TIDMSO4
RNS Number : 6519N
Salt Lake Potash Limited
01 October 2021
30 September 2021 AIM/ASX Code: SO4
SALT LAKE POTASH LIMITED
Full Year Statutory Accounts 2021
-----------------------------------
AIM and ASX listed company Salt Lake Potash Limited ("SO4" or
the "Company"), announces its results for the year ended 30 June
2021.
The Company's Full Year Statutory Accounts can be viewed at
www.so4.com.au .
The Company also advises that an Appendix 4G (Key to
Disclosures: Corporate Governance Council Principles and
Recommendations) and the 2020 Corporate Governance Statement have
been released today and are also available on the Company's
website.
The Company's securities remain suspended on the ASX pending
completion of a material fundraising. The Company's securities will
continue to trade on AIM during this period. The Company also
announces that it has paid the first instalment for the purchase of
Denver flotation cells ordered from Westpro to replace the existing
flotation cells
Further announcements will be made as the fundraising
progresses.
For further information please visit www.so4.com.au or
contact:
Tony Swiericzuk/Richard Knights Salt Lake Potash Limited Tel: +61 8 6559 5800
Colin Aaronson/Seamus Fricker Grant Thornton UK LLP (Nominated Adviser) Tel: +44 (0) 20 7383 5100
Derrick Lee/Peter Lynch Cenkos Securities plc (Joint Broker) Tel: +44 (0) 131 220 6939
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
OPERATING AND FINANCIAL REVIEW
During 2021 SO4's primary activities related to the development
of the Lake Way project in the Goldfields district of Western
Australia.
On-Lake Operations
The Company expanded its on-lake operations with total trench
length extended to 75 km and 29 active bores pumping brine at the
date of this report. Salt harvesting commenced in the Train 1
harvest cells in December-February 2021 and recommenced in the June
2021 quarter to prepare harvest salts for plant feed. At the end of
the period 96k m(3) of salt had been harvested.
Off-Lake Operations
Construction of the Process Plant at Lake Way continued
throughout the period, with practical completion achieved in the
June quarter with GR Engineering Services handing over the plant to
the SO4 operations team. Towards the period end and into the
September quarter commissioning activities were focused on the
calibration of the flotation circuit to achieve the designed waste
mass pull.
Approvals
The Company's Part IV Environmental submission was approved by
the Government in April, having been recommended by the EPA with no
appeals in January 2021. The permit has enabled SO4 to finalise
construction of the remaining evaporation ponds as well as the
trench and bore construction that will support full scale
operations at Lake Way.
Corporate
Equity Financing
The Company conducted six separate equity capital raisings in
the year to June 2021.
-- August 2020: $71m placement at $0.50/share to institutional and high net worth investors.
-- August - September 2020: $15m on conversion of convertible notes at $0.45/share.
-- September 2020: $27.5m from a retail entitlement offer at $0.50/share.
-- December 2020: $52m placement at $0.40/share to institutional and high net worth investors.
-- February 2021: $8m from a share purchase plan at $0.40/share.
-- June 2021: $27m placement at $0.35/share to institutional and high net worth investors.
Debt Financing
In addition to equity finance, the Company drew down on a
US$138m Syndicated Facility Agreement over two tranches. These
funds were used to repay the US$45m Bridge Facility and to further
the completion of the Lake Way Project construction.
Sustainability
SO4 is committed to ensure that its business has a sustainable
future for all of its stakeholders. The Company is driven by our
core values to create positive multi-generational benefits through
responsible environmental, social, cultural and economic
behaviours. SO4 is currently developing a sustainability framework
for its operations.
Results of Operations
The net loss of the Consolidated Entity for the year ended 30
June 2021 was $5.310m (2020: net loss of $15.681m). This loss is
mainly attributable to:
(i) Exploration and evaluation expenses of $2.495m (2020:
$12.554m) which is attributable to the Group's accounting policy of
expensing exploration and pre-development expenditure incurred by
the Group subsequent to the acquisition of the rights to explore
and up to the successful completion of bankable feasibility studies
(BFS) for each separate area of interest. The Lake Way BFS was
released to market in October 2019 and, as such, Exploration and
Evaluation expenditure fell significantly in the 2021 Financial
Year as the predominant focus of the Company was on completing the
development of the Lake Way Project;
(ii) Corporate and administrative expenses of $4.914m (2020:
$3.574m) attributable to the administration of the Company and its
operations, as well as corporate expenses including the Company's
dual listing on ASX and AIM together with investor relations
activities. The Group's administrative expenses have increased in
2021 to support the rapidly progressing development activities at
Lake Way;
(iii) Non-cash share-based payment expenses of $0.618m (2020:
$6.505m) which are attributable to the Group's accounting policy of
expensing the value (estimated using an option pricing model, and
performance rights valued using the underlying share price) of
Incentive Securities issued to key employees and consultants. The
value is measured at grant date and recognised over the period
during which the option/rights holders become unconditionally
entitled to the options and/or rights;
(iv) Business development expenses of $4.007m (2020: $4.713m)
which are attributable to additional activities required to support
the growth and development of the Lake Way Project including
indirect project funding costs and offtake activities;
(v) An impairment of inventories of stockpiled salts of $5.120m
(2020: nil) due to a reassessment during plant commissioning of
potassium grade thresholds for feedstocks. As a consequence of this
reassessment the value of stockpiled salts not meeting this
criterion, though previously recognised as inventory, have been
written down to nil;
(vi) A gain of $4.039m (2020: $nil) due to a remeasurement of
the amortised cost of the royalty liability. This reflects changes
to the mine plan during the year which delayed the timing of
revenue receipts from sales of potash; and
(vii) Foreign exchange gain on US dollar denominated loans and
cash balances of $5.723m (2020: $1.187m).
Impact of COVID-19
These financial results were incurred during the COVID-19
pandemic. In order to minimise any financial or operational impact,
the Company took immediate action to protect the integrity of the
Company's business interests and the safety and well-being of its
employees and stakeholders.
Salt Lake operates in the isolated and remote mining area of
Wiluna and fortunately, with the positive protection measures and
support of governments and employees, the Lake Way Project
continued to function close to normal levels. Prompt implementation
and affirmative compliance with government and health bodies'
regulations and recommendations forced quick changes to operational
processes, including strict social distancing and isolation
practices. The demographics and location of our remote workforce
also required changes to rosters and transport to comply with
Government restrictions. The closure of borders required immediate
action to manage the impact on the outputs, inputs, employees and
communities that Salt Lake operates in.
To protect the local community the Company applied restrictions
on staff entering the town of Wiluna and local communities. The
Company also provided additional support to local communities by
providing fresh food at a time when the normal supply chain for
goods into Wiluna was under pressure from the impact of
COVID-19.
Social and mental health issues are a potential outcome from the
roster changes, changed travel and dining arrangements and enhanced
hygiene practices introduced to manage the impact of COVID-19. Salt
Lake has taken a considerate approach to the hidden consequences of
such changes and continues to work with its employees to lessen the
impact. The over-arching objective of the Company has been to keep
all its employees and stakeholders safe and free from infection
and/or spread, and importantly to keep people employed during these
uncertain times.
Due to the concerted and quick action of the Company, the
overall financial impact of COVID-19 has been minimal.
Financial Position
At 30 June 2021, the Group had cash reserves of $69.441m (2020:
$7.030m) and net assets of $251.896m (2020: $60.127m), an increase
of 319% compared with the previous year. The increase in net assets
is largely a result of raising $202.148m) throughout the 12 month
period and directly applying those funds to the construction and
ongoing development of the Lake Way Project.
Business Strategies and Prospects for Future Financial Years
The objective of the Group is to create long-term shareholder
value through the exploitation of its SOP projects. To achieve its
objective, the Group currently has the following business
strategies and prospects:
(i) Complete construction of the on-lake infrastructure and
process plant for the Lake Way Project with a view to first
production during the March 2022 quarter;
(ii) Complete first sales of product to key offtake partners to
receive first revenues during 2022 ;
(iii) Progress to capacity of 217,000t per annum of SOP at Lake
Way during 2024, this is dependent on the economics of processing
muriate of potash (MOP); and
(iv) Continue assessment and exploration across the Company's multi lake portfolio.
All of these activities have inherent risks and the Board is
unable to provide certainty of the expected results or timing of
these activities, or that any or all of these likely activities
will be achieved. The material business risks faced by the Group
that could have an effect on the Group's future prospects, and how
the Group manages these risks, include:
Development Risks -The capital expenditures and time required to
develop new mines are considerable and changes in cost or
construction schedules can significantly increase both the time and
capital required to build the mine;
Operational risks - The planned schedule for production of
harvest salts for the commissioning and ramp up of the process
plant are subject to operational risks that could impact the amount
of harvest salts produced at its SOP operations, delay availability
of harvest salts or increase the cost of production for varying
lengths of time. Such risks include changes or variations in
hydrogeological conditions, weather conditions effecting
evaporation and/or recharge, equipment failures, limited
availability or increased costs of equipment and materials, safety
accidents, natural disasters, and a shortage of skilled labour. If
any of these or other conditions or events occur in the future,
they may increase the cost of production or delay or halt planned
commissioning, ramp up and production, which could adversely affect
our results of operations or decrease the value of our assets. The
Group has in place a framework for the management of operational
risks and an insurance program which provides coverage for a number
of these operational risks.
Sulphate of Potash prices and foreign exchange - The price of
potash and other commodities fluctuate and are affected by numerous
factors beyond the control of the Company. The economic viability
of the Group is dependent upon the price of potash and other
commodities being sufficient to cover the costs of production and
to provide an adequate return to the Company's shareholders. The
Company has engaged with potential customers with a view to
establishing binding offtake or distribution or tolling
agreements.
Project financing facilities with the Group's lenders are
denominated in US dollars whilst many of the planned development
and operational activities are denominated in Australian dollars.
The Company's ability to fund these activities may be adversely
affected if the Australian dollar rises against the US dollar.
The Company's activities will require further capital - The
development of the Company's projects will require additional
funding. There can be no assurance that additional capital or other
types of financing will be available if needed or that, if
available, the terms of such financing will be favourable to the
Company.
Native title and Aboriginal Heritage - There are areas of the
Company's projects, including Lake Way, over which legitimate
common law and/or statutory Native Title rights of Aboriginal
Australians exist. Where Native Title rights do exist, the Company
must obtain consent of the relevant landowner to progress the
exploration, development and mining phases of its operations. Where
there is an Aboriginal Site for the purposes of the Aboriginal
Heritage Act 1972, the Company must obtain consents in accordance
with the Act. The Company has executed a Native Title Land Access
Agreement with the Native Title Owners and established a framework
for obtaining required consents for the continuity of works, but in
the event that it is unable to obtain these consents, its
activities may be adversely affected.
The Company's activities are subject to Government regulations
and approvals - The development of the Lake Way Project is subject
to obtaining further key approvals from relevant government
authorities. The Company has an approvals schedule and a management
team with significant experience in approvals required for resource
projects in Western Australia. A delay or failure to obtain
required permits may affect the Company's schedule or ability to
develop the project.
Any material adverse changes in government policies or
legislation in Western Australia and Australia that affect mining,
processing, development and mineral exploration activities, income
tax laws, royalty regulations, government subsidies and
environmental issues may affect the viability and profitability of
any planned development of the Lake Way Project and other lakes in
the Company's portfolio. No assurance can be given that new rules
and regulations will not be enacted or that existing rules and
regulations will not be applied in a manner which could adversely
impact the Group's mineral properties; and
Global financial conditions may adversely affect the Company's
growth and profitability - Many industries, including the mineral
resource industry, are impacted by these market conditions. Some of
the key impacts of the current financial market turmoil caused by
the COVID-19 pandemic include contraction in credit markets
resulting in a widening of credit risk, devaluations and high
volatility in global equity, commodity and foreign exchange
markets, and a lack of market liquidity. Due to the current nature
of the Company's activities, a slowdown in the financial markets or
other economic conditions may adversely affect the Company's growth
and ability to finance its activities. If these increased levels of
volatility and market turmoil continue, the Company's activities
could be adversely impacted and the trading price of the Company's
shares could be adversely affected.
EARNINGS PER SHARE
2021 2020
Cents Cents
---------------------------------- ------- -------
Basic and diluted loss per share (0.84) (5.46)
---------------------------------- ------- -------
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In addition to equity and debt funding noted above, significant
changes in the state of affairs of the Consolidated Entity during
the 2021 financial year were as follows:
(i) Harvesting of potassium rich kainite and schoenite salts
from Train 1 commenced during the March 2021 quarter.
(ii) The Company announced on 22 March 2021 commencement of
commissioning of the Lake Way Process Plant and completion of the
gas supply pipeline for the Lake Way Project.
(iii) Part IV Environmental Approval was received from the
Government of Western Australia in April 2021 allowing finalisation
of the construction of pond trains 4-6 and associated trenches and
bore installations.
(iv) The Practical Completion certificate for the Lake Way
Process Plant (Plant) was received from the construction contractor
in June 2021 with Plant handover to the SO4 operations team
completed.
SIGNIFICANT EVENTS AFTER BALANCE DATE
i) The Company issued 2,805,000 shares to Directors on 10 August
2021 as part of a placement on 24 May 2021. The shares applied for
in the placement by Directors were subject to shareholder approval
which was granted on 13 July 2021.
ii) Mr Stuart Fraser was appointed as CFO on 15 July 2021.
iii) Mr Tony Swiericzuk resigned as CEO & Managing Director
on 27 August 2021. He remains on the Board as an executive
director.
iv) Mr Bruce Franzen was appointed as Company Secretary on 12 August 2021.
v) In July 2021 the Company announced a revised ramp up strategy
that includes suspension of the initial plant feed program to
enable more salts to precipitate before commencing continuous
harvesting activities. SO4 also announced that, as a result of this
delay in production, the Company will require further funding
before the end of 2021 to continue operations at Lake Way.
vi) Mr Isak Buitendag was appointed as CEO on 13 September 2021.
vii) As at the date of signing this report the Company was in
the process of raising further capital via a share placement and
rights issue planned to be completed in October/ November 2021.
Other than as noted above, as at the date of this report there
are no matters or circumstances which have arisen since 30 June
2021 that have significantly affected or may significantly
affect:
-- The operations, in financial years subsequent to 30 June 2021, of the Consolidated Entity;
-- The results of those operations, in financial years
subsequent to 30 June 2021, of the Consolidated Entity; or
-- The state of affairs, in financial years subsequent to 30
June 2021, of the Consolidated Entity.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year
consisted of the exploration and development of resource projects.
No significant change in nature of these activities occurred during
the year.
DIRECTORS
The names of the Group's Directors in office at any time during
the financial year or since the end of the financial year are:
Current Directors
Mr Ian Middlemas Chairman
Mr Tony Swiericzuk Executive Director
Mr Matthew Bungey Non-Executive Director
Mr Philip Montgomery Non-Executive Director (appointed 19 October 2020)
Mr Peter Thomas Non-Executive Director (appointed 19 October 2020)
Ms Rebecca Morgan Non-Executive Director (appointed 21 June 2021)
Mr Bryn Jones Non-Executive Director (resigned 4 May 2021)
Mr Mark Pearce Non-Executive Director (resigned 19 October 2020)
Unless otherwise stated, Directors held their office from 1 July
2020 until the date of this report.
DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the
Australian Institute of Company Directors and holds a Bachelor of
Commerce degree. He worked for a large international Chartered
Accounting firm before joining the Normandy Mining Group where he
was a senior group executive for approximately 10 years. He has had
extensive corporate and management experience and is currently a
Director with a number of publicly listed companies in the
resources sector.
Mr Middlemas was appointed a Director of the Company on 21
January 2010 and Chairman on 29 August 2014. During the three year
period to the end of the financial year, Mr Middlemas has held
directorships in Constellation Resources Limited (November 2017 -
present), Apollo Minerals Limited (July 2016 - present), Paringa
Resources Limited (October 2013 - present), Berkeley Energia
Limited (April 2012 - present), Prairie Mining Limited (August 2011
- present), Equatorial Resources Limited (November 2009 - present),
Piedmont Lithium Limited (September 2009 - present), Sovereign
Metals Limited (July 2006 - present), Odyssey Energy Limited
(September 2005 - present) and Cradle Resources Limited (May 2016 -
July 2019).
Mr Tony Swiericzuk BEng (Hons), MBA, GAICD
Executive Director (resigned as CEO & Managing Director 27
August 2021 though remains on the Board as an Executive
Director)
Mr Swiericzuk is a Mining Engineer with outstanding credentials
as a builder and operator of mining projects, having recently been
General Manager of the Fortescue Christmas Creek Mine from 2012 to
2017. He oversaw the construction, commissioning and ramp-up of
this project from 15Mtpa to 60Mtpa in his initial 2 year period,
then proceeded to optimise the operation and help drive Fortescue
Metals Group Limited (FMG) to become the world's lowest cost iron
ore producer.
In his initial years at FMG Mr Swiericzuk was General Manager
Port Operations in Port Hedland and managed the ramp up of port
operations from 20Mtpa to 60Mtpa from 2009 to 2011.
Mr Swiericzuk was appointed a Director of the Company on 5
November 2018. Mr Swiericzuk has not held any other Directorships
in the three year period up until the end of this financial
year.
Mr Matthew Bungey B.Chem Eng (Hons), B. Sci, MBA
Non-Executive Director
Mr Bungey is a Chemical Engineer with over 20 years experience
in natural resources. He commenced his career as a Process Engineer
with BHP at Centre for Minerals Technology in the United States
where he was responsible for process design and research into
bacterial leaching of copper-sulphide ore. He then spent several
years in the Marketing Division of BHP Billiton based in The Hague.
Mr Bungey was most recently a Managing Director and Head of Mining
and Metals with Barclays Investment Bank in London.
Mr Bungey was appointed Non-Executive Director of the Company on
14 May 2020 and has not held any other Directorships in the three
year period up until the end of this financial year.
Mr Philip Montgomery BSc
Non-Executive Director (appointed 19 October 2020)
Mr Montgomery is a highly experienced mining industry executive
who was most recently Vice President - Projects at BHP, responsible
for the development of BHP's Potash business through its Jansen
project in Saskatchewan, Canada. Mr. Montgomery previously held
senior project development positions at BHP and Billiton for over
20 years working across a number of commodities and geographies,
including leadership of BHP's Iron Ore growth program (2002-12). He
holds a BSc (Mechanical Engineering) from Oxford Brookes University
in the UK and completed the Executive Leadership Programme at
INSEAD. Mr Montgomery has not held any other Directorships in the
three year period up until the end of this financial year.
Mr Peter Thomas BEc, BSc, MBA
Non-Executive Director (appointed 19 October 2020)
Mr Thomas is a senior executive with significant experience in
project operations, construction, finance and strategy. Mr Thomas
held senior executive positions at Fortescue Metals Group between
2004-2014, including Project Director in charge of the $4.7bn T155
port and rail infrastructure investment and Director of Corporate
Services. He has previously worked for McKinsey and Lehman Brothers
in the USA and more recently held the position of CEO of the Balla
Balla Infrastructure Group (Todd Corporation). He is currently
Executive Director and CFO of Decmil, the ASX listed construction
and engineering group. Mr Thomas holds an MBA from Harvard Business
School and a BEc, BSc from Macquarie University. Mr Thomas has not
held any other Directorships in the three year period up until the
end of this financial year.
Ms Rebecca Morgan BAppSc (Hons), ME
Non-Executive Director (appointed 22 June 2021)
Ms Morgan is an experienced mining professional having worked in
senior technical and executive functions across a number of
companies, commodities and jurisdictions over a 20 year career. Ms
Morgan is currently a Non-Executive Director of Peak Resources
(ASX:PEK), the Raw Materials Manager at Minbos Resources (ASX:MIN)
and a director of REESearch technical consultancy. She has
previously held roles as Non-Executive Technical Director for
Koppar Resources (ASX:KRX), a Director of Calyx Resources
(unlisted), Acting Chief Geologist at First Quantum Minerals in
Panama and General Manager Technical Services and Acting Mine
Manager for Tiger Resources in the DRC. Ms Morgan holds a Master of
Engineering Science (Majoring in Mineral Economics and Mine
Optimisation), a Post Graduate Diploma in Mine Engineering, and a
Bachelor of Science (Hons) Applied Geology, all from Curtin
University. Ms Morgan has not held any other Directorships in the
three year period up until the end of this financial year.
Mr Bryn Jones BAppSc, FAusIMM
Non-Executive Director (resigned 4 May 2021)
Mr Jones is a Chemical Engineer with over 20 years management
experience in industrial processing in commercial and mining
operations around the world, including potash and phosphate
projects.
During the three year period to the date of his resignation, Mr
Jones has held directorships in DevEx Resources Limited (September
2009 - present) and Phosenergy Limited (July 2013 - present).
Mr Mark Pearce B.Bus, CA, FCIS, FFin
Non-Executive Director (resigned 19 October 2020)
Mr Pearce is a Chartered Accountant and is currently a director
of several listed companies that operate in the resources sector.
He has had considerable experience in the formation and development
of listed resource companies. Mr Pearce is also a Fellow of the
Institute of Chartered Secretaries and Administrators and a Fellow
of the Financial Services Institute of Australasia.
During the three year period to the end of the financial year,
Mr Pearce has held directorships in Apollo Minerals Limited (July
2016 - present), Constellation Resources Limited (July 2016 -
present), Prairie Mining Limited (August 2011 - present),
Equatorial Resources Limited (November 2009 - present), Sovereign
Metals Limited (July 2006 - present), Odyssey Energy Limited
(September 2005 - September 2020) and Piedmont Lithium
Limited (September 2009 - August 2018).
Mr Isak Buitendag
Chief Executive Officer (appointed 13 September 2021)
Mr Buitendag will be joining from his position as General
Manager of Transformation at Kazzinc (69.7% owned by Glencore).
Prior to Kazzinc, he was Vice President of Operations and Vice
President of Development at Kazchrome, the largest ferrochrome
producer in the world. Mr Buitendag has significant experience in
Executive roles within the mining industry in Australia, Kazakhstan
and Africa, including at BHP and Fortescue. In an Executive
capacity he has led teams in project development and minerals
processing and has a track record of delivering business
turnarounds.
Mr Stuart Fraser CA
Chief Financial Officer (appointed 15 July 2021)
Mr Fraser is a Chartered Accountant and an experienced energy
services finance executive with over 25 years experience in senior
finance roles with large multi-national corporations, including
Schlumberger and Weatherford International.
Mr Bruce Franzen B.Bus. FCPA FFIN
Company Secretary (appointed 12 August 2021)
Mr Franzen is a Certified Practicing Accountant with over 30
years experience in the resources sector and has held executive,
board and company secretarial positions with a number of ASX listed
companies.
Mr Matthew Worner
Company Secretary (appointed 28 April 2021, resigned 12 August
2021)
Mr Worner is a former lawyer, with broad company secretarial
experience. He has held management, company secretarial and board
positions with various ASX and AIM listed companies
Mr Clint McGhie B.Com, CA, ACIS, FFin
Company Secretary (resigned 28 April 2021)
Mr McGhie is an experienced Chartered Accountant and Company
Secretary and has been involved with a number of ASX and AIM listed
companies operating in the resources sector, including Apollo
Minerals Limited, Berkeley Energia Limited and Sovereign Metals
Limited. Mr McGhie is an Associate Member of the Governance
Institute of Australia (Chartered Secretary), and a Fellow of the
Financial Services Institute of Australasia.
Mr Shaun Day B.Com. CA, AICD
Chief Financial Officer (resigned 18 December 2020)
Mr Day is a Chartered Accountant and experienced CFO with over
20 years of experience in executive and financial positions across
mining and infrastructure, investment banking and international
accounting firms. Mr Day was previously CFO of Northern Star
Resources.
DIRECTORS' INTERESTS
As at the date of this report, the Directors' interests in the
securities of the Company are as follows:
Interest in securities at the date of this report
Ordinary Shares(1) Unlisted Options (2) Performance Rights (3)
----------------------- ------------------- --------------------- -----------------------
Mr Ian Middlemas(4) 22,500,000 - -
Mr Tony Swiericzuk(4) 5,454,470 5,000,000 5,879,377
Mr Matthew Bungey 2,014,075 450,000 750,000
Mr Philip Montgomery 1,250,000 500,000 -
Mr Peter Thomas (4) 300,000 500,000 -
Ms Rebecca Morgan(5) - 500,000 -
----------------------- ------------------- --------------------- -----------------------
Notes:
(1) Ordinary Shares means fully paid Ordinary Shares in the capital of the Company.
(2) Unlisted Options means an unlisted share option to subscribe
for one Ordinary Share in the capital of the Company.
(3) Performance Rights means Performance Rights issued by the
Company that convert to one Ordinary Share in the capital of the
Company upon satisfaction of various performance conditions.
(4) The following shares were issued to Directors on 10 August
2021 as part of a placement on 31 May 2021. These shares are
included in the totals above.
Mr Ian Middlemass 2,500,000 shares
Mr Tony Swiericzuk 250,000 shares
Mr Peter Thomas 55,000 shares
The issue of the above shares to Directors was subject to
shareholder approval which was granted on 13 July 2021.
(5) The issue of 500,000 options to Rebecca Morgan approved by
the board on 21 June 2021 are subject to shareholder approval,
which will be sought at the Company's 2021 Annual General Meeting
or earlier if a general meeting of shareholders is held before
then.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group's operations are subject to various environmental laws
and regulations under the relevant government's legislation. Full
compliance with these laws and regulations is regarded as a minimum
standard for all operations to achieve.
Instances of environmental non-compliance by an operation are
identified either by external compliance audits or inspections by
relevant government authorities.
There have been no significant known breaches by the Group
during the financial year.
DIVIDS
No dividends were paid or declared since the start of the
financial year. No recommendation for payment of dividends has been
made.
SHARE OPTIONS, PERFORMANCE SHARES AND PERFORMANCE RIGHTS
At the date of this report the following options, performance
shares and convertible notes have been issued over unissued
Ordinary Shares of the Company:
-- 9,375,000 Unlisted Options exercisable at $0.85 each on or before 30 June 2023;
-- 2,400,000 Unlisted Options exercisable at $0.60 each on or before 1 November 2023;
-- 5,250,000 Unlisted Options exercisable at $1.00 each on or before 1 November 2023;
-- 5,000,000 Unlisted Options exercisable at $1.20 each on or before 1 November 2023;
-- 1,000,000 Unlisted Options exercisable at $0.702 each on or before 30 June 2023;
-- 9,000,000 Unlisted Options exercisable at $0.702 each on or before 4 August 2024;
-- 15,000,000 Unlisted Options exercisable at $0.564 each on or before 28 September 2024;
-- 200,000 Unlisted Options exercisable at $0.50 each on or before 1 July 2024;
-- 300,000 Unlisted Options exercisable at $0.75 each on or before 1 July 2024;
-- 13,831,255 Performance Rights which are subject to various
performance conditions to be satisfied prior to the relevant expiry
dates in the period to1 November 2023; and
-- 7,500,000 Performance Rights issued to the CEO on 13
September 2021, being his date of appointment. The rights are
subject to various performance conditions to be satisfied prior to
the relevant expiry dates in the period up to 31 December 2022.
During the year ended 30 June 2021, 1,190,398 Ordinary Shares
were issued as a result of the conversion of Performance Rights and
no Ordinary Shares were issued as a result of the conversion of
Options. Subsequent to year end and until the date of this report,
no Ordinary Shares have been issued as a result of the exercise of
Options or conversion of Performance Rights.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 30 JUNE 2021
30 June Restated
2021 30 June
2020
Notes $'000s $'000s
--------------------------------------- ------ -------- ---------
Other income 3(a) 172 332
Research and development rebate - 4,460
Exploration and evaluation expenses (2,495) (12,554)
Pre-Development expenses - (13,017)
Corporate and administrative expenses (5,099) (3,574)
Business development expenses (4,007) (4,713)
Impairment of inventories 8 (5,120) -
Unrealised/realised foreign exchange
gain 5,722 1,187
Remeasurement of amortised cost 4,039 -
of royalty liability
Other - (11)
Finance costs (12) (943)
Share based payment expense 3(d) (433) (6,505)
--------------------------------------- ------ -------- ---------
Loss before tax (7,233) (35,338)
Income tax benefit 4 1,923 19,657
--------------------------------------- ------ -------- ---------
Total comprehensive loss for the
year (5,310) (15,681)
--------------------------------------- ------ -------- ---------
Basic and diluted loss per share
attributable to the ordinary equity
holders of the company (cents per
share) 21 (0.84) (5.46)
The above Consolidated Statement of Profit or Loss and other
Comprehensive Income should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 30 JUNE 2021
Restated Restated
30 June 30 June 1 July
2021 2020 2019
$'000s $'000s $'000s
ASSETS
Current Assets
Cash and cash equivalents 5 69,441 7,030 19,304
Trade and other receivables 6 1,986 4,032 923
Security deposits 7 17,632 - -
Prepaid transaction costs - 1,565 1,478
Inventory 8 - 1,535 -
------------------------------- --- ---------- ---------- ----------
Total Current Assets 89,059 14,162 21,705
Non-Current Assets
Security deposits 7 15,076 76 -
Plant and equipment 9 4,724 3,402 763
Right of use assets 10 42,218 5,617 -
Exploration and evaluation
expenditure 11 2,277 2,277 2,277
Mine development 12 346,010 124,773 -
Deferred tax assets 4 25,847 21,057 -
Total Non-Current Assets 436,152 157,202 3,040
------------------------------- --- ---------- ---------- ----------
TOTAL ASSETS 525,211 171,364 24,745
LIABILITIES
Current Liabilities
Trade and other payables 13 19,882 28,178 7,717
Interest bearing loans 14 14,550 56,074 -
Lease liabilities 15 2,694 1,332 12
Royalty liabilities 16 450 139 -
Provisions 17 1,079 671 79
Total Current Liabilities 38,655 86,394 7,808
------------------------------- --- ---------- ---------- ----------
Non-Current Liabilities
Other payables - 5 12
Interest bearing loans 14 162,468 - -
Lease liabilities 15 39,032 4,421 27
Royalty liabilities 16 26,860 16,580 -
Provisions 17 6,300 3,837 712
------------------------------- --- ---------- ---------- ----------
Total Non-Current Liabilities 234,660 24,843 751
------------------------------- --- ---------- ---------- ----------
TOTAL LIABILITIES 273,315 111,237 8,559
------------------------------- --- ---------- ---------- ----------
NET ASSETS 251,896 60,127 16,186
=============================== === ========== ========== ==========
EQUITY
Contributed equity 18 405,077 209,612 155,918
Reserves 19 12,896 11,282 5,751
Accumulated losses (166,077) (160,767) (145,483)
------------------------------- --- ---------- ---------- ----------
TOTAL EQUITY 251,896 60,127 16,186
=============================== === ========== ========== ==========
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2021
Share- Based Payment
Contributed Equity Reserve Accumulated Losses Total Equity
------------------------------
$'000s $'000s $'000s $'000s
------------------------------ ------------------- ----------------------------- ------------------- -------------
Balance at 1 July 2020 - as
previously reported 209,612 10,606 (160,696) 59,522
Prior period adjustment -
Refer Note 1(c) - 676 (71) 605
------------------------------ ------------------- ----------------------------- ------------------- -------------
Restated balance at 1 July
2020 209,612 11,282 (160,767) 60,127
Net loss for the year - - (5,310) (5,310)
Total comprehensive loss for
the year - - (5,310) (5,310)
Shares issued from placements 185,547 - - 185,547
Shares issued in connection
to conversion of performance
rights 789 (548) - 241
Shares issued in lieu of fees 812 - - 812
Shares issued in connection
to conversion of convertible
note 15,000 - - 15,000
Performance rights expired - (2,272) - (2,272)
Share issue costs (9,551) - - (9,551)
Deferred tax asset recognised
in equity 2,868 - - 2,868
Share based payment expense - 4,434 - 4,434
------------------------------ ------------------- ----------------------------- ------------------- -------------
Balance at 30 June 2021 405,077 12,896 (166,077) 251,896
============================== =================== ============================= =================== =============
Balance at 1 July 2019 as
previously reported 155,918 4,274 (145,483) 14,709
Prior period adjustment -
Refer Note 1(c) - 1,478 - 1,478
Restated balance at 1 July
2019 155,918 5,752 (145,483) 16,187
Net loss for the year as
previously stated - - (15,610) (15,610)
Prior period adjustment -
Refer Note 1(c) - - (71) (71)
Total comprehensive loss for
the year - - (15,681) (15,681)
Shares issued from placements 50,891 - - 50,891
Shares issued on exercise of
options 142 (142) - -
Shares issued in connection
to conversion of performance
rights 2,600 (2,600) - -
Shares issued to employees 431 - - 431
Shares issued in lieu of fees 12 - - 12
Incentive options expired - (152) 152 -
Performance rights expired - (245) 245 -
Share issue costs (1,781) - - (1,781)
Deferred tax asset recognised
in equity 1,399 - - 1,399
Options issued as transaction
cost for the interest
bearing loan - 3,411 - 3,411
Share based payment expense - 5,258 - 5,258
Balance at 30 June 2020 209,612 11,282 (160,767) 60,127
============================== =================== ============================= =================== =============
The above Consolidated Statement of Changes in Equity should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2021
30 June 30 June
2021 2020
Notes $'000s $'000s
------------------------------------------------------------ ------ ---------- -----------
Cash flows from operating activities
Payments to suppliers and employees (15,797) (39,555)
R&D tax incentive received 3,547 913
Interest received 111 168
Interest paid (23) (19)
Government grants received - 170
Payment for security deposits - (76)
Net cash outflow from operating activities 20 (12,162) ( 38,399 )
------------------------------------------------------------ ------ ---------- -----------
Cash flows from investing activities
Payment for security deposits (32,632) -
Payment for mine properties - (10,000)
Payments for plant and equipment (1,937) (2,375)
Proceeds from sale of assets - 35
Payments for mine development (198,834) (76,208)
Interest payment (8,497) -
Net cash outflow from investing activities (241,900) (88,548)
------------------------------------------------------------ ------ ---------- -----------
Cash flows from financing activities
Proceeds from issue of shares 185,104 50,891
Payment of transaction costs from issue of shares (9,109) (1,782)
Proceeds from issue of convertible notes 15,000 -
Receipt of borrowings 197,498 66,600
Transaction costs related to interest bearing loans (5,228) (982)
Repayment of borrowings (65,569) -
Principal portion of lease payments (1,647) (412)
Net cash inflow from financing activities 316,049 114,315
------------------------------------------------------------ ------ ---------- -----------
Net increase /(decrease) in cash and cash equivalents held 61,987 (12,632)
Cash and cash equivalents at the beginning of the year 7,030 19,304
Effect of exchange rate fluctuations on cash held 424 358
------------------------------------------------------------ ------ ---------- -----------
Cash and cash equivalents at the end of the year 5 69,441 7,030
------------------------------------------------------------ ------ ---------- -----------
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2020
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in preparing the
financial report of Salt Lake Potash Limited (Salt Lake or Company)
and its consolidated entities (Consolidated Entity or Group) for
the year ended 30 June 2021 are stated to assist in a general
understanding of the financial report.
Salt Lake is a company limited by shares incorporated and
domiciled in Australia whose shares are publicly traded on the
Australian Securities Exchange (ASX) and the AIM Market (AIM) of
the London Stock Exchange. The registered office is located at 239
Adelaide Terrace Perth WA 6000.
The financial report of the Group for the year ended 30 June
2021 was authorised for issue in accordance with a resolution of
the Directors on 30 September 2021.
(a) Basis of Preparation
The financial report is a general purpose financial report,
which has been prepared in accordance with Australian Accounting
Standards ("AASBs") and other authoritative pronouncements of the
Australian Accounting Standards Board ("AASB") and the Corporations
Act 2001. The Group is a for-profit entity for the purposes of
preparing the consolidated financial statements.
The financial report has been prepared on a historical cost
basis. The financial report is presented in Australian dollars.
Statement of compliance
The financial report complies with Australian Accounting
Standards and International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board.
Going concern
The consolidated financial statements have been prepared on a
going concern basis which assumes the continuity of normal business
activity and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
For the year ended 30 June 2021, the Group incurred a net loss
of $5.310m (2020: $15.681m), experienced net cash outflows from
operating and investing activities of $254.062m (2020: $126.947m)
and as at 30 June 2021 held cash and cash equivalents of $69.441m
(2020: $7.030m).
The Group is continuing to develop the Lake Way project, having
currently progressed to the commissioning phase, and has sufficient
funds to meet currently committed expenditure. However the period
of commissioning of the Lake Way Project is taking longer than
originally planned and this has resulted in a delay to the
commencement of product sales, and hence revenue receipts, which
has resulted in a funding shortfall for expenditure required in the
interim period. Product sales are now anticipated to commence in
the second half of FY22. To address the funding shortfall the Group
is in the process of raising further capital via a share placement
and rights issue planned to be completed in October/ November 2021.
The Directors are satisfied that the Group will be successful in
raising the planned additional funds and that the amount to be
raised will be adequate to fund the Group during the period up to
when revenue from product sales is sufficient to fund the Group's
operations.
However, should the Group require additional funds the Group has
demonstrated in the past that it can secure funding from multiple
sources. In addition, the Directors have been involved in a number
of recent successful capital raisings for the Group and for other
listed resource companies and are satisfied that they will be able
to raise the additional capital required to enable the Group to
meet its obligations as and when they fall due. Accordingly, the
Directors consider that it is appropriate to prepare the financial
statements on the going concern basis.
In the event that the Group is unable to achieve the matters
referred to above, uncertainty would exist that may cast doubt on
the ability of the Group to continue as a going concern.
These consolidated financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amounts, or to the amounts and classification of
liabilities that might be necessary should the Group be unable to
continue as a going concern.
Rounding
The financial report is presented in Australian dollars and all
values are rounded to the nearest thousand ($000), except when
otherwise indicated under the option available to the company under
ASIC Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191. The Company is an entity to which this
legislative instrument applies.
(b) New Accounting Standards Interpretations and amendments adopted by the Group
Since 1 July 2020, the Consolidated Entity has adopted all
Accounting Standards and Interpretations effective from 1 July
2020. Other than the changes described below, the accounting
policies adopted are consistent with those of the previous
financial year. The Consolidated Entity has not early adopted any
other standard, interpretation or amendment that has been issued
but is not yet effective.
Several new and amended Accounting Standards and Interpretations
applied for the first time from 1 July 2020. These did not have an
impact on the consolidated financial statements of the Consolidated
Entity.
AASB 3 Business Combinations
The amendment to IFRS 3 clarifies that to be considered a
business, an integrated set of activities and assets must include,
at a minimum, an input and a substantive process that together
significantly contribute to the ability to create output.
Furthermore, it clarified that a business can exist without
including all of the inputs and processes needed to create outputs.
These amendments had no impact on the consolidated financial
statements of the Group but may impact future periods should the
Group enter into any business combinations.
AASB 101 Presentation of Financial Statements and AASB 108
Accounting Polices, Changes in Accounting Estimate and Errors
The amendments provide a new definition of material that states
"information is material if omitting, misstating or obscuring it
could reasonably be expected to influence decisions that the
primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial
information about a specific reporting entity."
The amendments clarify that materiality will depend on the
nature or magnitude of information, either individually or in
combination with other information, in the context of the financial
statements. A misstatement of information is material if it could
reasonably be expected to influence decisions made by the primary
users. These amendments had no impact on the consolidated financial
statements of, nor is there expected to be any future impact to,
the Group.
Conceptual Framework for Financial Reporting
The Conceptual Framework is not a standard, and none of the
concepts contained therein override the concepts or requirements in
any standard. The purpose of the Conceptual Framework is to assist
the IASB in developing standards, to help preparers develop
consistent accounting policies where there is no applicable
standard in place and to assist all parties to understand and
interpret the standards.
The revised Conceptual Framework includes some new concepts,
provides updated definitions and recognition criteria for assets
and liabilities and clarifies some important concepts. These
amendments had no impact on the consolidated financial statements
of the Group.
(c) Prior Period Adjustments
Following a review of the mandate letter with Taurus Funds
Management ("Taurus") and the terms of the Bridge Facility
Agreement ("Bridge Facility") and the Syndicated Facility Agreement
("SFA") relating to the interest bearing loans (see note 14), the
Group has adjusted the accounting for royalty rights and options
granted as consideration for services rendered by Taurus in
establishing each loan facility which had been incorrectly
accounted for in prior periods.
The royalty rights, representing a contractual obligation to
make future cash payments, are financial liabilities which should
have been recognised on the signing of each facility agreement. In
this regard, the royalty rights relating to the Bridge Facility
(signed on 5 August 2019) were not recognised by the Group in the
prior year. The royalty rights have now been recognised and are
measured at fair value on initial recognition and are subsequently
carried at amortised cost ($16,719,511 at 30 June 2020). The Group
has used the forecast cash flows from its latest corporate model as
the basis for measuring the royalty obligation.
The options granted to Taurus under these arrangements are an
equity settled, share-based payment transaction. The value of the
services received should have been recognised as the services were
rendered over the mandate period. In prior periods, the options
were incorrectly recognised on signing the related facility
agreement. The Group has now recognised and measured the services
as they are received with reference to the fair value of the equity
instruments granted. In this regard, the fair value of the options
granted has been recalculated using a Binomial option pricing
model. The recalculation resulted in a cumulative adjustment to
share-based payments of $1,477,895 for the year ended 30 June 2019
and $675,850 for the year ended 30 June 2020.
In advance of the drawdowns under each facility agreement, costs
recognised in relation to the associated royalty rights and options
granted should have been deferred as a prepayment on the balance
sheet. On drawdown of each facility, an appropriate portion of the
prepaid transaction costs should have been reclassified such that
the loan was recognised net of transaction costs. This has resulted
in a cumulative adjustment to recognise prepayments of $1,477,895
at 30 June 2019 and $1,565,139 at 30 June 2020; and a cumulative
adjustment to reduce interest bearing liabilities by $ 7,766,571 at
30 June 2020 .
As a result of the restatement of loan balances in the prior
period and the recognition of the royalty rights in respect of the
Bridge Facility, the Group has retranslated the balances of these
financial liabilities at each reporting date using the closing
exchange rate.
Due to additional transaction costs being recognised on the
drawdowns under the Bridge Facility, the effective interest rate on
the loan was recalculated. Additional borrowing costs have been
capitalised to mine development costs in accordance with the
Group's stated accounting policy. This has resulted in a cumulative
adjustment to mine properties of $7,992,413 at 30 June 2020.
The restatements noted above had no significant current income
tax or net deferred tax consequences for the years ended 30 June
2019 or 30 June 2020.
The adjustments have been made by restating prior periods. The
impact of the adjustments on the financial statements is as
follows:
Cumulative impact on the Statements of Financial Position
30 June 30 June
2020 2019
$'000s $'000s
--------------------------------- --------- ---------
Current Assets
Increase in prepaid transaction
costs 1,565 1,478
Non-Current Assets
Increase in mine development 7,992 -
Current Liabilities
Increase in current royalty (139)
liabilities -
Non-Current Liabilities
Increase in non-current royalty (16,580)
liabilities -
Decrease in interest bearing 7,767
liabilities -
--------------------------------- --------- ---------
Net assets 605 1,478
--------------------------------- --------- ---------
Increase in share-based payment
reserve 676 1,478
Net increase in accumulated (71) -
loss
Total Equity 605 1,478
--------------------------------- --------- ---------
Impact on Statements of Profit or Loss and Other Comprehensive
Income
30 June 30 June
2020 2019
$'000s $'000s
Decrease in finance costs 53 -
Decrease in unrealised/realised (124) -
foreign exchange gain
Net increase in loss ( 71 ) -
-------------------------------- --------- ---------
Impact on basic and diluted earnings per share (cents per
share)
30 June 30 June
2020 2019
$ $
--------------------------- -------- --------
Increase in loss per share (0.02) -
--------------------------- -------- --------
The changes did not have any impact on the Statement of Cash
Flows.
(d) Principles of Consolidation
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of the Company as at 30 June 2021
and the results of all subsidiaries for the year then ended.
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the
entity.
The financial statements of the subsidiaries are prepared for
the same reporting period as the Company, using consistent
accounting policies.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Company. They are de-consolidated
from the date that control ceases. Intercompany transactions and
balances, income and expenses and profits and losses between Group
companies are eliminated.
(e) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less.
(f) Financial Assets
Financial assets are recognised when the entity becomes a party
to the contractual provisions to the instrument. Trade receivables
are initially recognised at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of
financial assets (other than financial assets at fair value through
profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the
acquisition of financial assets at fair value through profit or
loss are recognised immediately in profit or loss.
Classification and subsequent measurement of financial
assets
For the purpose of subsequent measurement, financial assets
other than those designated and effective as hedging instruments
are classified into the following categories upon initial
recognition:
-- Amortised cost
-- Fair value through profit or loss (FVPL)
-- Equity instruments at fair value through other comprehensive income (FVOCI)
-- Debt instruments at fair value through other comprehensive income
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within other income or
expenses respectively.
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of
the following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest rate (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
The Consolidated Entity's financial assets at amortised cost
include short term deposits and other receivables.
Impairment
The Group recognises an allowance for Expected Credit Loss (ECL)
for all debt instruments not held at fair value through profit or
loss. ECL is based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation
of the original EIR. An ECL is recognised in two stages. For credit
exposures for which there has not been a significant increase in
credit risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within the
next 12-months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For receivables due in less than 12 months, the Group will
recognise a loss allowance based on the financial asset's lifetime
ECL at each reporting date. The Group will establish a provision
matrix for these receivables that is based on its historical credit
loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment as sales from product
eventuate or significant receivables come to hand.
The Group considers a financial asset in default when
contractual payments are 60 days past due. In certain cases, the
Group may consider a financial asset to be in default when internal
or external information indicates that the Group is unlikely to
receive the outstanding contractual amounts in full before taking
into account any credit enhancements held by the Group. A financial
asset is written off when there is no reasonable expectation of
recovering the contractual cash flows and usually occurs when past
due for more than one year and not subject to enforcement
activity.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
(g) Inventory
Inventories are valued at the lower of cost or net realisable
value. Cost is determined primarily on the basis of average costs.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and cost
necessary to make the sale. The cost of raw materials, spare parts,
freight and indirect costs allocation is the purchase price. The
cost of partly processed and saleable products is generally the
cost of production including:
-- Labour costs, materials and contractor expenses which are
directly attributable to the extraction and processing of brine;
and
-- The depreciation of mining properties and leases of property
plant and equipment used in the extraction and processing of brine
and production of Sulphate of Potash and production overheads.
Brine inventory quantities are assessed primarily through
pumping and flow measurements together with grade from assays. If
the contained Sulphate of Potash calculated in the brine will not
be processed within 12 months after the balance sheet date, it is
included within non-current assets.
(h) Plant and Equipment
(i) Recognition and measurement
All classes of plant and equipment are measured at historical
cost.
Plant and equipment is stated at historical cost less
accumulated depreciation and any accumulated impairment losses.
Such cost includes the cost of replacing parts that are eligible
for capitalisation when the cost of replacing the parts is
incurred. Similarly, when each major inspection is performed, its
cost is recognised in the carrying amount of the plant and
equipment as a replacement only if it is eligible for
capitalisation. All other repairs and maintenance are recognised in
the Statement of Profit or Loss and other Comprehensive Income as
incurred.
(ii) Depreciation and Amortisation
Depreciation is provided on a straight-line basis on all plant
and equipment at rates varying from 10-50% (2020: 10-50%).
The assets' residual values, useful lives and amortisation
methods are reviewed, and adjusted if appropriate, at each
financial year end.
(iii) Derecognition
An item of plant and equipment is derecognised upon disposal or
when no further future economic benefits are expected from its use
or disposal.
(i) Exploration, Evaluation and Pre-Development Expenditure
Expenditure on exploration, evaluation and pre-development is
accounted for in accordance with the 'area of interest' method.
Exploration, evaluation and pre-development expenditure
encompasses expenditures incurred by the Group in connection with
the exploration for and evaluation of mineral resources and early
development activities before the technical feasibility and
commercial viability of extracting a mineral resource are
demonstrable.
For each area of interest expenditure incurred in the
acquisition of rights to explore is capitalised, classified as
tangible or intangible, and recognised as an exploration and
evaluation asset.
Exploration, evaluation and pre-development expenditure incurred
by the Group subsequent to acquisition of the rights to explore is
expensed as incurred, up to and including costs associated with the
preparation of a bankable feasibility study.
Impairment
Capitalised costs are reviewed each reporting date to establish
whether an indication of impairment exists. If any such indication
exists, the recoverable amount of the capitalised costs is
estimated to determine the extent of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount
of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development, any
acquired capitalised exploration expenditure is tested for
impairment and transferred to development properties and then
amortised over the life of the reserves associated with the area of
interest once mining operations have commenced. Recoverability of
the carrying amount of the exploration and evaluation assets is
dependent on successful development and commercial exploitation, or
alternatively, sale of the respective areas of interest.
(j) Mine Development
Expenditure is distinguished between 'Exploration and evaluation
assets' and 'Mine Development' once the work completed to date
supports the future development of the project and such development
receives appropriate approvals. Following this point, all
subsequent expenditure on the construction, installation or
completion of ponds and other infrastructure facilities is
capitalised in 'Mine Development'. After production starts, all
assets included in 'Mine Development' are then transferred to
'Producing Mines' and amortisation commences.
Borrowing costs that are directly attributable to the
acquisition, construction or production of mine development assets
are also capitalised. Capitalisation of borrowing costs ceases once
production starts and assets included in 'Mine Development' are
transferred to 'Producing Mines' or are otherwise ready for their
intended use or sale.
(k) Payables
Liabilities are recognised for amounts to be paid in the future
for goods and services received. Trade accounts payable are
normally settled within 30 days. Payables are carried at amortised
cost.
(l) Royalty Liability
Royalty liabilities are recognised initially at fair value and
are subsequently measured at amortised cost.
The gross carrying amount of the amortised cost of the royalty
liability is recalculated at each period end as the present value
of the actual and revised estimated future contractual cash flows
that are discounted at the original effective interest rate used on
initial recognition of the royalty liability. The gain or loss is
calculated as the difference between the original contractual cash
flows and the modified cash flows discounted at the original
effective interest rate. The adjustment is recognised in profit or
loss as income or expense
(m) 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 resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Provisions are measured at the present value of management's
best estimate of the expenditure required to settle the present
obligation at the balance date. If the effect of the time value of
money is material, provisions are discounted using a current
pre-tax rate that reflects, when appropriate, the risks specific to
the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance
cost.
Rehabilitation
The Group is required to decommission and rehabilitate mines or
related assets at the end of their producing lives to a condition
acceptable to the relevant authorities. A rehabilitation provision
is recognised when the Group has a present obligation, whether
legal or constructive, as a result of a past event.
The expected cost of any approved decommissioning or
rehabilitation programme, discounted to its net present value, is
provided when the related environmental disturbance occurs. Costs
arising from obligations for site rehabilitation incurred before a
decision to mine is made are expensed and accrued at the time of
incurring the obligation. Once a decision to mine is made,
estimated future rehabilitation costs will be capitalised and
amortised over the life of the operation. The increase in net
present value of the provision for the expected cost is included in
financing expenses. Expected decommissioning and rehabilitation
costs are based on the discounted value of the estimated future
cost of the detailed plans prepared. Where there is a change in the
expected decommissioning and restoration costs, the value of the
provision and any related asset are adjusted and the effect is
recognised in the profit or loss on a prospective basis over the
remaining life of the operation.
The estimated costs of the rehabilitation are reviewed annually
and adjusted as appropriate for changes in legislation, technology
or other circumstances. Cost estimates are not reduced by potential
proceeds from the sale of assets or from plant/site clean up at
closure.
The ultimate cost of rehabilitation is uncertain and costs can
vary in response to many factors including changes to the relevant
legal requirements, the emergence of new rehabilitation techniques
or experience at other sites. The expected
timing of expenditure can also change. Changes to any of the
estimates could result in significant changes to the level of
provisioning required, which would in turn impact future financial
results.
In recognising the amount of rehabilitation obligation at each
reporting date, judgement is made on the extent of rehabilitation
that the Group is responsible for at each reporting date.
(n) Interest Income
Interest income is recognised as it accrues in the Statement of
Profit or Loss, using the effective interest method. This
methodology exactly discounts estimated future cash receipts
through the expected life of the financial asset to the gross
carrying amount of the financial asset.
(o) Income Tax
The income tax expense for the period is the tax payable on the
current period's taxable income based on the national income tax
rate for each jurisdiction adjusted for changes in deferred tax
assets and liabilities attributable to temporary differences
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements and to unused tax losses.
Deferred tax assets and liabilities are recognised using the
full liability method for temporary differences at the tax rates
expected to apply when the assets are recovered or liabilities are
settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. The relevant tax rates
are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or
liability. An exception is made for certain temporary differences
arising from the initial recognition of an asset or a liability. No
deferred tax asset or liability is recognised in relation to these
temporary differences if they arose on goodwill or in a
transaction, other than a business combination, that at the time of
the transaction did not affect either accounting profit or taxable
profit or loss.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax bases of
investments in controlled entities where the Company is able to
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary
differences and losses.
The carrying amount of deferred income tax assets is reviewed at
each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each
balance date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax
asset to be recovered.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in
equity.
Deferred tax assets and deferred tax liabilities are offset only
if a legally enforceable right exists to set off current tax assets
against tax liabilities and the deferred tax liabilities relate to
the same taxable entity and the same taxation authority.
Tax consolidation
Salt Lake Potash Limited and its wholly-owned Australian
subsidiaries have formed an income tax consolidated group under the
tax consolidation regime. Each entity in the tax group recognises
its own current and deferred tax liabilities, except for any
deferred tax assets resulting from unused tax losses and tax
credits, which are immediately assumed by the Company. The current
tax liability of each tax group entity is then subsequently assumed
by the Company. The tax consolidated group has entered a tax
sharing agreement whereby each company in the tax group contributes
to the income tax payable in proportion to their contribution to
the net profit before tax of the tax consolidated group.
(p) Employee Entitlements
Provision is made for the Group's liability for employee
benefits arising from services rendered by employees to balance
date. Employee benefits that are expected to be settled within 12
months have been measured at the amounts expected to be paid when
the liability is settled, plus related on-costs. Employee benefits
expected to be settled later than 12 months after the year end have
been measured using the projected unit credit valuation method.
(q) Earnings per Share
Basic earnings per share (EPS) is calculated by dividing the net
profit attributable to members of the Company for the reporting
period, after excluding any costs of servicing equity, by the
weighted average number of Ordinary Shares of the Company, adjusted
for any bonus issue.
Diluted EPS is calculated by dividing the basic EPS earnings,
adjusted by the after tax effect of financing costs associated with
dilutive potential Ordinary Shares and the effect on revenues and
expenses of conversion to Ordinary Shares associated with dilutive
potential Ordinary Shares, by the weighted average number of
Ordinary Shares and dilutive Ordinary Shares adjusted for any bonus
issue.
(r) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount
of GST, except where the amount of GST incurred is not recoverable
from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as
part of the expense. Receivables and payables in the statement of
financial position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross
basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
(s) Research & Development Incentive Rebate
Any rebate received for eligible Research and Development
activities are offset against the area where the costs were
initially incurred. For R&D expenditure that has been
capitalised, any claim received will be offset against 'Exploration
and Evaluation' or 'Mine Development' in the Consolidated Statement
of Financial Position. For R&D expenditure that has been
expensed, any claim received will be recognised in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income.
(t) Acquisition of Assets
A group of assets may be acquired in a transaction which is not
a business combination. In such cases the cost is allocated to the
individual identifiable assets (including intangible assets that
meet the definition of and recognition criteria for intangible
assets in AASB 138 Intangible Assets) acquired and liabilities
assumed on the basis of their relative fair values at the date of
purchase.
(u) Impairment of Non-Current Assets
The Group assesses at each reporting date whether there is an
indication that a non-current asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset
is required, the Group makes an estimate of the asset's recoverable
amount. An asset's recoverable amount is the higher of its fair
value less costs of disposal and its value in use and is determined
for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or
groups of assets and the asset's value in use cannot be estimated
to be close to its fair value. In such cases the asset is tested
for impairment as part of the cash-generating unit to which it
belongs. When the carrying amount of an asset or cash-generating
unit exceeds its recoverable amount, the asset or cash-generating
unit is considered impaired and is written down to its recoverable
amount.
In assessing the value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset.
An assessment is also made at each reporting date as to whether
there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A
previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset's
recoverable amount since the last impairment loss was recognised.
If that is the case the carrying amount of the asset is increased
to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in the Statement of
Profit or Loss and Other Comprehensive Income. After such a
reversal the depreciation charge is adjusted in future periods to
allocate the asset's revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
(v) Issued and Unissued Capital
Ordinary Shares are classified as equity. Issued and paid up
capital is recognised at the fair value of the consideration
received by the Company.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Foreign Currencies
(i) Functional and presentation currency
The functional currency of each of the Group's entities is
measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements
are presented in Australian dollars which is the Company's
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measured at historical
cost continue to be carried at the exchange rate at the date of the
transaction.
Exchange differences arising on the translation of monetary
items are recognised in the Statement Profit or Loss and other
Comprehensive Income , except where deferred in equity as a
qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary
items are recognised directly in equity to the extent that the gain
or loss is directly recognised in equity, otherwise the exchange
difference is recognised in other Comprehensive Income.
(w) Government Grant Income
Government grants are recognised in the profit or loss on a
systematic basis over the period in which the entity recognises as
expenses the related costs for which the grants are intended to
compensate; i.e matching income and expenses.
If the grant relates to expenses or losses already incurred by
the entity, or to provide immediate financial support to the entity
with no future related costs, the income is recognised in the
period in which it becomes available.
(x) Share-Based Payments
Equity-settled share-based payments are provided to officers,
employees, consultants and other advisors. These share-based
payments are measured at the fair value of the equity instrument at
the grant date. Fair value of options is determined using the
Binomial option pricing model. Further details on how the fair
value of equity-settled share-based payments has been determined
can be found in Note 25.
The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the Company's
estimate of equity instruments that will eventually vest. At each
reporting date, the Company revises its
estimate of the number of equity instruments expected to vest.
The impact of the revision of the original estimates, if any, is
recognised in profit or loss over the remaining vesting period,
with a corresponding adjustment to the share-based payments
reserve.
Equity-settled share-based payments may also be provided as
consideration for the acquisition of assets or provision of
services. Where Ordinary Shares are issued, the transaction is
recorded at fair value based on the quoted price of the Ordinary
Shares at the date of issue. The acquisition is then recorded as an
asset or expensed in accordance with accounting standards.
(y) Interest Bearing Loans
Non-derivative financial liabilities other than financial
guarantees are initially measured at fair value net of directly
attributable transaction costs. These are subsequently measured at
amortised cost. Transaction costs that relate to these instruments
are included in the calculation of the amortised cost using the
effective interest method. Any gains or losses are recognised in
profit or loss through the amortisation process and when the
financial liabilities is derecognised.
(z) Leases - Group as Lessee
The Group assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys the right to
control the use of an identifiable asset for a period of time in
exchange for consideration.z
Right-of-use Assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred and lease payments made at or before the
commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognised right-of-use assets
are depreciated on a straight line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are
subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees and do not include non-lease components of a
contract. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and
payments of penalties for terminating a lease, if the lease term
reflects the Group exercising the option to terminate. The variable
lease payments that do not depend on an index or a rate are
recognised as an expense in the period on which the event or
condition that triggers the payment occurs. In calculating the
present value of lease payments, the Group uses the incremental
borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in
the lease term, a change in the substance of fixed lease payments
or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low value assets recognition exemption to
leases of equipment that are considered of low value (i.e. below
$5,000). Lease payments on short term leases and leases of low
value assets are recognised as an expense on a straight-line basis
over the lease term.
(aa) Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or
sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds.
(bb) Use and Revision of Accounting Estimates, Judgements and Assumptions
The preparation of the financial report requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the
revision affects both current and future periods.
In particular, information about significant areas of estimation
uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amounts recognised in
the financial statements are described in the following notes:
Judgements
(i) Right of Use Assets and Lease Liabilities (Note 10 and Note 15)
The Group determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or
any periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised.
The Group has the option, under some of its leases to lease the
assets for additional terms of one to four years. The Group applies
judgement in evaluating whether it is reasonably certain to
exercise the option to renew. That is, it considers all relevant
factors that create an economic incentive for it to exercise the
renewal. After the commencement date, the Group reassesses the
lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to
exercise (or not to exercise) the option to renew (e.g. a change in
business strategy).
(ii) Exploration and Evaluation Expenditure (Note 11)
The future recoverability of exploration and evaluation
expenditure is dependent on a number of factors, including whether
the Group decides to exploit the related area of interest itself
or, if not, whether it successfully recovers the related
exploration and evaluation asset through sale.
To the extent that exploration and evaluation expenditure is
determined not to be recoverable in the future, profits and net
assets will be reduced in the period in which this determination is
made.
Estimates
(iii) Deferred Tax Assets (Note 4)
Following completion of the Bankable Feasibility Study for the
Lake Way Project that demonstrated the technical feasibility and
commercial viability of the Project in October 2019, the Group
determined that it was appropriate for the Company to transfer the
Lake Way Project 'Exploration and evaluation assets' to 'Mine
Development' with effect from 1 November 2019.
Due to the Group entering the phase of Mine Development, it has
been deemed probable that future profits will be able to be offset
against available prior year tax losses and other deferred tax
assets. The Group has recognised a deferred tax asset of $25.847m
and income tax benefit for the 30 June 2021 period totalling
$1.923m. The Group considers that there is convincing evidence to
support the recoverability of the tax losses recognised based on
the information obtained through the completion of the Bankable
Feasibility Study, including the detailed financial modelling that
was prepared, and the signing of binding offtake agreements for a
majority of future sales volumes.
In determining the recoverability of deferred tax assets at each
balance date, management prepare and review an analysis of
estimated future results which support the future realisation of
deferred tax assets. The estimated future profitability results are
judgmental and involve a number of key assumptions. These
assumptions are also used for impairment assessments referred to in
the notes below. To the extent that cash flows and taxable income
differ significantly from estimates, the ability of the Group to
realise recognised deferred tax assets would be impacted.
(iv) Research and Development (Note 6)
The Group is entitled to claim R&D tax incentives in
Australia. The R&D tax incentive is calculated using the
estimated R&D expenditure multiplied by 43.5%. For the 2021
financial year, the Group has accounted for this incentive as other
income within the Statement of Profit or Loss and Other
Comprehensive Income.
(cc) Use and Revision of Accounting Estimates, Judgements and Assumptions (Continued)
(v) Mine Rehabilitation (Note 17)
The Group assesses its mine rehabilitation provision in
accordance with the accounting policy stated in Note 1(l). In
determining an appropriate level of provision, consideration is
given to the expected future costs to be incurred, the timing of
those future costs and the estimated level of inflation. The
ultimate rehabilitation costs are uncertain, and cost estimates can
vary in response to many factors, including estimates of the extent
and costs of rehabilitation activities, technological changes,
regulatory changes, cost increases as compared to the inflation
rates, and changes in discount rates. The expected timing of
expenditure can also change. These uncertainties may result in
future actual expenditure differing from the amounts currently
provided. Therefore, significant estimates and assumptions are made
in determining the provision for mine rehabilitation. As a result,
there could be significant adjustments to the provisions
established which would affect future financial results. The
provision at reporting date represents management's best estimate
of the present value of the future rehabilitation costs
required.
(vi) Impairment of Non-Financial Assets (Note 12)
The recoverability of mine development and property, plant and
equipment is dependent on a number of factors, including the level
of proved and probable reserves, production levels, future costs
and the future technological changes which could impact the cost,
future legal changes (including changes to environmental
restoration obligations) and changes in commodity prices.
Non-financial assets are reviewed for impairment if there is any
indication that the carrying amount may not be recoverable. Where
an indicator of impairment exists, a formal estimate of the
recoverable amount is made, which is deemed as being the higher of
the fair value less costs of disposal and value in use calculated
in accord-ance with the Group's accounting policy (refer Note
1u).
In the current period fair value less costs of disposal has been
used. These assumptions require the use of estimates and
assumptions such as discount rates, exchange rates, commodity
prices mineral resources and reserves and operating perfor-mance
(including the magnitude and time of related cash flows).
(vii) Royalty Liability (Note 16)
The Group assesses its royalty liability obligation at each
reporting date. The ultimate royalty expense is based on net
revenue from the Lake Way Project hence is subject the Group's
future financial performance which is by its nature uncertain. Cost
and sales estimates can vary in response to many factors, including
estimates of potash prices, the extent and costs of production and
distribution of potash, technological changes, regulatory changes
and cost increases as compared to forecast inflation rates. These
uncertainties may result in future net revenue, and hence royalty
expense, differing from the amounts currently provided. Therefore,
significant estimates and assumptions are made in determining the
royalty liability. As a result, there could be significant
adjustments to the liability established which would affect future
financial results. The royalty liability recognised at reporting
date is based on management's best estimate of the future net
revenue from the Lake Way Project.
2. SEGMENT INFORMATION
The Consolidated Entity operates in one operating segment, being
exploitation of SOP projects in Australia. This is the basis on
which internal reports are provided to the Directors for assessing
performance and determining the allocation of resources within the
Consolidated Entity.
3. INCOME AND EXPENSES
2021 2020
$'000s $'000s
------------------------------------------------------------ ------ ------
(a) Other income
Interest income calculated using the EIR
method 79 162
Government grant income 93 170
------------------------------------------------------------ ------ ------
172 332
============================================================ ====== ======
(b) Depreciation included in statement of
comprehensive income
Depreciation of plant and equipment 211 233
Depreciation of right of use assets 198 177
============================================================ ====== ======
(c) Employee benefits expense
Salaries and wages 1,834 4,794
Superannuation expense 164 394
Share-based payment expense 433 6,177
Total employment expenses included in profit
or loss 2,431 11,365
============================================================ ====== ======
(d) Share based payment expense
Expenses arising from equity-settled share-based
payment transactions relating to incentive
options and performance rights 192 6,062
Expenses arising from equity-settled share-based
payment transactions for previously issued
performance rights that vested but could
not be exercised due to share trading restrictions 241 431
Expenses arising from equity-settled share-based
payment transactions to suppliers and consultants - 12
----------------------------------------------------------- ------ ------
Total share based payments recognised during
the year 433 6,505
=========================================================== ====== ======
4. INCOME TAX
2021 2020
$'000s $'000s
-------------------------------------------------- ------- ----------
(a) Recognised in the statement of comprehensive
income
Current income tax
Current income tax benefit in respect of
the current year - -
Deferred income tax
Deferred income tax 1,923 19,657
Income tax benefit reported in the statement
of Profit or Loss and other Comprehensive
income 1,923 19,657
================================================== ======= ========
(b) Recognised in the statement of comprehensive
income
Deferred income tax related to items charged
or credited to equity
Deferred tax assets not previously brought
to account from prior periods - 865
Deferred tax assets recognised in equity 2,868 535
-------------------------------------------------- ------- --------
Income tax benefit recognised in equity 2,868 1,400
================================================== ======= ========
Total deferred tax asset recognised at
30 June 4,791 21,057
================================================== ======= ========
(c) Reconciliation between tax expense
and accounting loss before income tax
Accounting loss before income tax (7,233) (35,267)
================================================== ======= ========
At the domestic income tax rate of 30%
(2020: 30%) (2,170) (10,580)
Expenditure not allowable for income tax
purposes 423 2,801
Income not assessable for income tax purposes (15) (1,353)
Other (161) 1
Deferred tax assets brought to account* - (10,526)
Income tax benefit reported in the statement
of Profit or Loss and other Comprehensive
income (1,923) (19,657)
================================================== ======= ========
2021 2020
$'000s $'000s
------------------------------------------------ -------- -------
(d) Deferred Tax Assets and Liabilities
Deferred income tax at 30 June relates
to the following:
Deferred Tax Liabilities
Accrued income 2 (2)
Exploration and evaluation assets 47 (47)
Plant and equipment - (31)
Rehabilitation asset 1,795 -
Borrowing costs 3,924 (329)
Interest bearing liabilities 9,032 (401)
Foreign exchange 282 -
Right of use assets 12,665 (1,685)
Deferred tax assets used to offset deferred
tax liabilities (27,747) 2,495
------------------------------------------------ -------- -------
- -
Deferred Tax Assets
Mine development 3,303 3,855
Accrued expenditure 106 74
Lease liabilities 12,515 1,755
Royalty liability 8,193 -
Rehabilitation liability 1,884 89
Other capitalised costs 207 172
Provisions 329 201
Borrowing costs 1,858 -
Capital allowances 2,938 778
Tax losses available for offset against
future taxable income 22,261 16,628
Deferred tax assets used to offset deferred
tax liabilities (27,747) (2,495)
25,847 21,057
================================================ ======== =======
Tax Consolidation
The Company and its wholly-owned Australian resident entities
have formed a tax consolidated group and are therefore taxed as a
single entity. The head entity within the tax consolidated group is
Salt Lake Potash Limited.
5. CASH AND CASH EQUIVALENTS
2021 2020
$'000s $'000s
------------------------- ------ ------
Cash on hand and at bank 69,391 6,980
Deposit on call 50 50
69,441 7,030
========================= ====== ======
The Group has assessed the credit risk on cash and cash
equivalents using the lifetime expected credit losses method and
concluded that the probability of default is insignificant. Where
possible, the Group invests its cash and cash equivalents with
banks that are rated the equivalent of investment grade and
above.
6. TRADE AND OTHER RECEIVABLES
2021 2020
$'000s $'000s
------------------------------------------ ------ ------
Accrued interest 5 5
Research and development incentive rebate - 3,547
GST and other receivables 1,981 480
1,986 4,032
========================================== ====== ======
Other receivables are non-interest bearing. There are no past
due nor impaired receivables at 30 June 2021. GST receivables are
due from the ATO. The Group has assessed the probability of default
as low and the expected credit loss is insignificant.
7. SECURITY DEPOSITS
2021 2020
$'000s $'000s
------------------------------------ ------ ------
Current security deposits
Security deposits (1) 3,000 -
Restricted cash (2) 14,632 -
------------------------------------- ------ ------
Total current security deposits 17,632
===================================== ====== ======
Non-Current security deposits
Security deposits (1) 15,076 76
Total non-current security deposits 15,076 76
===================================== ====== ======
Notes:
(1) Relates to a one month rolling cash backed bank guarantee
for the APA gas pipeline at Lake Way. This balance is held with
Commonwealth Bank of Australia which is a high credit worthy
institution and therefore the probability of default is
insignificant.
(2) Relates to the Debt Service Reserve Account and the escrowed
Prepayment Proceeds required under the SFA (refer Note 14). These
amounts are held with Commonwealth Bank of Australia which is a
high credit worthy institution and therefore the probability of
default is insignificant.
8. INVENTORY
2021 2020
$'000s $'000s
---------------------------- ------ ------
Work in progress at cost(1) - 1,535
- 1,535
============================ ====== ======
(1) During commissioning of the plant it was determined that
plant efficiency would be improved by increasing the threshold of
potassium grade for plant feed during the ramp-up period. As a
consequence of this stockpiled salts not meeting this criterion,
though previously recognised as inventory, are unlikely to be
processed in the near-term and have been written down to nil value
resulting in an impairment expense for the year of $5.120m. There
were no write-downs of inventories for the year ended 30 June
2020.
9. PLANT AND EQUIPMENT
Plant & Other Total
Equipment
$'000s $'000s $'000s
------------------------------------------------------ ---------- ------ -------
(a) Plant & Equipment and Other
2021
Gross carrying amount - at cost 5,114 622 5,736
Accumulated depreciation (558) (454) (1,012)
------------------------------------------------------ ---------- ------ -------
Carrying amount at end of year, net
of accumulated depreciation 4,556 168 4,724
====================================================== ========== ====== =======
2020
Gross carrying amount - at cost 3,461 552 4,013
Accumulated depreciation (339) (272) (611)
------------------------------------------------------ ---------- ------ -------
Carrying amount at end of year, net
of accumulated depreciation 3,122 280 3,402
====================================================== ========== ====== =======
(b) Reconciliation
Carrying amount at beginning of year,
net of accumulated depreciation 3,122 280 3,402
Additions 1,652 71 1,723
Depreciation charge (capitalised
and expensed) (218) (183) (401)
Carrying amount at end of year, net
of accumulated depreciation 4,556 168 4,724
====================================================== ========== ====== =======
10. RIGHT OF USE ASSETS
Property & Lake Way Lakeway Gas
Vehicles Village & Supply and
Communications Power Assets(1) Total
------------------------------------------- ---------- --------------- ---------------- -------
$'000s $'000s $'000s $'000s
------------------------------------------- ---------- --------------- ---------------- -------
(a) Right of Use Assets
2021
Gross carrying amount
- at cost 2,130 5,578 35,886 43,594
Accumulated depreciation (386) (826) (164) (1,376)
------------------------------------------- ---------- --------------- ---------------- -------
Carrying amount at end
of year, net of accumulated
depreciation 1,744 4,752 35,722 42,218
=========================================== ========== =============== ================ =======
2020
Gross carrying amount
- at cost 950 5,206 - 6,156
Accumulated depreciation (191) (348) - (539)
------------------------------------------- ---------- --------------- ---------------- -------
Carrying amount at end
of year, net of accumulated
depreciation 759 4,858 - 5,617
=========================================== ========== =============== ================ =======
(b) Reconciliation
Balance at 1 July 2020 759 4,858 - 5,617
Additions 1,258 476 35,886 37,620
Disposals (78) - - (78)
Depreciation charge (195) (478) (164) (837)
Reassessment - (104) - (104)
Carrying amount at end
of year, net of accumulated
depreciation 1,744 4,752 35,722 42,218
=========================================== ========== =============== ================ =======
(1) These assets are held under long term lease contracts with
lease charges containing a fixed component that is capital in
nature. The lease term of these assets is:
Lake Way gas pipeline 20 years
Lake Way power station 10 years
11. EXPLORATION AND EVALUATION EXPITURE
2021 2020
$'000s $'000s
------------------------------------------------------- ------ --------
(a) Areas of Interest
SOP Project(1) 2,277 2,277
Carrying amount at end of year, net of impairment(1) 2,277 2,277
======================================================= ====== ========
(b) Reconciliation
Carrying amount at start of year 2,277 2,277
Additions (Lake Way Project)(3) - 10,715
Transfer to Mine Development(3) - (10,715)
Carrying amount at end of year net of impairment (2) 2,277 2,277
======================================================= ====== ========
Notes:
(1) The Group holds a number of large salt lake brine projects
in Western Australia, each having potential to produce Sulphate of
Potash (SOP) for domestic and international fertiliser markets.
(2) The ultimate recoupment of costs carried forward for
exploration and evaluation is dependent on the successful
development and commercial exploitation or sale of the respective
areas of interest.
(3) The Company completed the acquisition of tenements from
Blackham Resources Limited on 8 October 2019. The cost of
acquisition was initially recognised as an 'Exploration and
evaluation asset' before being transferred to Mine Development
assets following completion of a bankable feasibility study for the
Lake Way Project with effect from 1 November 2019.
12. MINE DEVELOPMENT
Mine properties Capitalised Capitalised Mine development
borrowing assets under
costs construction Total
--------------------------------- --------------- ----------- ------------- ---------------- -------
$'000s $'000s $'000s $'000s $'000s
--------------------------------- --------------- ----------- ------------- ---------------- -------
Reconciliation
Balance at 1 July 2020 10,715 14,873 59,663 39,522 124,773
Additions 30 23,445 142,013 55,749 221,237
Balance at 30 June
2021 10,745 38,318 201,676 95,271 346,010
================================= =============== =========== ============= ================ =======
Notes:
(1) Following completion of the bankable feasibility study on
the Lake Way Project in October 2019, the Group determined that it
was appropriate to transfer the Lake Way Project from 'Exploration
and evaluation assets' to 'Mine development' with effect from 1
November 2019 and for all subsequent expenditure on the
construction, installation or completion of infrastructure
facilities to be capitalised in 'Mine development'. This date marks
the completion of the BFS and the commencement of the second stage
of on-lake construction at Lake Way.
(2) The lenders under the SFA have security over the mine development assets (refer note 14)
Impairment assessment
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash generating units "CGUs"). An
impairment assessment of the Lake Way Project CGU has been made due
to the delay in commencement of production of potash and associated
cash inflows which has had a negative impact on the value of the
CGU and hence is considered an indicator of a possible
impairment.
Methodology
An impairment is recognised when the carrying amount exceeds the
recoverable amount.
The Lake Way Project has been treated as a separate CGU. The
recoverable amount of the Lake Way Project has been estimated using
fair value less costs of disposal basis. The costs of disposal have
been estimated by management based on prevailing market
conditions.
The recoverable amount of the CGU has been estimated based on
discounted cash flows using market-based commodity price and
exchange rate assumptions, estimated quantities of recoverable
product, production levels, operating costs and capital
requirements, based on latest life of mine plans (20 years).
The fair value estimates are considered to be level 3 fair value
measurements (as defined by accounting standards) as they are
derived from valuation techniques that include inputs that are not
based on observable market data. The Group considers the inputs and
the valuation approach to be consistent with the approach taken by
market participants.
Significant judgements and assumptions are required in making
estimates of the recoverable amounts. This is particularly so in
the assessment of long life assets. It should be noted that the CGU
fair values are subject to variability in key assumptions
including, but not limited to, potash prices, currency exchange
rates, discount rates, production profiles and operating and
capital costs. A change in one or more of the assumptions used to
estimate the recoverable amount would result in a change in a CGU's
recoverable amount.
Key Assumptions
In determining each key assumption, management has used external
sources of information and utilised experts within the Group to
validate entity specific assumptions such as reserves and
resources. Production and capital costs are based on the Group's
estimate of forecast geological conditions, capacity of existing
plant and equipment and future production levels. This information
is obtained from external experts where applicable, internally
maintained budgets, mine models and project evaluations performed
by the Group in its ordinary course of business. The table below
summarises the key assumptions used in the carrying value
assessments:
The Group receives long term forecast price data from multiple
externally verifiable sources when determining its pricing
forecasts. The AUD/USD exchange rate used in the model is 0.75.
The Group has applied a pre-tax discount rate to the Lake Way
Project of 9.9%. The discount rate applied to the future cash flow
forecasts represent an estimate of the rate the market would apply
having regard to the time value of money and the risks specified to
the asset for which the future cash flow estimate have not been
adjusted.
The recoverable amount of the Lake Way Project at 30 June 2021
was determined based on a fair value less costs of disposal
model.
The key assumptions to which the model is most sensitive
includes:
-- potash price range of A$694 to A$747 per tonne;
-- discount rate; and
-- date of commencement of production deferred to July 2022.
Sensitivity analysis
Any variation in the key assumptions used to determine the
recoverable amount would result in a change of the estimated
recoverable amount. If the variation in assumption had a negative
impact on the recoverable amount it could indicate a requirement
for an impairment of non-current assets.
It is estimated that the following reasonably possible changes
in the key assumptions would have the following approximate impact
on the recoverable amount of the Lake Way project CGU as at 30 June
2021:
$'000s
5% decrease in potash price over
project life (55,337)
An increase in discount rate
of 1% (34,813)
A six-month delay to commencement
of production (21,161)
None of the above reasonably possible changes would result in
impairment of the CGU as at 30 June 2021.
It must be noted that each of the sensitivities above assumes
that the specific assumption moves in isolation, whilst all other
assumptions are held constant. In reality, a change in one of the
aforementioned assumptions may accompany a change in another
assumption which may have an offsetting impact. Action is also
usually taken to respond to adverse changes in economic assumptions
that may mitigate the impact of any such change.
13. TRADE AND OTHER PAYABLES
2021 2020
$'000s $'000s
--------------------- ------ ------
Trade creditors 3,730 7,275
Accrued expenses 15,318 20,273
Employee obligations 834 623
Other payables - 7
--------------------- ------ ------
19,882 28,178
===================== ====== ======
Terms and conditions of the above financial liabilities:
- Trade payables are non-interest bearing and are normally settled on 30-60 day terms.
14. INTEREST BEARING LOANS
2021 2020
$'000s $'000s
--------- --------
Current Interest Bearing Loans
Face value drawn down - SFA(1) 19,275 -
Face value drawn down - Guarantee facilit(1) 3,000 -
Face value drawn down - Stage 1 Facility(1) - 65,569
Transaction costs and establishment
fees net of interest amortisation(2) (7,725) (9,495)
------------------------------------------------- --------- --------
14,550 56,074
================================================= ========= ========
Non-Current Interest Bearing Loans
Face value drawn down - SFA(1) 160,333 -
Face value drawn down - Guarantee facility(1) 15,000 -
Transaction costs and establishment
fees net of interest amortisation(2) (12,865) -
------------------------------------------------- --------- --------
162,468 -
================================================= ========= ========
Notes:
(1) On 22 December 2020, the Company announced that it drew down
the first tranche of the US$138m Syndicated Facility Agreement
(SFA) from Taurus Funds Management (Taurus) and the Clean Energy
Finance Corporation (CEFC), having achieved project financial close
on the Lake Way Project. The SFA was subsequently syndicated in
March 2021 to include Sequoia Economic Infrastructure Fund (SEQI)
and Commonwealth Bank of Australia as lenders.
The first tranche of US$105m was used to repay the Taurus Bridge
Facility (Stage 1 Facility) totalling US$45m and to fund further
development of the Lake Way Project. The remaining US$33m of the
SFA was drawn down in June 2021. The interest rate on the SFA is 9%
per annum, repayable from 31 March 2022 to 30 September 2024.
An A$18m Guarantee Facility with SEQI was drawn down in June
2021, which allowed the Company to access A$18m previously held in
a restricted deposit as security for a guarantee for the APA gas
pipeline at Lake Way. The interest rate on the Guarantee Facility
is 12% per annum, repayable from 11 April 2022 to 30 September
2024.
(2) Transaction costs include establishment fees, options issued
and royalties granted under the Stage 1 Facility, the SFA and the
Guarantee Facility. Transaction costs for the Stage 1 Facility
include 9,000,000 unlisted options issued to Taurus Funds
Management which are exercisable at $0.702 on or before 4 August
2024. These options were valued at $0.379 per option using a
Binomial option valuation model on the date of grant (2 August
2019). The share price on the date of grant was $0.790. Transaction
costs for the SFA facility include 15,000,000 unlisted options
issued to Taurus Funds Management which are exercisable at $0.564
on or before 28 September 2024. These options were valued at $0.188
per option using a Binomial option valuation model on the date of
grant (23 September 2020). The share price on the date of grant was
$0.485. Refer to Note 19(c) for further details of the terms and
conditions of unlisted options.
The lenders under the SFA have security over the Lake Way
assets.
The balance at 30 June 2020 relates to the extended Stage 1
Facility with Taurus Funds Management. The Facility was extended
from US$30 million to US$45 million in December 2019 and was fully
drawn down during the 2019-20 financial year. The Facility was
repaid in December 2020.
(3) Interest bearing loans are initially measured at fair value
net of directly attributable transaction costs and are subsequently
remeasured at amortised cost.
15. LEASE LIABILITIES
2021 2020
$'000s $'000s
--------------------------------------- -------- -------
Opening balance 5,753 39
Recognised at 1 July 2019 on adoption
of AASB 16 - 893
Additions 37,620 5,263
Terminations - (35)
Interest expense 416 5
Payments (2,063) (412)
--------------------------------------- -------- -------
Closing balance 41,726 5,753
======================================= ======== =======
Current Lease Liabilities 2,694 1,332
Non Current Lease Liabilities 39,032 4,421
--------------------------------------- -------- -------
41,726 5,753
======================================= ======== =======
16. ROYALTY LIABILITIES
Restated
2021 2020
$'000s $'000s
-------------------------------------- ------ --------
Current
Royalty liabilities at amortised cost 450 139
====================================== ====== ========
Non-Current
Royalty liabilities at amortised cost 26,860 16,580
====================================== ====== ========
As part of the terms of the Stage 1 Facility and the SFA
agreements, the Company granted a 2% royalty right based on the net
revenue of the Lake Way project on a life of mine basis. The
royalty liability has been measured at fair value on initial
recognition and is subsequently carried at amortised cost. The fair
value on initial recognition was determined based on forecast cash
flows discounted at 9% with inputs categorised as Level 3 of the
fair value hierarchy (refer Note 27(h)). Royalty payments will
commence following the first sale of SOP, which is expected late in
the 2021-22 financial year .
17. PROVISIONS
2021 2020
$'000s $'000s
----------------------- ------ ------
Current Provisions
Annual Leave 1,079 671
======================= ====== ======
Non-Current Provisions
Long service leave 19 -
Mine Rehabilitation(1) 6,281 3,837
----------------------- ------ ------
6,300 3,837
======================= ====== ======
(1) SO4 has recognised the need to provide for the costs of
rehabilitating the land impacted by the development of the Lake Way
Project. The mine rehabilitation provision represents the present
value of rehabilitation costs relating to Lake Way, the majority of
which are expected to be incurred at the end of the project life.
Assumptions used are based on the current economic environment,
which management believe is a reasonable basis upon which to
estimate the future liability. The timing of rehabilitation is
likely to depend on when the ponds cease to produce at economically
viable rates, and is currently based on a mine life of 20 years
with mine closure rehabilitation work commencing in 2041. This in
turn will depend on future potash prices, which are inherently
uncertain in the longer term.
2021 2020
$'000s $'000s
-------------------------------- ------ ------
Movement in mine rehabilitation
At 1 July 3,837 712
Change in cost estimate(1) - (411)
Arising during the year 2,299 3,490
Unwind of discount 145 46
-------------------------------- ------ ------
At 30 June 6,281 3,837
-------------------------------- ------ ------
(1) During the previous year there was a reassessment of the
disturbed area and cost estimate which resulted in a reduction in
the provision of $410,528.
18. CONTRIBUTED EQUITY
2021 2020
--------------------------------------------------------- -------- --------
$'000s $'000s
--------------------------------------------------------- -------- --------
Share Capital
813,670,721 (30 June 2020: 353,285,840) Ordinary Shares 405,077 209,612
--------------------------------------------------------- -------- --------
(a) Movements in Ordinary Shares During the Past Two Years Were as Follows:
Issue Price
Number of Ordinary Shares $ $'000s
------------------ -------------------------------------------- -------------------------- ------------ --------
01-Jul-20 Opening Balance 353,285,840 209,612
17 Aug 20 Placement 142,083,323 0.50 71,042
17 Aug 20 Conversion of Convertible Notes 11,111,113 0.45 5,000
1 Sep 20 Placement 54,991,200 0.50 27,496
29 Sep 20 Conversion of Convertible Notes(3) 22,222,223 0.45 10,000
29 Sep 20 Shares issued in lieu of consultant fees 370,000 0.50 185
16 Oct 20 Shares issued in lieu of transaction costs 1,248,788 0.50 629
17 Dec 20 Placement 125,000,000 0.40 50,000
18 Dec 20 Conversion of Performance Rights 690,398 0.79 548
3 Feb 21 Placement 19,999,978 0.40 8,000
11 Feb 21 Placement 5,025,000 0.40 2,010
11 Feb 21 Conversion of Performance Rights 500,000 0.48 241
1 Jun 21 Placement 74,553,143 0.35 26,094
4 Jun 21 Placement 2,589,715 0.35 906
30 Jun 21 Deferred tax assets recognised in equity - - 2,868
Jul-20 to Jun-21 Share issue costs - - (9,554)
------------------ -------------------------------------------- -------------------------- ------------ --------
30-Jun-21 Closing balance 813,670,721 405,077
------------------ -------------------------------------------- -------------------------- ------------ --------
01-Jul-19 Opening Balance 245,137,865 155,918
6-Aug-19 Share issue(1) 266,258 0.802 214
6-Aug-19 Placement 10,582,857 0.700 7,408
11-Nov-19 Conversion of performance rights to shares 472,500 0.482 228
11-Nov-19 Shares issued in lieu of consultant fees 17,635 0.680 12
11-Nov-19 Share issue(1) 266,258 0.816 217
18-Dec-19 Placement 32,867,858 0.700 23,008
7-Feb-20 Placement 678,571 0.700 475
12-Feb-20 Share issue(2) 4 0.000 -
20-Mar-20 Conversion of performance rights to shares 4,172,500 0.675 2,515
23-Apr-20 Placement 56,067,647 0.340 19,063
17-Jun-20 Share issue(2) 4 0.000 -
17-Jun-20 Placement 2,755,883 0.340 937
30-Jun-20 Deferred tax assets recognised in equity - - 1,399
Jul-19 to Jun-20 Share issue costs - - (1,782)
30-Jun-20 Closing balance 353,285,840 209,612
------------------ -------------------------------------------- -------------------------- ------------ --------
Notes:
(1) Shares issued relating to performance shares that could not
be issued at the time of vesting as a result of the Company being
in a Blackout Period.
(1) As a result of performance shares relating to the
acquisition of the Company's SOP Project expiring (Note 11), each
holder of performance shares was issued one share.
(2) 33.333 million zero coupon convertible notes were issued on
2 July 2020. These Notes mandatorily convert to ordinary shares at
the lower of $0.45 per share or a 5% discount to any future equity
raising of at least $10 million. During August 2020 all of these
Notes were converted to ordinary shares at a price of $0.45 per
share to raise $15 million.
(b) Rights Attaching to Ordinary Shares:
The rights attaching to fully paid Ordinary Shares arise from a
combination of the Company's Constitution, statute and general
law.
Ordinary Shares issued following the exercise of Unlisted
Options in accordance with Note 19(c) or Performance Rights in
accordance with Note 19(e) will rank equally in all respects with
the Company's existing Ordinary Shares.
Copies of the Company's Constitution are available for
inspection during business hours at the Company's registered
office. The clauses of the Constitution contain the internal rules
of the Company and define matters such as the rights, duties and
powers of its shareholders and directors, including provisions to
the following effect (when read in conjunction with the
Corporations Act 2001 or the listing rules of the ASX and AIM
(Listing Rules)).
(i) Shares
The issue of shares in the capital of the Company and options
over unissued shares by the Company is under the control of the
Directors, subject to the Corporations Act 2001, ASX Listing Rules
and any rights attached to any special class of shares.
(ii) Meetings of Members
Directors may call a meeting of members whenever they think fit.
Members may call a meeting as provided by the Corporations Act
2001. The Constitution contains provisions prescribing the content
requirements of notices of meetings of members and all members are
entitled to a notice of meeting. A meeting may be held in two or
more places linked together by audio-visual communication devices.
A quorum for a meeting of members is two shareholders.
The Company holds annual general meetings in accordance with the
Corporations Act 2001 and the Listing Rules.
(iii) Voting
Subject to any rights or restrictions at the time being attached
to any shares or class of shares of the Company, each member of the
Company is entitled to receive notice of, attend and vote at a
general meeting. Resolutions of members will be decided by a show
of hands unless a poll is demanded. On a show of hands each
eligible voter present has one vote. Where a person present at a
general meeting represents personally or by proxy, attorney or
representative of more than one member, on a show of hands the
person is entitled to one vote only despite the number of members
the person represents.
On a poll each eligible member has one vote for each fully paid
share held and a fraction of a vote for each partly paid share
determined by the amount paid up on that share.
(iv) Changes to the Constitution
The Company's Constitution can only be amended by a special
resolution passed by at least three quarters of the members present
and voting at a general meeting of the Company. At least 28 days
written notice specifying the intention to propose the resolution
as a special resolution must be given.
(v) Listing Rules
Provided the Company remains admitted to the Official List of
the ASX then, despite anything in its Constitution, no act may be
done that is prohibited by the Listing Rules and authority is given
for acts required to be done by the Listing Rules. The Company's
Constitution will be deemed to comply with the Listing Rules as
amended from time to time.
19. RESERVES
Restated
2021 2020
Note $'000s $000s
----------------------------- ----- ------ --------
Share-based payments reserve 19(b) 12,896 11,282
============================= ===== ====== ========
(a) Nature and Purpose of Reserves
(i) Share-based payments reserve
The share-based payments reserve is used to record the fair
value of Unlisted Options, Performance Rights and Performance
Shares issued by the Group.
(b) Movements in the share-based payments reserve during the past two years were as follows:
Number of Number of Number of
Performance Rights Performance Shares Unlisted Options $' 000s
------------------ ---------------------- --------------------- --------------------- ------------------ --------
01-Jul-20 Opening Balance 18,560,398 - 33,925,000 10,606
Grant of unlisted options - - 7,500,000 676
----------------------------------------- --------------------- --------------------- ------------------ --------
Restated opening
01-Jul-20 balance 18,560,398 - 41,425,000 11,282
1 Jul 20 Grant of performance
rights 569,067 - - -
23 Jul 20 Grant of unlisted
options - - 7,500,000 -
19 Dec 20 Grant of unlisted
options - - 1,000,000 -
19 Dec 20 Grant of performance
rights 379,377 - - -
Performance rights
19 Dec 20 converted to shares (690,398) - - (548)
Expiry of performance
31 Dec 20 rights (500,000) - - (374)
Cancellation of
31 Dec 20 performance rights (250,000) - - (115)
29 Apr 21 Expiry of options - - (1,000,000) -
21 Jun 21 Grant of incentive
options - - 500,000 -
30 Jun 21 Expiry of options - - (1,900,000) -
Cancellation of
30-Jun-21 Performance Rights (4,237,189) (1,597)
Share based payments
Jul 20 to Jun 21 expense - - - 4,248
------------------ ---------------------- --------------------- --------------------- ------------------ --------
30-Jun-21 Closing balance 13,831,255 - 47,525,000 12,896
================== ====================== ===================== ===================== ================== ========
(b) Movements in the share-based payments reserve during the
past two years were as follows: (Continued)
Number of Number of Number of
Performance Rights Performance Shares Unlisted Options $'000s
01-Jul-19 Opening Balance 20,945,016 17,500,000 11,100,000 4,274
Unlisted options
1-Jul-19 converted to equity - - - (142)
1-Jul-19 Issue of Performance 538,324
Rights - - -
22-Jul-19 Issue of Performance 500,000
Rights - - -
Expiry of Performance
31-Jul-19 Rights (532,516) - - (245)
2-Aug-19 Issue of Unlisted -
Options - 9,375,000 -
Issue of Unlisted
5-Aug-19 Options - - 9,000,000 3,411
16-Sep-19 Issue of Performance 3,113,750 - - -
Rights
14-Oct-19 Issue of Performance 200,000 - - -
Rights
11-Nov-19 Issue of Unlisted - - 5,200,000 -
Options
11-Nov-19 Issue of Performance 788,324 - - -
Rights
Performance Rights
11-Nov-19 converted to Shares (472,500) - - (228)
Cancellation of
31-Dec-19 Performance Rights (400,000) - - (162)
31-Dec-19 Expiry of Performance - (7,500,000) - -
Shares
Performance Rights
20-Mar-20 converted to Shares (4,172,500) - - (2,373)
12-Jun-20 Expiry of Performance - (10,000,000) - -
Shares
Cancellation of
30-Jun-20 Performance Rights (1,947,500) - - (951)
Cancellation of
30-Jun-20 Unlisted Options - - (750,000) (153)
Share based payments
expense excluding
cancellation of
Jul-19 to Jun-20 Performance Rights - - - 7,175
------------------ ---------------------- --------------------- --------------------- ------------------ --------
30-Jun-20 Closing balance 18,560,398 - 33,925,000 10,606
================== ====================== ===================== ===================== ================== ========
(c) Terms and Conditions of Unlisted Options
The Unlisted Options are granted based upon the following terms
and conditions:
-- Each Unlisted Option entitles the holder to the right to
subscribe for one Ordinary Share upon the exercise of each Unlisted
Option;
-- The Unlisted Options outstanding at the end of the financial
year have the following exercise prices and expiry dates:
- 9,375,000 Unlisted Options exercisable at $0.85 each on or
before 30 June 2023;
- 1,000,000 Unlisted Options exercisable at $0.702 each on or
before 30 June 2023;
- 2,400,000 Incentive Options exercisable at $0.60 each on or
before 1 November 2023;
- 5,250,000 Incentive Options exercisable at $1.00 each on or
before 1 November 2023;
- 5,000,000 Incentive Options exercisable at $1.20 each on or
before 1 November 2023;
- 9,000,000 Unlisted Options exercisable at $0.702 each on or
before 4 August 2024; and
- 15,000,000 Unlisted Options exercisable at $0.564 each on or
before 28 September 2024;
- 200,000 Incentive Options exercisable at $0.50 each on or
before 1 July 2024; and
- 300,000 Incentive Options exercisable at $0.75 each on or
before 1 July 2024 .
-- The Unlisted Options are exercisable at any time prior to the
Expiry Date, subject to vesting conditions being satisfied (if
applicable);
-- Ordinary Shares issued on exercise of Unlisted Options rank
equally in all respects with the Company's existing Ordinary
Shares;
-- Application will be made by the Company to ASX and to the AIM
market of the London Stock Exchange for official quotation of the
Ordinary Shares issued upon the exercise of Unlisted Options.
-- If there is any reconstruction of the issued share capital of
the Company, the rights of the Unlisted Option holders may be
varied to comply with the Listing Rules which apply to the
reconstruction at the time of the reconstruction; and
-- No application for quotation of Unlisted Options will be made
by the Company.
(d) Terms and Conditions of Performance Shares
As a result of performance hurdles not being met during the 30
June 2020 Financial Period, all 17,500,000 outstanding Performance
Shares on issue at the beginning of that financial year expired.
Each tranche of Performance Shares were converted to four Fully
Paid Ordinary shares upon cancellation. As two tranches expired in
the 12 month period, a total of eight shares were issued.
(e) Terms and Conditions of Performance Rights
The Performance Rights are granted based upon the following
terms and conditions:
-- Each Performance Right automatically converts into one
Ordinary Share upon vesting of the Performance Right;
-- Each Performance Right is subject to performance conditions
(as determined by the Board from time to time) which must be
satisfied in order for the Performance Right to vest;
-- The Performance Rights have the following expiry dates:
- 2,822,500 Performance Rights subject to the Plant Construction
Milestone, requiring completion of the Lake Way Plant in a ready
state to complete commissioning, expiring on 1 November 2021;
- 3,600,000 Performance Rights subject to the Plant
Commissioning Milestone, including production of a commercial
quantity of sulphate of potash, expiring on 1 November 2022;
- 3,950,000 Performance Rights subject to the Nameplate Capacity
Milestone (minimum 200,000 tonnes per annum) expiring on 1 November
2023;
- 1,300,000 Performance Rights subject to the Schedule
Advancement Milestone, requiring meeting the timeline of various
stages of the brine extraction process, expiring on 31 December
2021;
- 1,400,000 Performance Rights subject to the Reduce Capex
Milestone, requiring identification of capex savings during the
construction and commissioning phases, expiring on 31 December
2021;
- 758,755 Performance Rights subject to the Short-term Income
Milestone, requiring employees to remain employed with the Group
over the year, expiring on 31 December 2021 (as set out in
employment contracts of certain key management personnel);
Except for the short-term income milestone performance rights,
none of the milestones above were achieved during the year.
-- Ordinary Shares issued on conversion of Performance Rights
rank equally in all respects with the Company's existing Ordinary
Shares ;
-- Application will be made by the Company to ASX AIM market of
the London Stock Exchange for official quotation of the Ordinary
Shares issued upon conversion of the Performance Rights;
-- If there is any reconstruction of the issued share capital of
the Company, the rights of Performance Right holders may be varied
to comply with the Listing Rules which apply to the reconstruction
at the time of the reconstruction; and
-- No application for quotation of Performance Rights will be
made by the Company.
20. STATEMENT OF CASH FLOWS
Reconciliation of the Loss after Tax to the Net Cash Flows from
Operations
2021 2020
$'000s $'000s
--------------------------------------------------------- -------- --------
Net loss for the year (5,310) (15,681)
Adjustment for non-cash income and expense items
Depreciation 409 410
Share based payment expense 618 6,505
FX movement on equity settled transactions - (11)
Deferred tax asset recognition (1,923) (19,657)
Unrealised/realised foreign exchange movements (5,722) (1,187)
Impairment of inventory 5,120 -
Remeasurement of amortised cost of royalty liability (4,039) -
Change in rehabilitation estimate - (411)
Loss on disposal of asset - 11
Interest expense unwind from leasing - 5
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables 3,542 (3,033)
Increase in inventory (3,585) (1,535)
Increase in other payables (1,272) (4,939)
Increase in provisions - 149
Non-operating activity transactions - 975
Net cash outflow from operating activities (12,162) (38,399)
========================================================== ======== ========
21. EARNINGS PER SHARE
2021 2020
$'000s $'000s
The following reflects the income and share data used in the calculations of basic and diluted
earnings per share:
Net loss attributable to the owners of the Company used in calculating basic and diluted
earnings
per share excluding abnormal items (5,310) (15,681)
================================================================================================= ======== =========
Number of Shares Number of Shares
2021 2020
Weighted average number of ordinary shares used in calculating basic and
diluted earnings
per share 630,205,588 288,733,430
================================================================================ ================= =================
(a) Non-Dilutive Securities
As at balance date, 47,525,000 Unlisted Options (which represent
47,525,000 potential Ordinary Shares) and 13,831,255 Performance
Rights (which represent 13,831,255 potential Ordinary Shares) were
considered non-dilutive as they would decrease the loss per
share.
(b) Conversions, Calls, Subscriptions or Issues after 30 June 2021
The Company has issued no Ordinary Shares and no Unlisted
Options or Performance Rights since 30 June 2021.
There have been no other conversions to, calls of, or
subscriptions for Ordinary Shares or issues of potential Ordinary
Shares since the reporting date and before the completion of this
financial report.
22. RELATED PARTIES
(a) Subsidiaries
% Equity Interest
Name Country of 2021 2020
Incorporation
% %
Ultimate parent entity of
the Group:
Salt Lake Potash Limited Australia
Subsidiaries of Salt Lake
Potash Limited:
Australia Salt Lake Potash
Pty Ltd Australia 100 100
Piper Preston Pty Ltd Australia 100 100
Irve Holdings Pty Ltd Australia 100 100
Irve Developments Pty Ltd Australia 100 100
Two Lake Holdings Pty Ltd Australia 100 100
Two Lake Developments Pty
Ltd Australia 100 100
SO4 Fertiliser Holdings Pty
Ltd Australia 100 100
SO4 Fertiliser Developments
Pty Ltd Australia 100 100
(b) Transactions with Related Parties
Balances and transactions between the Company and its
subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note.
Transactions with Key Management Personnel, including remuneration,
are included at Note 23.
23. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
The KMP of the Group during or since the end of the financial
year were as follows:
Directors
Mr Ian Middlemas Chairman
Mr Tony Swiericzuk Executive Director
Mr Matthew Bungey Non-Executive Director
Mr Peter Thomas Non-Executive Director (appointed 19 October 2020)
Mr Philip Montgomery Non-Executive Director (appointed 19 October 2020)
Ms Rebecca Morgan Non-Executive Director (appointed 22 June 2021)
Mr Bryn Jones Non-Executive Director (resigned 4 May 2021)
Mr Mark Pearce Non-Executive Director (resigned 19 October 2020)
Other KMP
Mr Isak Buitendag Chief Executive Officer (appointed 13 September 2021)
Mr Stephen Cathcart Project Director - Technical
Mr Stuart Fraser Chief Financial Officer (appointed 15 July 2021)
Mr Bruce Franzen Company Secretary (appointed 12 August 2021)
Mr Shaun Day Chief Financial Officer (resigned 18 December 2020)
Mr Clint McGhie Company Secretary (resigned 28 April 2021)
Unless otherwise disclosed, the KMP held their position from 1
July 2020 until the date of this report.
2021 2020
$ $
----------------------------- ---------- ----------
Short-term employee benefits 1,333,148 1,120,640
Post-employment benefits 108,356 92,301
Share-based payments 447,453 4,219,683
Total compensation 1,888,957 5,432,624
============================== ========== ==========
(b) Loans from Key Management Personnel
No loans were provided to or received from Key Management
Personnel during the year ended 30 June 2021 (2020: Nil).
(c) Other Transactions
No other related party transactions were entered into in the
2021 Financial year (2020: Nil).
24. PARENT ENTITY DISCLOSURES
2021 2020
$'000s $'000s
------------------------------ ---------- ----------
(a) Financial Position
Assets
Current assets 11,876 10,641
Non-current assets 255,326 132,201
------------------------------ ---------- ----------
Total assets 267,202 142,842
------------------------------ ---------- ----------
Liabilities
Current liabilities 2,590 67,288
Non-current liabilities 529 759
Total liabilities 3,119 68,047
------------------------------ ---------- ----------
Equity
Contributed equity 405,076 209,612
Accumulated losses (147,831) (145,422)
Share Based Payments Reserve 6,838 10,606
------------------------------ ---------- ----------
Total equity 264,083 74,796
============================== ========== ==========
(b) Financial Performance
Profit/(Loss) for the year (2,862) 376
------------------------------ ---------- ----------
Total comprehensive loss (2,862) 376
============================== ========== ==========
(c) Other information
The Company has not entered into any guarantees in relation to
its subsidiaries.
Refer to Note 28 for details of contingent assets and
liabilities.
25. SHARE-BASED PAYMENTS
(a) Recognised Share-based Payment Expense
From time to time, the Group provides incentive Unlisted Options
and Performance Rights to officers, employees, consultants and
other key advisors as part of remuneration and incentive
arrangements. The number of options or rights granted, and the
terms of the options or rights granted are determined by the Board.
Shareholder approval is sought where required.
In the current and prior year, the Company has granted shares in
lieu of payments to key consultants in accordance with the terms of
engagement.
During the past two years, the following equity-settled
share-based payments have been recognised:
2021 2020
$'000s $'000s
----------------------------------------------------- ------ ------
Expenses arising from equity-settled share-based
payment transactions relating to incentive
options and performance rights 192 6,062
Expenses arising from equity-settled share-based
payment transactions for previously issued
performance rights that vested but could
not be exercised due to share trading restrictions 241 431
Expenses arising from equity-settled share-based
payment transactions to suppliers and consultants - 12
----------------------------------------------------- ------ ------
Total share-based payments recognised during
the year 433 6,505
===================================================== ====== ======
(b) Summary of Unlisted Options and Performance Rights Granted as Share-based Payments
The following Unlisted Options and Performance Rights were
granted as share-based payments during the past two years:
Series Issuing Security Type Number Grant Expiry Date Exercise Grant Date
Entity Date Price Fair Value
$ $
----------- -------------- --------------- ---------- -------------- ------------ -------------- --------------
2021
Salt Lake
Potash 23-Jul-20 -
Series 73 Limited Options 7,500,000 4-Aug-20(1) 23-Jul-24 0.52 0.245
Salt Lake
Potash
Series 74 Limited Options 200,000 20-Nov-20 1-Nov-23 0.60 0.169
Salt Lake
Potash
Series 75 Limited Options 200,000 20-Nov-20 1-Nov-23 0.60 0.169
Salt Lake
Potash
Series 76 Limited Options 300,000 20-Nov-20 1-Nov-23 1.00 0.097
Salt Lake
Potash
Series 77 Limited Options 300,000 20-Nov-20 1-Nov-23 1.00 0.097
Salt Lake
Potash
Series 78 Limited Rights 569,067 1-Jul-20 31-Dec-21 - 0.536
Salt Lake
Potash
Series 79 Limited Rights 379,377 20-Nov-20 31-Dec-21 - 0.525
Salt Lake
Potash
Series 80 Limited Options 200,000 21-Jun-21 1-Nov-23 0.50 0.169
Salt Lake
Potash
Series 81 Limited Options 300,000 21-Jun-21 1-Nov-23 0.75 0.097
2020
Salt Lake
Potash
Series 51 Limited Options 300,000 22-Jul-19 1-Nov-23 0.6 0.354
Salt Lake
Potash
Series 52 Limited Options 9,000,000 2-Aug-19 4-Aug-24 0.7 0.379
Salt Lake
Potash
Series 53 Limited Options 1,000,000 11-Nov-19 30-Jun-23 0.7 0.316
Salt Lake
Potash
Series 54 Limited Options 300,000 22-Jul-19 1-Nov-23 1 0.239
Salt Lake
Potash
Series 55 Limited Options 1,500,000 16-Sep-19 1-Nov-23 1 0.296
Salt Lake
Potash
Series 56 Limited Options 100,000 14-Oct-19 1-Nov-23 1 0.291
Salt Lake
Potash
Series 57 Limited Options 400,000 22-Jul-19 1-Nov-23 1.2 0.201
Salt Lake
Potash
Series 58 Limited Options 1,500,000 16-Sep-19 1-Nov-23 1.2 0.252
Salt Lake
Potash
Series 59 Limited Options 100,000 14-Oct-19 1-Nov-23 1.2 0.246
Salt Lake
Potash
Series 60 Limited Rights 250,000 24-Jun-19 1-Nov-23 - 0.79
Salt Lake
Potash
Series 61 Limited Rights 288,324 1-Jul-19 31-Jul-20 - 0.745
Salt Lake
Potash
Series 62 Limited Rights 500,000 22-Jul-19 31-Dec-20 - 0.748
Salt Lake
Potash
Series 63 Limited Rights 113,750 16-Sep-19 31-Jul-20 - 0.862
Salt Lake
Potash
Series 64 Limited Rights 750,000 16-Sep-19 1-Nov-20 - 0.862
Salt Lake
Potash
Series 65 Limited Rights 750,000 16-Sep-19 1-Nov-21 - 0.862
Salt Lake
Potash
Series 66 Limited Rights 750,000 16-Sep-19 1-Nov-22 - 0.862
Salt Lake
Potash
Series 67 Limited Rights 750,000 16-Sep-19 1-Nov-23 - 0.862
Salt Lake
Potash
Series 68 Limited Rights 100,000 14-Oct-19 31-Dec-21 - 0.8
Salt Lake
Potash
Series 69 Limited Rights 100,000 14-Oct-19 31-Dec-23 - 0.8
Salt Lake
Potash
Series 70 Limited Rights 288,324 11-Nov-19 31-Jul-20 - 0.816
Salt Lake
Potash
Series 71 Limited Rights 250,000 11-Nov-19 1-Nov-22 - 0.816
Salt Lake
Potash
Series 72 Limited Rights 250,000 11-Nov-19 1-Nov-23 - 0.816
----------- -------------- --------------- ---------- -------------- ------------ -------------- --------------
Note:
(1) This is considered to be the service period for arranging the SFA facility.
(c) Summary of Unlisted Options Granted as Share-based Payments (Cont.)
The following table illustrates the number and weighted average
exercise prices (WAEP) of Unlisted Options granted as share-based
payments at the beginning and end of the financial year:
Unlisted Options
2021 2021 Restated 2020 Restated 2020
Number WAEP Number WAEP
---------------------------------------- ----------- ------- -------------- --------------
Opening balance 32,050,000 $0.77 11,100,000 $0.84
Granted by the Company during the year 9,000,000 $0.56 14,200,000 $0.81
Forfeited/cancelled/lapsed/exercised - - (750,000) $0.50
Granted - - 7,500,000 $0.52
Outstanding at end of year 41,050,000 $0.72 32,050,000 $0.77
======================================== =========== ======= ============== ==============
Exercisable at end of year 20,000,000 $0.54 12,100,000 $0.55
======================================== =========== ======= ============== ==============
The following table illustrates the number and weighted average
exercise prices (WAEP) of Performance Rights granted as share-based
payments at the beginning and end of the financial year:
(d) Summary of Performance Rights Granted as Share-based Payments
Performance Rights 2021 2021 2020 2020
Number WAEP Number WAEP
---------------------------------------- ------------ ------ ------------ ------
Outstanding at beginning of year 18,560,398 - 20,945,016 -
Granted by the Company during the year 948,444 - 5,140,398 -
Forfeited/cancelled/lapsed/converted (1,940,398) - (7,525,016) -
Outstanding at end of year 17,568,444 - 18,560,398 -
======================================== ============ ====== ============ ======
(e) Weighted Average Remaining Contractual Life
At 30 June 2021, the weighted average remaining contractual life
of Unlisted Options on issue that had been granted as share-based
payments was 2.39 years (2020: 3.32 years) and of Performance
Rights on issue that had been granted as share-based payments was
1.18 years (2020: 2.52 years).
(f) Range of Exercise Prices
At 30 June 2021, the range of exercise prices of Unlisted
Options on issue that had been granted as share-based payments was
$0.50 to $1.20 (2020: $0.60 to $1.20). Performance Rights have no
exercise price.
(g) Weighted Average Fair Value
The weighted average fair value of Unlisted Options granted as
share-based payments by the Group during the year ended 30 June
2021 was $0.223 (2020: $0.342) and of Performance Rights granted as
share-based payments was $0.53 (2020: $0.83).
(h) Option and Performance Right Pricing Models
The fair value of the equity-settled share options granted is
estimated as at the date of grant using a Binomial option valuation
model taking into account the terms and conditions upon which the
Unlisted Options were granted. The fair value of Performance Rights
granted is estimated as at the date of grant based on the
underlying share price (being the five day volume weighted average
share price prior to issuance).
The table below lists the inputs to the valuation model used for
share options and Performance Rights granted by the Group in the
current year:
2021
Inputs Series 73 Series 74 & 75 Series 76 &77
----------------------------- ------------------------ --------------- --------------
Options
Exercise price $0.52 $0.60 $1.00
Grant date share price $0.55 $0.52 $0.52
Dividend yield (1) - - -
Volatility (2) 57% 56% 56%
Risk-free interest rate 0.29% 0.11% 0.11%
Grant date 23-Jul-20 - 4-Aug-20(4) 20-Nov-20 20-Nov-20
Expiry date 23-Jul-24 1-Nov-23 1-Nov-23
Expected life of option (3) 4.02 years 2.95 years 2.95 years
Fair value at grant date $0.245 $0.169 $0.097
----------------------------- ------------------------ --------------- --------------
Inputs Series 80 Series 81
----------------------------- ----------- -----------
Options
Exercise price $0.50 $0.75
Grant date share price $0.38 $0.38
Dividend yield (1) - -
Volatility (2) 54% 54%
Risk-free interest rate 0.17% 0.17%
Grant date 21-Jun-21 21-Jun-21
Expiry date 1-Jul-24 1-Jul-24
Expected life of option (3) 3.03 years 3.03 years
Fair value at grant date $0.107 $0.066
----------------------------- ----------- -----------
Notes:
(1) The dividend yield reflects the assumption that the current
dividend payout will remain unchanged.
(2) The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may not
necessarily be the actual outcome.
(3) The expected life of the options is based on the expiry date
of the options as there is limited track record of the early
exercise of options.
(4) This is considered to be the service period for arranging
the SFA financing facility
Inputs Series 78 Series 79
Milestones Short Term Short Term
------------------------------ ----------- -----------
Performance Rights
Exercise price - -
Grant date share price $0.535 $0.52
Grant date 1-Jul-20 20-Nov-20
Expiry date 31-Dec-21 31-Dec-21
Expected life (1) 1.50 years 1.11 years
Fair value at grant date (2) $0.536 $0.525
------------------------------ ----------- -----------
Notes:
(1) The expected life of the Performance Rights is based on the
expiry date of the performance rights as there is limited track
record of the early conversion of performance rights.
(2) The fair value of Performance Rights granted is estimated as
at the date of grant based on the underlying share price (being the
closing share price at the date of issuance).
26. AUDITORS' REMUNERATION
As a result of work in relation to and required for the 30 June
2021 period, the auditor of Salt Lake Potash Limited, Ernst and
Young, has charged the following fees:
2021 2020
$ $
----------------------------------------------- -------- --------
Fees to Ernst & Young (Australia):
Fees for auditing the statutory financial
report of the parent covering the group 142,480 76,298
Fees for other assurance services 52,000 -
Fees for other services including tax and
other advisory services 170,113 36,996
----------------------------------------------- -------- --------
364,593 113,294
----------------------------------------------- -------- --------
27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(a) Overview
The Group's principal financial instruments comprise
receivables, payables, finance leases, borrowings, cash and
short-term deposits. The main risks arising from the Group's
financial instruments are credit risk, liquidity risk and interest
rate risk. The Group's financial assets and liabilities are held at
amortised cost.
This note presents information about the Group's exposure to
each of the above risks, its objectives, policies and processes for
measuring and managing risk and the management of capital. Other
than as disclosed, there have been no significant changes since the
previous financial year to the exposure or management of these
risks.
The Group manages its exposure to key financial risks in
accordance with the Group's financial risk management policy. Key
risks are monitored and reviewed as circumstances change (e.g.
acquisition of a new project) and policies are revised as required.
The overall objective of the Group's financial risk management
policy is to support the delivery of the Group's financial targets
whilst protecting future financial security.
Given the nature and size of the business and uncertainty as to
the timing and amount of cash inflows and outflows, the Group does
not enter into derivative transactions to mitigate the financial
risks. In addition, the Group's policy is that no trading in
financial instruments shall be undertaken for the purposes of
making speculative gains. As the Group's operations change, the
Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework. The
Board reviews and agrees policies for managing the Group's
financial risks and actively monitors and assesses the risk and
exposure profile of the Group.
(b) Credit Risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. This arises principally from cash and
cash equivalents and trade and other receivables.
There are no significant concentrations of credit risk within
the Group. The carrying amount of the Group's financial assets
represents the maximum credit risk exposure, as represented
below:
2021 2020
$'000s $'000s
----------------------------- -------- -------
Financial assets
Cash and cash equivalents 69,441 7,030
Trade and other receivables 1,986 4,032
Security deposits 32,708 76
Total Financial Assets 104,135 11,138
============================= ======== =======
With respect to credit risk arising from cash and cash
equivalents, the Group's exposure to credit risk arises from
default of the counterparty, with a maximum exposure equal to the
carrying amount of these instruments. Where possible, the Group
invests its cash and cash equivalents with banks that are rated the
equivalent of investment grade and above. The Group's exposure and
the credit ratings of its counterparties are continuously monitored
and the aggregate value of transactions concluded is spread amongst
approved counterparties.
The Group does not have any significant customers and
accordingly does not have significant exposure to bad or doubtful
debts.
Trade and other receivables comprise interest accrued and GST
refunds due. Where possible the Group trades only with recognised,
creditworthy third parties. Receivable balances are monitored on an
ongoing basis with the result that the Group's exposure to bad
debts is not significant. At 30 June 2021, none (2020: none) of the
Group's receivables are past due.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Board's
approach to managing liquidity is to ensure, as far as possible,
that the Group will always have sufficient liquidity to meet its
liabilities when due. At 30 June 2021 the Group had sufficient
liquid assets to meet its financial obligations.
The contractual maturities of financial liabilities, including
estimated interest payments, are provided below. There are no
netting arrangements in respect of financial liabilities.
<=6 Months 6-12 Months 1-5 Years >=5 Years Total
$'000s $'000s $'000s $'000s $'000s
2021
Group
Financial Liabilities
Other payables 19,878 - - - 19,878
Interest bearing loans 7,452 24,696 164,480 - 196,628
Lease liabilities 3,384 3,374 23,417 48,119 78,294
Royalty liabilities - 482 10,503 54,480 65,465
30,714 28,552 198,400 102,599 360,265
-------------------------- ----------- ------------ ---------- ---------- --------
2020
Group
Financial Liabilities
Trade and other payables 27,552 4 - - 27,556
Lease liabilities 699 699 4,872 1 6,271
Interest bearing loans 65,569 - - - 65,569
Royalty liabilities - 208 9,317 48,912 58,437
93,820 911 14,189 48,913 157,833
-------------------------- ----------- ------------ ---------- ---------- --------
(d) Interest Rate Risk
Interest rate risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because of
changes in the market interest rates. At 30 June 2021 the Company
held cash of $69.441 million, had secured and fully drawn down
US$138million of the SFA (refer to Note 14) (2020: US$45million of
Stage 1 Facility) and had leases and a royalty obligation. The
Group's exposure to risk of changes in market interest rates to
financial liabilities is limited as the interest rates on these
liabilities is fixed.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably
possible change in interest rates on that portion of deposits
affected. With all other variables held constant, the Group's
profit before tax is affected through the impact on floating rate
borrowings, as follows:
Increase / Effect on profit
decrease in before tax
interest rate
$'000s
2021 +0.25% 174
-0.25% (174)
2020 +0.25% 18
-0.25% (18)
(e) Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of changes in
foreign exchange rates. The Group's exposure to the risk of changes
in foreign exchange rates relates primarily to the Group's loan
denominated in US dollars and deposits held in US dollars and GB
pounds. The Group's US dollar denominated loan will form a natural
hedge once sales commence, as future revenues will also be in US
dollars.
The Company is investigating the potential use of hedging and/or
derivative instruments that it could apply against short term
foreign capital requirements of the Group. The Group will also
consider longer term hedging for the conversion of US dollar
revenue to meet AUD operational expenses.
Foreign currency sensitivity
The following tables demonstrate the sensitivity to a reasonably
possible change in USD and GBP exchange rates, with all other
variables held constant.
Change in USD Effect on profit Effect on pre-tax
rate before tax equity
$000s $000s
2021 +5% 6,120 6,120
-5% (6,764) (6,764)
2020 +5% 3,120 3,120
-5% (3,448) (3,448)
Change in GBP Effect on profit Effect on pre-tax
rate before tax equity
$000s $000s
2021 +5% (485) (485)
-5% 536 536
2020 +5% - -
-5% - -
(f) Changes in liabilities arising from financing activities
Foreign
Exchange New Lease
1-Jul-20 Cashflows Movement Liability Disposal Other 30-Jun-21
---------------------
$'000s $'000s $'000s $'000s $'000s $'000s $'000s
--------------------- --------- ---------- ----------- --------- --------- ----------
2021
Current
Interest bearing
loans and
liabilities 56,074 (43,294) - - - 1,770 14,550
Lease liabilities 1,332 (1,332) - 2,694 - - 2,694
Convertible
notes - 15,000 - - - (15,000) -
Royalty liabilities 139 - - - - 311 450
Non interest
bearing loans
and liabilities 7 (2) - - - - 5
Non Current
Interest bearing
loans and
liabilities - 150,329 3,357 - - 8,782 162,468
Lease liabilities 4,421 (315) - 34,925 - - 39,031
Royalty liabilities 16,581 - - - - 10,278 26,859
Non-interest
bearing loans
and liabilities 5 (5) - - - - -
--------------------- --------- ---------- ---------- ----------- --------- --------- ----------
78,559 120,381 3,357 37,619 - 36,141 246,057
--------------------- --------- ---------- ---------- ----------- --------- --------- ----------
Foreign
Exchange New Lease Restated Restated
1-Jul-19 Cashflows Movement Liability Disposal Other 30-Jun-20
---------------------
$'000s $'000s $'000s $'000s $'000s $'000s $'000s
--------------------- --------- ---------- ----------- --------- ----------- -----------
2020
Current
Interest bearing
loans and
liabilities - 65,618 (1,031) - - (8,514)(1) 56,073
Lease liabilities 12 (411) - 1,526 (8)(3) 213(2) 1,332
Royalty liabilities - - - - - 139 139
Non interest
bearing loans
and liabilities 7 (7) - - - 7(2) 7
Non Current
Lease liabilities 27 - - 4,668 (27)(3) (248)(2) 4,420
Royalty liabilities - - - - 16,581 16,581
Non interest
bearing loans
and liabilities 12 - - - - (7)(2) 5
--------------------- --------- ---------- ---------- ----------- --------- ----------- -----------
58 65,200 (1,031) 6,194 (35) 8,171 78,557
--------------------- --------- ---------- ---------- ----------- --------- ----------- -----------
Notes:
(1) Indicates the transaction and establishment fees net of
interest amortisation.
(2) Indicates the effect of reclassification of non-current
portion of non interest bearing loans and leases to current due to
the passage of time and the accrued but not yet paid lease
liabilities.
(3) Indicates the reduction in liability as a result of the
disposal of the lease liability.
(g) Capital Management
The Group manages its capital to ensure that entities in the
Group are able to continue as a going concern and maintain a robust
capital base sufficient to fund future development of its projects.
The Board can manage the capital structure by a number of means
including return of capital to shareholders, issuing share capital,
obtaining debt funding and selling assets to reduce debt. The
Group's focus has been to raise sufficient funds through equity and
debt capital markets to fund the development and commissioning of
the Lake Way Project.
The Lenders have placed certain financial conditions on the
Group that must be met while the Syndicated Facility Agreement is
in place.
There were no changes in the Group's approach to capital
management during the year.
(h) Fair Values
The Group uses various methods in estimating the fair value of a
financial instrument. The methods comprise:
-- Level 1 - the fair value is calculated using quoted prices in
active markets.
-- Level 2 - the fair value is estimated using inputs other than
quoted prices included in Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived
from prices).
-- Level 3 - the fair value is estimated using inputs for the
asset or liability that are not based on observable market
data.
As at 30 June 2021 and 30 June 2020 the carrying value of the
Group's financial assets and liabilities are reasonable
approximations of their fair value.
28. CONTINGENT ASSETS AND LIABILITIES
(i) Contingent Assets
As at the date of this report, no contingent assets had been
identified in relation to the 30 June 2021 financial year.
(ii) Contingent Liability
As at the date of this report, no contingent liabilities had
been identified in relation to the 30 June 2021 financial year.
29. COMMITMENTS
Management have identified the following material commitments
for the Group as at 30 June 2021 and 30 June 2020 which have not
been recognised as liabilities.
2021 2020
$'000s $'000s
---------------------------------------- -------- -------
Commercial commitments
Within one year - 12,448
Later than one year but not later than
five years - 8,930
- 21,378
================================================= =======
2021 2020
$'000s $'000s
---------------------------------------- ------- -------
Exploration commitments
Within one year 6,234 5,198
Later than one year but not later than
five years 16,457 15,111
22,691 20,309
======================================== ======= =======
30. EVENTS SUBSEQUENT TO BALANCE DATE
(i) The Company issued 2,805,000 shares to Directors on 10
August 2021 as part of a placement on 24 May 2021. The shares
applied for in the placement by Directors were subject to
shareholder approval which was granted on 13 July 2021.
(ii) Stuart Fraser was appointed as CFO on 15 July 2021.
(iii) Mr Tony Swiericzuk resigned as CEO & Managing Director
on 27 August 2021. He remains on the Board as an executive
director.
(iv) Bruce Franzen was appointed as Company Secretary on 12 August 2021.
(v) The Company announced a revised ramp up strategy that
includes suspension of the initial plant feed program to enable
more salts to precipitate before commencing continuous harvesting
activities. SO4 also announced that, as a result of this delay in
production, the Company will require further funding before the end
of 2021 to continue operations at Lake Way.
(vi) Mr Isak Buitendag was appointed as CEO on 13 September 2021.
(vii) As at the date of signing this report the Company was in
the process of raising further capital via a share placement and
rights issue planned to be completed in October/ November 2021
.
Other than as noted above, as at the date of this report there
are no matters or circumstances which have arisen since 30 June
2021 that have significantly affected or may significantly
affect:
-- The operations, in financial years subsequent to 30 June 2021, of the Consolidated Entity;
-- The results of those operations, in financial years
subsequent to 30 June 202 1 , of the Consolidated Entity; or
-- The state of affairs, in financial years subsequent to 30
June 2021, of the Consolidated Entity.
CORPORATE GOVERNANCE
Salt Lake Potash Limited (Salt Lake or Company) believes
corporate governance is a critical pillar on which business
objectives and, in turn, shareholder value must be built. The Board
of Salt Lake has adopted a suite of charters and key corporate
governance documents which articulate the policies and procedures
followed by the Company.
These documents are available in the Corporate Governance
section of the Company's website,
www.so4.com.au/corporate_governance. These documents are reviewed
at least annually to address any changes in governance practices
and the law.
This Corporate Governance Statement (Statement), which is
current as at 30 June 2021 and has been approved by the Company's
Board, explains how Salt Lake complies with the ASX Corporate
Governance Council's 'Corporate Governance Principles and
Recommendations - 4th Edition' published in February 2019 (ASX
Principles and Recommendations) in relation to the year ended 30
June 2021.
In addition to the ASX Corporate Governance Council's 'Corporate
Governance Principles and Recommendations - 4th Edition' the Board
has taken into account a number of important factors in determining
its corporate governance policies and procedures; including
the:
-- the scale of operations of the Company, which currently
undertakes mineral exploration and development activities, however
it is noted that the Company aims to be in production in 2022;
-- cost verses benefit of additional corporate governance requirements or processes;
-- size of the Board;
-- Board's experience in the resources sector;
-- organisational reporting structure and number of reporting
functions, operational divisions and employees;
-- relatively simple financial affairs with limited complexity and quantum;
-- relatively moderate market capitalisation and economic value of the entity; and
-- direct shareholder feedback.
The full version of the 2021 Directors' Report and Financial
Statements is available on the Company's website at www.so4.com.au
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END
FR FSSSEFEFSEES
(END) Dow Jones Newswires
October 01, 2021 02:00 ET (06:00 GMT)
Salt Lake Potash (LSE:SO4)
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