Portfolio

Company Announcements

Final Results

By LSE RNS

RNS Number : 2083S
Salt Lake Potash Limited
29 September 2017
 

29 September 2017

 

AIM/ASX Code: SO4

 

 

SALT LAKE POTASH LIMITED

Annual Report 2017

 

 

AIM and ASX listed company Salt Lake Potash Limited ("SO4" or the "Company"), announces its results for the year ended 30 June 2017.

 

The Company's Report and Accounts can be viewed at www.saltlakepotash.com.au.

 

The Company also advises that an Appendix 4G (Key to Disclosures: Corporate Governance Council Principles and Recommendations) and the 2017 Corporate Governance Statement have been released today and is available on the Company's website: www.saltlakepotash.com.au/corporate/corporate-governance/. 

 

For further information please visit www.saltlakepotash.com.au or contact:

 

Sam Cordin

Salt Lake Potash Limited

Tel: +61 8 9322 6322

Colin Aaronson/Richard Tonthat/Daniel Bush

Grant Thornton UK LLP (Nominated Adviser)

Tel: +44 (0)207 383 5100

Nick Tulloch/Beth McKiernan

Cenkos Securities plc (Broker)

Tel: +44 (0) 131 220 6939

 

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

 

OPERATING AND FINANCIAL REVIEW

 

Operations

The Company's primary focus during the year continued to be the advancement of the Goldfield Salt Lakes Project (GSLP), located in the Northern Goldfields of Western Australia. The Company's aim is to construct a Pilot Plant at the GSLP, intended to be the first salt-lake brine Sulphate of Potash (SOP) production operation in Australia.

Highlights

Highlights during, and subsequent to the end of, the financial year include:

·     Completion of a positive Scoping Study

The Company completed a Scoping Study which confirmed the potential of the Lake Wells Project to produce low cost SOP by solar evaporation of lake brines for domestic and international fertiliser markets. The Scoping Study (accuracy ±30%) prepared by global engineering firm, Amec Foster Wheeler, and other international experts, demonstrates excellent project fundamentals based on well-established solar evaporation and salt processing techniques. Based on the positive results of the Scoping Study, the Company commenced work for a Pre-Feasibility Study (PFS).

Lake Wells has the potential to be one of only five large scale salt lake SOP producers around the world and the Project's estimated cash production costs of A$185 per tonne (Stage 2) would be amongst the lowest in the world.

      The Scoping Study is based on a two stage development plan for Lake Wells:

-       Stage 1 is based on shallow trenching and bore production with 100% of brine feed drawn from the near surface Measured Resource.

-       Stage 2 includes pumping additional brine from the deeper Inferred Resource, to increase production to 400,000 tpa of SOP.

All-in capital costs total A$268 million for the 400,000 tpa production scenario; amongst the lowest capital intensity for any proposed potash project worldwide.

·     Surface Aquifer Exploration Program

The Lake Wells surface aquifer exploration program was completed, comprising a total of 250 shallow test pits and 10 test trenches. This work provides very high quality data for the hydrogeological model for the surface aquifer of the Lake, giving the Company a high level of confidence about the potential brine production from low cost surface trenching. 

·     Deeper Paleochannel Aquifer

The off-lake aircore drilling program, targeting the Lake Wells paleochannel, was completed successfully intersecting Basal Paleochannel Sediments along the entire length of the paleochannel unit. 

·     Process Development Testwork

The Site Evaporation Trial (SET) at Lake Wells has now processed approximately 215 tonnes of brine and produced 3.4 tonnes of harvest salts.

The Company continues a range of process development testwork to enhance the Lake Wells process model. Raw brine or Lake Wells harvest salts have already produced substantial samples of SOP. Ongoing work at SGS (Perth), Bureau Veritas (Perth) and Saskatchewan Research Council (Canada) continues to enhance the process flowsheet and also produce further customer and testwork samples.

·     Regional Lakes

A surface aquifer reconnaissance exploration program commenced at Lake Ballard with the mobilisation of an amphibious excavator. The Company also completed further surface brine sampling and reconnaissance work at Lake Ballard and Lake Irwin.

Initial evaporation testwork on Lake Ballard and Lake Irwin brine confirmed the suitability of harvest salts for SOP production.

Next Steps

The Company's primary focus is to construct a Pilot Plant at the GSLP, intended to be the first salt-lake brine SOP production operation in Australia. While proceeding with the analysis of options to construct a 20-40,000 tpa SOP Pilot Plant at Lake Wells.

Corporate

·     Successful Placement Raising $17.6 million: the Company completed a placement of 41,000,000 ordinary shares to strategic and institutional investors in Australia and overseas, raising gross proceeds of $17.6 million.

Scoping Study

The Scoping Study (accuracy ±30%) prepared by global engineering firm, Amec Foster Wheeler, and other international experts, demonstrates excellent project fundamentals based on well-established solar evaporation and salt processing techniques. Based on the positive results of the Scoping Study, the Company commenced work for a PFS.

Lake Wells has the potential to be one of only five large scale salt lake SOP producers around the world and the Project's estimated cash production costs of A$185 per tonne (Stage 2) would be amongst the lowest in the world.

The Project will produce SOP from hypersaline brine extracted from Lake Wells via trenches and a combination of shallow and deep production bores. The extracted brine will be transported to a series of solar evaporation ponds built on the Lake where selective evapo-concentration will precipitate potassium double salts in the final evaporation stage. These potassium-rich salts will be mechanically harvested and processed into SOP in a crystallisation plant. The final product will then be transported for sale to the domestic and international markets.

The Scoping Study is based on a two stage development plan for Lake Wells:

-     Stage 1 is based on shallow trenching and bore production with 100% of brine feed drawn from the near surface Measured Resource.

-     Stage 2 also includes pumping additional brine from the deeper Inferred Resource, to increase production to 400,000 tpa of SOP.

Key Scoping Study results for Stage 1 and Stage 2:


Stage 1

Stage 2

Annual Production (tpa) - steady state

200,000

400,000

Capital Cost * 

A$191m

A$39m

Operating Costs **

A$241/t

A$185/t

* Capital Costs based on an accuracy of -10%/+30% before contingencies and growth allowance but including Engineering, Procurement and Construction Management (EPCM).

** Operating Costs based on an accuracy of ±30% including transportation & handling (FOB Esperance) but before royalties and depreciation.

The Scoping Study is based on the Project's Mineral Resource Estimate of 80-85 Mt of SOP in 9,691 GL of brine at an average of 8.7 kg/m3 of K2SO4. The Mineral Resource Estimate includes Measured and Indicated Resources of 26 Mt of SOP in the shallowest 20m of the Lake.

The Scoping Study has established the indicative costs of a two stage production operation, initially producing 200,000 tonnes per annum (tpa) and then 400,000 tpa of dried organic SOP. Stage 1 produces 200,000 tpa but includes most of the capital works required for a 400,000 tpa operation. Stage 2 will commence after initial capex is repaid by cashflow generated from the shallow Measured and Indicated Resource.

Key Assumptions and Inputs of the Scoping Study


Maximum Study Accuracy Variation

+/- 30%

+/- 30%

Stage

Stage 1

Stage 2

Life of Mine (LOM)

20 years

Annual Production (steady state) tonnes

200,000

400,000

Portion of Production Target - Measured & Indicated

100%

70%

Portion of Production Target - Inferred

0%

30%




Mining Method (Extraction)



Trenches (km)

107

157

Shallow Bores (number)

4

4

Deep Bores (number)

-

34




Mining Method (Extraction (volume))



Trenches (m3/h)

3,074

4,521

Shallow Bores (m3/h)

576

576

Deep Bores (m3/h)

-

2,203

Total Volume

3,650

7,300




Evaporation Ponds



Area (ha)

2,990

3,170

Recovery of Potassium from feed brine

70%

70%

Recovery of Sulphate from feed brine

18%

18%




Plant



Operating time (h/a)

7,600

7,600




Operating Costs *  (±30%)



Minegate (A$/t)

$165.74

$110.00

Transport (A$/t)

$75.10

$75.10

Total (A$/t)

$240.84

$185.10




Capital Costs (-10%/+30%)



Direct

A$160.7m

A$32.0m

Indirect

A$30.5m

A$6.8m

Growth Allowance

A$32.5m

A$5.1m

Total Capital

A$223.7m

A$43.9m

* Before Royalties and Depreciation

The Scoping Study results highlight the benefits of Lake Wells' location in the Northern Goldfields, with excellent access to gas and transportation infrastructure. Total Capex of A$268 million for 400,000 tpa of SOP is amongst the lowest capital intensity of any proposed potash project worldwide.

Opportunities have been identified to further optimise capital and operating costs through equipment lease financing, further operational refinements and partnerships. The Company will also continue to investigate potential additional revenue streams for the project.

 

Results of Operations

The net loss of the Consolidated Entity for the year ended 30 June 2017 was $9,200,509 (2016: net loss of $4,645,028). This loss is mainly attributable to:

 

(i)         Exploration and evaluation expenses of $7,717,231 (2016: $3,191,159) which are attributable to the Group's accounting policy of expensing exploration and evaluation expenditure incurred by the Group subsequent to the acquisition of the rights to explore and up to the successful completion of definitive feasibility studies for each separate area of interest;

 

(ii)        Non-cash share-based payment expenses of $580,976 (2016: $163,448) which are attributable to the Group's accounting policy of expensing the value (estimated using an option pricing model) 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 holders become unconditionally entitled to the options and/or rights; and

 

(iii)       Business development expenses of $994,979 (2016: $365,354) which are attributable to additional business development and investor relations activities required to support the growth and development of the Lake Wells Project, including travel costs associated with representing the Company at international conferences and investor meetings.

 

Financial Position

As at the date of this report, the Company had working capital in excess of $14 million which includes cash and cash equivalents.

 

At 30 June 2017, the Company had cash reserves of $15,596,759 (2016: $7,498,285).

 

At 30 June 2017, the Company had net assets of $17,046,443 (2016: $9,397,552), an increase of 81% compared with the previous year. This increase is consistent with the increase in cash reserves following the completion of the placement raising $17.6 million, which is offset by the total comprehensive loss for the year of $9.6 million.

 

Business Strategies and Prospects for Future Financial Years

 

The objective of the Group is to create long-term shareholder value through the discovery, exploration and development of its projects.

To date, the Group has not commenced production of any minerals. To achieve its objective, the Group currently has the following business strategies and prospects:

(i)         Complete a PFS on the Lake Wells Project;

(ii)        Continue additional exploration activities including drilling, test pumping and other testwork; and

(iii)       Continue a comprehensive field evaporation trial to optimise the definition of evaporation ponds and design.

All of these activities are inherently risky and the Board is unable to provide certainty of the expected results 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:

The Company's exploration properties may never be brought into production - The exploration for, and development of, mineral deposits involves a high degree of risk. Few properties which are explored are ultimately developed into producing mines. To mitigate this risk, the Company will undertake systematic and staged exploration and testing programs on its mineral properties and, subject to the results of these exploration programs, the Company will then progressively undertake a number of technical and economic studies with respect to its projects prior to making a decision to mine. However there can be no guarantee that the studies will confirm the technical and economic viability of the Company's mineral properties or that the properties will be successfully brought into production;

The Company's activities will require further capital - The exploration and any development of the Company's exploration properties will require substantial additional financing.  Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration and any development of the Company's properties or even a loss of property interest. 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;

The Company's exploration licence may be subject to Native title and Aboriginal Heritage - There may be areas over which legitimate common law and/or statutory Native Title rights of Aboriginal Australians exist.  If Native Title rights do exist, the ability of the Company to gain access to the Projects (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations may be adversely affected;

The Company may be adversely affected by fluctuations in commodity prices - The price of potash and other commodities fluctuates widely and is affected by numerous factors beyond the control of the Company. Future production, if any, from the Company's mineral properties will be dependent upon the price of potash and other commodities being adequate to make these properties economic. The Company currently does not engage in any hedging or derivative transactions to manage commodity price risk.  As the Company's operations change, this policy will be reviewed periodically going forward; 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 include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal 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



2017
Cents


2016
Cents

Basic and diluted loss per share

(6.61)

(4.13)

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.

DIVIDENDS       

No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Significant changes in the state of affairs of the Consolidated Entity during the financial year were as follows:

(i)         On 29 August 2016, the Company announced the results from a Scoping Study on the Lake Wells project which confirmed its potential to produce low cost SOP by solar evaporation of lake brines for domestic and international fertiliser markets;

(ii)        On 21 April 2017, Amec Foster Wheeler were appointed to prepare an analysis of the alternatives for the Company to construct a Pilot Plant at the GSLP.

(iii)       On 12 June 2017, the Company appointed Mr Bryn Jones as a Non-Executive Director. Mr Jason Baverstock resigned as Executive Director.

(iv)       On 20 June 2017, the Company completed a placement of 41,000,000 Shares at A$0.43 each to institutional and sophisticated investors in Australia and overseas to raise A$17,630,000 (before costs).

SIGNIFICANT EVENTS AFTER BALANCE DATE

On 18 August 2017, the Company issued 42,000 shares to an advisor as part of their annual fees.

Other than as noted above, as at the date of this report there are no matters or circumstances which have arisen since 30 June 2017 that have significantly affected or may significantly affect:

·           the operations, in financial years subsequent to 30 June 2017, of the Consolidated Entity;

·           the results of those operations, in financial years subsequent to 30 June 2017, of the Consolidated Entity; or

·           the state of affairs, in financial years subsequent to 30 June 2017, of the Consolidated Entity.

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 Shares1

Incentive Options 2

Performance Rights 3

Mr Ian Middlemas

11,000,000

-

-

Mr Matthew Syme

4,500,000

2,500,000

2,000,000

Mr Mark Hohnen

5,033,218

-

-

Mr Mark Pearce

4,000,000

-

200,000

Mr Bryn Jones

-

-

200,000

Notes:

1   Ordinary Shares means fully paid Ordinary Shares in the capital of the Company.

2   Incentive 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.

SHARE OPTIONS, PERFORMANCE SHARES AND PERFORMANCE RIGHTS

At the date of this report the following options and performance shares have been issued over unissued Ordinary Shares of the Company:

·            750,000 Unlisted Options exercisable at $0.40 each on or before 29 April 2019;

·            750,000 Unlisted Options exercisable at $0.50 each on or before 29 April 2020;

·            1,000,000 Unlisted Options exercisable at $0.60 each on or before 29 April 2021;

·            5,000,000 'Class A' Performance Shares on or before 12 June 2018;

·            7,500,000 'Class B' Performance Shares on or before 12 June 2019;

·            10,000,000 'Class C' Performance Shares on or before 12 June 2020;

·            1,025,000 Performance Rights subject to the PFS Milestone expiring on 30 June 2018;

·            1,025,000 Performance Rights subject to the BFS Milestone expiring on 30 June 2019;

·            1,025,000 Performance Rights subject to the Construction Milestone expiring on 30 June 2020; and

·            1,025,000 Performance Rights subject to the Production Milestone expiring on 30 June 2021.

During the year ended 30 June 2017, no Ordinary Shares have been issued as a result of the exercise of Unlisted Options, and no Ordinary Shares have been issued as a result of the conversion of Performance Shares or Rights. Subsequent to year end and until the date of this report, no Ordinary Shares have been issued as a result of the exercise of Unlisted Options.

 

 

Signed in accordance with a resolution of the Directors.

 

 

 

 

MATTHEW SYME

CEO

 

29 September 2017

 

 

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2017

 



30 June

2017

30 June

2016


Notes

$

$





Finance income

3

 123,477

 72,946

Other income

4

 604,468

-

Exploration and evaluation expenses


 (7,717,231)

 (3,191,159)

Corporate and administrative expenses


 (1,216,244)

 (867,999)

Business development expenses


 (994,979)

 (365,354)

Impairment of exploration and evaluation assets


-

 (293,462)

Loss before tax


(9,200,509)

 (4,645,028)

Income tax expense

6

-

 -

Loss for the year


(9,200,509)

(4,645,028)

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:




Foreign currency translation differences reclassified to profit or loss on disposal of controlled entity


(454,468)

-

Exchange differences on translation of foreign operations


-

14,873

Other comprehensive income/(loss) for the year, net of tax


(454,468)

14,873

Total comprehensive loss for the year


(9,654,977)

(4,630,155)

Basic and diluted loss per share attributable to the ordinary equity holders of the company (cents per share)

16

(6.61)

(4.13)

 

The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the accompanying notes.

 

 

 

 

 

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

AS AT 30 JUNE 2017

 


Notes

 

30 June 2017
$

 

30 June 2016
$





ASSETS




Current Assets




Cash and cash equivalents

7

15,596,759

7,498,285

Trade and other receivables

8

300,058

126,583

Total Current Assets


15,896,817

7,624,868





Non-Current Assets




Property, plant and equipment

9

303,511

115,275

Exploration and evaluation expenditure

10

2,276,736

2,276,736

Total Non-Current Assets


2,580,247

2,392,011

TOTAL ASSETS


18,477,064

10,016,879





LIABILITIES




Current Liabilities




Trade and other payables

11

1,348,791

607,615

Finance lease


62,649

-

Provisions

12

19,181

11,712

Total Current Liabilities


1,430,621

619,327

TOTAL LIABILITIES


1,430,621

619,327





NET ASSETS


17,046,443

9,397,552





EQUITY




Contributed equity

13

123,484,561

106,761,669

Reserves

14

821,824

695,316

Accumulated losses


(107,259,942)

(98,059,433)

TOTAL EQUITY


17,046,443

9,397,552

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

 

 

 

CONSOLIDATED STATEMENT

OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2017

 

CONSOLIDATED

Contributed Equity

 

 

Share- Based Payment Reserve

Foreign Currency Translation Reserve

Accumulated Losses

Total Equity

$

$

$

$

$

Balance at 1 July 2016

106,761,669

240,848

454,468

(98,059,433)

9,397,552

Net loss for the year

-

-

-

 (9,200,509)

(9,200,509)

Exchange differences reclassified to profit or loss on disposal of controlled entity

-

-

 (454,468)

-

 (454,468)

Total comprehensive loss for the year

-

-

 (454,468)

 (9,200,509)

 (9,654,977)







Transactions with owners, recorded directly in equity






Shares issued in lieu of fees

86,400

-

-

-

86,400

Share placement

17,630,000

-

-

-

17,630,000

Share issue costs

(993,508)

-

-

-

(993,508)

Share based payment expense

-

580,976

-

-

580,976

Balance at 30 June 2017

123,484,561

821,824

-

(107,259,942)

17,046,443

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

 

 

CONSOLIDATED

Contributed Equity

 

 

Share- Based Payment Reserve

Foreign Currency Translation Reserve

Accumulated Losses

Total Equity

$

$

$

$

$

At 1 July 2015

 98,440,152

 77,400

 439,595

 (93,414,405)

 5,542,742

Net loss for the year

-

-

-

(4,645,028)

(4,645,028)

Exchange differences arising during the year - continuing operations

-

-

14,873

-

14,873

Total comprehensive income/(loss) for the year

-

-

14,873

(4,645,028)

(4,630,155)







Transactions with owners, recorded directly in equity






Shares issued in lieu of fees

35,124

-

-

-

35,124

Share placement

8,888,000

-

-

-

8,888,000

Share issue costs

(601,607)

-

-

-

(601,607)

Share based payment expense

-

163,448

-

-

163,448

Balance at 30 June 2016

106,761,669

240,848

454,468

(98,059,433)

9,397,552

 

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

                                                                    


CONSOLIDATED STATEMENT

OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2017

 

 


Note

 

30 June

2017
$

 

30 June

2016
$





Cash flows from operating activities




Payments to suppliers and employees


(8,657,842)

(3,906,492)

Exploration investment scheme received


120,000

-

Interest received


114,423

66,335

Net cash outflow from operating activities

15(a)

(8,423,419)

(3,840,157)





Cash flows from investing activities




Payments for property, plant and equipment


(162,675)

(120,456)

Net cash outflow from investing activities


(162,675)

(120,456)





Cash flows from financing activities




Proceeds from issue of shares


17,630,000

8,888,000

Transaction costs from issue of shares


(945,448)

(601,607)

Net cash inflow from financing activities


16,684,552

8,286,393





Net increase in cash and cash equivalents held


8,098,458

4,325,780

Net foreign exchange differences


16

142

Cash and cash equivalents at the beginning of the year


7,498,285

3,172,363

Cash and cash equivalents at the end of the year

15(b)

15,596,759

7,498,285

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 YEAR ENDED 30 JUNE 2017

 

 

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 2017 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 financial report of the Group for the year ended 30 June 2017 was authorised for issue in accordance with a resolution of the Directors on 27 September 2017.

 

Whilst the financial information included in this announcement has been prepared in accordance with the accounting policies and basis of preparation set out below, this announcement does not constitute the Company's statutory financial statements.  The posting of the full audited financial statements of the Company and a notice of AGM will be announced in due course.

(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.

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.

 (b)     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.

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period.

New and revised standards and amendments thereof and interpretations effective for the current reporting period that are relevant to the Group include:

•           AASB 2014-4 Amendments to Australian Accounting Standards - Clarification of Acceptable Methods of Depreciation and Amortisation which clarify the principle in AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset;

•           AASB 2015-1 Amendments to Australian Accounting Standards - Annual Improvements to Australian Accounting Standards 2012-2014 Cycle which clarify certain requirements in AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 7 Financial Instruments: Disclosures, AASB 119 Employee Benefits, and AASB 134 Interim Financial Reporting; and

•           AASB 2015-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 101 which amends AASB 101 Presentation of Financial Statements to clarify existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying the Standard in determining what information to disclose, where and in what order information is presented in their financial statements

The adoption of these new and revised standards has not resulted in any significant changes to the Group's accounting policies or to the amounts reported for the current or prior periods.  The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2017.  Those which may be relevant to the Group are set out in the table below. The adoption of these standards is not expected to have a significant impact on the Group's financial statements.

 

Standard/Interpretation

Application date of standard

Application date for Group

AASB 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 107

1 January 2017

1 July 2017

AASB 9 Financial Instruments, and relevant amending standards

1 January 2018

1 July 2018

AASB 15 Revenue from Contracts with Customers, and relevant amending standards

1 January 2018

1 July 2018

AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment Transactions

1 January 2018

1 July 2018

AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration

1 January 2018

1 July 2018

AASB 16 Leases

1 January 2019

1 July 2019

(c)      Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at 30 June 2017 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. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

 

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.

(d)      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.

(e)      Trade and Other Receivables

Trade receivables are recognised and carried at the original invoice amount less a provision for any uncollectable debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written‑off as incurred.

Short term receivables from related parties are recognised and carried at the nominal amount due and are interest free.

(f)       Investments and Other Financial Assets

(i)       Classification

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than twelve months after the reporting date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position.

 Loans and receivables are carried at amortised cost using the effective interest rate method.

(ii)      Impairment

Collectability of trade and other receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment allowance is recognised when there is objective evidence that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.

(g)      Property, Plant and Equipment

(i)       Recognition and measurement

All classes of property, 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 property, plant and equipment.

 


2017

2016

Major depreciation and amortisation periods are:



Plant and equipment:

22%- 40%

22%- 40%

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 property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

(h)      Exploration and Development Expenditure

Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method.

Exploration and evaluation expenditure encompasses expenditures incurred by the Group in connection with the exploration for and evaluation of mineral resources 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 and evaluation assets are measured at cost at recognition and are recorded as an asset if:

a.      the rights to tenure of the area of interest are current; and

b.      at least one of the following conditions is also met:

 

·      the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and

·      exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation expenditure incurred by the Group subsequent to acquisition of the rights to explore is expensed as incurred, up to costs associated with the preparation of a feasibility study.

 

(i)    Impairment

Capitalised exploration 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 exploration 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, accumulated 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.

(i)       Payables

Liabilities are recognised for amounts to be paid in the future for goods and services received. Trade accounts payable are normally settled within 60 days. Payables are carried at amortised cost.

(j)       Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(k)      Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable.

Interest income

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.

(l)       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 by 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 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 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 group entity is then subsequently assumed by the Company. The tax consolidated group has entered a tax sharing agreement whereby each company in the Group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.

(m)     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 more later than 12 months after the year end have been measured at the present value of the estimated future cash outflows to be made for those benefits.

(n)      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.

(o)      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.

(p)      Acquisition of Assets

A group of assets may be acquired in a transaction which is not a business combination. In such cases the cost of the group is allocated to the individual identifiable assets (including intangible assets that meet the definition of and recognition criteria for intangible assets in AASB 138) acquired and liabilities assumed on the basis of their relative fair values at the date of purchase.

(q)      Impairment of Non-Current Assets

The Group assesses at each reporting date whether there is an indication that an 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 profit or loss. 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.

(r)      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.

(s)      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 the other Comprehensive Income.

(iii)          Group companies

The financial results and position of foreign operations whose functional currency is different from the Group's presentation currency are translated as follows:

·           assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

·           income and expenses are translated at average exchange rates for the period; and

·           items of equity are translated at the historical exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the statement of financial position. These differences are recognised in the Statement of Profit or Loss and other Comprehensive Income in the period in which the operation is disposed.

(t)       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 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 20.

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. 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.

(u)      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:

·              Exploration and Evaluation Expenditure (Note 10)

·              Share-Based Payments (Note 20)

 

 

2.       SEGMENT INFORMATION

The Consolidated Entity operates in one segment, being mineral exploration. 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.

 

(a)        Reconciliation of non-current assets by geographical location

 



2017

2016



$

$





Australia


2,276,736

2,276,736

United States of America


           -

          -



2,276,736

2,276,736

 

Non-Current Assets for this purpose consist of exploration and evaluation assets.

 

(b)        Reconciliation of revenues by geographical location

 



2017

2016



$

$





Australia


123,477

72,946

United States of America


-

-



123,477

72,946

 

Revenues for this purpose consist of interest income.

3.       FINANCE INCOME



 

2017

 

2016


Note

$

$





Interest income


123,477

72,946



123,477

72,946

4.       OTHER INCOME



 

2017

 

2016


Note

$

$





Gain on disposal of controlled entity1


454,468

-

Exploration Incentive Scheme


150,000

-



604,468

-

Notes:

1  During the year, the Company sold its United States subsidiary, Golden Eagle Uranium, for a nominal amount which resulted in a gain on disposal of A$454,468 relating to prior exchange differences on translation of Golden Eagle Uranium that have been transferred from the foreign currency translation reserve.

 

5.       EXPENSES



 

2017

 

2016


Note

$

$





(a)        Depreciation included in statement of comprehensive income




Depreciation of plant and equipment

9

37,088

15,469

 




(b)        Employee benefits expense (including KMP)




Salaries and wages


 1,342,932

 504,684

Superannuation expense


126,503

 45,057

Share-based payment expense

20

580,976

 163,448

Total employment expenses included in profit or loss


 2,050,411

 713,189

6.       INCOME TAX


 

2017

 

2016


$

$




(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 on discontinued operations

-

-

Income tax expense reported in the statement of Profit or Loss and other Comprehensive income

-

-




(b)        Reconciliation between tax expense and accounting loss before income tax



Accounting loss before income tax

 (9,200,509)

 (4,645,028)




At the domestic income tax rate of 27.5% (2016: 30%)

(2,530,140)

(1,393,509)

Expenditure not allowable for income tax purposes

155,773

60,959

Deferred tax assets not brought to account

2,374,366

1,332,550

Income tax expense/(benefit) reported in the statement of Profit or Loss and other Comprehensive income

-

-



 


2017

2016


$

$




(c)        Deferred Tax Assets and Liabilities



Deferred income tax at 30 June relates to the following:






Deferred Tax Liabilities



Accrued income

6,109

3,949

Exploration and evaluation assets

43,209

-

Deferred tax assets used to offset deferred tax liabilities

(49,319) 

(3,949) 


-

-




Deferred Tax Assets



Accrued expenditure

7,200

32,613

Capital allowances

341,543

167,121

Tax losses available for offset against future taxable income

6,368,677

4,525,636

Deferred tax assets used to offset deferred tax liabilities

 (49,319)

 (3,949)

Deferred tax assets not brought to account

 (6,668,101)

 (4,721,421)


-

-

 

The benefit of deferred tax assets not brought to account will only be brought to account if:

·      future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

·      the conditions for deductibility imposed by tax legislation continue to be complied with; and

·      no changes in tax legislation adversely affect the Group in realising the benefit.

Deferred tax assets have not been recognised in respect to tax losses because it is not probable that future taxable profit will be available against which the Group can utilise the benefits.

 

(d)        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.

7.       CASH AND CASH EQUIVALENTS



2017

2016



$

$

 




Cash on hand and at bank


15,524,703

1,478,285

Deposit on call


72,056

6,020,000



15,596,759

7,498,285

8.       TRADE AND OTHER RECEIVABLES



2017

2016



$

$

 




Accrued interest


22,216

13,162

GST and other receivables


277,842

99,713

Other assets


-

13,708



300,058

126,583

9.       PROPERTY, PLANT AND EQUIPMENT



2017

2016



$

$

(a)        Plant and Equipment




Gross carrying amount - at cost


345,780

130,744

Accumulated depreciation


(42,269)

(15,469)

Carrying amount at end of year, net of accumulated depreciation


303,511

115,275







Carrying amount at beginning of year, net of accumulated depreciation


115,275

10,288

Additions


225,324

120,456

Depreciation charge


(37,088)

(15,469)

Carrying amount at end of year, net of accumulated depreciation


303,511

115,275

 

Finance Leases

The carrying value of plant and equipment held under finance leases at 30 June 2017 was $64,036 (2016: nil). Additions during the year include $64,036 (2016: nil) of plant and equipment under finance lease. Leased assets are pledged as security for the related finance lease.

10.     EXPLORATION AND EVALUATION EXPENDITURE



 

2017

 

2016


Note

$

$

(a)        Areas of Interest




SOP Project


2,276,736

2,276,736

Golden Eagle Uranium  Project


-

-

Carrying amount at end of year, net of impairment1


2,276,736

2,276,736





(b)        Reconciliation




Carrying amount at start of year


2,276,736

2,555,915

Impairment losses 2


-

(293,462)

Exchange differences on translation of foreign operations


-

14,283

Carrying amount at end of year net of impairment 1


2,276,736

2,276,736

 

Notes:

1 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.

2   Impairment of the carrying value of Golden Eagle Uranium. During the 2017 financial year the Company disposed of its interest in the project for a nominal amount.

 

SOP Project

Salt Lake holds a number of large salt lake brine projects (Projects) in Western Australia, South Australia and the Northern Territory, each having potential to produce highly sought after Sulphate of Potash (SOP) for domestic and international fertiliser markets.

 

Golden Eagle Uranium Project

During the year, the Company sold its United States subsidiary, Golden Eagle Uranium LLC, for a nominal amount which resulted in a gain on disposal of A$454,468 relating to prior exchange differences on translation of Golden Eagle Uranium that have been transferred from the foreign currency translation reserve. The Golden Eagle Uranium and Vanadium Project held nine U.S. Department of Energy Uranium/Vanadium Mining Leases, covering 22.7 km2 located in the Uravan Mineral Belt, Colorado USA.

 

 

11.     TRADE AND OTHER PAYABLES



2017

2016



$

$





Trade creditors


1,250,959

377,775

Accrued expenses


97,832

229,840



1,348,791

607,615

 

 

12.     PROVISIONS



2017

2016



$

$





Statutory employee benefits


19,181

11,712



19,181

11,712

 

 

 

 

 

 

13.     CONTRIBUTED EQUITY

 


30 June 2017
$

30 June 2016
$

Share Capital



175,007,596 (30 June 2016: 133,827,596) Ordinary Shares

123,484,561

106,761,669


123,484,561

106,761,669

 

(a)        Movements in Ordinary Shares During the Past Two Years Were as Follows:

 



Number of Ordinary Shares

Issue Price

$

$





01-Jul-16

Opening Balance

133,827,596

-

106,761,669

09-Sep-16

Share issue 1

180,000

0.48

86,400

02-May-17

Share placement

 30,700,000

0.43

13,201,000

21-Jun-17

Share placement

 10,300,000

0.43

4,429,000

Jul-16 to Jun-17

Share issue costs

-

-

(993,508)

30-Jun-17

Closing balance

175,007,596

-

123,484,561






01-Jul-15

Opening Balance

105,802,596

-

98,440,152

09-Jul-15

Share issue 1

250,000

0.1405

35,124

31-Mar-16

Share placement

 16,250,000

0.32

5,200,000

4-Apr-16

Share placement

 9,925,000

0.32

3,176,000

7-Jun-16

Share placement

 1,600,000

0.32

512,000

Jul-15 to Jun-16

Share issue costs

-

-

(601,607)

30-Jun-16

Closing balance

133,827,596

-

106,761,669

 

Notes:

1        Shares issued to a key consultant of the Company in lieu of fees.

 

 

(b)        Rights Attaching to Ordinary Shares:

 

The rights attaching to fully paid Ordinary Shares (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 14(c) or Performance Shares in accordance with Note 14(e) or Performance Rights in accordance with Note 14(f) 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. However, where a person present at a general meeting represents personally or by proxy, attorney or representative 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.

 

14.     RESERVES

 



2017

2016


Note

$

$





Share-based payments reserve

14(b)

821,824

240,848

Foreign currency translation reserve


-

454,468



821,824

695,316

(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.            

(ii)        Foreign Currency Translation Reserve

Exchange differences arising on translation of foreign controlled entities are taken to the foreign currency translation reserve, as described in Note 1(u). The reserve is recognised in the Statement of Profit or Loss and other Comprehensive Income when the net investment is disposed of.

 

(b)        Movements in the share-based payments reserve during the past two years were as follows:



Number of Performance Rights

Number of Performance Shares

Number of
Unlisted Options

$






01-Jul-16

Opening Balance

-

22,500,000

2,705,443

240,848

22-Nov-16

Expiry of unlisted options

-

-

(205,443)

-

01-Mar-17

Issue of Performance Rights

3,000,000

-

-

-

09-Jun-17

Issue of Performance Rights

200,000

-

-

-

20-Jun-17

Issue of Performance Rights

1,000,000

-

-

-

30-Jun-17

Lapsed Performance Rights

(100,000)

-

-

-

Jul-16 to Jun-17

Share based payments expense

-

-

-

580,976

30-Jun-17

Closing balance

4,100,000

22,500,000

2,500,000

821,824







01-Jul-15

Opening Balance

-

22,500,000

205,443

77,400

03-Jun-16

Issue of Incentive Options

-

-

2,500,000

-

Jul-15 to Jun-16

Share based payments expense

-

-

-

163,448

30-Jun-16

Closing balance

-

22,500,000

2,705,443

240,848

 

(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:

·             750,000 Unlisted Options exercisable at $0.40 each on or before 29 April 2019;

·             750,000 Unlisted Options exercisable at $0.50 each on or before 29 April 2020; and

·             1,000,000 Unlisted Options exercisable at $0.60 each on or before 29 April 2021.

·      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 the Unlisted Options rank equally with the then Ordinary Shares of the Company;

·      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 the 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 the Unlisted Options will be made by the Company.

(c)        Terms and Conditions of Performance Shares

The Convertible Performance Shares (Performance Shares) were granted as part of the consideration to acquire Australia Salt Lake Potash Pty Ltd on the following terms and conditions:

·        Each Performance Share will convert into one Ordinary Share upon the satisfaction, prior to the Expiry Date, of the respective Milestone:

-      5,000,000 Performance Shares subject to Class A Milestone: The announcement by the Company to ASX of the results of a positive Pre-feasibility Study on all or part of the Project Licences, within three years from the date of issue;

-      7,500,000 Performance Shares subject to Class B Milestone: The announcement by the Company to ASX of the results of a positive Definitive Feasibility Study on all or part of the Project Licences, within four years from the date of issue; and

-      10,000,000 Performance Shares subject to Class C Milestone: The commencement of construction activities for a mining operation on all or part of the Project Licences (including the commencement of ground breaking for the construction of infrastructure and/or processing facilities) following a final investment decision by the Board as per the project development schedule and budget in accordance with the Definitive Feasibility Study, within five years from the date of issue.

·        Expiry Date means:

-      in relation to the Class A Performance Shares, 3 years from the date of issue (12 June 2018);

-      in relation to the Class B Performance Shares, 4 years from the date of issue (12 June 2019); and

-      in relation to the Class C Performance Shares, 5 years from the date of issue (12 June 2020);

·        If the Milestone for a Performance Share is not met by the Expiry Date, the total number of the relevant class of Performance Shares will convert into one Ordinary Share per holder;

·        The Company shall allot and issue Ordinary Shares immediately upon conversion of the Performance Shares for no consideration;

·        Ordinary Shares issued on conversion of the Performance Shares rank equally with the then Ordinary Shares of the Company;

·        In the event of any reconstruction, consolidation or division into (respectively) a lesser or greater number of securities of the Ordinary Shares, the Performance Shares shall be reconstructed, consolidated or divided in the same proportion as the Ordinary Shares are reconstructed, consolidated or divided and, in any event, in a manner which will not result in any additional benefits being conferred on the Performance Shareholders which are not conferred on the Ordinary Shareholders;

·        The Performance Shareholders shall have no right to vote, subject to the Corporations Act;

·        No application for quotation of the Performance Shares will be made by the Company; and

·        The Performance Shares are not transferable.

(d)        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:

-        1,025,000 Performance Rights subject to the PFS Milestone expiring on 30 June 2018;

-        1,025,000 Performance Rights subject to the BFS Milestone expiring on 30 June 2019;

-        1,025,000 Performance Rights subject to the Construction Milestone expiring on 30 June 2020; and

-        1,025,000 Performance Rights subject to the Production Milestone expiring on 30 June 2021.

·      Ordinary Shares issued on conversion of the Performance Rights rank equally with the then Ordinary Shares of the Company;

·      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 the 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 the Performance Rights will be made by the Company.

15.     STATEMENT OF CASH FLOWS

(a)        Reconciliation of the Loss after Tax to the Net Cash Flows from Operations

 



 

2017

 

2016



$

$





Net loss for the year


(9,200,509)

(4,645,028)





Adjustment for non-cash income and expense items




Depreciation of plant and equipment  


37,088

15,469

Share based payment expense


580,976

163,448

Gain on disposal of controlled entity


(454,468)

-

Shares issued in lieu


86,400

35,124

Unrealised foreign exchange (loss)/gain


-

448

Impairment losses


-

293,462





Change in operating assets and liabilities




(Increase)/Decrease in trade and other receivables 


(173,475)

(71,211)

Increase in trade and other payables  


693,100

356,419

Increase/(Decrease) in provisions


7,469

(16,519)





Net cash outflow from operating activities


(8,423,419)

(3,840,157)





(b)       




Cash at bank and on hand


15,524,703

1,478,285

Deposits on call


72,056

6,020,000



15,596,759

7,498,285

 

16.     EARNINGS PER SHARE


 

30 June 2017

$

 

30 June 2016

$

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

(9,200,509)

(4,645,028)

 


Number of Shares
2017

Number of Shares
2016

Weighted average number of ordinary shares used in calculating basic and diluted earnings per share

139,217,150

112,565,903

 

(a)        Non-Dilutive Securities

As at balance date, 2,500,000 Unlisted Options (which represent 2,500,000 potential Ordinary Shares), 22,500,000 Performance Shares (which represent 22,500,000 potential Ordinary Shares) and 4,100,000 Performance Rights (which represent 4,100,000 potential Ordinary Shares) were considered non-dilutive as they would decrease the loss per share.

 

(b)        Conversions, Calls, Subscriptions or Issues after 30 June 2017

Since 30 June 2017, the Company has issued the following securities:

·           42,000 Ordinary Shares were issued, refer to Note 25.

Other than as outlined above, 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.

17.     RELATED PARTIES

(a)        Subsidiaries



% Equity Interest

Name

Country of Incorporation

2017
%

2016
%





Ultimate parent entity:




Salt Lake Potash Limited

Australia



Subsidiaries of Salt Lake Potash Limited




Australia Salt Lake Potash Pty Ltd (ASLP)

Australia

100

100

Subsidiary of ASLP




Piper Preston Pty Ltd

Australia

100

100

Peak Coal Pty Ltd

Australia

100

100

Wildhorse GE Holding Inc

USA

-

100

Subsidiary of Wildhorse GE Holdings Inc




Golden Eagle Uranium LLC

USA

-

100

(i)      During the year, the Company disposed of its USA operation. The holding companies were dormant.

(b)        Ultimate Parent

Salt Lake Potash Limited is the ultimate parent of the Group.

(c)        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 18.

18.     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 Matthew Syme                   Chief Executive Officer

Mr Jason Baverstock                          Executive Director (resigned 12 June 2017)

Mr Mark Hohnen                     Non-Executive Director

Mr Mark Pearce                       Non-Executive Director
Mr Bryn Jones                         Non-Executive Director (appointed 12 June 2017)

 

Other KMP

Mr Sam Cordin                       Chief Financial Officer and Company Secretary

 

Unless otherwise disclosed, the KMP held their position from 1 July 2016 until the date of this report.

 



2017

2016



$

$





Short-term employee benefits


591,898

395,834

Post-employment benefits


52,928

22,737

Share-based payments


556,016

163,448

Total compensation


1,200,842

582,019

(b)        Loans from Key Management Personnel


No loans were provided to or received from Key Management Personnel during the year ended 30 June 2017 (2016: Nil).

(c)        Other Transactions

Apollo Group Pty Ltd, a Company of which Mr Mark Pearce is a Director and beneficial shareholder, was paid or is payable $150,000 (2016: $210,000) for the provision of serviced office facilities, company secretarial, corporate and administration services for the year ended 30 June 2017. The amount is based on a monthly retainer due and payable in advance, with no fixed term, and is able to be terminated by either party with one month's notice. At 30 June 2017, $12,500 (2016: $20,000) was included as a current liability in the Statement of Financial Position.

19.     PARENT ENTITY DISCLOSURES


 

2017

 

2016


$

$

 



(a)        Financial Position



Assets



Current assets

15,738,697

7,607,069

Non-current assets

2,027,221

2,406,661

Total assets

17,765,918

10,013,730




Liabilities



Current liabilities

1,430,620

616,178

Total liabilities

1,430,620

616,178




Equity



Contributed equity

123,484,561

106,761,669

Accumulated losses

(107,971,087)

(97,604,964)

Reserves

821,824

240,847

Total equity

16,335,298

9,397,552




(b)        Financial Performance



Loss for the year

(10,366,123)

(4,956,874)

Total comprehensive income/(loss)

(10,366,123)

(4,956,874)

 

(c)        Other information

 

The Company has not entered into any guarantees in relation to its subsidiaries.

 

Refer to Note 23 for details of contingent assets and liabilities.

20.     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 year, the Company has also granted shares in lieu of payments to trade creditors for outstanding balances.

During the past two years, the following equity-settled share-based payments have been recognised:

 


2017

2016


$

$




Expenses arising from equity-settled share-based payment transactions relating incentive options

580,976

163,448

 

Expenses arising from equity-settled share-based payment transactions to creditors and consultants

86,400

35,124

 

Total share-based payments recognised during the year

667,376

198,572

 

         

(b)        Summary of Unlisted Options and Performance Rights Granted as Share-based Payments

 

The following Incentive Options and Performance Rights were granted as share-based payments during the past two years:

 

Series

Issuing Entity

Security Type

Number

Grant
Date

Expiry Date

Exercise Price

$

Grant Date Fair Value

$

2016








Series 1

Salt Lake Potash Limited

Options

750,000

03-Jun-16

29-Apr-19

0.40

0.190

Series 2

Salt Lake Potash Limited

Options

750,000

03-Jun-16

29-Apr-20

0.50

0.204

Series 3

Salt Lake Potash Limited

Options

1,000,000

03-Jun-16

29-Apr-21

0.60

0.217









2017








Series 4

Salt Lake Potash Limited

Rights

550,000

30-Nov-16

30-Jun-18

-

0.506

Series 5

Salt Lake Potash Limited

Rights

550,000

30-Nov-16

30-Jun-19

-

0.506

Series 6

Salt Lake Potash Limited

Rights

550,000

30-Nov-16

30-Jun-20

-

0.506

Series 7

Salt Lake Potash Limited

Rights

550,000

30-Nov-16

30-Jun-21

-

0.506

Series 8

Salt Lake Potash Limited

Rights

200,000

07-Feb-17

30-Jun-18

-

0.543

Series 9

Salt Lake Potash Limited

Rights

200,000

07-Feb-17

30-Jun-19

-

0.543

Series 10

Salt Lake Potash Limited

Rights

200,000

07-Feb-17

30-Jun-20

-

0.543

Series 11

Salt Lake Potash Limited

Rights

200,000

07-Feb-17

30-Jun-21

-

0.543

Series 12

Salt Lake Potash Limited

Rights

50,000

08-Jun-17

30-Jun-18

-

0.428

Series 13

Salt Lake Potash Limited

Rights

50,000

08-Jun-17

30-Jun-19

-

0.428

Series 14

Salt Lake Potash Limited

Rights

50,000

08-Jun-17

30-Jun-20

-

0.428

Series 15

Salt Lake Potash Limited

Rights

50,000

08-Jun-17

30-Jun-21

-

0.428

Series 16

Salt Lake Potash Limited

Rights

250,000

08-Jun-17

30-Jun-18

-

0.412

Series 17

Salt Lake Potash Limited

Rights

250,000

08-Jun-17

30-Jun-19

-

0.412

Series 18

Salt Lake Potash Limited

Rights

250,000

08-Jun-17

30-Jun-20

-

0.412

Series 19

Salt Lake Potash Limited

Rights

250,000

08-Jun-17

30-Jun-21

-

0.412

(c)        Summary of Unlisted Options and Performance Rights Granted as Share-based Payments

 

The following table illustrates the number and weighted average exercise prices (WAEP) of Unlisted Options and Performance Rights granted as share-based payments at the beginning and end of the financial year:

 

Unlisted Options/performance rights

2017
Number

2017
WAEP

2016
Number

2016
WAEP

Outstanding at beginning of year

2,705,443

$0.81

205,443

$4.46

Granted by the Company during the year

4,200,000

-

2,500,000

$0.51

Forfeited/cancelled/lapsed/expired

(305,443)

$4.46

-

-

Outstanding at end of year

6,600,000

$0.19

2,705,443

$0.81

Exercisable at end of year

1,500,000

$0.45

955,443

$0.81

 

The outstanding balance of options and performance rights as at 30 June 2017 is represented by:

·            750,000 Unlisted Options exercisable at $0.40 each on or before 29 April 2019;

·            750,000 Unlisted Options exercisable at $0.50 each on or before 29 April 2020;

·            1,000,000 Unlisted Options exercisable at $0.60 each on or before 29 April 2021;

·            1,025,000 Performance Rights subject to the PFS Milestone expiring on 30 June 2018;

·            1,025,000 Performance Rights subject to the BFS Milestone expiring on 30 June 2019;

·            1,025,000 Performance Rights subject to the Construction Milestone expiring on 30 June 2020; and

·            1,025,000 Performance Rights subject to the Production Milestone expiring on 30 June 2021.

 

(d)        Weighted Average Remaining Contractual Life

 

At 30 June 2017, the weighted average remaining contractual life of Unlisted Options and Performance Rights on issue that had been granted as share-based payments was 2.93 years (2016: 3.66 years).

(e)        Range of Exercise Prices

 

At 30 June 2017, the range of exercise prices of Unlisted Options on issue that had been granted as share-based payments was $0.40 to $0.60 (2016: $0.40 to $6.00). 

 

(f)         Weighted Average Fair Value


The weighted average fair value of Incentive Options and Performance Rights granted as share-based payments by the Group during the year ended 30 June 2017 was $0.496 (2016: $0.205).

 

(g)        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 the Binomial option valuation model taking into account the terms and conditions upon which the 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 and prior year:

 

Inputs

Series 1

Series 2

Series 3

Exercise price

0.40

0.50

0.60

Grant date share price

0.330

0.330

0.330

Dividend yield 1

-

-

-

Volatility 2

100%

100%

100%

Risk-free interest rate

1.59%

1.59%

1.77%

Grant date

03-Jun-16

03-Jun-16

03-Jun-16

Expiry date

29-Apr-19

29-Apr-20

29-Apr-21

Expected life of option 3

2.90

3.91

4.91

Fair value at grant date

0.190

0.204

0.217

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.

 

Inputs

Series 4

Series 5

Series 6

Series 7

Exercise price

-

-

-

-

Grant date share price

$0.51

$0.51

$0.51

$0.51

Grant date

30-Nov-16

30-Nov-16

30-Nov-16

30-Nov-16

Expiry date

30-Jun-18

30-Jun-19

30-Jun-20

30-Jun-21

Expected life of option 3

1.6 years

2.6 years

3.6 years

4.6 years

Fair value at grant date

$0.506

$0.506

$0.506

$0.506

 

Inputs

Series 8

Series 9

Series 10

Series 11

Exercise price

-

-

-

-

Grant date share price

$0.53

$0.53

$0.53

$0.53

Grant date

07-Feb-17

07-Feb-17

07-Feb-17

07-Feb-17

Expiry date

30-Jun-18

30-Jun-19

30-Jun-20

30-Jun-21

Expected life of option 3

1.3 years

2.3 years

3.3 years

4.3 years

Fair value at grant date

$0.577

$0.577

$0.577

$0.577

 

Inputs

Series 12

Series 13

Series 14

Series 15

Exercise price

-

-

-

-

Grant date share price

$0.43

$0.43

$0.43

$0.43

Grant date

08-Jun-17

08-Jun-17

08-Jun-17

08-Jun-17

Expiry date

30-Jun-18

30-Jun-19

30-Jun-20

30-Jun-21

Expected life of option 3

1.1 years

2.1 years

3.1 years

4.1 years

Fair value at grant date

$0.431

$0.431

$0.431

$0.431

 

Inputs

Series 16

Series 17

Series 18

Series 19

Exercise price

-

-

-

-

Grant date share price

$0.41

$0.41

$0.41

$0.41

Grant date

08-Jun-17

08-Jun-17

08-Jun-17

08-Jun-17

Expiry date

30-Jun-18

30-Jun-19

30-Jun-20

30-Jun-21

Expected life of option 3

1.0 years

2.0 years

3.0 years

4.0 years

Fair value at grant date

$0.431

$0.431

$0.431

$0.431

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 and performance rights is based on the expiry date of the options and performance rights as there is limited track record of the early exercise or conversion of options and performance rights.

21.     AUDITORS' REMUNERATION

The auditor of Salt Lake Potash Limited is Ernst and Young.

 


2017

2016


$

$

Amounts received or due and receivable by Ernst and Young for:



    an audit or review of the financial report of the entity and any other entity in the consolidated group

25,000

25,000

    tax and other advisory services

5,000

21,773


30,000

46,773

 

22.     FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

(a)        Overview


The Group's principal financial instruments comprise receivables, payables, finance leases, cash and short-term deposits. The main risks arising from the Group's financial instruments are credit risk, liquidity risk and interest rate risk.

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 as summarised below.

 

(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:

 


2017

2016


$

$

Financial assets



Cash and cash equivalents

15,596,759

7,498,285

Trade and other receivables

300,058

126,583


15,896,817

7,624,868

 

With respect to credit risk arising from cash and cash equivalents, the Group's exposure to credit risk arises from default of the counter party, 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 Consolidated Entity 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 2017, none (2016 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 2017 and 2016, 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

$

2017
Group






Financial Liabilities






Finance lease

5,914

5,914

50,821

-

62,649

Trade and other payables

1,348,791

-

-

-

1,348,791


1,354,705

5,914

50,821

-

1,411,440







2016
Group






Financial Liabilities






Trade and other payables

607,615

-

-

-

607,615


607,615

-

-

-

607,615

(d)        Interest Rate Risk

 

The Group does not have any long-term borrowing or long term deposits, which would expose it to significant cash flow interest rate risk.

The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.

 

(f)         Capital Management


The Group defines its Capital as total equity of the Group, being $17,046,443 as at 30 June 2017 (2016: $9,397,552). The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while financing the development of its projects through primarily equity based financing. The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Given the stage of development of the Group, the Board's objective is to minimise debt and to raise funds as required through the issue of new shares.

The Group is not subject to externally imposed capital requirements.

There were no changes in the Group's approach to capital management during the year. During the next 12 months, the Group will continue to explore project financing opportunities, primarily consisting of additional issues of equity.

(g)        Fair Value

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.

At 30 June 2017 and 30 June 2016, the carrying value of the Group's financial assets and liabilities approximate their fair value.

23.     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 2017 financial year.

 

(ii)        Contingent Liability

 

As at the date of this report, no contingent liabilities had been identified in relation to the 30 June 2017 financial year.

24.     COMMITMENTS

Management have identified the following material commitments for the consolidated group as at 30 June 2017 and 30 June 2016:

 


2017

2016


$

$




Exploration commitments



Within one year

1,061,000

890,000

Later than one year but not later than five years

-

-


1,061,000

890,000

25.     EVENTS SUBSEQUENT TO BALANCE DATE

On 18 August 2017, the Company issued 42,000 shares to an advisor as part of their annual fees.

Other than as above, as at the date of this report there are no matters or circumstances which have arisen since 30 June 2017 that have significantly affected or may significantly affect:

·           the operations, in financial years subsequent to 30 June 2017, of the Consolidated Entity;

·           the results of those operations, in financial years subsequent to 30 June 2017, of the Consolidated Entity; or

·           the state of affairs, in financial years subsequent to 30 June 2017, of the Consolidated Entity.

 

 

ASX ADDITIONAL INFORMATION

 

1.       TWENTY LARGEST HOLDERS OF LISTED SECURITIES

The names of the twenty largest holders of listed securities as at 31 August 2017 are listed below:

 

Name

Number of
Ordinary Shares

Percentage of Ordinary Shares

Computershare Clearing Pty Ltd

48,974,252

27.98

Arredo Pty Ltd

11,000,000

6.28

Pershing Australia Nominees Pty Ltd

5,716,017

3.27

Vynben Pty Ltd

5,025,498

2.87

Howitt MGMT Pty Ltd

4,620,000

2.64

Hopetoun Consulting Pty Ltd

4,500,000

2.57

HSBC Custody Nominees (Australia) Limited

4,436,364

2.53

JBJF Management Pty Ltd

4,100,000

2.34

Mr Mark Stuart Savage

3,600,000

2.06

Pershing Australia Nominees Pty Ltd

2,875,000

1.64

Aroida Investments Pty Ltd

2,726,511

1.56

Aegean Capital Pty Ltd

2,492,749

1.42

Roseberry Holdings Pty Ltd

2,000,000

1.14

Apollo Group Pty Ltd

2,000,000

1.14

Mr Aharon Arakel & Mrs Ida Arakel

1,950,000

1.11

Mr Terry Patrick Coffey & Hawkes Bay Nominees Limited

1,930,064

1.10

Cantori Pty Ltd

1,872,432

1.07

Sunset Capital Management Pty Ltd

1,800,000

1.03

J P Morgan Nominees Australia Limited

1,745,038

1.00

Mr Neil David Irvine

1,700,000

0.97

Total Top 20

115,063,925

65.73

Others

59,985,671

34.27

Total Ordinary Shares on Issue

175,049,596

100.00

 

2.       DISTRIBUTION OF EQUITY SECURITIES

An analysis of numbers of holders of listed securities by size of holding as at 31 August 2017 is listed below:

 


Ordinary Shares

Distribution

Number of
Shareholders

Number of
Ordinary Shares

1 - 1,000

1,137

304,986

1,001 - 5,000

379

936,386

5,001 - 10,000

151

1,192,405

10,001 - 100,000

291

11,173,817

More than 100,000

141

161,442,002

Totals

2,099

175,049,596

 

There were 1,176 holders of less than a marketable parcel of Ordinary Shares.

3.       VOTING RIGHTS

See Note 14(b) of the Notes to the Financial Statements.

4.       SUBSTANTIAL SHAREHOLDERS

Substantial holders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are as follows:

 

Distribution

Number of
Ordinary Shares

Lombard Odier Asset Management (Europe) Limited

13,541,000

Arredo Pty Ltd

11,000,000

5.       UNQUOTED SECURITIES


Performance Shares Subject to Pre-Feasibility Study Milestone (Class A) expiring

Performance Shares Subject to Definitive Feasibility Study Milestone (Class B) expiring

Performance Shares Subject to Construction Milestone (Class C) expiring

Holder

12-Jun-18

12-Jun-19

12-Jun-20

JBJF Management Pty Ltd

1,700,000

2,550,000

3,400,000

Mr Aharon Arakel & Mrs Ida Arakel

1,650,000

2,475,000

3,300,000

Howitt MGMT Pty Ltd

1,540,000

2,310,000

3,080,000

Others (less than 20%)

110,000

165,000

220,000

Total

5,000,000

7,500,000

10,000,000

Total holders

4

4

4

6.       ON-MARKET BUY BACK

There is currently no on-market buyback program for any of Salt Lake Potash Limited's listed securities.

 

7.       EXPLORATION INTERESTS

Summary of Exploration and Mining Tenements

As at 31 August 2017, the Company holds the following interests in the listed tenements:

Project

Status

License Number

Area       (km2)

Term

Grant Date

Date of First Relinquish-ment

Interest

 (%)

31-Aug-17

Western Australia






Lake Wells







Central

Granted

E38/2710

192.2

5 years

05-Sep-12

4-Sep-17

100%

South

Granted

E38/2821

131.5

5 years

19-Nov-13

18-Nov-18

100%

North

Granted

E38/2824

198.2

5 years

04-Nov-13

3-Nov-18

100%

Outer East

Granted

E38/3055

298.8

5 years

16-Oct-15

16-Oct-20

100%

Single Block

Granted

E38/3056

3.0

5 years

16-Oct-15

16-Oct-20

100%

Outer West

Granted

E38/3057

301.9

5 years

16-Oct-15

16-Oct-20

100%

North West

Granted

E38/3124

39.0

5 years

30-Nov-16

29-Nov-21

100%

West

Granted

L38/262

113.0

20 years

3-Feb-17

2-Feb-38

100%

East

Granted

L38/263

28.6

20 years

3-Feb-17

2-Feb-38

100%

South West

Granted

L38/264

32.6

20 years

3-Feb-17

2-Feb-38

100%

South

Application

L38/287

95.8

-

-

-

100%

South Western

Application

E38/3247

350.3

-

-

-

100%

Lake Ballard







West

Granted

E29/912

607.0

5 years

10-Apr-15

10-Apr-20

100%

East

Granted

E29/913

73.2

5 years

10-Apr-15

10-Apr-20

100%

North

Granted

E29/948

94.5

5 years

22-Sep-15

21-Sep-20

100%

South

Granted

E29/958

30.0

5 years

20-Jan-16

19-Jan-21

100%

South East

Granted

E29/1011

68.2

5 years

11-Aug-17

10-Aug-22

100%

South

Application

E29/1020

9.3

-

-

-

100%

South

Application

E29/1021

27.9

-

-

-

100%

South

Application

E29/1022

43.4

-

-

-

100%

Lake Irwin







West

Granted

E37/1233

203.0

5 years

08-Mar-16

07-Mar-21

100%

Central

Granted

E39/1892

203.0

5 years

23-Mar-16

22-Mar-21

100%

East

Granted

E38/3087

139.2

5 years

23-Mar-16

22-Mar-21

100%

North

Granted

E37/1261

107.3

5 years

14-Oct-16

13-Oct-21

100%

Central East

Granted

E38/3113

203.0

5 years

14-Oct-16

13-Oct-21

100%

South

Granted

E39/1955

118.9

5 years

14-Oct-16

13-Oct-21

100%

North West

Application

E37/1260

203.0

-

-

-

100%

South West

Application

E39/1956

110.2

-

-

-

100%

Lake Minigwal








West

Granted

E39/1893

246.2

5 years

01-Apr-16

31-Mar-21

100%

East

Granted

E39/1894

158.1

5 years

01-Apr-16

31-Mar-21

100%

Central

Granted

E39/1962

369.0

5 years

8-Nov-16

7-Nov-21

100%

Central East

Granted

E39/1963

93.0

5 years

8-Nov-16

7-Nov-21

100%

South

Granted

E39/1964

99.0

5 years

8-Nov-16

7-Nov-21

100%

South West

Application

E39/1965

89.9

-

-

-

100%

Lake Way








Central

Granted

E53/1878

217.0

5 years

12-Oct-16

11-Oct-21

100%

South

Application

E53/1897

77.5

-

-

-

100%

Lake Marmion








North

Granted

E29/1000

167.4

5 years

03-Apr-17

02-Apr-22

100%

Central

Granted

E29/1001

204.6

5 years

03-Apr-17

02-Apr-22

100%

South

Granted

E29/1002

186.0

5 years

15-Aug-17

14-Aug-22

100%

West

Granted

E29/1005

68.2

5 years

11-Jul-17

10-Jul-22

100%

Lake Noondie








North

Application

E57/1062

217.0

-

-

-

100%

Central

Application

E57/1063

217.0

-

-

-

100%

South

Application

E57/1064

55.8

-

-

-

100%

West

Application

E57/1065

120.9

-

-

-

100%

Lake Barlee








North

Application

E49/495

217.0

-

-

-

100%

Central

Application

E49/496

220.1

-

-

-

100%

South

Application

E77/2441

173.6

-

-

-

100%

Lake Raeside








North

Application

E37/1305

155.0

-

-

-

100%

Northern Territory






Lake Lewis







South

Granted

EL 29787

146.4

6 years

08-Jul-13

7-Jul-19

100%

North

Granted

EL 29903

125.1

6 years

21-Feb-14

20-Feb-19

100%

8.       MINERAL RESOURCES STATEMENT

Mineral Resource Statement as at 30 June 2017 is grouped by deposit, all of which form part of the Lake Wells SOP in Western Australia. To date, no Ore Reserves have been reported for these deposits.

Governance

The Company engages external consultants and Competent Persons (as determined pursuant to the JORC Code 2012) to prepare and estimate the Mineral Resources. Management and the Board review these estimates and underlying assumptions for reasonableness and accuracy. The results of the Mineral Resource estimates are then reported in accordance with the requirements of the JORC Code 2012 and other applicable rules (including ASX Listing Rules).

Where material changes occur during the year to the project, including the project's size, title, exploration results or other technical information, previous resource estimates and market disclosures are reviewed for completeness.

The Company reviews its Mineral Resources as at 30 June each year. A revised Mineral Resource estimate will be prepared as part of the annual review process where a material change has occurred in the assumptions or data used in previously reported Mineral Resources. However, there are circumstances where this may not be possible (e.g. an ongoing drilling programme), in which case a revised Mineral Resource estimate will be prepared and reported as soon as practicable.

Results of Annual Review

In November 2015, the Company reported its maiden JORC Mineral Resource estimate for the Lake Wells Project, totalling 29 million tonnes (Mt) of Sulphate of Potash (SOP) with approximately 80% in the 'Measured' category with excellent brine chemistry of 4,009 mg/L Potassium (K), 19,175 mg/L (SO4). The resource was calculated only on the upper 16 metres of the Lake, with mineralisation remaining open at depth across most of the Lake.

In February 2016, an expanded Mineral Resource Estimate (MRE) was calculated at Lake Wells totaling 80-85 million tonnes of SOP. This represents an additional 51-56 Mt of Inferred Resource calculated in the strata below the previously reported shallow Resource of 29 Mt.

During the year ended 30 June 2017, the Company continue exploration activites including drilling,test pumping and other testwork at Lake Wells.

As a result of the annual review of the Company's Mineral Resources, there has been no change to the Mineral Resources reported for the Lake Wells Project in February 2016.

Total Mineral Resource Estimate

Classification

Geological Unit

Bulk Volume

(Million m3)

Porosity

Brine Volume

(Million m3)

Average SOP1 (K2SO4) Concentration (kg/m3)

K2SO4 Tonnage

(Mt)

Measured

Playa Lake Sediments

5,427

0.464

2,518

8.94

23

Indicated

Playa Lake Sediments

775

0.464

359

8.49

3

Inferred

Playa Lake Sediments (Islands)

1,204

0.464

558

5.34

3

Inferred

Paleovalley Sediment

10,600

0.40

4,240

9.07

38

Inferred

Fractured Siltstone Aquifer

6,717

0.22-.30

1,478 - 2,015

8.79

13-18

Total


24,723


9,691

8.74

80-85

Note: 1) Conversion factor to K to SOP (K2SO4 equivalent) is 2.23

Lake Wells Project - Mineral Resource Estimate (JORC 2012)

Competent Person Statement - Mineral Resource Statement

The information in this Mineral Resource Statement that relates to Mineral Resources is based on, and fairly represents, information compiled by Mr Ben Jeuken, a Competent Person, who is a member Australian Institute of Mining and Metallurgy. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

 

Mr Jeuken has approved the Mineral Resource Statement as a whole and consents to its inclusion in the form and context in which it appears. 

Cautionary Statement and Important Information

The information in the Report that relates to the Scoping Study is extracted from the report entitled 'Scoping Study Confirms Potential Confirms Lake Wells Potential' dated 29 August 2016 (Scoping Study Announcement). The announcement is available to view on www.saltlakepotash.com.au. The Scoping Study has been prepared and reported in accordance with the requirements of the JORC Code (2012) and relevant ASX Listing Rules.

The primary purpose of the Scoping Study is to establish whether or not to proceed to a Pre-Feasibility Study ("PFS") and has been prepared to an accuracy level of ±30%, the Scoping Study results should not be considered a profit forecast or production forecast. As defined by the JORC Code, a "Scoping Study is an order of magnitude technical and economic study of the potential viability of Mineral Resources. It includes appropriate assessments of realistic assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be justified." (Emphasis added)

The Modifying Factors included in the JORC Code have been assessed as part of the Scoping Study, including mining (brine extraction), processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and government factors. The Company has received advice from appropriate experts when assessing each Modifying Factor.

Following an assessment of the results of the Scoping Study, the Company has formed the view that a PFS is justified for the Lake Wells project, which it will now commence. The PFS will provide the Company with a more comprehensive assessment of a range of options for the technical and economic viability of the Lake Wells project.

The Company has concluded it has a reasonable basis for providing any of the forward looking statements included in this announcement and believes that it has a reasonable basis to expect that the Company will be able to fund its stated objective of completing a PFS for the Lake Wells project. All material assumptions on which the forecast financial information is based are set out in the Scoping Study Announcement.

In accordance with the ASX listing rules, the Company advises the Scoping Study referred to in the Scoping Study Announcement is based on lower-level technical and preliminary economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realised.

Production Target

The Production Target stated in this Report is based on the Company's Scoping Study for the Lake Wells Project as released to the ASX on 29 August 2016. The information in relation to the Production Target that the Company is required to include in a public report in accordance with ASX Listing Rule 5.16 was included in the Company's ASX Announcement released on 29 August 2016. The Company confirms that the material assumptions underpinning the Production Target referenced in the 29 August 2016 release continue to apply and have not materially changed.

The Production Target referred to in this Report and the Scoping Study Announcement is based on 100% Measured Mineral Resources for Stage 1 and 70% Measured Mineral Resources and 30% Inferred Mineral Resources for Stage 2. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Measured or Indicated Mineral Resources or that the production target or preliminary economic assessment will be realised.

Forward Looking Statements

This presentation contains 'forward-looking information' that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information includes, among other things, statements with respect to pre-feasibility and definitive feasibility studies, the Company's business strategy, plans, development, objectives, performance, outlook, growth, cash flow, projections, targets and expectations, mineral reserves and resources, results of exploration and related expenses. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'outlook', 'anticipate', 'project', 'target', 'potential', 'likely', 'believe', 'estimate', 'expect', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'will', 'plan', 'forecast', 'evolve' and similar expressions. Persons reading this news release are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in Schedule 2 of the Company's Notice of General Meeting and Explanatory Memorandum dated 8 May 2015.

Competent Persons Statement

The information in the Report that relates to the Scoping Study is extracted from the report entitled 'Scoping Study Confirms Potential Confirms Lake Wells Potential' dated 29 August 2016. The announcement is available to view on www.saltlakepotash.com.au. The information in the original announcement that relates to processing, infrastructure and cost estimation are based on and fairly represents information compiled or reviewed by Mr Zeyad El-Ansary, who is a Competent Person as a member of the Australasian Institute of Mining and Metallurgy.  Mr Zeyad El-Ansary has 9 years' experience relevant to the activities undertaken for preparation of these report sections and is a employed by Amec Foster Wheeler. Mr Zeyad El-Ansary consents to the inclusion in the report/press release of the matters based on their information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

The information in this Report that relates to Mineral Resources for Lake Wells, is extracted from the reports entitled 'Lake Wells Resource Increased By 193 Percent to 85Mt of SOP' dated 22 February 2016 and 'Significant Maiden SOP Resource of 29Mt at Lake Wells' dated 11 November 2015  and is available to view on the Company's website www.saltlakepotash.com.au. The information in the original ASX Announcement that related to Exploration Results for Lake Wells based on information compiled by Mr Ben Jeuken, who is a member Australian Institute of Mining and Metallurgy. Mr Jeuken is employed by Groundwater Science Pty Ltd, an independent consulting company. Mr Jeuken has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Jeuken consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.


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