309,022
79,183,501
No.
No.
1,715,532,065
-
974,819,553
740,712,512
200
492,126
5,235,602
1,314,351
-
-
-
-
1,722,574,344 1,715,532,065
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.
Sayona Mining I Annual Report 2019 57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 15: ISSUED CAPITAL (continued)
Options on issue are as follows:
(i) Unlisted employee and officer options
Balance at beginning of reporting period
Granted (Note 22)
Exercised (Note 22)
Expired
Balance at reporting date
(ii) Listed options
Balance at beginning of reporting period
Granted
Exercised
Expired
Balance at reporting date
2019
$
2018
$
-
-
-
-
-
-
5,000,000
(5,000,000)
-
-
2018
$
2019
$
120,242,789
-
(200)
-
-
120,242,789
-
-
120,242,589
120,242,789
Options granted on 31 May 2018 to shareholders, exercisable at $0.078 each and expire 30 April
2020.
Capital management policy
Exploration companies such as Sayona Mining Limited are funded by share capital during exploration
and a combination of share capital and borrowings as they move into the development and operating
phases of their business life.
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio,
generate long-term shareholder value and ensure that the Group can fund its operations and
continue as a going concern. The Group’s debt and capital include ordinary share capital and
financial liabilities, supported by financial assets.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market.
There are no externally imposed capital requirements.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year.
NOTE 16: 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.
58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 17: CASH FLOW INFORMATION
(a) Reconciliation of Cash Flow from Operations with Loss
from Ordinary Activities after Income Tax:
Loss from ordinary activities after income tax
Non-cash flows in profit from ordinary activities:
Depreciation
Share based payments - exploration and corporate
Share based payments - remuneration
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in other assets
(Decrease)/Increase in creditors and accruals
(Increase)/Decrease in provisions
Cash flows from operations
(b) Non-cash Financing and Investing Activities
2019
$
2018
$
(2,225,651)
(2,328,463)
9,369
-
-
6,641
160,000
22,522
232,078
90,128
(689,937)
(9,441)
(2,593,454)
(158,168)
(129,146)
917,545
1,540
(1,507,529)
On 27 November 2018, 492,326 new shares were issued in settlement of tenement acquisition.
On 24 January 2019, 5,235,602 new shares were issued in settlement of tenement acquisition.
On 23 April 2019, 1,314,351 new shares were issued in settlement of tenement acquisition.
In the prior year a total of 10,072,296 shares were issued in settlement of tenement acquisitions and
capital raise fees.
NOTE 18: 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 5).
(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 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
$75,000 were incurred during the year (2018:$60,000). $Nil was owed by the Company at 30 June
(2018: $15,000).
NOTE 19: COMMITMENTS
(a) Operating lease commitments
Non-cancellable operating leases contracted for but not
recognised in the financial statements:
Not later than 1 year
Between 1 year and 5 years
Total commitment
2019
$
2018
$
3,579
-
3,579
3,904
3,579
7,483
In addition to the above, the Group has a month to month lease for office premises.
Sayona Mining I Annual Report 2019 59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 19: COMMITMENTS (continued)
(b) Exploration commitments
The entity must meet minimum expenditure commitments on granted exploration tenements to
maintain those tenements in good standing. If the relevant mineral tenement is relinquished the
expenditure commitment also ceases.
The following commitments exist at balance date but have not been brought to account.
Not later than 1 year
Between 1 year and 5 years
Total commitment
NOTE 20: FINANCIAL RISK MANAGEMENT
2019
$
1,521,794
1,105,871
2018
$
765,004
-
2,627,665
765,004
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 9: Financial
Instruments 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) below.
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 and foreign exchange 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 9.
(b) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to 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.
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
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.
Consolidated Group
2019
Financial assets
Cash and cash equivalents (i)
Receivables (ii)
Financial liabilities
Payables (ii)
Net cash flow on financial instruments
2018
Financial assets
Cash and cash equivalents (i)
Receivables (ii)
Financial liabilities
Payables (ii)
Net cash flow on financial instruments
1 year or
less
1 to 2
years
More than 2
years
Total
$
$
$
$
1,822,133
272,933
2,095,066
945,906
945,906
1,149,160
1 year or
less
$
10,275,738
484,445
10,760,183
1,531,489
1,531,489
9,228,694
1 to 2
years
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
More than 2
years
$
-
-
-
-
-
-
1,822,133
272,933
2,095,066
945,906
945,906
1,149,160
Total
$
10,275,738
484,445
10,760,183
1,531,489
1,531,489
9,228,694
(i)
(ii)
Floating interest with a weighted average effective interest rate of 1.75% (2018: 2.49%).
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 Canadian and US Dollar. No derivative financial instruments
are employed to mitigate the exposed risks. Risk is reviewed regularly, including forecast movements
in these currencies by the senior executive team and the Board.
Sayona Mining I Annual Report 2019 61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
These foreign exchange risks arose from:
-
-
Cash held in Canadian and US dollars.
Canadian and US dollar denominated receivables and payables.
The Group's exposure (in AUD) to foreign currency risk at the
reporting date was as follows:
Cash and cash equivalents
Receivables
Payables
Net exposure
Cash and cash equivalents
Receivables
Payables
Net exposure
(d) Sensitivity analysis
CAD
2019
98,892
262,606
(630,649)
(269,151)
CAD
2018
102,394
443,179
(1,280,987)
(735,414)
USD
2019
4,503
-
-
4,503
USD
2018
11,598
-
(34,620)
(23,022)
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 $238 +/-
(2018: $1,139).
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
$13,457 +/- (2018: $36,770).
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 +/- $18,221 (2017: $102,757).
(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.
NOTE 21: CONTINGENT LIABILITIES
There were no material contingent liabilities at the end of the reporting period.
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 22: SHARE BASED PAYMENTS
Options
Options issued under employee share
based payment arrangements are
summarised as:
Outstanding at beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at period end
Exercisable and vested at year end
2019
2018
Number of
Options
No
Weighted
Average
Exercise
Price
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of
Options
No
-
5,000,000
-
5,000,000
-
-
Weighted
Average
Exercise
Price
$
-
0.040
-
0.040
-
-
-
-
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.
There were no options issued under this plan during the year.
Shares
On 15 October 2018, 200 new shares were issued on conversion of listed options.
On 27 November 2018, 492,326 shares were issued in settlement of a tenement acquisition.
On 24 January 2019, 5,235,602 shares were issued in settlement of a tenement acquisition.
On 23 April 2019, 1,314,351 shares were issued in settlement of a tenement acquisition.
The value of the shares issued was determined by reference to the market price.
NOTE 23: EVENTS AFTER BALANCE SHEET DATE
Key events since the end of the financial year have been:
Mr Brett Lynch commenced as Managing Director of the Group on 1 July 2019.
On 8 August 2019, the Company announced an Earn-‐in Agreement with lithium producer Altura
Mining Limited, over Sayona’s Western Australian lithium portfolio in the world-‐class Pilgangoora
lithium district.
Under the agreement, Altura will spend $1.5 million on exploration across the project portfolio over
three years to earn a 51% interest, with Sayona retaining the remaining project interest. Sayona
retains the right to contribute to project evaluation and development in the future to participate in the
upside exploration potential.
On 14 August 2019 the Company announced that a placement would be undertaken to Directors,
management and a major shareholder to raise approximately $1.2 million. The placement will be on
the same terms as the SPP announced on 24 June 2019.
On 23 August 2019, funds raised totalled $716,341 from the issue of 83,295,471 new shares at an
issue price of $0.0086 each, and 41,647,702 free attaching options to applicants under the SPP
announced on 24 June 2019. Options are exercisable at $0.03 each, expiring on 23 July 2022.
Sayona Mining I Annual Report 2019 63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 23: EVENTS AFTER BALANCE SHEET DATE (continued)
On 23 August 2019, the Company also issued 43,927,651 new shares at an issue price of $0.0086
each, and 21,963,826 free attaching options to eligible parties under the placement announced on 14
August 2019. Options are exercisable at $0.03 each, expiring on 23 July 2022. Funds raised totalled
$377,778 and further shares to raise $800,000 committed to by Directors have not been issued under
the placement pending shareholder approval at the Company's annual general meeting.
There have been no other key events since the end of the financial year.
NOTE 24 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 Note 12).
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 (Mt Edon).
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 three year option to acquire
the remaining 20% for $100,000.
The Group holds an 80% interest in the project at 30 June 2019. 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 commodities 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. The agreement also provides for a free
carried interest of Grant Sandy up to decision to mine. Great Sandy can elect to convert the 20%
interest to a 2% gross smelter royalty.
On 19 December 2017, the Group exercised its option and made the initial $300,000 payment under
the agreement. Of this, $80,000 was settled through the issue of 1,869,159 ordinary shares.
On 18 December 2018, the Group made the second $300,000 payment under the agreement to attain
the 80% interest in relevant tenements.
On 24 January 2019, the Group acquired the final 20% of the tenure subject of the agreement through
payment of $100,000 to Great Sandy Pty Ltd, by issuing 5,235,602 shares. The Group now holds
100% unecumbered interest in the tenement package.
Sayona Quebéc Inc.
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 Quebéc, Canada. The option to purchase
CDC2187652 is exercisable anytime in the next five years, by making payments including
CAD$25,000 on signing, CAD$5,000 on each anniversary between years two to five, and CAD$75,000
on exercise of the option. At 30 June 2019, the Company held a 100% interest in the property.
On 18 January 2018, the Company entered into an acquisition agreement with Matamec Explorations
Inc in relation to a number of mineral claims in Quebéc. The acquisition includes the staged
payments of cash and exploration commitments, and net smelter royalty payable to Matamec should
Sayona achieve 100% ownership.
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 24: JOINT ARRANGEMENTS (continued)
The staged acquisition strategy enables Sayona to obtain an initial 50% interest in the property
through the expenditure of CAD$105,000 for claim renewal costs of the property, as required by the
Quebéc department of natural energy and resources.
Sayona can then earn 100% interest in the property by completing the milestones in the timeframes
outlined below:
-
-
Investing CAD$200,000 in exploration and pay CAD$100,000 in cash to Matamec within the first
12 months; and
Investing CAD$350,000 in exploration and pay CAD$250,000 in cash to Matamec within 12 and
24 months of signing.
At 30 June 2019, the Company held a 50% interest in the property (Tansim project).
On 15 October 2018, the Group entered into an agreement to purchase four additional Mineral
Claims 2472424, 2472425, 2480180, 2507910, to extend the Authier project. The agreement provided
for an initial share issue of CAD$12,500 worth of shares, and a payment of CAD$12,500 in cash. On
27 November 2018, the Group paid AUD$12,500 through a share issue of 492,126 shares.
On 28 February 2019, the Company expanded the Tansim project with the acquisition of the Lac
Simard lithium prospect from Exiro Minerals Corp (Exiro). Under the agreement Sayona can acquire a
100% interest by making cash and share payments and undertaking work on the property over a
three-year period, with Exiro retaining a 2% net smelter return royalty. At 30 June 2019, the Company
held a 100% interest in the property.
NOTE 25: 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
Net Assets
Contributed equity
Option Reserve
Accumulated losses
Total equity
2019
$
2018
$
1,750,503
19,810,778
10,229,890
12,731,956
21,561,281
22,961,846
337,710
-
337,710
281,124
-
281,124
21,223,571
22,680,722
79,309,022
-
(58,085,451)
79,183,501
-
(56,502,779)
21,223,571
22,680,722
Statement of Profit or Loss and Other Comprehensive
Income
Total loss for the year
Total other comprehensive income
Total comprehensive loss for the year
1,582,672
-
2,176,941
-
1,582,672
2,176,941
Sayona Mining I Annual Report 2019 65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 25: PARENT ENTITY INFORMATION
Guarantees
There are no parent company guarantees.
Contingent Liabilities
There are no material contingent liabilities at the end of the reporting period.
NOTE 26: 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 2019.
Sayona Quebéc 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 and Tansim Lithium Project at 30 June
2019.
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 27: SEGMENT REPORTING
The Group operates internationally, in the mineral exploration industry. Segment reporting is based
on the whole of entity. Geographical segment information is as follows:
Primary Reporting: Geographical Segments
Australia
Overseas
Consolidated Group
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
REVENUE
Revenue
Total revenue from
ordinary activities
112,405
78,875
11,693
413
124,098
79,288
112,405
78,875
11,693
413
124,098
79,288
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE 27: SEGMENT REPORTING (continued)
RESULT
Australia
Overseas
Consolidated Group
2019
2018
2019
2018
2019
2018
Profit/(loss) from
ordinary activities
before income tax
expense
Income tax
expense
Profit/(loss) from
ordinary activities
after income tax
expense
ASSETS
Segment assets
LIABILITIES
(504,925)
(2,197,589)
(1,720,726)
(130,874)
(2,225,651)
(2,328,463)
-
-
-
-
-
-
(504,925)
(2,197,589)
(1,720,726)
(130,874)
(2,225,651)
(2,328,463)
5,000,144 12,367,549
17,208,179 11,892,473 22,208,323 24,260,022
Segment liabilities
341,931
293,744
642,821
1,285,556
984,752
1,579,300
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 28: FAIR VALUE MEASUREMENT
The Group does not measure any assets or liabilities at fair value on a recurring basis after initial
recognition.
The Group does not subsequently measure any assets or liabilities at fair value on a non-recurring
basis.
NOTE 29: COMPANY DETAILS
The registered office and principal place of business is:
Sayona Mining Limited
Unit 68
283 Given Terrace
Paddington Queensland 4064
Sayona Mining I Annual Report 2019 67
DIRECTOR’S DECLARATION
The Directors of the Company declare that:
1.
The attached financial statements and notes are in accordance with the Corporations Act 2001
and:
(a)
comply with Australian Accounting Standards which, as stated in accounting policy
Note 1 to the financial statements, constitutes compliance with International Financial
Reporting Standards (IFRS); and
(b) give a true and fair view of the financial position as at 30 June 2019 and of the
performance of the consolidated Group for the year ended on that date.
2.
3.
In the Directors' opinion there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable; and
The Directors have been given the declarations by their Chief Executive Officer and Chief
Finance Officer required by section 259A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Dennis O’Neill
Director
Paul Crawford
Director
Dated this: 13th day of September 2019
68
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 subsidiaries (the
Group)), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group 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 2019 and of its
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. 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, would be in the same terms if given to the directors as at the
time 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.
Material uncertainty related to going concern
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 funds. As
stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate
that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue
as a going concern. Our opinion is not modified in respect of this matter.
Sayona Mining I Annual Report 2019 69
Independent Auditor’s Report to the Members of Sayona Mining Limited
(continued)
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 12 (exploration and
evaluation assets)
and
evaluation
As at 30 June 2019 the carrying value of
exploration
is
$19,877,399. This is a significant asset of the
Group. The Group’s accounting policy in
respect of exploration and evaluation assets is
outlined in Note 1.
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.
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70
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
in the Group’s Annual Report for the year ended 30 June 2019, but does not include the financial report
and the auditor’s report thereon. The Annual Report will be made available to us after the date of this
auditor’s report. Our opinion on the financial report does not cover the other information and 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we
are required to communicate the matter to the directors and request that a correction be made.
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 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 Group’s
ability 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.
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Sayona Mining I Annual Report 2019 71
Independent Auditor’s Report to the Members of Sayona Mining Limited
(continued)
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
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.
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72
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 pages 10 to 13 of the Directors’ Report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Sayona Mining Limited for the year ended 30 June 2019
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Nexia Brisbane Audit Pty Ltd
ND Bamford
Director
Level 28, 10 Eagle Street
Brisbane Qld 4000
Date: 13 September 2019
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Sayona Mining I Annual Report 2019 73
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 31 August, 2019.
1.
Shareholding:
Distribution of Shareholders Number:
Category Number
(Size of Holding)
Ordinary Shares
(Number)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
236
281
376
1,970
1,567
4,430
The number of shareholdings held in less than marketable parcels is 2,405.
Twenty Largest Holders - Ordinary Shares
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17
18.
19.
20.
Terryjoy Pty Ltd
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