30 September 2021
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AIM/ASX Code: SO4
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SALT LAKE POTASH LIMITED Full Year Statutory Accounts 2021
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AIM and ASX listed company Salt Lake Potash Limited ("SO4" or the "Company"), announces its results for the year ended 30 June 2021.
The Company's Full Year Statutory Accounts can be viewed at www.so4.com.au.
The Company also advises that an Appendix 4G (Key to Disclosures: Corporate Governance Council Principles and Recommendations) and the 2020 Corporate Governance Statement have been released today and are also available on the Company's website.
The Company's securities remain suspended on the ASX pending completion of a material fundraising. The Company's securities will continue to trade on AIM during this period. The Company also announces that it has paid the first instalment for the purchase of
Further announcements will be made as the fundraising progresses.
For further information please visit www.so4.com.au or contact:
Tony Swiericzuk/Richard Knights |
Salt Lake Potash Limited |
Tel: +61 8 6559 5800 |
Colin Aaronson/Seamus Fricker |
Grant Thornton |
Tel: +44 (0) 20 7383 5100 |
Derrick Lee/Peter Lynch |
Cenkos Securities plc (Joint Broker) |
Tel: +44 (0) 131 220 6939 |
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The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "
OPERATING AND FINANCIAL REVIEW
During 2021 SO4's primary activities related to the development of the Lake Way project in the Goldfields district of
On-Lake Operations
The Company expanded its on-lake operations with total trench length extended to 75 km and 29 active bores pumping brine at the date of this report. Salt harvesting commenced in the Train 1 harvest cells in December-February 2021 and recommenced in the June 2021 quarter to prepare harvest salts for plant feed. At the end of the period 96k m3 of salt had been harvested.
Off-Lake Operations
Construction of the Process Plant at Lake Way continued throughout the period, with practical completion achieved in the June quarter with GR Engineering Services handing over the plant to the SO4 operations team. Towards the period end and into the September quarter commissioning activities were focused on the calibration of the flotation circuit to achieve the designed waste mass pull.
Approvals
The Company's Part IV Environmental submission was approved by the Government in April, having been recommended by the EPA with no appeals in January 2021. The permit has enabled SO4 to finalise construction of the remaining evaporation ponds as well as the trench and bore construction that will support full scale operations at Lake Way.
Corporate
Equity Financing
The Company conducted six separate equity capital raisings in the year to June 2021.
· August 2020:
· August - September 2020:
· September 2020:
· December 2020:
· February 2021:
· June 2021:
Debt Financing
In addition to equity finance, the Company drew down on a
Sustainability
SO4 is committed to ensure that its business has a sustainable future for all of its stakeholders. The Company is driven by our core values to create positive multi-generational benefits through responsible environmental, social, cultural and economic behaviours. SO4 is currently developing a sustainability framework for its operations.
Results of Operations
The net loss of the Consolidated Entity for the year ended 30 June 2021 was
(i) Exploration and evaluation expenses of
(ii) Corporate and administrative expenses of
(iii) Non-cash share-based payment expenses of
(iv) Business development expenses of
(v) An impairment of inventories of stockpiled salts of
(vi) A gain of
(vii) Foreign exchange gain on US dollar denominated loans and cash balances of
Impact of COVID-19
These financial results were incurred during the COVID-19 pandemic. In order to minimise any financial or operational impact, the Company took immediate action to protect the integrity of the Company's business interests and the safety and well-being of its employees and stakeholders.
Salt Lake operates in the isolated and remote mining area of Wiluna and fortunately, with the positive protection measures and support of governments and employees, the Lake Way Project continued to function close to normal levels. Prompt implementation and affirmative compliance with government and health bodies' regulations and recommendations forced quick changes to operational processes, including strict social distancing and isolation practices. The demographics and location of our remote workforce also required changes to rosters and transport to comply with Government restrictions. The closure of borders required immediate action to manage the impact on the outputs, inputs, employees and communities that Salt Lake operates in.
To protect the local community the Company applied restrictions on staff entering the town of Wiluna and local communities. The Company also provided additional support to local communities by providing fresh food at a time when the normal supply chain for goods into Wiluna was under pressure from the impact of COVID-19.
Social and mental health issues are a potential outcome from the roster changes, changed travel and dining arrangements and enhanced hygiene practices introduced to manage the impact of COVID-19. Salt Lake has taken a considerate approach to the hidden consequences of such changes and continues to work with its employees to lessen the impact. The over-arching objective of the Company has been to keep all its employees and stakeholders safe and free from infection and/or spread, and importantly to keep people employed during these uncertain times.
Due to the concerted and quick action of the Company, the overall financial impact of COVID-19 has been minimal.
Financial Position
At 30 June 2021, the Group had cash reserves of
Business Strategies and Prospects for Future Financial Years
The objective of the Group is to create long-term shareholder value through the exploitation of its SOP projects. To achieve its objective, the Group currently has the following business strategies and prospects:
(i) Complete construction of the on-lake infrastructure and process plant for the Lake Way Project with a view to first production during the March 2022 quarter;
(ii) Complete first sales of product to key offtake partners to receive first revenues during 2022;
(iii) Progress to capacity of 217,000t per annum of SOP at Lake Way during 2024, this is dependent on the economics of processing muriate of potash (MOP); and
(iv) Continue assessment and exploration across the Company's multi lake portfolio.
All of these activities have inherent risks and the Board is unable to provide certainty of the expected results or timing of these activities, or that any or all of these likely activities will be achieved. The material business risks faced by the Group that could have an effect on the Group's future prospects, and how the Group manages these risks, include:
Development Risks -The capital expenditures and time required to develop new mines are considerable and changes in cost or construction schedules can significantly increase both the time and capital required to build the mine;
Operational risks - The planned schedule for production of harvest salts for the commissioning and ramp up of the process plant are subject to operational risks that could impact the amount of harvest salts produced at its SOP operations, delay availability of harvest salts or increase the cost of production for varying lengths of time. Such risks include changes or variations in hydrogeological conditions, weather conditions effecting evaporation and/or recharge, equipment failures, limited availability or increased costs of equipment and materials, safety accidents, natural disasters, and a shortage of skilled labour. If any of these or other conditions or events occur in the future, they may increase the cost of production or delay or halt planned commissioning, ramp up and production, which could adversely affect our results of operations or decrease the value of our assets. The Group has in place a framework for the management of operational risks and an insurance program which provides coverage for a number of these operational risks.
Sulphate of Potash prices and foreign exchange - The price of potash and other commodities fluctuate and are affected by numerous factors beyond the control of the Company. The economic viability of the Group is dependent upon the price of potash and other commodities being sufficient to cover the costs of production and to provide an adequate return to the Company's shareholders. The Company has engaged with potential customers with a view to establishing binding offtake or distribution or tolling agreements.
Project financing facilities with the Group's lenders are denominated in US dollars whilst many of the planned development and operational activities are denominated in Australian dollars. The Company's ability to fund these activities may be adversely affected if the Australian dollar rises against the US dollar.
The Company's activities will require further capital - The development of the Company's projects will require additional funding. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company.
Native title and Aboriginal Heritage - There are areas of the Company's projects, including Lake Way, over which legitimate common law and/or statutory Native Title rights of Aboriginal Australians exist. Where Native Title rights do exist, the Company must obtain consent of the relevant landowner to progress the exploration, development and mining phases of its operations. Where there is an Aboriginal Site for the purposes of the Aboriginal Heritage Act 1972, the Company must obtain consents in accordance with the Act. The Company has executed a Native Title Land Access Agreement with the Native Title Owners and established a framework for obtaining required consents for the continuity of works, but in the event that it is unable to obtain these consents, its activities may be adversely affected.
The Company's activities are subject to Government regulations and approvals - The development of the Lake Way Project is subject to obtaining further key approvals from relevant government authorities. The Company has an approvals schedule and a management team with significant experience in approvals required for resource projects in
Any material adverse changes in government policies or legislation in
Global financial conditions may adversely affect the Company's growth and profitability - Many industries, including the mineral resource industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil caused by the COVID-19 pandemic include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity and foreign exchange markets, and a lack of market liquidity. Due to the current nature of the Company's activities, a slowdown in the financial markets or other economic conditions may adversely affect the Company's growth and ability to finance its activities. If these increased levels of volatility and market turmoil continue, the Company's activities could be adversely impacted and the trading price of the Company's shares could be adversely affected.
EARNINGS PER SHARE
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Basic and diluted loss per share |
(0.84) |
(5.46) |
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In addition to equity and debt funding noted above, significant changes in the state of affairs of the Consolidated Entity during the 2021 financial year were as follows:
(i) Harvesting of potassium rich kainite and schoenite salts from Train 1 commenced during the March 2021 quarter.
(ii) The Company announced on 22 March 2021 commencement of commissioning of the Lake Way Process Plant and completion of the gas supply pipeline for the Lake Way Project.
(iii) Part IV Environmental Approval was received from the Government of
(iv) The Practical Completion certificate for the Lake Way Process Plant (Plant) was received from the construction contractor in June 2021 with Plant handover to the SO4 operations team completed.
SIGNIFICANT EVENTS AFTER BALANCE DATE
i) The Company issued 2,805,000 shares to Directors on 10 August 2021 as part of a placement on 24 May 2021. The shares applied for in the placement by Directors were subject to shareholder approval which was granted on 13 July 2021.
ii) Mr Stuart Fraser was appointed as CFO on 15 July 2021.
iii) Mr Tony Swiericzuk resigned as CEO & Managing Director on 27 August 2021. He remains on the Board as an executive director.
iv) Mr Bruce Franzen was appointed as Company Secretary on 12 August 2021.
v) In July 2021 the Company announced a revised ramp up strategy that includes suspension of the initial plant feed program to enable more salts to precipitate before commencing continuous harvesting activities. SO4 also announced that, as a result of this delay in production, the Company will require further funding before the end of 2021 to continue operations at Lake Way.
vi) Mr Isak Buitendag was appointed as CEO on 13 September 2021.
vii) As at the date of signing this report the Company was in the process of raising further capital via a share placement and rights issue planned to be completed in October/ November 2021.
Other than as noted above, as at the date of this report there are no matters or circumstances which have arisen since 30 June 2021 that have significantly affected or may significantly affect:
§ The operations, in financial years subsequent to 30 June 2021, of the Consolidated Entity;
§ The results of those operations, in financial years subsequent to 30 June 2021, of the Consolidated Entity; or
§ The state of affairs, in financial years subsequent to 30 June 2021, of the Consolidated Entity.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the financial year consisted of the exploration and development of resource projects. No significant change in nature of these activities occurred during the year.
DIRECTORS
The names of the Group's Directors in office at any time during the financial year or since the end of the financial year are:
Current Directors
Mr Ian Middlemas Chairman
Mr Tony Swiericzuk Executive Director
Mr Matthew Bungey Non-Executive Director
Mr Philip Montgomery Non-Executive Director (appointed 19 October 2020)
Mr Peter Thomas Non-Executive Director (appointed 19 October 2020)
Ms Rebecca Morgan Non-Executive Director (appointed 21 June 2021)
Mr Bryn Jones Non-Executive Director (resigned 4 May 2021)
Mr Mark Pearce Non-Executive Director (resigned 19 October 2020)
Unless otherwise stated, Directors held their office from 1 July 2020 until the date of this report.
DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the Australian Institute of Company Directors and holds a Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive corporate and management experience and is currently a Director with a number of publicly listed companies in the resources sector.
Mr Middlemas was appointed a Director of the Company on 21 January 2010 and Chairman on 29 August 2014. During the three year period to the end of the financial year, Mr Middlemas has held directorships in Constellation Resources Limited (November 2017 - present), Apollo Minerals Limited (July 2016 - present), Paringa Resources Limited (October 2013 - present), Berkeley Energia Limited (April 2012 - present), Prairie Mining Limited (August 2011 - present), Equatorial Resources Limited (November 2009 - present), Piedmont Lithium Limited (September 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - present) and Cradle Resources Limited (May 2016 - July 2019).
Mr Tony Swiericzuk BEng (Hons), MBA, GAICD
Executive Director (resigned as CEO & Managing Director 27 August 2021 though remains on the Board as an Executive Director)
Mr Swiericzuk is a Mining Engineer with outstanding credentials as a builder and operator of mining projects, having recently been General Manager of the Fortescue Christmas Creek Mine from 2012 to 2017. He oversaw the construction, commissioning and ramp-up of this project from 15Mtpa to 60Mtpa in his initial 2 year period, then proceeded to optimise the operation and help drive Fortescue Metals Group Limited (FMG) to become the world's lowest cost iron ore producer.
In his initial years at FMG Mr Swiericzuk was General Manager Port Operations in Port Hedland and managed the ramp up of port operations from 20Mtpa to 60Mtpa from 2009 to 2011.
Mr Swiericzuk was appointed a Director of the Company on 5 November 2018. Mr Swiericzuk has not held any other Directorships in the three year period up until the end of this financial year.
Mr Matthew Bungey B.Chem Eng (Hons), B. Sci, MBA
Non-Executive Director
Mr Bungey is a Chemical Engineer with over 20 years experience in natural resources. He commenced his career as a Process Engineer with BHP at Centre for Minerals Technology in
Mr Bungey was appointed Non-Executive Director of the Company on 14 May 2020 and has not held any other Directorships in the three year period up until the end of this financial year.
Mr Philip Montgomery BSc
Non-Executive Director (appointed 19 October 2020)
Mr Montgomery is a highly experienced mining industry executive who was most recently Vice President - Projects at BHP, responsible for the development of BHP's Potash business through its
Mr Peter Thomas BEc, BSc, MBA
Non-Executive Director (appointed 19 October 2020)
Mr Thomas is a senior executive with significant experience in project operations, construction, finance and strategy. Mr Thomas held senior executive positions at Fortescue Metals Group between 2004-2014, including Project Director in charge of the
Ms Rebecca Morgan BAppSc (Hons), ME
Non-Executive Director (appointed 22 June 2021)
Ms Morgan is an experienced mining professional having worked in senior technical and executive functions across a number of companies, commodities and jurisdictions over a 20 year career. Ms Morgan is currently a Non-Executive Director of Peak Resources (ASX:PEK), the Raw Materials Manager at Minbos Resources (ASX:MIN) and a director of REESearch technical consultancy. She has previously held roles as Non-Executive Technical Director for Koppar Resources (ASX:KRX), a Director of Calyx Resources (unlisted), Acting Chief Geologist at First Quantum Minerals in
Mr Bryn Jones BAppSc, FAusIMM
Non-Executive Director (resigned 4 May 2021)
Mr Jones is a Chemical Engineer with over 20 years management experience in industrial processing in commercial and mining operations around the world, including potash and phosphate projects.
During the three year period to the date of his resignation, Mr Jones has held directorships in DevEx Resources Limited (September 2009 - present) and Phosenergy Limited (July 2013 - present).
Mr Mark Pearce B.Bus, CA, FCIS, FFin
Non-Executive Director (resigned 19 October 2020)
Mr Pearce is a Chartered Accountant and is currently a director of several listed companies that operate in the resources sector. He has had considerable experience in the formation and development of listed resource companies. Mr Pearce is also a Fellow of the Institute of Chartered Secretaries and Administrators and a Fellow of the Financial Services Institute of
During the three year period to the end of the financial year, Mr Pearce has held directorships in Apollo Minerals Limited (July 2016 - present), Constellation Resources Limited (July 2016 - present), Prairie Mining Limited (August 2011 - present), Equatorial Resources Limited (November 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - September 2020) and Piedmont Lithium Limited (September 2009 - August 2018).
Mr Isak Buitendag
Chief Executive Officer (appointed 13 September 2021)
Mr Buitendag will be joining from his position as General Manager of Transformation at Kazzinc (69.7% owned by Glencore). Prior to Kazzinc, he was Vice President of Operations and Vice President of Development at Kazchrome, the largest ferrochrome producer in the world. Mr Buitendag has significant experience in Executive roles within the mining industry in
Mr Stuart Fraser CA
Chief Financial Officer (appointed 15 July 2021)
Mr Fraser is a Chartered Accountant and an experienced energy services finance executive with over 25 years experience in senior finance roles with large multi-national corporations, including Schlumberger and Weatherford International.
Mr Bruce Franzen B.Bus. FCPA FFIN
Company Secretary (appointed 12 August 2021)
Mr Franzen is a Certified Practicing Accountant with over 30 years experience in the resources sector and has held executive, board and company secretarial positions with a number of ASX listed companies.
Mr Matthew Worner
Company Secretary (appointed 28 April 2021, resigned 12 August 2021)
Mr Worner is a former lawyer, with broad company secretarial experience. He has held management, company secretarial and board positions with various ASX and AIM listed companies
Mr Clint McGhie B.Com, CA, ACIS, FFin
Company Secretary (resigned 28 April 2021)
Mr McGhie is an experienced Chartered Accountant and Company Secretary and has been involved with a number of ASX and AIM listed companies operating in the resources sector, including Apollo Minerals Limited, Berkeley Energia Limited and Sovereign Metals Limited. Mr McGhie is an Associate Member of the Governance Institute of
Mr Shaun Day B.Com. CA, AICD
Chief Financial Officer (resigned 18 December 2020)
Mr Day is a Chartered Accountant and experienced CFO with over 20 years of experience in executive and financial positions across mining and infrastructure, investment banking and international accounting firms. Mr Day was previously CFO of Northern Star Resources.
DIRECTORS' INTERESTS
As at the date of this report, the Directors' interests in the securities of the Company are as follows:
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Interest in securities at the date of this report |
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Ordinary Shares1 |
Unlisted Options 2 |
Performance Rights 3 |
Mr Ian Middlemas4 |
22,500,000 |
- |
- |
Mr Tony Swiericzuk4 |
5,454,470 |
5,000,000 |
5,879,377 |
Mr Matthew Bungey |
2,014,075 |
450,000 |
750,000 |
Mr Philip Montgomery |
1,250,000 |
500,000 |
- |
Mr Peter Thomas4 |
300,000 |
500,000 |
- |
Ms Rebecca Morgan5 |
- |
500,000 |
- |
Notes:
1 Ordinary Shares means fully paid Ordinary Shares in the capital of the Company.
2 Unlisted Options means an unlisted share option to subscribe for one Ordinary Share in the capital of the Company.
3 Performance Rights means Performance Rights issued by the Company that convert to one Ordinary Share in the capital of the Company upon satisfaction of various performance conditions.
4 The following shares were issued to Directors on 10 August 2021 as part of a placement on 31 May 2021. These shares are included in the totals above.
Mr Ian Middlemass 2,500,000 shares
Mr Tony Swiericzuk 250,000 shares
Mr Peter Thomas 55,000 shares
The issue of the above shares to Directors was subject to shareholder approval which was granted on 13 July 2021.
5 The issue of 500,000 options to Rebecca Morgan approved by the board on 21 June 2021 are subject to shareholder approval, which will be sought at the Company's 2021 Annual General Meeting or earlier if a general meeting of shareholders is held before then.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group's operations are subject to various environmental laws and regulations under the relevant government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations to achieve.
Instances of environmental non-compliance by an operation are identified either by external compliance audits or inspections by relevant government authorities.
There have been no significant known breaches by the Group during the financial year.
DIVIDENDS
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
SHARE OPTIONS, PERFORMANCE SHARES AND PERFORMANCE RIGHTS
At the date of this report the following options, performance shares and convertible notes have been issued over unissued Ordinary Shares of the Company:
§ 9,375,000 Unlisted Options exercisable at
§ 2,400,000 Unlisted Options exercisable at
§ 5,250,000 Unlisted Options exercisable at
§ 5,000,000 Unlisted Options exercisable at
§ 1,000,000 Unlisted Options exercisable at
§ 9,000,000 Unlisted Options exercisable at
§ 15,000,000 Unlisted Options exercisable at
§ 200,000 Unlisted Options exercisable at
§ 300,000 Unlisted Options exercisable at
§ 13,831,255 Performance Rights which are subject to various performance conditions to be satisfied prior to the relevant expiry dates in the period to1 November 2023; and
§ 7,500,000 Performance Rights issued to the CEO on 13 September 2021, being his date of appointment. The rights are subject to various performance conditions to be satisfied prior to the relevant expiry dates in the period up to 31 December 2022.
During the year ended 30 June 2021, 1,190,398 Ordinary Shares were issued as a result of the conversion of Performance Rights and no Ordinary Shares were issued as a result of the conversion of Options. Subsequent to year end and until the date of this report, no Ordinary Shares have been issued as a result of the exercise of Options or conversion of Performance Rights.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
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30 June 2021 |
Restated 30 June 2020 |
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Notes |
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