More annual reports from Sayona Mining Limited:
2023 ReportANNUAL REPORT
2020
PLUGGED
INTO AN
ELECTRIC
FUTURE
CONTENTS
2
3
4
5
The Company
8
Leadership
Team
20
Tenement
Schedule
Highlights
10
Operations
Review
24
Resources
and Reserves
Sayona's
Expansion
Strategy
Managing
Director’s
Report
11
Authier
Project
26
Directors’
Report
14
Tansim
Project
16
Western
Australian
Assets
42
Auditor’s
Independence
Declaration
43
Financial
Statements
19
East Kimberley
Graphite
Project
82
ASX
Information
85
Corporate
Directory
Sayona Mining Limited I Annual Report 2020 1
THE COMPANY
East Kimberley Graphite
Mt Edon Lithium
Tansim Lithium
Authier Lithium
Pilbara Lithium
Sayona Mining Limited (ASX:SYA) is
an emerging lithium miner with
projects in Québec, Canada and
Western Australia.
In Québec, Sayona is progressing a
bid for the North American Lithium
(NAL) mine with the backing of a
world‐class advisory team, while
advancing its flagship Authier Lithium
Project and emerging Tansim Project.
The Company’s expansion
complements the Québec
Government’s strategy of creating a
complete lithium value chain in the
province, from the extraction of
battery minerals to battery
manufacturing.
This is based on the province’s
competitive advantages as the most
economic, strategic and sustainable
supplier of choice to the North
American and European battery
market.
THE DEVELOPMENT
OF THE BATTERY
SECTOR FOR
ELECTRIC VEHICLES
IS AT THE HEART OF
GOVERNMENT
PRIORITIES…FROM
THE EXTRACTION OF
MINERALS TO THE
MANUFACTURE OF
BATTERIES
Québec Economy Minister,
Pierre Fitzgibbon,
August 24, 2020
2
Lithium development
Lithium exploration
Gold exploration
Graphite exploration
In Australia, Sayona has an earn-in
agreement with leading lithium
producer, Altura Mining, concerning its
Pilbara projects, which are considered
prospective for lithium and gold.
Leading Sayona is an experienced
management team and Board, who
are well-practiced in developing global
resource projects from exploration
through to production.
Amid an accelerating clean energy
revolution, Sayona is well placed to
generate increased shareholder value
by becoming a world-scale lithium
producer.
HIGHLIGHTS
Bid launched for
North American Lithium,
with backing of
expert advisory team
Revised definitive feasibility
study upgrades Authier’s
economics; EIS lodged as
approvals advance
Project pipeline strengthened
in Canada (Tansim) and
Western Australia
(Altura earn-in)
Global EV sales hit
record high as analysts
forecast lithium supply
deficit by mid-decade
Sayona Mining Limited I Annual Report 2020 3
SAYONA’S EXPANSION STRATEGY
Stepping up the lithium
value chain
MEDIUM TERM
World-scale
spodumene producer
! Complete Authier ‘BAPE’
approval process and
commission operations
! Integrate Authier with
NAL
! Further expand Québec
operations with Tansim
project to create world-
scale spodumene
operation
LONG TERM
Battery material
processor
! In combination with
partners, generate
added value through
downstream processing
to produce lithium
carbonate/hydroxide
! Partner with Québec’s
vertical integration
strategy, securing its
position as supplier of
choice to North
American and European
battery market
SHORT TERM
Junior explorer
! Advance flagship Authier
Lithium Project towards
development while
progressing bid for
nearby North American
Lithium (NAL)
! Accelerate earn-in
agreement with Altura
Mining for lithium/gold
projects in the Pilbara
4
MANAGING DIRECTOR’S REVIEW
Dear Shareholder
Sayona’s vision
The lithium decade has begun. That
much is obvious from the
acceleration of the electric vehicle
(EV) and battery storage industry in
Europe, North America and Asia and
with it the enormous rise in demand
for key battery metals such as
lithium.
In the first half of 2020, Europe
overtook China as the world’s
biggest EV market with sales
topping half a million vehicles, on
the back of multi-billion dollar
investments by governments and
automakers. China meanwhile has
continued its rapid growth in battery
‘megafactories,’ while Tesla has
become the most valuable
automaker in the world.
The International Energy Agency
reported that EV sales worldwide hit
a new record high of 2.1 million in
2019, with the global EV fleet
predicted to reach some 245 million
vehicles by 2030.
Analysts Benchmark Mineral
Intelligence and Roskill have
predicted a structural deficit in
lithium supply by mid-decade, with
recent supply constraints due to the
COVID-19 pandemic and other
factors only adding to the shortfall.
The global coronavirus pandemic
has also accelerated moves to
localise supply chains, with Québec
and Canada seen as the most
competitive, strategic and
sustainable supplier of critical
minerals to the growing U.S. battery
industry.
Where does Sayona fit into this
picture?
The past year, my first as Managing
Director, has seen the coronavirus
pandemic cause untold suffering
and loss of human life, together with
inflicting a global recession and
associated market disruptions.
However, through your support and
the hard work of the Board and
management, we have steadfastly
advanced towards our goal of
becoming a world-scale lithium
producer in Québec, Canada.
Sayona aims to develop a lithium
hub in Abitibi, comprising our
flagship Authier Lithium Project, the
emerging but potentially highly
valuable Tansim project and North
American Lithium (NAL) which we
are currently bidding for with the
backing of a world-class advisory
team.
Our Québec expansion
complements the Québec
Government’s strategy of creating a
complete lithium value chain in the
province, from the extraction of
battery minerals to battery
manufacturing.
Québec’s Economy Minister, Pierre
Fitzgibbon, has described this “at
the heart of government priorities,”
with the sector seen capable of
generating 25,000 jobs and annual
revenues of more than C$5.3 billion
(AUD$5.5 billion).
For Sayona, integrating NAL with
Authier while developing the nearby
Tansim project would put us on track
for the next phase - downstream
processing to produce lithium
carbonate or hydroxide.
NAL bid
From my appointment in July 2019,
my first task was to reappraise our
strategic environment and consider
new pathways towards delivering
increased shareholder value across
our project portfolio in Canada and
Australia.
The first such opportunity to present
itself was NAL, an operation which
includes an established
concentrator as well as a
spodumene mine, but which has
failed to generate a profit under
different owners despite some
C$400 million of investment.
In 2018, NAL produced around
114,000 tonnes of spodumene
against its nameplate capacity of
180,000t, while the operation also
has the potential to produce battery-
grade lithium carbonate with the
necessary investment.
Located some 60 kilometres from
our flagship Authier project, there
are obvious synergies for Sayona in
combining the two operations, not
least being a significant
improvement in plant performance
and economics by combining ore
from Authier with NAL’s. This is an
advantage that only Sayona can
offer.
Sayona Mining Limited I Annual Report 2020 5
In September 2019, Sayona
submitted our first expression of
interest in NAL, which was followed
a month later by the announcement
of our world-class bidding advisory
team. This team has continued to
grow and currently encompasses all
facets of a successful operation,
with proven operational, technical,
environmental and legal expertise
together with financial know-how.
At the time of writing, the monitor
(administrator) for NAL had
extended the bidding process to the
end of September 2020. A
successful outcome would
accelerate Sayona’s expansion
plans, however our project pipeline
has even greater potential to take
the Company to the next level.
Authier project advances
Authier remains our flagship project
and in fiscal 2020 we made
significant steps towards securing a
social licence to operate, together
with upgrading its projected financial
returns.
A revised definitive feasibility study
released in November 2019
highlighted the project’s potential,
with an estimated net present value
of C$216 million, an internal rate of
return of nearly 34% and estimated
capital payback within 2.7 years,
based on annual average
production of 114,116t (6% Li O).
2
Importantly, the project could
generate up to 176 new jobs for the
benefit of the local community, with
the mining operation spanning an
estimated 14 years.
However, no mining operation can
succeed without the support of the
local community. In this regard we
have made major advances,
including reaching agreement in
December 2019 with the Council of
the First Nation Abitibiwinni
(Pikogan) concerning exploration
activities at Authier.
In January 2020, Sayona submitted
a new environmental impact
statement (EIS) with Québec’s
Ministry of the Environment and the
Fight against Climate Change
(MELCC). In April, the MELCC
provided its feedback to the EIS
which demonstrated there were no
‘show-stoppers’ for the project.
Sayona is now working on a detailed
response to the ministry’s queries,
with various works to be undertaken
during the northern hemisphere
summer and autumn targeting
completion by year-end.
Pending regulatory approval which,
due to delays caused by the
COVID-19 pandemic, is now
expected in 2021, construction and
mining operations could commence
from the following year.
Exploration assets expand
Having a strong project pipeline is
key for any mining company. Over
the past year, Sayona advanced its
portfolio considerably both in
Québec and Western Australia.
In Québec, the Tansim project is
showing great promise, with an
Exploration Target* for its Viau-
Dallaire prospect estimated at
between 5 to 25m tonnes, at an
estimated grade of 1.2-1.3% Li O.
2
* Refer Competent Person's Statement Page 84
6
Located just 82km south-west of
Authier, the project is prospective for
lithium, tantalum and beryllium.
Post-balance date, in August 2020,
Sayona announced a 25%
expansion of the Tansim project to
encompass more than 10,000 ha of
prospective lithium acreage. The
acquisition followed research by
consultancy EY-Parthenon showing
Québec’s considerable competitive
advantages in supplying lithium to
North America (together with
Europe), making this acreage an
increasingly valuable asset for the
Company.
In addition to our lithium portfolio,
Sayona has reappraised our
Western Australian assets including
some prospective gold rights within
12km of De Grey Mining’s Hemi
gold discovery. An earn-in
agreement with Altura Mining was
signed in August 2019, under which
Altura agreed to spend A$1.5m on
exploration across the Western
Australian projects over three years
to earn a 51% interest.
In June 2020, Sayona announced a
strategic review of these assets,
under which the Company has
retained the most prospective
lithium tenements near Altura’s
Pilgangoora lithium mine, while also
reviewing the gold tenue to identify
Hemi-style targets and further
options for value-adding.
With gold prices recently hitting
record highs above US$2,000 an
ounce, there is considerable
potential for added value from these
assets which we look forward to
progressing.
Investor support
The travails of 2020 have made
investor support more important
than ever, particularly for an
emerging miner such as Sayona.
I would like to thank all shareholders,
both new and longstanding, for
supporting our capital raising
initiatives over the past year which
have been crucial in delivering
recent milestones.
Investors always appreciate
management with ‘skin in the game’
and your Board definitely has shown
its commitment in this regard,
having invested in last year’s Share
Purchase Plan together with this
year’s renounceable rights issue and
other initiatives.
The Board is appreciative of such
support and based on our strategic
vision, we are confident of delivering
value for shareholders.
Once again, thank you to our
shareholders, employees,
contractors, suppliers, partners and
all others associated with Sayona for
your invaluable support.
Post-pandemic, 2021 is looking
brighter than ever and I am
extremely confident that Sayona is
set for a milestone year as our
projects help advance the world’s
clean energy future.
Yours sincerely
Brett Lynch
Managing Director
THE LITHIUM DECADE
HAS BEGUN ... FROM
THE ACCELERATION OF
THE ELECTRIC VEHICLE
AND BATTERY STORAGE
INDUSTRY IN EUROPE,
NORTH AMERICA AND
ASIA AND WITH IT THE
ENORMOUS RISE IN
DEMAND FOR KEY
BATTERY METALS SUCH
AS LITHIUM.
Sayona Mining Limited I Annual Report 2020 7
LEADERSHIP TEAM
A well-credentialled leadership team is in place to take Sayona from explorer through to mid-tier producer. The Board
has a history of managing major resources projects from exploration through to production. It is further supported by
an experienced executive team on the ground in Québec, skilled in local community and stakeholder engagement, to
ensure the responsible and sustainable development of the Company’s projects.
L to R Brett Lynch, Dan O’Neill, Paul Crawford
8
Brett Lynch
Managing Director
Dan O’Neill
Non-Executive Director
Alan Buckler
Non-Executive 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 in 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 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 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.
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.
Sayona Mining Limited I Annual Report 2020 9
OPERATIONS REVIEW
Bid for North American Lithium
In September 2019, Sayona
announced its intention to
participate in the bidding
process for the NAL operation
in Québec. NAL has a lithium
mine and concentrator located
in Abitibi, near the mining
district of Val d’Or, in close
proximity to the Authier
project. Spodumene
production was halted in
February 2019 and the
company obtained protection
from creditors in May, which
ended in September with bids
invited for the company’s
assets.
During 2018 NAL produced around
114,000 tonnes of spodumene
against a nameplate capacity of
180,000 tonnes. With the necessary
investment, the operation also has
the potential to produce battery-
grade lithium carbonate.
There are substantial synergies with
the Authier project offering
opportunities for the integration of
both operations enhancing overall
operational efficiencies and outputs.
A successful bid for NAL would fast-
track the Company to becoming a
world-scale spodumene producer,
advancing from junior explorer to
mid-tier miner with potentially three
operating mines supplying a central
concentrator.
In February 2020, Sayona submitted
its official bid for NAL with the court-
appointed monitor (administrator),
Raymond Chabot Inc. This followed
the monitor’s decision to extend the
previous 21 January 2020 deadline.
However, the continued impact of
the COVID-19 pandemic in Québec
has caused delays to the bidding
process. This comes amid broader
industry restructuring, including
Nemaska Lithium, which had its
bidding process similarly extended
under a court-administered process.
At the time of this report, the
deadline has been delayed to the
end of September 2020, pending
any mutual agreement for a further
extension.
Sayona has assembled a
world‐class team to support its bid.
The team includes established
lithium producer Altura Mining,
Primero Group Americas, a leading
engineering firm specialising in
lithium operations, engineers BBA
and Hatch, financial advisers
Evercore Group LLC, Jett Capital
Advisors and PwC, and other
leading consultants as well as
former NAL mine management.
Together they will provide the
necessary technical skills,
managerial expertise and financial
capacity to develop NAL into a
sustainable and profitable operation.
Sayona is confident of its team’s
ability to turn around the NAL
operation, drawing upon established
operational, engineering and
environmental expertise together
with the necessary financial backing.
10
Authier Lithium Project
The Company’s flagship
project is the advanced stage
Authier Lithium Project in
Québec, Canada.
2
Authier is a hard rock spodumene
lithium deposit scheduled for
development as an open cut mine
and concentrator, producing a 6%
Li O spodumene concentrate. The
new mine could create 176
additional jobs for the benefit of the
local community, with Sayona
putting priority on engaging local
workers and suppliers.
Pending the necessary stakeholder
support and regulatory approvals,
expected in 2021 following delays
due to COVID-19, construction
could commence as early as the
following year.
Should the Company’s bid for NAL
prove successful, Authier’s
development would be integral in
ensuring a significant improvement
in plant performance and economics
for the NAL operation.
N
Rouyn-
Noranda
Val-d'Or
Authier Lithium Project
CANADA
Tansim Lithium Project
Québec
100km
Authier Project location
Ottawa
Montreal
USA
Sayona Mining Limited I Annual Report 2020 11
Permitting and Definitive
Feasibility Study (DFS)
Key findings of the revised DFS
compared to the previous DFS
included:
In early 2019 it was announced the
Authier project would be subject to
the environmental impact
assessment and review procedures
under the BAPE (bureau
d'audiences publiques en
environnement).
Subsequently, Sayona announced it
would seek approval to process in
the order of 2,600 tonnes of ore 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).
2
In May 2019, engineering
consultancy BBA was appointed to
review the original mine plan and the
2018 DFS in accordance with the
BAPE approval process, and based
on the optimised production levels.
The revised DFS was announced in
November 2019.
! NPV (real terms at 8%
discount rate) of C$216m vs
previous study’s C$184.8m;
! Pre‐tax internal rate of return
33.9% vs 33.7%;
! Annual average spodumene
production – dry (6% Li O) of
114,116t vs 87,400t; 78%
recovery rate;
2
! Life of mine 13.8 years (based
on a higher daily production
rate of 2,600 tonnes per day
compared to the previous
DFS rate of 1,850t);
! Total EBITDA of C$461m and
total net revenue of
C$1,412m;
! Initial capital costs C$120m;
life of mine capital costs
C$211m;
! Project payback period of 2.7
years.
The project’s low capital and
operating costs reflect its close
proximity to established infrastructure,
including rail and road, and access to
a skilled local workforce. In addition,
there is no requirement for on‐site
infrastructure such as accommodation
camps and power plants. It also
benefits from access to economical,
environmentally friendly hydroelectric
power and offers a simple deposit
geology, mining and production
processes.
The DFS is based on the current
Proven and Probable Ore Reserve
estimate of 12.10 Mt @ 1.00% Li O at
a 0.55% Li O cut‐off grade (refer table
below).
2
2
The LOM cash operating costs are
estimated at C$400 per tonne (mine
gate basis) or C$469 per tonne FOB
Port of Montreal, based on a
development capital expenditure of
C$120 million and a life‐of‐mine
capital cost estimate of C$211 million.
AUTHIER LITHIUM PROJECT DFS HIGHLIGHTS
Description
Average Annual Ore Feed to the Plant
Annual Average Spodumene Production
Life-of-Mine
Life-of-Mine Strip Ratio
Average Spodumene Price
Initial Development Capital Costs
Total Life of Mine Capital Costs
Total Net Revenue (real terms)
Total Project EBITDA (real terms)
Average Life of Mine Cash Costs (Mine-gate)
Average Life of Mine Cash Costs (Montreal Port FOB)
Net Present Value (real terms @ 8% discount rate)
Pre-Tax Internal Rate of Return
Project Payback Period (after start of production)
Exchange Rate
12
Unit
tonnes
tonnes
years
waste to ore
US$/tonne
C$ million
C$ million
C$ million
C$ million
C$/tonne
C$/tonne
C$ million
%
years
CAD:USD
Results
874,594
114,116
13.8
6.9:1
693
120
211
1,412
461
400
469
216
33.9
2.7
0.76
In parallel with the DFS, Sayona
progressed a revised Environmental
Impact Study (EIS) in accordance
with BAPE requirements. The EIS is
a rigorous scientific study containing
all the necessary documentation to
satisfy the legal and regulatory
requirements of the Authier project
and its eventual rehabilitation.
Additionally, following a public
consultation process held from 19
June to 19 July (as per the Ministère
de l’Environnement et de la Lutte
contre les changements climatiques,
or MELCC), Sayona modified the
EIS to reflect community feedback.
This included moving the planned
waste rock and tailings pile and
partitioning the planned spodumene
loading area to further minimise any
potential environmental impacts. The
revision also included the
establishment of a project
monitoring committee comprised of
key stakeholders. The 14‐member
committee held its first meeting on
19 September 2019 and will remain
active through to completion.
Significantly for the local community,
the EIS reaffirmed the project will
have no impact on the St-Mathieu-
Berry esker where the esker is used
to pump drinking water. The
protection of the esker has been a
key focus for Sayona due to its
importance to the people of La
Motte and Abitibi, as well as the
broader community.
The revised EIS was submitted to
Québec’s MELCC on 22 January
2020.
In early April 2020, the MELCC
provided feedback to the
submission by way of queries on a
range of categories including flora
and fauna, impact on air quality,
roads, traffic and water
management. Such queries are
normal for projects of this type and
will allow Sayona to further fine-tune
the project to satisfy community and
government expectations.
Importantly, there were very few
questions relating to the project’s
hydrological study, which concluded
that the Authier project would not
impact the water quality of the
St‐Mathieu-Berry esker.
At the time of this report, Sayona
announced a new program of
activities aimed at addressing the
MELCC’s queries, and awarded all
of the critical follow-up works
contracts.
These activities will largely occur
during the northern hemisphere
summer/autumn and will comprise a
range of activities including
geotechnical surveys by leading
Canadian consulting engineering
firm, BBA; the collection of
additional soil samples by
consulting engineers Norinfra;
wetlands inventories by
environmental consultants Del
Degan & Massé; and inventories of
various plants of interest to the
Council of the First Nation
Abitibiwinni (Pikogan) and
non‐timber forest products together
with fish, sediments and water
quality in Lake Kapitagama by Aki
Resources, a First Nations
contractor in partnership with Desfor.
Such activities will ensure a detailed
response is compiled for the MELCC
and for the benefit of the community
in ensuring the project’s
sustainability and earning a social
licence to operate. Completion is
targeted by year-end.
Following this, the EIS will be
submitted to the Public Hearings
Office for further public hearings and
review, ultimately leading to an
expected recommendation for
project approval under the BAPE in
2021, assuming no further delays
are incurred as a result of the
COVID-19 pandemic.
Sayona continues to engage closely
with all stakeholders, including
holding information sessions and
consultations with local
municipalities, landowners, First
Nations communities,
non‐governmental organisations and
other stakeholders, with the
engagement effort led by its local
team in Québec.
In December 2019, Sayona was
pleased to announce an agreement
with First Nation Abitibiwinni for the
works during the exploration phase
of the Authier Lithium Project. This
agreement is aimed at
ensuring a collaborative and
mutually beneficial partnership for
the development of the project.
Sayona Mining Limited I Annual Report 2020 13
Tansim Project
Tansim is situated some 80
kilometres south‐west of the
Authier Project in Québec. The
project area is prospective for
lithium, tantalum, and
beryllium. In August 2020,
post year-end, Sayona
announced the addition of 39
claims adjacent to the
Company's existing
tenements.
N
Rouyn-
Noranda
Val-d'Or
The Tansim Project now comprises
180 mineral claims encompassing
10,405 ha of prospective lithium
acreage.
hosted by metasedimentary –
metavolcanic rocks of the Pontiac
sub‐province. The main prospects
are Viau‐Dallaire, Viau and Vezina.
Previous exploration by Sayona
since 2018 has highlighted the
project's potential to host a valuable
new lithium deposit. Mineralisation is
hosted within spodumene‐bearing
pegmatite intrusions striking
east‐west, dipping to the north and
Authier Lithium Project
CANADA
Tansim Lithium Project
Québec
100km
Tansim Project location
14
Ottawa
Montreal
USA
Drilling conducted during 2019 resulted in an Exploration Target* for the
Viau‐Dallaire prospect of between 5 million and 25 million tonnes, at an
estimated grade of 1.2 – 1.3% Li O.
2
VIAU-DALLAIRE EXPLORATION TARGET
Range
Lower
Upper
Tonnes
5,000,000
25,000,000
Grade % Li O2
1.2 to 1.3
1.2 to 1.3
*
The potential quantity and grade of the Exploration Target is conceptual in nature, and is
therefore an approximation. There has been insufficient exploration to estimate a Mineral
Resource and it is uncertain if further exploration will result in the estimation of a Mineral
Resource.
Tansim, in conjunction with the Authier Project and, potentially, NAL (subject
to a successful bid) would enable Sayona to become a world-scale producer
with three spodumene mines supplying a central concentrator to feed the
North American battery markets.
Québec’s strategic position
Québec’s lithium sector has become an increasingly strategic asset, with
analysts pointing to economic, strategic and environmental benefits of the
province as a key supply source of the critical minerals in demand for the
North American lithium-ion battery market. This is particularly significant in
the wake of the COVID-19 pandemic which has resulted in a push towards
the localisation of global supply chains.
In early October 2019, Propulsion Québec released an independent study
into the potential of the province’s lithium-ion battery sector, amid strong
growth in demand from the electric vehicle (EV) and energy sectors across
North America. The study confirmed the economic potential of the lithium
industry for Québec.
This study further supports recent comments by the Québec Premier who
stated that lithium is a ‘jewel’ for the province (Montréal Gazette, 19 August
2019). Québec has a number of competitive advantages, including proximity
to established lithium-ion battery markets in North America, access to
economical and sustainable hydropower and well-established infrastructure,
together with its geopolitical advantages.
In its provincial budget for fiscal year 2021, the Québec Government
committed to advancing electrification as a core part of its strategy, with an
additional C$90 million (A$101m) dedicated to critical and strategic minerals
including lithium.
The Government’s backing for the
lithium industry followed its
announcement earlier this year
broadening the role of the province’s
investment arm, Investissement
Québec, with the Government
increasing its capital to C$5 billion to
allow it to play an even greater role
in supporting business
development.
Adding to the positive momentum
for battery minerals, the Canadian
Government has announced rebates
for the purchase or rental of electric
or plug-in hybrid vehicles, further
supporting demand for the growing
EV industry. Sales of EVs in Canada
grew by 25 per cent in 2019, with
further growth expected following
the rebates and increasing focus on
environmental issues.
Québec is also cementing its
position as a leader in the battery
materials and energy storage sector,
with the appointment by
Investissement Québec (IQ) of Dr
Karim Zaghib, an internationally
renowned researcher in lithium-ion
batteries. As a strategic adviser to
the government investment arm, Dr
Zaghib will support IQ in its
development strategy for the lithium
sector, from the extraction of ore to
the production and recycling of
batteries, aiming to make the
Canadian province a leader in the
fast-growing EV and energy storage
industry.
On August 24, the Québec
Government announced a “new
start” for Nemaska Lithium, with the
Government and private partners
pledging up to C$600 million to
recapitalise the miner. Nemaska
Lithium plans to commission a
lithium mine and concentrator in
Whabouchi and value-add by
Sayona Mining Limited I Annual Report 2020 15
transforming its spodumene product
into battery-grade lithium hydroxide.
Western Australian Assets
Commenting on the transaction,
Québec Economy Minister, Pierre
Fitzgibbon said: “The development
of the battery sector for electric
vehicles is at the heart of
government priorities. It is essential
to establish as many links as
possible in this sector, ranging from
the extraction of minerals to the
manufacture of batteries, so that
Québec can reap the maximum
benefits.”
Significantly, the province “is
seeking other investment partners
for other projects in a wider battery-
making push that Mr Fitzgibbon
estimates will cost upward of C$7
billion, from mineral extraction to
material production” (The Globe and
Mail, August 24, 2020). The
economy minister was also quoted
by La Presse describing the
Nemaska Lithium deal as “the first
piece of the puzzle” for Québec in
ultimately building its own batteries.
Sayona is fully aligned with
Québec’s strategy of developing a
complete lithium value chain, from
mining through to downstream
processing. The Company has
proposed the creation of lithium
hubs in the Abitibi and James Bay
regions, feeding lithium
concentrators to achieve maximum
economies and scale, while also
establishing a world-scale lithium
hydroxide facility.
With the backing of the Québec
Government and other key
stakeholders, this strategy offers a
feasible solution that would benefit
not only Sayona but also Québec in
its drive towards a clean energy
future.
16
Western Australia is a
premium lithium province with
high-grade lithium deposits
associated with rare metal
pegmatites.
Sayona’s leases in Western Australia
cover 1,141 sq km and comprise
lithium tenure in the Pilbara and
Yilgarn areas and graphite
tenements in the East Kimberley.
The Pilbara regional project covers
971 sq km and is centred in the
world-class Pilgangoora lithium
district. Recently, the gold potential
of the Pilbara tenement area has
become apparent following the
Hemi gold discovery by De Grey
Mining Limited.
Altura earn-in agreement
In August 2019, Sayona announced
an earn-in agreement with leading
listed lithium producer, Altura Mining
Limited (Altura). This will enable the
Company to maximise the value of
its Western Australia exploration
assets.
Under the agreement, Altura will
spend AUD$1.5 million on
exploration across the Pilgangoora
project portfolio over a three-year
period, earning a 51% interest.
Sayona will retain the remaining
project interest and the right to
contribute to project evaluation and
development in the future to
participate in the upside potential.
Altura is a key player in the global
lithium market. The company owns
and operates the Altura lithium mine
at Pilgangoora which commenced
production in 2018. It also holds an
extensive portfolio of exploration
assets and is focussed on
advancing exploration activity to
realise value from those assets. The
addition of the Sayona tenement
package will provide upside for both
companies.
Gold potential
During the review of the Pilbara
projects, the gold potential of leases
around the recent Hemi gold
discovery has become apparent.
The De Grey Hemi discovery
comprises the Aquila, Brolga and
Crow gold systems and has the
potential to be a world class
discovery.
The Sayona-Altura earn-in tenure
includes gold rights to eight
tenements covering 808 sq km. The
project includes the Mt Dove lease,
E47/3950, which is centrally located
and only 12km to the south west of
the Hemi mineralisation. De Grey
Mining has also identified gold
targets less than 3km to the north,
east and west of the Mt Dove
tenement boundary.
A review of the gold tenure is
underway to identify Hemi style
targets within the tenement package
and options for value-adding.
Wyndham
Broome
N
Exmouth
Port Hedland
Pilgangoora Lithium Deposit
Pilbara Gold & Lithium Project
WESTERN
AUSTRALIA
Mt Magnet
Geraldton
Mount Edon
Lithium Project
500km
Kalgoorlie
Mount Marion
Lithium Deposit
PERTH
Greenbushes
Lithium
Deposit
Cattlin Creek
Lithium Deposit
Esperance
Albany
Sayona Mining Limited I Annual Report 2020 17
Port Headland
E 45/2364
Tabba Tabba
ELA 47/3829
Deep Well
)
E 45/4703
Tabba Tabba East
Hemi Gold Discovery
(De Grey)
) Mallina
N
)
Goldsworthy
E 45/5289
Strelley West
E 45/5288
Strelley
E 45/4716
Red Rock
) Tabba Tabba
E 47/3950
Mt Dove
Pilbara Lithium Mine
Altura Pilgangoora Lithium Mine
E 47/2983
Mallina
Wodgina Lithium Mine
E 47/3802
Friendly Creek
E 45/4726
West Wodgina
LEGEND
Sayona tenement
(gold and lithium)
Sayona tenement
(lithium only)
Road
Rail
0
25
50km
Pilbara Tenements
Strategic Review
In June 2020, a strategic review of
the Company’s Western Australian
assets was completed which led to
a focus of exploration efforts on
projects within the world‐class
Pilgangoora lithium district.
The Pilbara Regional Project covers
971 sq km and is centred in the
Pilgangoora lithium district. The
project is prospective for hard rock
spodumene mineralisation,
18
associated with fractionated albite –
spodumene pegmatite systems.
This area is home to Altura’s
producing Pilgangoora mining
operation and other major
spodumene deposits.
Kimberley Graphite Project, was
originally included in the earn-in
agreement tenement package.
Following the strategic review, this
was excluded from the package and
is now retained 100% by Sayona.
With a focus on maximising the
value of its Western Australian
assets, Sayona retained the 10 most
prospective Pilbara lithium
tenements and, in addition, the Mt
Edon lithium project in the south
Murchison. Corkwood, the East
Whilst some tenements were
relinquished following the strategic
review, the key terms of the earn‐in
agreement with Altura remain
unchanged.
Deep Well Project
The Deep Well tenement covers an
area of 119 sq km near Port
Hedland. It was pegged to secure
an area of interpreted granites
prospective for lithium pegmatite
and has subsequently been
considered prospective for gold
mineralisation.
The tenement has poor exposure of
bedrock but areas of Fortescue
aged Mt Roe Basalt crop out in the
western tenement region, margined
by younger Mallina Formation
sediments.
Geochemical sampling of oxidised
pyrite cubes (metamorphosed
authigenic pyrite) has returned
elevated gold (to 120ppb Au) as well
as anomalous bismuth,
molybdenum, antimony, nickel,
tellurium, uranium and other
pathfinder elements. Further work is
required to better understand the
area’s geology and mineralisation
potential.
Tabba Tabba Project
The Tabba Tabba Project is located
in an area of historic tin and
tantalum mining. It comprises five
tenements covering 366 sq km,
situated 40km to the north of the
Pilgangoora lithium mining area.
The main Tabba Tabba tenement,
E45/2364 (lithium rights only), is
centred in an area of historic tin and
tantalum mining. Spodumene
pegmatite has been identified in
adjacent tenure and the Tabba
Tabba Project provides exposure to
the area’s emerging lithium
prospectivity.
Within E45/2364, where the
company has rights to 100% of the
pegmatite minerals, exploration has
identified three new areas of
fractionated rare metal pegmatites,
as well as seven soil anomalies of
LCT type pegmatite geochemistry.
None of the prospect areas have
been drilled.
Mallina Project
(lithium only)
The Mallina Project is the most
advanced of Sayona’s Pilbara
portfolio. Multiple zones of newly
discovered spodumene pegmatites
have been identified within a 25 sq
km zone.
The pegmatites occur in three main
swarms: the western Discovery
prospect, the central Area C
prospect and the Eastern Group
pegmatites. Surface sampling has
been encouraging with rock results
up to 4.6% Li2O returned from
spodumene pegmatite at surface.
Mapping has confirmed the
pegmatites can be extensive, with
the Eastern No.2 pegmatite being
over 1,300m in strike extent and up
to 20m in thickness.
Mt Edon Lithium Project
(lithium only)
This project located in the South
Murchison covers the southern
portion of the Paynes Find
greenstone belt and hosts an
extensive swarm of pegmatites.
The pegmatites have not previously
been assessed for their lithium
potential, but have been variably
prospected and mined for tantalum,
feldspar and beryl.
Reconnaissance exploration has
identified lepidolite (lithium mica)
bearing pegmatite with a peak assay
of 1.57% Li O. Geochemical results
indicate that the pegmatite suite
becomes increasingly fractionated
towards the west.
2
East
Kimberley
Graphite
Past exploration by Sayona has
identified graphite mineralisation
within a 25-kilometre strike extent of
the Corkwood geochemical and
geophysical anomaly. The target is
structurally deformed, higher grade
graphite portions of the stratigraphy
with the potential to host coarse
flake, high purity graphite
mineralisation.
Sayona is reviewing the Corkwood
project to see the best way of
maximising the value of its 100%
held interest. No fieldwork was
carried out during the year.
Sayona Mining Limited I Annual Report 2020 19
TENEMENT SCHEDULE
As at 31 August 2020
Australian Tenement Schedule
Tenement
Name
Status
Interest in Tenement
E59/2092
E59/2055
E45/2364
E45/4703
E45/4716
E45/4726
E80/4511
E80/4949
E47/3802
E47/3829
E47/3950
E45/5288
E45/5289
E47/2983
Mt Edon
Mt Edon West
Tabba Tabba
Tabba Tabba East
Red Rock
West Wodgina
Western Iron
Corkwood
Friendly Creek
Deep Well
Mt Dove
Strelley
Strelley West
Mallina
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
Granted
Note: * Tenement subject to Altura Farm‐In Agreement
80% (pegmatite minerals)*
100% (pegmatite minerals)*
100% (pegmatite minerals)*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100%*
100% (pegmatite minerals)*
20
Canadian Tenement Schedule
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
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%
50%
50%
50%
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 Limited I Annual Report 2020 21
Tenement
Location
Interest in
Tenement
Tenement
Location
Interest in
Tenement
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%
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
22
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%
Tenement
Location
Interest in
Tenement
Tenement
Location
Interest in
Tenement
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%
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%
Sayona Mining Limited I Annual Report 2020 23
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. This was
confirmed by a revised DFS,
completed in November 2019.
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:
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.
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
24
QUÉBEC’S LITHIUM
SECTOR HAS BECOME AN
INCREASINGLY
STRATEGIC ASSET, WITH
ANALYSTS POINTING TO
ECONOMIC, STRATEGIC
AND ENVIRONMENTAL
BENEFITS OF THE
PROVINCE AS KEY SUPPLY
SOURCE OF THE CRITICAL
MINERALS IN DEMAND
FOR THE NORTH
AMERICAN LITHIUM-ION
BATTERY MARKET.
Sayona Mining Limited I Annual Report 2020 25
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 2020. 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 2020 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 13 meetings of the full Board of Directors. The meetings attended by each Director were:
DIRECTOR
D.C. O’Neill
P.A. Crawford
A. C. Buckler
J. S. Brown
B. L. Lynch (appointed 1 July 2019)
ELIGIBLE TO
ATTEND
13
13
13
13
13
ATTENDED
13
13
13
12
13
The Company does not have an Audit Committee. The role of the Audit Committee has been assumed by
the full Board. The size and nature of the Company’s activities does not justify the establishment of a
committee at this time.
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
The names and qualifications of current Directors are summarised as follows:
Brett L. Lynch
Managing Director
Qualifications
Experience
Company Director Diploma; Graduate Diploma of Business (Accounting);
Bachelor of Engineering (Mining) (Honours).
Appointed to 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
88,153,101 ordinary shares, 24,374,999 listed options and 18,534,885 unlisted
options.
Directorships in other
listed entities during
the 3 years prior to
current year
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. 40 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.
Interest in Securities
149,488,108 ordinary shares, 12,623,605 listed options and 2,325,581 unlisted
options.
26
DIRECTORS’ REPORT
Directorships in other
listed entities during
the 3 years prior to
current year
Nil
Dennis C O’Neill
Director (Non-Executive) (from 1 September 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
89,587,664 ordinary shares, 625,000 listed options and 872,094 unlisted
options.
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 Managers
Certificate and a Mine Surveyor Certificate issued by the Queensland
Government’s Department of Mines.
Appointed to the Board on 5 August 2013. Over 35 years’ experience in the
mining industry and has taken lead roles in the establishment of several
leading mining and port operations in both Australia and Indonesia. Significant
operations such as PT Adaro Indonesia, PT Indonesia Bulk Terminal and New
Hope Coal Australia have been developed under his leadership.
Interest in Securities
157,808,253 ordinary shares and 29,941,861 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
6,164,565 ordinary shares, 616,457 listed options and 872,094 unlisted
options.
Directorships in other
listed entities during
the 3 years prior to
current year
DIVIDENDS
Altura Mining Limited
No dividends were declared or paid during the financial year.
Sayona Mining Limited I Annual Report 2020 27
DIRECTORS’ REPORT
SHARE OPTIONS
At the date of this report, the unissued ordinary shares of Sayona Mining Limited under option are as
follows:
Grant Date
Expiry Date
Exercise Price No. under Option
23 August to 29 November 2019
29 November 2019
29 November 2019
17 February 2020
29 April to 7 August 2020
23 July 2022
29 November 2021
29 November 2022
17 February 2023
29 April 2023
3.0 cents
3.0 cents
4.0 cents
1.2 cents
2.0 cents
110,123,160
4,000,000
4,000,000
4,869,141
372,060,199
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 16 in the financial report.
During the year ended 30 June 2020, 6,749 listed options were exercised at an exercise price of $0.078 per
share (options were issued on 31 May 2018). The remaining 120,235,840 listed options expired 30 April
2020. 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.
Since the end of the year, an additional 83,926,983 listed options were granted over unissued shares.
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 willful breach of duty
in relation to the Company. The contracts include a prohibition on disclosure of the premium paid and
nature of the liabilities covered under the policy.
The Company has not given an indemnity or entered into any agreement to indemnify, or paid or agreed to
pay insurance premiums in respect of any person who is or has been an auditor of the Company or a
related body corporate during the year and up to the date of this report.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
AUDITOR INDEPENDENCE
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is attached.
Non-Audit Services
There were no non-audit services provided by the Company’s auditors in the current or previous financial
year.
28
OPERATING AND FINANCIAL REVIEW
PRINCIPAL ACTIVITY
The consolidated Group’s principal activity during the financial year continued as the identification,
acquisition and evaluation of mineral exploration assets, focusing on lithium. During the year, the
Company completed a revised Definitive Feasibility Study on the Authier Project in Canada and lodged
a bid to acquire the assets of North American Lithium Inc. a lithium miner in Quebec. In addition,
exploration activity continued on a number of projects in Australia and Canada including, in respect of
the Australian projects, a strategic review of projects and entering into earn-in arrangements with Altura
Mining Ltd.
There were no other 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
$5,403,751 (2019: $2,225,651). Tenement acquisition, exploration and evaluation expenditure during
the year totalled $3,438,587 (2019: $5,919,690).
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.
Sayona’s focus during the year has been two pronged; firstly, the development of its lithium assets, in
particular its flagship project, the advanced stage Authier Lithium Project (Authier) in Québec, Canada,
but also working to realise value from its lithium and gold tenements in Western Australia.
The second focus for Sayona during the period has been its bid for the North American Lithium (NAL)
mine in Québec. Sayona considers NAL a near-term growth opportunity, given its proximity to the
Company’s flagship Authier Lithium Project.
There are substantial synergies with the Authier project offering opportunities for the integration of both
operations enhancing overall operational efficiencies and outputs. A successful bid would offer the
fastest pathway for Sayona to becoming a world-scale producer and achieving the Company’s goal of
advancing from junior explorer to mid-tier miner.
Authier Lithium Project
Authier is a hard rock spodumene lithium deposit scheduled for development as an open cut mine and
concentrator, producing a 6% spodumene concentrate. The new mine could create 176 additional jobs
with Sayona putting priority on engaging local workers and suppliers. Pending regulatory approvals,
which are expected by 2021, construction could commence as early as the following year.
This near-term development project has the potential to create a significant uplift in shareholder value
as it progresses towards development.
In early 2019, the Québec Environment Minister announced that the Authier project would be subject to
the environmental impact assessment and review procedures under the BAPE (bureau d'audiences
publiques en environnement). Under this process, Sayona is seeking approval 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 Mining Limited I Annual Report 2020 29
OPERATING AND FINANCIAL REVIEW
Definitive Feasibility Study
A revised Definitive Feasibility Study (DFS) was announced for the project in November 2019 (refer ASX
announcement 11 November 2019)
Key outcomes of the DFS include an NPV of C$216 million over an initial 13.8-‐year mine life, based on
the current Proven and Probable Ore Reserve estimate of 12.10 Mt @ 1.00% Li2O at a 0.55% Li2O cut-‐
off grade (refer table below).
Authier Lithium Project DFS Highlights
Description
Average Annual Ore Feed to the Plant
Annual Average Spodumene Production
Life-of-Mine
Life-of-Mine Strip Ratio
Average Spodumene Price
Initial Development Capital Costs
Total Life of Mine Capital Costs
Total Net Revenue (real terms)
Total Project EBITDA (real terms)
Average Life of Mine Cash Costs (Mine-gate)
Unit
tonnes
tonnes
years
waste to ore
US$/tonne
C$ million
C$ million
C$ million
C$ million
C$/tonne
Average Life of Mine Cash Costs (Montreal Port FOB)
C$/tonne
Net Present Value (real terms @ 8% discount rate)
C$ million
Pre-Tax Internal Rate of Return
Project Payback Period (after start of production)
Exchange Rate
%
years
CAD:USD
Results
874,594
114,116
13.8
6.9:1
693
120
211
1,412
461
400
469
216
33.9
2.7
0.76
Environmental Impact Statement
As part of the approval process, Sayona produced a revised Environmental Impact Statement (EIS), a
rigorous scientific study containing all the necessary documentation in accordance with the
environmental impact assessment and review procedures under Québec’s Environmental Quality Act.
The new EIS was submitted to Québec’s Ministry of the Environment and the Fight against Climate
Change (MELCC) in January 2020.
In early April 2020 the MELCC provided feedback to the submission by way of queries on a range of
categories including flora and fauna, impact on air quality, roads, traffic and water management. Such
queries are normal for projects of this type and will allow Sayona to further fine-tune the project to
satisfy community and government expectations.
Importantly, there were very few questions relating to the project’s hydrological study, which concluded
that the Authier project would not impact the water quality of the St-‐Mathieu-Berry esker where it is
used to pump drinking water.
Following the Company’s response to the Minister’s queries, the EIS will be submitted to the Public
Hearings Office for further public hearings and review, ultimately leading to an expected recommendation
for project approval under the BAPE in 2021, subject to any delays related to the COVID-19
pandemic.
30
OPERATING AND FINANCIAL REVIEW
Meanwhile, Sayona continues to engage closely with all stakeholders, including local municipalities,
landowners, First Nations communities, non-‐governmental organisations and other stakeholders, with
the engagement effort led by its local team in Québec.
In December 2019, Sayona was pleased to announce an agreement with First Nation Abitibiwinni for
the works during the exploration phase of the Authier Lithium Project. This agreement is aimed at
ensuring a collaborative and mutually beneficial partnership for the project’s development.
North American Lithium bid
Sayona’s bid for North American Lithium (NAL) is seen as an opportunity to fast-track the company’s
expansion plans. NAL has a lithium mine and concentrator located in Abitibi, in close proximity to the
Authier Project in Québec. Combining ore produced from Authier with ore produced at NAL would
provide the opportunity for a significant improvement in plant performance and economics.
Concerning NAL, spodumene production halted at the mine in February 2019, after which NAL sought
creditor protection in May. In September 2019, the Québec Superior Court ended creditor protection
and invited bids for the company’s assets.
In February 2020, Sayona submitted an official bid backed by a world-class advisory team comprising
operational, engineering, financial and other necessary expertise, including former NAL management.
However, the continued impact of the COVID-19 pandemic in Québec has caused delays to the bidding
process, which has seen several extensions by the administrator, currently to the end of September
2020. This comes amid broader industry restructuring, including Nemaska Lithium, which had its
bidding process similarly extended under a court-administered process.
A successful bid for NAL would fast-track the Company to becoming a world-scale spodumene
producer, advancing from junior explorer to mid-tier miner with potentially three operating mines
supplying a central concentrator. It would also secure local jobs and investment and support Québec’s
plans for a clean energy future based on the development of its own battery industry.
Tansim Project
The Tansim Project (Tansim) is situated south-‐west of the Authier Project in Québec and is prospective
for lithium, tantalum and beryllium.
Mineralisation is hosted within spodumene-‐bearing pegmatite intrusions striking east-‐west, dipping to
the north and hosted by metasedimentary – metavolcanic rocks of the Pontiac sub-‐province.
Tansim, in conjunction with the Authier Project and, potentially, NAL (subject to a successful bid) would
enable Sayona to become a world-scale producer with three spodumene mines supplying a central
concentrator to feed the North American battery markets.
The main prospects at Tansim are Viau-‐Dallaire, Viau and Vezina. Drilling conducted last year resulted
in an Exploration Target for the Viau-Dallaire prospect of between 5 million and 25 million tonnes, at an
estimated grade of 1.2 – 1.3% Li2O (refer ASX release 19 November 2019) highlighting the potential for
the development of a new lithium deposit.
Viau-‐ Dallaire Exploration Target
Range
Tonnes
Grade % Li2O
Lower
Upper
5,000,000
25,000,000
1.2 to 1.3
1.2 to 1.3
* The potential quantity and grade of the Exploration Target is conceptual in nature, and is therefore an
approximation. There has been insufficient exploration to estimate a Mineral Resource and it is
uncertain if further exploration will result in the estimation of a Mineral Resource.
Sayona Mining Limited I Annual Report 2020 31
OPERATING AND FINANCIAL REVIEW
Western Australian Assets
Sayona’s leases in Western Australia cover 1,141 sq km and comprise lithium tenure in the Pilbara and
Yilgarn areas and graphite tenements in the East Kimberley, and are also prospective for gold
mineralisation.
In August 2019, Sayona announced an earn-‐in agreement with leading listed lithium producer, Altura
Mining Limited (Altura). This will enable the Company to maximise the value of its Western Australia
exploration assets. The earn-‐in agreement included the Pilbara lithium project tenure, the Mt Edon
lithium project in the south Murchison and the Corkwood graphite project in the Kimberley.
Under the terms of the agreement, Altura with spend AUD$1.5 million on exploration across the
Pilgangoora project portfolio over a three-‐year period, earning a 51% interest. Sayona will retain the
remaining project interest and the right to contribute to project evaluation and development in the future
to participate in the upside potential.
During the year a strategic review of the Western Australian assets was completed and resulted in a
focus of exploration efforts on projects within the world-‐class Pilgangoora lithium district (refer ASX
announcement 4 June 2020). This area is home to Altura’s producing Pilgangoora mining operation
and other major spodumene deposits. Whilst some tenements were relinquished following the strategic
review, the key terms of the earn-‐in agreement with Altura remain unchanged.
Sayona retained the 10 most prospective Pilbara lithium tenements, spanning 971 sq km and located in
close proximity to Altura’s Pilgangoora mine. The East Kimberley graphite project was excluded from
the earn-in agreement and subsequently was retained 100% by Sayona.
During the year, the gold potential of the Pilbara tenement package has become apparent following the
Hemi gold discovery by De Grey Mining Limited. The Sayona / Altura earn-in tenure includes gold rights
to eight leases covering 808 sq km.
FINANCIAL POSITION, CONTINUED OPERATIONS AND FUTURE FUNDING
At 30 June 2020, the Company's Statement of Financial Position shows total assets of $22,190,444, of
which $492,660 was cash, total liabilities of $1,044,715 and net assets of $21,145,728.
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. Subsequent to year
end, the Company raised $2.65 million through a placement. The Group has other initiatives in place,
to fund the Group’s activities.
Over recent years the Group has focused on the 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. During the period the Company tendered a bid for the North American Lithium (NAL)
mine in Québec. NAL is considered a near-term growth opportunity, given its proximity to the
Company’s flagship Authier Lithium Project.
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:
• 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.
32
OPERATING AND FINANCIAL REVIEW
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 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 share purchase plan
announced on 24 June 2019. Options are exercisable at $0.03 each, expiring on 23 July 2022.
• 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 a placement to
raise $377,777. Options have same conditions as those granted under the share purchase plan.
A further 93,023,259 shares and 46,511,632 options were issued to Directors under the
placement following shareholder approval at the Company’s annual general meeting on 29
November 2019, raising $800,000.
• On 29 October 2019, the Company entered into a Controlled Placement Agreement (CPA) with
Acuity Capital. The CPA provides up to $3 million of standby equity capital over the period to 31
January 2022.
As collateral for the CPA, Sayona issued 95,000,000 new shares at nil consideration. The
Company may, at any time, cancel the CPA and buy back the Collateral Shares for no
consideration (subject to shareholder approval).
• On 13 January 2020, Sayona entered into a convertible note facility for up to $2.75 million with
Obsidian Global GP. The first tranche of A$1,000,000 was received, resulting in the issue of
691,400 notes.
• On 15 January 2020 Obsidian converted 200,000 of the notes issued, resulting in the issue of
32,333,962 new shares, at an issue price of $0.0099 per share.
The outstanding notes were repaid on 30 April 2020.
• On 29 April 2020, the Company issued 324,580,104 new shares at an issue price of $0.008 each,
and 182,716,433 free attaching options to applicants under the renounceable entitlement offer.
Options are exercisable at $0.02 each, expiring on 29 April 2023.
• On 29 April 2020, 120,235,840 listed options, exercisable at $0.0078 each, expired unexercised.
• Various other share issues in the year totalling 74,223,909 shares.
•
•
Issue of 4,869,141 unlisted options and exercise of 6,749 listed options.
Impacts on the Group, during the year and subsequent, of the COVID-19 pandemic are outlined
below.
SIGNIFICANT EVENTS AFTER BALANCE DATE
• On 15 July 2020 the Company announced it had entered into a formal agreement with Obsidian
Global GP, LLC, for the early close out of the convertible securities funding facility. All amounts
drawn under the facility were either converted to shares or repaid.
• On 22 July 2020, the Company issued 331,250,000 new shares at an issue price of $0.008 each,
and 187,625,016 free attaching options to parties, representing the shortfall from the
renounceable entitlement offer undertaken in April 2020 together with an additional placement.
Options have same conditions as those granted under the entitlement offer. Total funds raised
were $2,650,000.
• On 6 August 2020, the Company announced the expansion of its Tansim Lithium Project, with
the acquisition of an additional 39 claims spanning 2,234 hectares. Subsidiary company, Sayona
Quebec Inc. holds 100% interest in the tenements.
• On 7 August 2020, the Company issued 3,437,500 new shares at an issue price of $0.008 each,
and 1,718,750 free attaching options to an advisor in settlement of services provided.
Sayona Mining Limited I Annual Report 2020 33
OPERATING AND FINANCIAL REVIEW
• In March 2020, the World Health Organisation declared the outbreak of a novel coronavirus
(COVID-19) as a pandemic, which continued to spread throughout Australia and the world. The
spread of COVID-19 has caused significant volatility in Australian and international markets.
There is significant uncertainty around the breadth and duration of business disruptions related
to COVID-19, as well as its impact on Australian and international economies.
The Group’s core business is mineral exploration and development in Australia and Canada. To
the date of this report the Group has not experienced any significant adverse impact.
Government directives and travel restrictions, primarily in Québec, have limited the Group’s
ability to undertake some activity. The situation has eased significantly recently and operations
are returning to normal.
The Directors are actively monitoring the Group’s financial condition, operations and workforce.
Although the Group cannot estimate the length or gravity of the impacts of these events at this
time, if the pandemic continues beyond the short-term or worsens, then this may have an
adverse effect on the Group’s results of future operations, financial position and liquidity in the
financial year 2021.
• On 7 September 2020, the Company entered into a Share Placement Agreement with Battery
Metals Capital Group, LLC.
The agreement provides for a placement of ordinary shares worth up to US$2 million
(AUD$2.73m), with an initial investment of US$585,000 for placement shares worth US$635,000
and a second investment of US$1,415,000 for shares worth US$1,545,000, subject to
shareholder approval.
In addition, the Company has the option to receive an additional investment of US$2,000,000 for
placement shares worth US$2,180,000 at each of the six month, 12 month and 18 month
anniversaries of the date of the second investment. The Company is under no obligation to draw
down these additional investments.
No other matters or key events have arisen since 30 June 2020 which significantly affect or may
significantly affect the operations of the Company, the results of those operations, or the state of affairs
of the Company in subsequent financial years.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
During the year, the Company has focused on completing the permitting process, required to
commence the development of the Authier project. Authier is a near-term development project and
cash-flow generation opportunity. The Company believes it will create significant share value-uplift
potential for shareholders as the project advances towards development.
The Company’s strategic focus will continue to be on the development of Authier, its bid for NAL, and
the exploration and evaluation of its other assets. The assets range from early stage exploration to
advanced projects with potential for advancement to production. Australian projects will be
undertaken primarily through the Altura Agreement.
To complete mine development at the Authier Project and acquisition of NAL assets, 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:
• all relevant approvals are obtained to conduct proposed operations;
•
• potential delays arising through the various stages to commissioning of the Authier and other
technical works will not achieve the results expected;
projects;
• exploration and evaluation success on individual projects; and
•
the ability to raise additional funds in the future.
34
OPERATING AND FINANCIAL REVIEW
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. In addition, the Authier project is subject to review procedures under the
BAPE (bureau d'audiences publiques en environnement) as the Company seeks permitting approval to
develop and operate a new mine.
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 is available on the Company’s website
www.sayonamining.com.au/corporate-governance.
Sayona Mining Limited I Annual Report 2020 35
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 shares/options are intended to align the interests of the KMP and
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
predominantly on the
forecast growth of the consolidated Group, project milestones and
shareholders’ value. All bonuses and incentives must be linked to predetermined performance
criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses
and options. Any change must be justified by reference to measurable performance criteria. The
policy is designed to attract the highest calibre of executives possible and reward them for
performance results leading to long-term growth in shareholder wealth.
All remuneration paid to KMP is valued at the cost to the company and expensed.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The Board collectively determines payments to the non-executive directors and
their remuneration annually, based on market practice, duties and accountability.
reviews
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.
36
REMUNERATION REPORT
ENGAGEMENT OF REMUNERATION CONSULTANTS
The Company does not engage remuneration consultants.
PERFORMANCE BASED REMUNERATION
KPIs are set annually, in consultation with KMP. The measures are specifically tailored to the area
each individual is involved in and has a level of control over. The KPIs target areas the Board believes
hold greater potential for Group expansion and shareholder value, covering financial and non-
financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures
for the Group and relevant industry standards.
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 shares/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 3 years, together with
the share price at the end of the respective financial years.
2018
2019
2020
Exploration Expenditure ($)
5,724,378
5,921,618
3,438,587
Exploration Tenements (no. including applications)
40
185
184
Net Assets ($)
Share Price at Year-end ($)
Dividends Paid ($)
22,680,722
21,223,571
21,145,728
0.040
0.008
Nil
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 (shares/cash, excluding options).
Key
Management
Personnel
Position held at 30 June
2020 & change during the
year
B Lynch
CEO/Managing Director.
Appointed 1 July 2019
D O'Neill
Executive Director. Resigned
as CEO 1 July 2019.
Resigned as Executive
Director 31 August 2019.
Non-Executive role from 1
September 2019
P Crawford
Executive Director
Company Secretary
Proportion of Remuneration:
Contract Details
(Term)
Related to
performance
Not related to
performance
Shares/Cash Salary & Fees
No fixed term, 3
months’ notice to
terminate.
No fixed term,
termination as
provided by
Corporations Act
No fixed term,
termination as
provided by
4%/25%
69%
-/-
100%
-/-
100%
Sayona Mining Limited I Annual Report 2020 37
REMUNERATION REPORT
Key
Management
Personnel
Position held at 30 June
2020 & change during the
year
Proportion of Remuneration:
Contract Details
(Term)
Related to
performance
Not related to
performance
Shares/Cash Salary & Fees
A Buckler
Non-Executive Director
J Brown
Non-Executive Director
Corporations Act
No fixed term,
termination as
provided by
Corporations Act
No fixed term,
termination as
provided by
Corporations Act
-/-
-/-
100%
100%
Employment Contract of Chief Executive Officer
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 3
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 if the
event of a change of control transaction involving the Company his employment is involuntarily
terminated without cause, Mr Lynch will be entitled to twelve months’ notice or payment in lieu of
notice.
The contract provides for the payment of short-term cash or equity incentive and equity based long-
term incentive. Long-term incentives were approved by shareholders at the 2019 Annual General
Meeting. Contract provides for annual review of the compensation value. The terms of this agreement
are not expected to change in the immediate future.
CHANGES IN DIRECTORS AND EXECUTIVES SUBSEQUENT TO YEAR-END
There have been no changes to Directors or executives since the end of the financial year.
REMUNERATION EXPENSE DETAILS (KMP)
The remuneration of each Director of the Company during the year is detailed in the following table.
Amounts have been calculated in accordance with Australian Accounting Standards.
2020
Short Term Benefits
Equity Settled
Long Term Benefits
Key
Management
Personnel
Salary
& Fees
Move’t in
AL
balance
Total
Salary
& Fees
Bonus
Non-
Cash
Shares Options
Other
Total
Post
Employ’t
benefits
B Lynch
D O’Neill
170,785
P Crawford
282,648
A Buckler (1)
72,000
J Brown
72,000
317,945
31,255
349,200
140,000
-
20,000
12,050
30,205
-
551,455
170,785
282,648
72,000
72,000
14,215
17,352
185,000
300,000
72,000
72,000
915,378
31,255
946,633
140,000
-
20,000
12,050
61,772
- 1,180,455
38
REMUNERATION REPORT
2019
Short term benefits
Key
Management
Personnel
B Lynch
D O'Neill
P Crawford
A Buckler (1)
J Brown
Salary
& Fees
-
273,972
273,972
75,000
75,000
697,944
Bonus
Non-
Cash
Benefits
-
-
-
-
-
-
-
-
-
-
-
-
Equity
Settled
Options
Post-
employment
benefits
Long
term
benefits
Total
-
-
-
-
-
-
-
26,028
26,028
-
-
52,056
-
-
-
-
-
-
-
300,000
300,000
75,000
75,000
750,000
(1) Represents payments made to Shazo Holdings Pty Ltd, an entity controlled by Mr Allan Buckler,
to provide directorial and technical services.
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.
SHARES ISSUED AS REMUNERATION
The following shares were granted as remuneration to KMP during the current year. KMP may hold
other shares acquired in their capacity as shareholders:
• Mr B Lynch received 2,000,000 ordinary shares on 29 November 2019, valued at $0.01 each.
OPTIONS GRANTED AS REMUNERATION
The following options were granted as remuneration to KMP during the current year. KMP may hold
other options acquired in their capacity as shareholders.
Grant Details
Exercised
Lapsed
KMP
Balance
1 July 2019
Issued
Date
No.
No.
Value
$
No.
Balance
30 June 2020
Value
$
Note 1
B Lynch
B Lynch
-
-
29.09.19 2,000,000
29.09.19 2,000,000
5,296
6,754
-
-
-
-
-
-
2,000,000
2,000,000
Note 1 The fair value of options granted as remuneration and shown in the table above has been
determined in accordance with Australian Accounting Standards and will be recognised as an
expense over the relevant vesting period. The options have vested and are exercisable.
There have not been any alterations to the terms or conditions of the options since grant
date.
Sayona Mining Limited I Annual Report 2020 39
REMUNERATION REPORT
DESCRIPTION OF OPTIONS ISSUED AS REMUNERATION
Details of options granted by Sayona Mining Limited as remuneration to those KMP listed in the
previous table are as follows:
Grant Date
Entitlement on
Exercise
Dates
Exercisable
Exercise
Price
Value per
Option at
Grant Date
Amount
Paid/Payable
by Recipient
29.09.19
29.09.19
1:1 ordinary
share
1:1 ordinary
share
From vesting to
29.09.21
From vesting to
29.09.22
3.0 cents
0.2648 cents
4.0 cents
0.3377 cents
-
-
Option values at grant date were determined using the binomial valuation method. These are the
only remuneration options held by KMP.
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 2019
Remun-
eration
Exercise of
Options (*)
Other
Changes (**)
Balance
30 June 2020
B Lynch
D O'Neill
P Crawford
A Buckler
J Brown
-
2,000,000
86,593,477
98,440,535
97,924,530
3,187,463
-
-
-
-
Total
286,146,005
2,000,000
*Remuneration options and shareholder options
** Share trades and participation in share issues
OTHER EQUITY-RELATED KMP TRANSACTIONS
-
-
-
-
-
-
77,819,767
2,994,187
79,819,767
89,587,664
30,047,573
128,483,108
59,883,723
157,808,253
2,977,102
6,164,565
173,722,352
461,868,357
Options held by KMP in their capacity as shareholders at 30 June 2020:
B Lynch
D O’Neill
24,374,999 listed options and 18,534,885 unlisted options
625,000 listed options and 872,094 unlisted options
P Crawford
12,623,605 listed options and 2,325,581 unlisted options
A Buckler
J Brown
29,941,861 unlisted options
616,457 listed options and 872,094 unlisted options
There were no other transactions involving equity instruments apart from those described in the
tables above relating to options and shares.
40
REMUNERATION REPORT
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.
Brett Lynch
Managing Director
Paul Crawford
Director
Signed: 15 September 2020
Brisbane, Queensland
Sayona Mining Limited I Annual Report 2020 41
Auditor’s Independence Declaration
Under Section 307C of the Corporations Act 2001
To the Directors of Sayona Mining Limited
As lead auditor for the audit of Sayona Mining Limited I declare that, to the best of my knowledge
and belief, during the year ended 30 June 2020 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: 15 September 2020
42
FINANCIAL STATEMENTS 2020
CONTENTS
44
Statement of Profit and Loss
and Comprehensive Income
45
Statement of
Financial Position
46
Statement of
Changes in Equity
47
Statement of
Cash Flows
48
Notes to the
Financial Statements
76
Directors’
Declaration
77
Independent
Auditor’s Report
Sayona Mining Limited I Annual Report 2020 43
Sayona Mining Limited I Annual Report 2020 43 STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated Group
Note
2020
$
2019
$
Revenue and other income
2
60,429
124,098
Administrative expenses
Exploration expenditure expensed during year
Employee benefit expense
Foreign exchange losses
Loss before income tax
Tax expense
Loss for the year
(2,261,051)
(1,682,996)
(1,473,782)
(46,351)
(1,199,313)
(74,188)
(1,070,894)
(5,354)
3
4
(5,403,751)
(2,225,651)
-
-
(5,403,751)
(2,225,651)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
when specific conditions are met:
Exchange differences on translating foreign operations
(409,386)
642,979
Items that will not be reclassified subsequently to profit or loss
-
-
Other comprehensive income/(loss) for the year
(409,386)
642,979
Total comprehensive income or (loss) attributable to members
(5,813,137)
(1,582,672)
Earnings per Share:
Basic and diluted earnings per share (cents per share)
6
(0.26)
(0.13)
Dividends per share (cents per share)
-
-
The accompanying notes form part of these financial statements.
44
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2020
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
Right of Use Asset
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Lease Liability
Provisions
Total Current Liabilities
NON CURRENT LIABILITIES
Lease Liability
Consolidated Group
Note
2020
$
2019
$
8
9
10
11
12
13
14
13
15
492,660
228,361
38,864
759,885
1,822,133
272,933
91,775
2,186,841
151,720
21,193,106
85,733
21,430,559
144,083
19,877,399
-
20,021,482
22,190,444
22,208,323
894,189
37,540
61,429
993,158
945,906
-
38,846
984,752
13
51,558
-
-
Total Non-Current Liabilities
51,558
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
1,044,716
984,752
21,145,728
21,223,571
16
17
84,930,181
328,454
(64,112,907)
79,309,022
623,705
(58,709,156)
21,145,728
21,223,571
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2020 45
STATEMENT OF CHAMGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated Group
Share
Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserve
Option
Reserve
Total
$
$
$
$
$
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 in
their capacity as owners
-
-
-
-
-
- (2,225,651)
642,979
-
642,979
-
(2,225,651)
642,979
- (1,582,672)
Shares issued during the year
Transaction costs
Share based payments
16
23
133,555
(8,034)
-
Total transactions with owners
125,521
-
-
-
-
-
-
-
-
-
-
-
-
133,555
(8,034)
-
125,521
Balance at 30 June 2019
79,309,022
(58,709,156)
623,705
- 21,223,571
Loss attributable to members
of the entity
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners
-
-
(5,403,751)
-
- (5,403,751)
-
(409,386)
-
(409,386)
-
(5,403,751)
(409,386)
- (5,813,137)
Shares issued during the year
Transaction costs
Share based payments
16
23
5,999,379
(378,220)
-
Total transactions with owners
5,621,159
-
-
-
-
-
-
-
-
- 114,135
5,999,379
(378,220)
114,135
- 114,135
5,735,294
Balance at 30 June 2020
84,930,181
(64,112,907)
214,319 114,135 21,145,728
The accompanying notes form part of these financial statements.
46
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Government Subsidies
Interest received
Other income
Finance costs
Consolidated Group
Note
2020
$
2019
$
(2,846,654)
50,000
10,429
-
(790,130)
(2,717,552)
-
114,238
9,860
-
Net cash provided by (used in) operating activities
18
(3,576,355)
(2,593,454)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Capitalised exploration expenditure
11
12
(26,942)
(2,974,613)
(144,051)
(5,713,891)
Net cash provided by (used in) investing activities
(3,001,555)
(5,857,942)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Costs associated with share and option issues
Proceeds from convertible note facility
Repayment of convertible notes
Repayment of lease liabilities
16
5,262,655
(337,367)
1,102,538
(783,790)
(34,738)
16
(8,034)
-
-
-
Net cash provided by (used in) financing activities
5,209,298
(8,018)
Net increase (decrease) in cash held
(1,368,612)
(8,459,414)
Cash at beginning of financial year
1,822,133
10,275,738
Effect of exchange rates on cash holdings in foreign
currencies
39,139
5,809
Cash at end of financial year
8
492,660
1,822,133
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2020 47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Sayona Mining Limited "the
Company" and Controlled Entities (the “Consolidated Group” or “Group”).
The separate financial statements of the parent entity, Sayona Mining Limited, have not been
presented within this financial report as permitted by the Corporations Act 2001.
Financial information for Sayona Mining Limited as an individual entity is included in Note 26.
The financial statements have been authorised for issue as at the date of the Directors' Declaration.
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting
Standards Board and International Financial Reporting Standards as issued by the International
Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under
Australian Accounting Standards. Material accounting policies adopted in the preparation of these
financial statements are presented below and have been consistently applied unless stated
otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis
and are based on historical costs, modified, where applicable, by the measurement at fair value of
selected non-current assets, financial assets and financial liabilities.
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 2020 the Group had $1,193,834 (note 20(b)) of exploration commitments due within one
year, in addition to other ongoing corporate and operational expenditure. The Group will also need to
source new funds to proceed with the Authier Lithium Project and the North American Lithium bid.
Net current asset deficiency of the Group at balance date totals $233,272, and cash balance was
$492,660.
The ability of the Group to settle its liabilities and 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 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, borrowings, 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.
As set out in Note 24, since balance date the Group raised $2,650,000 of new capital, and entered
into a share placement arrangement for an initial amount of US $2,000,000. In addition, the Group
has a controlled placement agreement in place with standby capital of $3,000,000 (note 30).
The Directors have concluded that it is reasonable to adopt the going concern basis in preparation of
the financial statements on the basis of funds currently available to the Group, arrangements in place
to raise additional capital, arrangements for its Australian exploration projects, and options available
to fund its Canadian exploration projects.
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 the parent controls. The
parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. A list of the
subsidiaries is provided in Note 27.
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 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.
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. The members of the tax-consolidated Group are
identified in Note 26. 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 arrangement are currently in place between entities in the tax-consolidated Group.
Sayona Mining Limited I Annual Report 2020 49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property, Plant and Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment. In the event the carrying amount of plant and
equipment is greater than the estimated recoverable amount, the carrying amount is written down
immediately to the estimated recoverable amount and impairment losses are recognised in profit or
loss. 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.
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.
The term "Joint Operation" has been used to describe "farm-in" and "farm-out" arrangements.
Where the Group has entered into joint operation agreements on its areas of interest, the earn-in
contribution by the joint operation partner is offset against expenditure incurred. Earn-in contributions
paid, or expenditure commitments incurred by the Company to acquire a joint venture interest are
expensed when incurred up to the time an interest is acquired.
Restoration Costs
The Group currently has no obligation for any restoration costs in relation to discontinued operations,
nor is it currently liable for any future restoration costs in relation to current areas of interest.
Consequently, no provision for restoration has been deemed necessary.
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leases
At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease
present, a right-of-use asset and a corresponding lease liability is recognised by the Group where the
Group is a lessee. However, all contracts that are classified as short-term leases (lease with remaining
lease term of 12 months or less) and leases of low value assets are recognised as an operating
expense on a straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at
commencement date. The lease payments are discounted at the interest rate implicit in the lease. If
this rate cannot be readily determined, the Group uses the incremental borrowing rate.
Lease payments included in the measurement of the lease liability are as follows:
•
•
•
•
•
•
fixed lease payments less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or
rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options, if the lessee is reasonably certain to exercise the
options;
lease payments under extension options if lessee is reasonably certain to exercise the options;
and
payments of penalties for terminating the lease, if the lease term reflects the exercise of an
option to terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability as
mentioned above, any lease payments made at or before the commencement date as well as any
initial direct costs. The subsequent measurement of the right-of-use assets is at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset
whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects
that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the
useful life of the underlying asset.
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.
Sayona Mining Limited I Annual Report 2020 51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments
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.
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 of 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 the initial recogition.
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 derecognition of 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).
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are
presented in Australian dollars which is the parent entity’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-
end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income otherwise the exchange difference is recognised in the profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the
Group’s presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than
Australian dollars are recognised in other comprehensive income and included in the foreign
currency translation reserve in the statement of financial position. The cumulative amount of these
differences is reclassified into profit or loss in the period in which the operation is disposed of.
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee
benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12
months after the end of the annual reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short-term employee benefits are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled.
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.
Sayona Mining Limited I Annual Report 2020 53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be
settled wholly within 12 months after the end of the annual reporting period in which the employees
render the related service. Other long-term employee benefits are measured at the present value of
the expected future payments to be made to employees. Expected future payments incorporate
anticipated future wage and salary levels, durations of service and employee departures and are
discounted at rates determined by reference to market yields at the end of the reporting period on
government bonds that have maturity dates that approximate the terms of the obligations. Any
remeasurements for changes in assumptions of obligations for other long-term employee benefits are
recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in
its statement of financial position, except where the Group does not have an unconditional right to
defer settlement for at least 12 months after the end of the reporting period, in which case the
obligations are presented as current provisions.
Equity Settled Payments
The Group uses shares and options to settle liabilities. 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.
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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's only revenue is interest and sundry income items, recognised on an accrual basis.
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 taxation authority.
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 taxation authority 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 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 GST.
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.
Sayona Mining Limited I Annual Report 2020 55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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
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
continued 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 Adopted
The Group has adopted AASB 16 Leases retrospectively with the cumulative effect of initially applying
AASB 16 recognised at 1 July 2019. In accordance with AASB 16, the comparatives for the 2019
reporting period have not been restated.
The Group has recognized a lease liability and right-of-use asset for all leases (with the exception for
short term and low value leases) recognised as operating leases under AASB 117 Leases where the
Group is the lessee.
The lease liabilities are measured at the present value of the remaining lease payments. The Group’s
incremental borrowing rate at 1 July 2019 of 4.25% was used to discount the lease payments.
The right-of-use asset was measured and recognised in the Statement of Financial Position as at 1
July 2019 by taking into consideration the lease liability, pre-paid and accrued lease payments
previously recognised as at 1 July 2019 (that are related to the lease).
The following practical expedients have been used by the Group in applying AASB 16 for the first
time:
- Leases that have remaining lease term of less than 12 months as at 1 July 2019 have been
accounted for in the same way as short-term leases
- Not applying AASB 16 to leases previously not identified as containing a lease under AASB 117
and interpretation 4.
AASB 16 will apply to the Group's premises lease, which is currently on a short term month to month
basis (note 13).
A right-of-use asset and corresponding lease liability of $123,836 was recognised at 1 July 2019 in
the Statement of Financial Position. During the year ended 30 June 2020, depreciation on the right-of-
use asset of $38,103 and interest on the lease liability $4,862 were recognised in profit or loss. The
lease liability was reduced by $34,738 during the period.
NOTE 2: REVENUE AND OTHER INCOME
Interest received from unrelated parties
Government subsidies
Insurance refunds
Other income
Total revenue and other income
2020
$
2019
$
10,429
50,000
-
-
60,429
114,238
-
7,360
2,500
124,098
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 3: LOSS FOR THE YEAR
(i) Expenses:
Included in expenses are the following items:
Rental expense on operating lease
Foreign exchange loss
Depreciation and amortisation
(ii) Significant Revenue and Expenses
The following significant revenue and expense items are
relevant in explaining the financial performance:
Capitalised exploration & evaluation expenditure written-off
Exploration and evaluation expenditure expensed during the
year
Finance costs incurred in relation to a convertible securities
facility
NOTE 4: INCOME TAX EXPENSE
(a) The prima facie tax on loss from ordinary activities is
reconciled to the income tax as follows:
2020
$
2019
$
-
68,484
53,569
120,451
5,354
9,369
(1,545,618)
-
(137,378)
(74,188)
(785,268)
-
Prima facie tax payable on loss from ordinary activities before
income tax at 27.5% (2019: 27.5%).
(1,486,031)
(612,054)
Adjust for tax effect of:
Exploration expenditure capitalised
Other non-deductible costs (net)
Other non-assessable income
Tax losses and temporary differences not brought to account
(151,289)
530,186
(13,750)
1,120,884
(166,935)
(350,531)
-
1,129,520
Income tax expense attributable to entity
-
-
Weighted average effective tax rate (nil due to tax losses)
0.00%
0.00%
(b) Deferred tax assets and liabilities not brought to account,
the net benefit of which will only be realised if the conditions
for deductibility set out in Note 1 occur:
Temporary differences
Tax losses - Revenue
Tax losses - Capital
Net unbooked deferred tax asset
(337,507)
5,973,041
5,613,671
11,249,205
(619,807)
5,181,442
6,175,038
10,736,673
The Group has unconfirmed carry forward losses for revenue of $23,621,838 (2019: $18,942,527)
and for capital of $22,454,683 (2019: $22,454,683). Deferred tax assets and liabilities are stated at tax
rates expected to apply when the relevant items are realised. Prior year carry forward revenue losses
have been revised in the current year to agree to amended tax returns due for lodgement.
The tax benefits will only be obtained if the conditions in Note 1 are satisfied; the economic entity
derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the losses to be realised and if the economic entity continues to comply with the
conditions for deductibility imposed by the relevant tax legislation.
Sayona Mining Limited I Annual Report 2020 57
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020.
(a) The names of key management personnel of the Group who have held office during the financial
year are:
Key Management Personnel
Brett Lynch
Dennis O’Neill
Paul Crawford
Allan Buckler
James Brown
Position
Managing Director/CEO
Director - Non-Executive
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
2020
$
1,086,633
61,772
-
32,050
1,180,455
2019
$
697,944
52,056
-
-
750,000
These amounts include salary, fees and paid leave benefits paid to the directors, or their related
entities (Note 19).
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 options, 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
2020
$
2019
$
2,054,565,673
-
1,718,318,957
-
2,054,565,673
1,718,318,957
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.
58
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
2020
$
2019
$
48,000
-
37,000
-
48,000
37,000
442,660
50,000
772,005
1,050,128
492,660
1,822,133
The effective interest rate on short-term bank deposits was 0.75% (2019: 1.75%). These deposits
have an average maturity of 365 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
NOTE 9: TRADE AND OTHER RECEIVABLES
Current (unsecured):
Other Debtors
2020
2019
$
492,660
$
1,822,133
228,361
272,933
228,361
272,933
Other debtors includes $158,079 (2019: $271,273) 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
NOTE 11: PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
2020
$
2019
$
2,238
36,626
2,281
89,494
38,864
91,775
194,855
(43,135)
172,701
(28,618)
Total plant and equipment
151,720
144,083
Sayona Mining Limited I Annual Report 2020 59
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 11: PLANT AND EQUIPMENT (continued)
Reconciliation of the carrying amounts for property, plant and
equipment:
Balance at the beginning of year
Additions
Depreciation expense
Foreign currency translation
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)
2020
$
2019
$
144,083
26,942
(15,466)
(3,839)
5,518
144,051
(9,369)
3,883
151,720
144,083
2020
$
2019
$
17,839,978
3,353,128
19,111,142
766,257
21,193,106
19,877,399
(a) Movement in exploration and evaluation expenditure:
Non-Joint Operation
Opening balance - at cost
Capitalised exploration and evaluation expenditure
Transfer from joint operations
Capitalised exploration expenditure written-off
Foreign currency translation movement
Carrying amount at end of year
19,111,142
2,534,017
(1,849,946)
(1,545,618)
(409,617)
12,712,550
4,609,557
1,096,431
-
692,604
17,839,978
19,111,142
(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
766,257
767,192
1,849,946
(30,267)
606,637
1,237,873
(1,096,431)
18,178
3,353,128
766,257
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 $1,385,539 (2019:
$4,164,921) on the Authier Lithium project in Canada. A further $1,915,670 (2019: $1,680,581) has
been expended on existing and new projects. Of that total, $309,345 (2018: $133,540) was settled by
issue of 30,217,160 (2019: 7,042,079) ordinary shares in the company.
Commitments in respect of exploration projects are set out in Note 20. In addition, the Group has
options on projects as set out in Note 25.
60
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 13: RIGHT-OF-USE-ASSETS & LEASE LIABILITY
The Group has a lease of premises with possible expiry in 2022. Lease payments are subject to
annual adjustments, and there is an option to extend.
Right-of-use assets
Leased Building
Accumulated Depreciation
Movement in carrying amounts:
Recognised on initial application of AASB 16 (previously
classified as operating leases under AASB 117)
Depreciation Expense
Net Carrying Amount
Lease Liability
- Current
-Non Current
Depreciation charge related to right-of-use assets
Interest Expense on Lease Liabilities
Total Yearly cash outflows for leases
NOTE 14: TRADE AND OTHER PAYABLES
Current (unsecured):
Trade creditors
Sundry creditors and accrued expenses
Total trade and other payables
2020
$
123,836
(38,103)
85,733
123,836
(38,103)
85,733
37,540
51,558
89,098
38,103
4,862
39,600
2020
$
2019
$
642,963
251,226
710,287
235,619
894,189
945,906
Financial liabilities at amortised cost classified as trade and
other payables:
Financial liabilities as trade and other liabilities (refer Note 21)
894,189
945,906
NOTE 15: PROVISIONS
Current:
Provision for employee entitlements
Opening balance
Additional provisions
Amounts used
Balance at year end
61,429
38,846
61,981
(39,398)
61,429
38,846
47,811
48,056
(57,021)
38,846
Sayona Mining Limited I Annual Report 2020 61
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: ISSUED CAPITAL
2020
$
2019
$
Fully paid ordinary shares
84,930,181
79,309,022
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:
23 August 2019, new issue of shares at $0.0086 per share
were issued under the Share Placement Program.
23 August 2019, new issue of shares at $0.0086 per share
were issued as a Management Placement.
29 October 2019, new issue of shares at $0.00 per share were
issued to Acuity Capital.
29 November 2019, new issue of shares at $0.0086 per share
were issued as a Director Placement.
29 November 2019, new issue of shares at $0.01 per share
were issued to the Group CEO.
30 November 2019, new issue of shares at $0.01 per share
were issued to the Canadian CEO.
30 December 2019, new issue of shares at $0.01 per share
were issued to the Pikogan native title holders.
14 January 2020, new issue of shares at $0.021 per share
issued to Obsidian Global GP.
15 January 2020, new issue of shares at $0.0099 per share
following conversion of convertible notes
8 April 2020, new issue of shares at $0.0126 per share in
settlement of tenement acquisition
21 April 2020, new issue of shares at $0.078 per share
following a conversion of options.
No.
No.
1,722,574,344 1,715,532,065
7,042,279
83,295,471
43,927,651
95,000,000
93,023,259
2,000,000
2,000,000
27,500,000
40,000,000
32,333,962
2,717,160
6,749
29 April 2020, new issue of shares at $0.008 per share were
issued under an entitlement offer.
324,580,104
Balance at reporting date
2,468,958,700 1,722,574,344
Share issues on 29 October and 14 January relate to "collateral" for finance facilities - refer Note 30.
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.
62
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: ISSUED CAPITAL (continued)
Options on issue are as follows:
(i) Unlisted employee and officer options
Balance at beginning of reporting period
Granted (Note 23)
Exercised
Expired
Balance at reporting date
Employee incentive options issued in the period were
approved at the Company's Annual General Meeting in
November 2019, with key terms:
- 4,000,000 options expiring 2 years after grant date, each
option to acquire ordinary shares at $0.03
- 4,000,000 options expiring 3 years after grant date, each
option to acquire 1 ordinary share at $0.04
All options have vested.
The options have been valued at $0.003 each, with $24,100
recognised in the reserves and charged to profit & loss.
(ii) Listed options
Balance at beginning of reporting period
Granted
Exercised
Expired
Balance at reporting date
On 29 April 2020, 182,716,433 options were granted to
shareholders as part of a capital raise. These options are
exercisable at $0.02 each and expire on 29 April 2023.
Unexercised listed options issued in a prior year, exercisable
at $0.078 each expired on 30 April 2020.
(iii) Other Unlisted options
Balance at beginning of reporting period
Granted during the period
Exercised during the period
Expired during the period
Balance at reporting date
Balance at reporting date
2020
$
2019
$
-
8,000,000
-
-
8,000,000
-
-
-
-
-
120,242,589
182,716,433
(6,749)
(120,235,840)
182,716,433
120,242,789
-
(200)
-
120,242,589
-
114,992,301
-
-
-
114,992,301
-
-
-
-
-
-
Unlisted options issued during the year consisted of 110,123,160 options relating to shares
subscribed for under a Share Placement Plan offer and Management/Director placement.
One free option was issued for each 2 shares subscribed, each option is exercisable at $0.03 to
acquire 1 ordinary share with all options expiring in July 2022.
No value is ascribed to unlisted shareholder options for accounting purposes.
In addition, 4,869,141 unlisted options were issued to Jett Capital Advisors LLC for services
provided.
Each option is exercisable at $0.012 and expires 17 February 2023.
Sayona Mining Limited I Annual Report 2020 63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 16: ISSUED CAPITAL (continued)
The options have been valued at $0.010 each, with $49,182 recognised in the reserves and charged
to profit & loss.
Capital management policy
Exploration companies such as Sayona Mining are funded by share capital during exploration and a
combination of share capital and borrowings as they move into the development and operating
phases of their business life.
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio,
generate long-term shareholder value and ensure that the Group can fund its operations and
continue as a going concern. The Group’s debt and capital include ordinary share capital and
financial liabilities, supported by financial assets.
In the current year, capital management strategy has included the use of collateral shares and
convertible notes.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market.
There are no externally imposed capital requirements.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year.
NOTE 17: RESERVES
Foreign currency translation reserve
The foreign currency translation reserve recorded exchange differences arising on translation of a
foreign controlled subsidiary.
Options reserve
The options reserve records amounts recognised as expenses on valuation of employee share
options.
NOTE 18: CASH FLOW INFORMATION
Note
2020
$
2019
$
(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/amortisation
Share based payments – corporate costs
Share based payments - remuneration
Write-off capitalised exploration expenditure
Changes in operating assets and liabilities:
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in other assets
(Decrease)/Increase in creditors and accruals
(Decrease)/Increase in provisions
Cash flows from operations
3
(5,403,751)
(2,225,651)
53,569
49,182
64,100
1,545,618
101,239
53,941
(46,520)
6,267
(3,576,355)
9,369
-
-
-
232,078
90,128
(689,937)
(9,441)
(2,593,454)
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 18: CASH FLOW INFORMATION (confirmation)
(b) Non-cash Financing and Investing Activities
Issue of 95,000,000 shares to Acuity Capital, with nil value on 29 October 2019, for services
provided.
Issue of 4,000,000 shares and 8,000,000 unlisted options as remuneration to executives of the
Company approved by shareholders on 29 November 2020.
Issue of 27,500,000 shares to The Council of the First Nation Abitibiwinni (Pikogan), native title
holders, on 20 December 2019 as settlement for enabling works during the exploration phase to
proceed.
Issue of 32,333,962 shares to Obsidian Global GP, on exercise of convertible notes.
Issue of 2,717,160 shares issued to Exiro Mineral Corporation, in settlement of tenement acquisition
on 8 April 2020.
Grant of 20,426,423 listed options to Mahe Capital Pty Ltd on 29 April 2020, for services provided.
In the prior year a total of 7,042,279 shares were issued in settlement of tenement acquisitions.
(c) Changes in liabilities from financing activities
Balance
1 July 2019
Application
of AASB 16
Cash
Flows
Non-cash
movements
Balance
30 June 2020
Convertible Notes (Note 30)
Lease liabilities
Total
-
-
-
-
318,748
(318,748)
-
123,836
(34,738)
-
123,836
284,010
(318,748)
89,098
89,098
NOTE 19: RELATED PARTY TRANSACTIONS
(a) The Group's main related parties are as follows:
Key Management Personnel:
Any persons having authority and responsibility for planning, directing and controlling the activities
of the Group, directly or indirectly, including any director (whether executive or non-executive) of the
Group, are considered key management personnel (see Note 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
$72,000 were incurred during the year (2019:$75,000). $11,150 was owed by the company at 30
June (2019: Nil).
Included in payables (Note 14) is $227,555 remuneration payable to other directors.
Sayona Mining Limited I Annual Report 2020 65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 20: COMMITMENTS
(a) Operating lease commitments
Non-cancellable operating leases contracted for but not
recognised in the financial statements:
Not later than 1 year
Between 1 year and 5 years
Total commitment
2020
$
2019
$
-
-
-
3,579
-
3,579
In addition to the above, the Group has a month to month lease for office premises which has now
been assessed as being a Right of Use Asset (note 13).
(c) 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
2020
$
1,193,834
997,271
2,191,105
2019
$
1,521,794
1,105,871
2,627,665
Under the earn-in agreement with Altura Mining (Note 25), exploration amounts paid will be applied
to meet some of the above exploration commitments.
The Group has submitted a bid for the assets of North American Lithium Inc. (NAL) with the Court
appointed Monitor. Details are provided in the Review of Operations section of the Directors’ Report.
A successful bid for NAL would result in additional financial commitments to the Group. It is not
possible to quantify any commitment at this time.
NOTE 21: FINANCIAL RISK MANAGEMENT
The Group’s financial instruments mainly comprises cash balances, receivables and payables. The
main purpose of these financial instruments is to provide finance for group operations.
The totals for each category of financial instruments, measured in accordance with AASB 139:
Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these
financial statements are detailed in the table outlining financial instruments composition and
maturity analysis in part (b) 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.
66
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
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 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.
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
2020
Financial assets
Cash and cash equivalents (i)
Receivables (ii)
Financial liabilities
Payables (ii)
Lease Liability (iii)
Net cash flow on financial instruments
2019
Financial assets
Cash and cash equivalents (i)
Receivables (ii)
1 year or
less
$
1 to 2
years
$
More than
2 years
Total
$
$
492,660
228,361
721,021
894,189
37,540
931,729
(210,708)
1 year or
less
$
1,822,133
272,933
2,095,066
-
-
-
-
-
-
-
-
40,930
40,930
(40,930)
10,628
10,628
(10,628)
492,660
228,361
721,021
894,189
89,098
983,287
(262,266)
1 to 2
years
$
More than
2 years
$
Total
$
-
-
-
-
-
-
1,822,133
272,933
2,095,066
Sayona Mining Limited I Annual Report 2020 67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
Financial liabilities
Payables (ii)
Net cash flow on financial instruments
945,906
945,906
1,149,160
-
-
-
-
-
-
945,906
945,906
1,149,160
(i) Floating interest with a weighted average effective interest rate of 0.75% (2019: 1.75%).
(ii) Non-interest bearing.
(iii)
Incremental borrowing rate 4.25%
(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.
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
CAD
2020
183,856
151,355
(465,709)
USD
2020
3,877
-
-
(130,498)
3,877
CAD
2019
98,892
262,606
(630,649)
(269,151)
USD
2019
4,503
-
-
4,503
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
(d) Sensitivity analysis
If the spot Australian Dollar rate strengthened/weakened by 5 percent against the US Dollar, with all
other variables held constant, the Group's post-tax result for the year would have been $194 +/-
(2019: $238).
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
$11,525 +/- (2019: $13,457).
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 +/- $4,927 (2019: $18,221).
(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 22: CONTINGENT LIABILITIES
There were no material contingent liabilities at the end of the reporting period.
NOTE 23: SHARE BASED PAYMENTS
Options
The following options were issued during the year.
On 29 November 2020, 4,000,000 unlisted options were issued to Brett Lynch as part of his
remuneration.
On 29 November 2020, 4,000,000 unlisted options were issued to an employee as part of his
remuneration.
On 17 February 2020, 4,869,141 unlisted options to Jett Capital Advisors LLC for services provided.
On 29 April 2020, 20,426,423 listed options to Mahe Capital Pty Ltd for services provided.
2020
2019
Options issued are summarised as:
Outstanding at beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at period end
Number of
Options
No
-
33,295,564
-
-
-
33,295,564
Weighted
Average
Exercise
Price
$
Number
of
Options
Weighted
Average
Exercise Price
No
$
-
0.022
-
-
-
0.022
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercisable and vested at year end
33,295,564
0.022
Sayona Mining Limited I Annual Report 2020 69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23: SHARE BASED PAYMENTS (continued)
Shares
On 29 October 2019, 95,000,000 new shares were issued as part of a funding facility.
On 29 November 2020, 4,000,000 new shares were issued as remuneration to executives of the
Company.
On 20 December 2019, 27,500,000 new shares were issued under an agreement.
On 14 January 2019, 40,000,000 new shares were issued as part of a funding facility.
On 8 April 2020, 2,717,160 new shares were issued in settlement of tenement acquisition.
Other than where indicated otherwise, the value of the shares issued was determined by reference
to market price.
NOTE 24: EVENTS AFTER BALANCE DATE
Key events since the end of the financial year have been:
On 15 July 2020 the Company announced it had entered into a formal agreement with Obsidian
Global GP, LLC, for the early close out of the convertible securities funding facility. All amounts
drawn under the facility were either converted to shares or repaid.
On 22 July 2020, the Company issued 331,250,000 new shares at an issue price of $0.008 each,
and 187,625,016 free attaching options to parties, representing the shortfall from the renounceable
entitlement offer undertaken in April 2020 together with an additional placement. Options have the
same conditions as those granted under the entitlement offer. Total funds raised were $2,650,000.
On 6 August 2020, the Company announced the expansion of its Tansim Lithium Project, with the
acquisition of an additional 39 claims spanning 2,234 hectares. Subsidiary company, Sayona
Quebec Inc. holds 100% interest in the tenements.
On 7 August 2020, the Company issued 3,437,500 new shares at an issue price of $0.008 each, and
1,718,750 free attaching options to an advisor in settlement of services provided.
In March 2020, the World Health Organisation declared the outbreak of a novel coronavirus (COVID-
19) as a pandemic, which continued to spread throughout Australia and the World. The spread of
COVID-19 has caused significant volatility in Australian and international markets. There is
significant uncertainty around the breadth and duration of business disruptions related to COVID-
19, as well as its impact on Australian and international economies.
The Group’s core business is mineral exploration and development in Australia and Canada. To the
date of this report the Group has not experienced any significant adverse impact. Government
directives and travel restrictions, primarily in Quebec, have limited the Group’s ability to undertake
some activity. The situation has eased significantly recently and operations are returning to normal.
The Directors are actively monitoring the Group’s financial condition, operations and workforce.
Although the Group cannot estimate the length or gravity of the impacts of these events at this time,
if the pandemic continues beyond the short-term or worsens, then this may have an adverse effect
on the Group’s results of future operations, financial position and liquidity in the financial year 2021.
On 7 September 2020, the Company entered into a Share Placement Agreement with Battery
Metals Capital Group, LLC. The agreement provides for a placement of ordinary shares worth up to
US$2 million (AUD$2.73m), with an initial investment of US$585,000 for placement shares worth
US$635,000 and a second investment of US$1,415,000 for shares worth US$1,545,000, subject to
shareholder approval.
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 24: EVENTS AFTER BALANCE DATE (continued)
In addition, the Company has the option to receive an additional investment of US$2,000,000 for
placement shares worth US$2,180,000 at each of the six month, 12 month and 18 month
anniversaries of the date of the second investment. The Company is under no obligation to draw
down these additional investments.
There have been no other key events since the end of the financial year.
NOTE 25 JOINT ARRANGEMENTS
The Group has entered into joint arrangements with the following parties. Joint arrangements are in
the form of options to acquire mineral tenements (refer Note 12).
Sayona Lithium Pty Ltd
The Group holds an 80% interest in the Western Australian mineral tenement E59/2092 (Mt Edon) at
30 June 2020. Under the agreement, the vendor is entitled to receive a 1% gross production royalty
and is entitled to explore for and develop other non-lithium commodity within the Tenement during
the option period.
During the period, the Group entered an "Earn-In" Agreement with lithium producer Altura Mining
Limited (ASX:AJM). Altura is to spend $1.5m on exploration within three years to earn a 51% stake
in the Company's Australian tenements.
Sayona Quebec Inc.
On 18 January 2018, the Company entered into an acquisition agreement with Matamec
Explorations Inc in relation to a number of mineral claims in Quebec. The acquisition includes the
staged payments of cash and exploration commitments, and net smelter royalty payable to
Matamec should Sayona achieve 100% ownership.
At 30 June 2020, the Company held a 50% interest in the property (Tansim project).
Sayona can then earn 100% interest in the property by completing the milestones in the timeframes
outlined below:
Investing CAD$200k in exploration and pay CAD$100k in cash to Matamec within the first 12
months; and
Investing CAD$350k in exploration and pay CAD$250k in cash to Matamec within 12 and 24 months
of signing.
All conditions have been met other than the payment of CAD$250,000 in cash which will be paid by
December 2020.
On 28 February 2019, the Company expanded the Tansim project with the acquisition of the Lac
Simard lithium prospect. Under the agreement the vendor retains a 2% net smelter return royalty.
Sayona Mining Limited I Annual Report 2020 71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 26: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Sayona Mining Limited. This information has
been prepared using consistent accounting policies as presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Contributed equity
Option Reserve
Accumulated losses
Total equity
Statement of Profit or Loss and Other Comprehensive Income
Total loss for the year
Total other comprehensive income
Total comprehensive loss for the year
Guarantees
There are no parent company guarantees.
Contingent Liabilities
2020
$
2019
$
409,530
21,283,366
1,750,503
19,819,743
21,692,896
21,570,246
495,610
51.558
337,710
-
547,168
337,710
21,145,728
21,232,536
84,930,181
114,135
(63,898,588)
79,309,022
-
(58,076,486)
21,145,728
21,232,536
5,822,102
-
5,822,102
-
-
-
There are no material contingent liabilities at the end of the reporting period.
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.
Sayona East Kimberley Pty Ltd, incorporated in Australia on 18 June 2015. The parent entity holds
100% of the ordinary shares of the entity.
Sayona International Pty Ltd, incorporated in Australia on 29 April 2016. The parent entity holds
100% of the ordinary shares of the entity.
Sayona Quebec Inc, incorporated in Canada on 7 July 2016. The parent entity holds 100% of the
ordinary shares of the entity.
These subsidiaries have share capital consisting solely of ordinary shares which are held directly by
the Group.
72
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 27: INTERESTS IN SUBSIDIARIES
There are no significant restrictions over the Group's ability to access or use assets and settle
liabilities of the Group.
Each subsidiary's principal place of business is also its country of incorporation, and year ends
coincide with the parent company.
NOTE 28: 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
2020
$
2019
2020
$
$
2019
$
2020
$
2019
$
54,866
112,405
5,563
11,693
60,429
124,098
54,866
112,405
5,563
11,693
60,429
124,098
(5,057,425)
-
(504,925) (346,326)
-
-
(1,720,726) (5,403,751) (2,225,651)
-
-
-
(5,057,425) (2,197,589) (346,326)
(130,874) (5,403,751)
(2,225,651)
REVENUE
Revenue
Total revenue from
ordinary activities
RESULT
Profit/(loss) from ordinary
activities before income
tax expense
Income tax expense
Profit/(loss) from ordinary
activities after income tax
expense
ASSETS
Australia
Overseas
2020
$
2019
$
2020
$
2019
$
Consolidated Group
2020
2019
$
$
Segment assets
2,345,992 5,000,144 19,844,452 17,208,179 22,190,444 22,208,323
LIABILITIES
Segment liabilities
550,521
341,931
494,194
642,821
1,044,715
984,752
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 29: 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.
Sayona Mining Limited I Annual Report 2020 73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30: SHARE ISSUES FOR FINANCE FACILITIES
Controlled Placement Agreement
During the financial year, the Company entered into a Controlled Placement Agreement and issued
95,000,000 shares as collateral. These collateral shares were issued for nil consideration and are
similar to treasury shares.
Under the Agreement, the Group has standby equity capital of up to $3m over the period 31
January 2022. The Group controls all aspects of any such placement under the Agreement. The
collateral shares are cancellable at any time by the Group for no consideration. The collateral
shares may be applied by the Group to meet any share issues under the Agreement when
subscription monies are received. The Company receives 90% of subscription monies with the
remaining 10% retained by the subscriber.
Convertible Note Facility
During the financial year, the Company established a finance facility of $2,750,000 with an initial
tranche of $1,000,000 drawn down in the form of convertible notes.
Key features of the facility were:
-
-
-
-
-
-
-
each note was priced at US$1.00 with a face value of US $1.10;
the notes are interest free, but fees/charges are payable;
the facility term is cancellable at any time and the initial tranche of notes had a 90 day term;
the facility was secured by the issue of 40,000,000 ordinary shares;
conversion of the initial tranche of notes was based on a VWAP formula or a fixed price of
$0.015;
conversion of the notes is at discretion of the note holder;
redemption of the notes is at the discretion of the Company, or otherwise at expiry date.
Movements in the convertible note facility were as follows:
Opening Balance
Initial tranche (January 2020)
Conversion into 32,333,962 ordinary shares (January 2020)
Redemption (May 2020)
Closing Balance
Number
$
-
-
691,400
(200,000)
(491,400)
1,102,593
(318,748)
(783,790)
-
-
The entire facility was then terminated. The collateral shares were applied as follows:
Opening Balance
Issued
Sold on termination of the facility
Closing Balance
Number
-
40,000,000
(40,000,000)
-
The collateral shares were valued on issue at market value ($840,000), and on termination of the
facility the proceeds were paid to the Company, less agreed fees and charges paid to the financier for
provision of the facility.
74
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30: SHARE ISSUES FOR FINANCE FACILITIES (continued)
Total finance costs of the facility:
Fees and charges
Proceeds of collateral shares paid to financier
Total
$
185,268
600,000
785,268
The convertible notes were accounted for on issue date as a liability on the basis that the
conversion to shares is a variable number based on share price and foreign exchange rate.
NOTE 31: COMPANY DETAILS
The registered office and principal place of business is:
Sayona Mining Limited
Unit 68
283 Given Terrace
Paddington Queensland 4064
Sayona Mining Limited I Annual Report 2020 75
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 applicable to the Company 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 2020 and of the performance of
the consolidated Group for the year ended on that date.
2.
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable; and
3. The Directors have been given the declaration of 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.
Brett Lynch
Managing Director
Paul Crawford
Director
Dated this: 15th day of September 2020
76
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 2020, 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 2020 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.
Key audit matters
Key audit matters are those matters that, in our professional judge ment, 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.
Sayona Mining Limited I Annual Report 2020 77
Independent Auditor’s Report to the Members of Sayona Mining Limited
(continued)
Key audit matter
Carrying value of exploration and
evaluation assets
Refer to note 12 (exploration and
evaluation assets)
and
As at 30 June 2020 the carrying value of
is
exploration
$21,193,106. The Group’s accounting policy in
respect of exploration and evaluation assets is
outlined in Note 1.
evaluation
assets
This is a key audit matter as this is a significant
asset of the Group, and due to the fact that
significant judgement is applied in determining
whether
the capitalized exploration and
evaluation assets meet the recognition criteria
set out in AASB 6 Exploration for and
Evaluation of Mineral Resources.
Preparation of financial statements on a
going concern basis
Refer to note 1 Continued Operations
and Future Funding
activities
exploration
As at 30 June 2020 the ability of the Group to
settle its liabilities and execute its currently
planned
requires
additional funds. On the basis of various
arrangements currently in place to raise
additional capital, and for the Australian
exploration projects, and options available to
fund the Canadian exploration projects, the
going concern basis has been adopted in
preparing the financial statements.
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.
Our procedures included, amongst others:
• We evaluated management’s assessment of
the Group’s ability to continue as a going
concern;
• We reviewed the Group’s cash flow forecast,
including checking the mathematical accuracy,
agreed it to be the latest Board approved
forecast, and tested the key assumptions used
in the forecast;
• We performed sensitivity analysis on the cash
flow forecast;
• we evaluated the adequacy of the disclosures
made in the financial statements in relation to
going concern.
This is a key audit matter as the availability of
funds is critical to the continuity of business,
and the carrying value and classification of
assets and
financial
statements.
liabilities
the
in
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78
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 2020, 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 responsib le 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 Limited I Annual Report 2020 79
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, actions
taken to eliminate threats or safeguards applied.
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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80
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 36 to 41 of the Directors’ Report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of Sayona Mining Limited for the year ended 30 June 2020
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: 15 September 2020
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Sayona Mining Limited I Annual Report 2020 81
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 1 September, 2020.
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
TOTAL
219
273
341
1,869
1,936
4,638
Option Holders
(Number)
17
56
40
123
206
442
The number of shareholdings held in less than marketable parcels is 2102.
Twenty Largest Holders - Ordinary Shares
Number of
Shares Held
% of Total
Issued Capital
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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