TIDMDNK
RNS Number : 4131T
Danakali Limited
20 March 2019
Announcement Wednesday, 20 March 2019
============= =========================
Danakali releases 2018 Financial Report
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the
Company), the potash company focused on the development of the
Colluli Potash Project (Colluli, or the Project) in Eritrea, is
pleased to announce its Full Year Results for the year ended 31
December 2018.
Key operational highlights
* Completion of the Front End Engineering Design (FEED)
Study, confirming Colluli as the most advanced stage
greenfield SOP project globally with industry leading
capital intensity, first quartile costs, a project
level NPV of US$902m and IRR of 29.9% for Module I &
II(1)
* Updated JORC-2012 compliant Ore Reserve report for
Colluli completed as part of FEED(2) , estimating:
_ 1,100Mt @ 10.5% K(2) O Ore Reserve
_ 203Mt of contained SOP equivalent
_ Expected mine life of almost 200 years at FEED production rates
* Signed binding take-or-pay offtake agreement with
global partner EuroChem Trading GmbH (EuroChem) for
up to 100% of Colluli Module I SOP production for an
initial 10-year term, with an option to extend a
further 3 years(3)
* Successful admission to trading on the London Stock
Exchange (LSE) Main Market, helping to increase the
Company's reach to international institutions and
raise the profile of the Project(4)
* Significant positive developments in
Eritrean-Ethiopian relations including signing of
peace treaty
* CMSC's Social and Environmental Management Plans
(SEMPs) were agreed and finalised following an
extensive review process by the Eritrean Ministry of
Land, Water & Environment's Department of
Environment(5)
* DRA Global confirmed as preferred Engineering
Procurement Construction & Management (EPCM)
contractor for Colluli(6)
Key financial highlights
* Cash position of A$9.6M as at 31 December 2018
* Executed non-binding indicative US$200M debt term
sheet and associated mandate with highly reputable
African development finance institutions (DFIs) the
African Export-Import Bank (Afreximbank) and Africa
Finance Corporation (AFC), to fund construction and
development of Colluli(7) .
Post-period highlights
* UNDP report released outlining potential for Colluli
to boost the Eritrean economy and support the
implementation of 13 out of the 17 total UN
Sustainable Development Goals (SDGs) in the
country(8)
Corporate Governance Statement
The Corporate Governance Statement is available for download
from the Company's website at
http://www.danakali.com.au/images/stories/corporate-governance-statement/20190318_Corporate_Governance_Statement.pdf
For more information, please contact:
Danakali
Seamus Cornelius William Sandover
Executive Chairman Head of Corporate Development &
+61 8 6189 8635 External Affairs
+61 499 776 998
Corporate broker - Numis Securities UK IR/PR - Instinctif Partners
John Prior / Matthew Hasson / James David Simonson / Sarah Hourahane
Black / / Dinara Shikhametova
Paul Gillam danakali@instinctif.com
+44 (0)20 7260 1000 +44 (0)207 457 2020
1 DNK announcement, 29-Jan-18
2 DNK announcement, 19-Feb-18
3 DNK announcement, 12-Jun-18
4 DNK announcement, 24-Jul-18
5 DNK announcement, 22-Aug-18
6 DNK announcement, 27-Sep-18
7 DNK announcement, 6-Dec-18
8 DNK announcement, 30-Jan-19, Danakali and its Board take no responsibility
for the content of the Report, nor does the Company or its Board
endorse or warrant the accuracy of any content of the Report
- - -S - - -
DANAKALI LTD
ABN 56 097 904 302
AUDITED FINANCIAL REPORT
FOR THE YEARED
31 DECEMBER 2018
The following sections from the Financial Report are available
on our website at www.danakali.com:
Auditor's Independence Declaration
Independent Auditor's Report
Corporate Information
Directors
Seamus Cornelius
Paul Donaldson (Executive Chairman)
Zhang Jing (Non-Executive Director)
Robert Connochie (Non-Executive Director)
John Fitzgerald (Independent Non-Executive Director)
Andre Liebenberg (Independent Non-Executive Director)
(Independent Non-Executive Director)
Executive Management Joint Company Secretary
Stuart Tarrant (Chief Financial Catherine Grant Edwards
Officer) Melissa Chapman
Registered Office and Principal Place of Business
Level 11, 125 St George's Terrace
PERTH WA 6000
Telephone: +61 (0)8 6189 8635
Bank Auditors
National Australia Bank Ernst and Young
Level 12, 100 St Georges Terrace 11 Mounts Bay Road
PERTH WA 6005 PERTH WA 6000
Share Register (Australia) Share Register (United Kingdom)
Computershare Investor Services Computershare Investor Services
Pty Limited PLC
Level 11, 172 St Georges Terrace The Pavilions, Bridgwater Road
PERTH WA 6000 Bristol BS13 8AE, United Kingdom
Telephone: 1300 850 505 (Inside Telephone: +44 (0) 370 702 0003
Australia)
Telephone: +61 (0)3 9415 4000
(Outside Australia) www.computershare.com
Facsimile: +61 (0)3 9473 2500
www.computershare.com
To facilitate trading of Danakali's shares on the Standard
Segment of the London Stock Exchange (LSE) Main Market, Danakali
has established a Depositary Interest (DI) facility, under which it
has appointed Computershare Investor Services Plc as the
depositary. Securities of Australian issuers such as Danakali
cannot be directly registered, transferred or settled through CREST
(which is the electronic settlement system in the UK). The DI
facility overcomes this by creating entitlements to Danakali's
shares (the DIs), which are deemed to be UK securities and
therefore admissible to CREST. The underlying shares are listed and
traded on the Standard Segment of the LSE Main Market, while the
DIs are transferred in CREST to settle those trades.
Website
www.danakali.com
Stock Exchange Listing
Danakali Limited Shares are listed on the Australian Stock
Exchange (ASX:DNK) and the London Stock Exchange (LSE:DNK).
American Depository Receipts
The Bank of New York Mellon sponsors DNK's Level 1 American Depository
Receipts Program (ADR) in the United States of America. DNK's ADRs
are traded on the over-the-counter (OTC) securities market in the
US under the symbol DNKLY and CUSIP: 23585T101. One ADR represents
one ordinary share in DNK.
US OTC Market information is available here: http://www.otcmarkets.com/stock/DNKLY/quote
DNK's ADR information can also be viewed here: https://www.adrbnymellon.com/?cusip=23585T101
ADR Holders seeking information on their shareholding should contact:
shrrelations@bnymellon.com OR
LONDON NEW YORK
Mark Lewis Rick Maehr
mark.lewis@bnymellon.com richard.maehr@bnymellon.com
Telephone +44 207 163 7407 Telephone +1 212 815 2275
Director's Report
The directors present their report together with the financial
statements of the consolidated entity being, Danakali Limited
(Danakali or the Company) and its controlled entities (the Group)
for the financial year ended 31 December 2018.
DIRECTORS
The names and details of the Company's directors in office
during the financial period and until the date of this report are
as follows. Where applicable, all current and former directorships
held in listed public companies over the last three years have been
detailed below. Directors were in office for this entire period
unless otherwise stated.
Names, qualifications, experience and special
responsibilities:
Seamus Ian Cornelius
Executive Chairman, LLB, LLM, initially appointed Non-Executive
Chairman 15 July 2013, transitioned to Executive Chairman 14 June
2018
Mr Cornelius is a corporate lawyer and former partner of one of
Australia's leading international law firms. He has a high degree
of expertise in cross-border transactions, particularly in the
resources and finance sectors.
Mr Cornelius has been based in China since 1993, and has advised
global companies, banks, major resource companies and Chinese
State-owned entities on resource project investments both within
China and abroad.
Mr Cornelius is currently the Non-Executive Chairman of Buxton
Resources Ltd (appointed 29 November 2010), Element 25 Limited
(appointed 30 June 2011), and Duketon Mining Ltd (appointed 8
February 2013).
Special Responsibilities:
Mr Cornelius is a member of the Audit Committee and a member of
the Technical and Risk Committee.
Paul Michael Donaldson
Non-Executive Director, Master's Degree - Mining Engineering,
Master's Degree - Business and Technology, BEng Chemical (Honours,
University Medal), Assoc Dip. Applied Science (Metallurgy),
initially appointed Chief Operating Officer 29 November 2012,
transitioned to Chief Executive Officer 1 February 2013 and
additionally appointed Managing Director 29 April 2014,
transitioned from Chief Executive Office and Managing Director role
to Non-Executive Director role on 21 December 2017
Mr Donaldson has over 25 years of experience in senior
management roles at BHP Billiton. At BHP Billiton Mr Donaldson
managed large scale, open cut mining operations, significant growth
and sustaining capital projects, and complex pyro metallurgical,
beneficiation and manufacturing processes. Mr Donaldson headed the
BHP Carbon Steel Materials Technical Marketing Team, managed the
Port Hedland iron ore facility as well as occupying key roles in
product and infrastructure planning across large scale supply
chains. Mr Donaldson also brings extensive experience in high-level
business improvement and logistics from base metal operations and a
high degree of integrated supply chain management, technical
operational management and frontline leadership experience in the
steel industry. Mr. Donaldson, in his previous role as the
Company's CEO and Managing Director, redefined the product and
development path and process for the Project, overseeing the
pre-feasibility, definitive feasibility and FEED study phases. In
December 2017, he transitioned to his role as Non-Executive
Director. Mr Donaldson is also currently Chief Transformation
Officer at Pacific National, Australia's largest rail operator.
Special Responsibilities:
Mr Donaldson is a Chairman of the Technical and Risk Committee
and a member of the Remuneration and Nomination Committee.
John Daniel Fitzgerald
Independent Non-Executive Director, CA, appointed 19 February
2015
Mr Fitzgerald has over 30 years of finance and corporate
advisory experience in the resource sector.
Previously, he held senior positions at NM Rothschild and Sons,
Investec Bank Australia, Commonwealth Bank, HSBC Precious Metals
and Optimum Capital.
Mr Fitzgerald is Non-Executive Chairman of Exore Resources
Limited (appointed 23 December 2015) and a Non-Executive Director
of Northern Star Resources Limited (appointed 30 November
2012).
Previously Mr Fitzgerald was Non-Executive Chairman of Carbine
Resources Limited (13 April 2016 to 23 March 2018).
Mr Fitzgerald is a Chartered Accountant, a Fellow of the
Financial Services Institute of Australasia (FINSIA) and a graduate
member of the Australian Institute of Company Directors.
Special Responsibilities:
Mr Fitzgerald is Chairman of the Audit Committee and member of
the Remuneration and Nomination Committee.
Zhang Jing
Non-Executive Director, M. Sc, appointed 17 June 2016
Ms Zhang has more than 15 years of international trading and
business development experience in China and previously held
investment and project managerial roles in public listed
companies.
Ms Zhang holds a Master's degree in International Consultancy
and Accounting from the university of Reading in the United
Kingdom.
Special Responsibilities:
None.
Robert Gordon Connochie
Independent Non-Executive Director, B.A. Sc, M.B.A., appointed 6
February 2017
Mr Connochie is a highly-experienced potash and mining
specialist with over 40 years of industry experience. He brings
extensive senior line management experience from the potash
industry, including marketing, corporate development, evaluations,
financing and acquisitions.
Previously, Mr. Connochie held positions as Chairman of Canpotex
(a world leading potash exporter for over 40 years) and Chairman of
Behre Dolbear Capital, Inc.
Further, Mr Connochie was Chairman and CEO of Potash Company of
America, CEO Asia Pacific Potash, Director of Athabasca Potash,
Chairman of the Phosphate and Potash Institute, Director of the
Fertiliser Institute, and Director of the Saskachewan Potash
Producers Association.
Special Responsibilities:
Mr Connochie is a member of the Technical and Risk
Committee.
Andre Liebenberg
Independent Non-Executive Director, MBA, BSc (Elec) Eng.,
appointed 2 October 2017
Mr Liebenberg is an experienced mining industry professional
with extensive investor, market, finance, business development and
leadership experience, and has spent over 25 years in private
equity, investment banking, and held senior roles within QKR
Corporation and BHP Billiton.
In addition to the CFO role at QKR Corporation, Mr. Liebenberg
occupied senior executive roles within BHP including Head of Group
Investor Relations, as well as CFO roles for the Energy Coal and
Diamonds and Speciality Products divisions. These roles were based
in London, Melbourne and Sydney.
Mr Liebenberg's experience within BHP Billiton also included key
roles in the BHP Billiton merger, the bid for Rio Tinto and the bid
for Potash Corp. of Saskatchewan. Prior to BHP Billiton, Mr
Liebenberg worked at UBS in London and Standard Bank Group in South
Africa.
Mr Liebenberg is currently the Executive Director and Chief
Executive Officer of Yellow Cake Plc.
Special Responsibilities:
Mr Liebenberg is Chairman of the Remuneration and Nomination
Committee and a member of the Audit Committee.
COMPANY SECRETARY
Catherine Grant-Edwards and Melissa Chapman
Appointed Joint Company Secretary 7 July 2017
Ms Melissa Chapman (Certified Practicing Accountant (CPA),
AGIA/ACIS, GAICD) and Ms Catherine Grant-Edwards (Chartered
Accountant (CA)) were appointed as Joint Company Secretary on 7
July 2017. Ms Chapman and Ms Grant-Edwards are directors of
Bellatrix Corporate Pty Ltd (Bellatrix), a company that provides
company secretarial and accounting services to a number of ASX
listed companies. Between them, Ms Chapman and Ms Grant-Edwards
have over 30 years' experience in the provision of accounting,
finance and company secretarial services to public listed resource
and private companies in Australia and the UK, and in the field of
public practice external audit.
INTERESTS IN SHARES, OPTIONS AND PERFORMANCE RIGHTS OF THE
COMPANY
As at the date of this report, the interests of the directors in
the shares, options and performance rights on issue by Danakali
Limited were:
Ordinary Options over Ordinary Performance
Director Shares Shares Rights
S Cornelius 10,328,965 300,000 -
P Donaldson 2,957,751 100,000 800,000
J Fitzgerald 526,453 250,000 -
Z Jing - 100,000 -
R Connochie - 500,000 -
A Liebenberg - - -
----------- ---------------------- ------------
PRINCIPAL ACTIVITIES
The principal activity of the Group during the period was
advancing the Colluli Potash Project in Eritrea, East Africa. There
was no significant change in the nature of the Group's activities
during the financial year ended 31 December 2018.
CORPORATE STRUCTURE
Danakali Limited is a company limited by shares that is
incorporated and domiciled in Australia.
REVIEW OF OPERATIONS
PROJECT OVERVIEW
The Colluli Potash Project (Colluli, or the Project) is located
in the Danakil Depression region of Eritrea, East Africa. Colluli
is approximately 177km south-east of the capital, Asmara, and 180km
from the port of Massawa, which is Eritrea's key import/export
facility. The Project is a joint venture between the Eritrean
National Mining Company (ENAMCO) and Danakali with each having 50%
ownership of the joint venture company, the Colluli Mining Share
Company (CMSC). CMSC is responsible for the development of the
Project.
The Danakil Depression is an emerging potash province, which
commences in Eritrea and extends south across the border into
Ethiopia. It is one of the largest unexploited potash basins
globally; over 6Bt of potassium bearing salts suitable for
production of potash fertilisers have been identified in the region
to date (ASX announcement 25 February 2015 and
http://circumminerals.com/resources).
Colluli is located approximately 75km from the Red Sea coast
providing unrivalled future logistics potential. The Project
resides on the Eritrean side of the border, giving Colluli a
significant advantage relative to all other potash development
projects in the Danakil Depression, which need to ship from the
Tadjoura Port in Djibouti - over 600km by road from the closest
project on the Ethiopian side of the border.
Colluli boasts the shallowest mineralisation in the Danakil
Depression. Mineralisation commences at just 16m below surface. In
addition, the potassium bearing salts are present in solid form (in
contrast with production of SOP from brines). Shallow access to
salts in solid form provides Colluli with significant mining,
logistics and, in turn, capital and operating cost advantages over
other potash development projects globally. The Project also
carries a significantly lower level of complexity as a consequence
of predictable processing plant feed grade and predictable
production rates due to low reliance on ambient conditions.
Shallow mineralisation makes the resource amenable to open cut
mining: a proven, high productivity mining method. Open cut mining
provides higher resource recoveries relative to underground and
solution mining methods, is generally safer, and can be more easily
expanded.
The Colluli resource comprises three potassium bearing salts in
solid form: Sylvinite, Carnallitite and Kainitite. These salts are
suitable for high yield, low energy production of Sulphate of
Potash (SOP), which is a high-quality potash fertiliser carrying a
price premium over the more common Muriate of Potash (MOP). SOP is
chlorine free and is commonly applied to high value crops such as
fruit, vegetables, nuts, and coffee. Economic resources for primary
production of SOP are geologically scarce and there are few current
primary producers.
The JORC-2012 compliant Mineral Resource for Colluli is
estimated at 1.289Bt @ 11% K(2) O for 260Mt of contained SOP
equivalent (ASX announcement 25 February 2015). The JORC-2012
compliant Ore Reserve estimate for Colluli is estimated at 1,100Mt
@ 10.5% K2O for 203Mt of contained SOP equivalent (ASX announcement
19 February 2018). The Measured and Indicated Mineral Resources are
inclusive of those Mineral Resources modified to produce the Ore
Reserves.
Colluli will be developed to its full potential by adopting the
principles of risk management, resource utilisation and modularity,
using the first module as a platform for growth. The Colluli Front-End
Engineering Design (FEED) modules are:
* Module I - 472ktpa SOP production
* Module II - additional 472ktpa SOP production
commencing in year 6
The massive Colluli Ore Reserve has significant capacity to
underpin further expansions and support decades of growth beyond
Modules I and II.
Colluli has significant diversification potential beyond SOP,
including the option to produce additional potash and salt products
such as MOP, SOP-M, kieserite (MgSO(4) .H(2) O), gypsum (CaSO(4)
.2H(2) O), magnesium chloride (MgCl(2) ), and rock salt (NaCl). The
Colluli SOP Mineral Resource also comprises an 85Mt Kieserite
(magnesium sulphate) Mineral Resource (ASX announcement 15 August
2016). Kieserite is a suitable fertiliser for magnesium deficient
soils. A 347Mt Rock Salt (sodium chloride) Mineral Resource (ASX
announcement 23 September 2015) has also been established at
Colluli. Unprocessed Rock Salt can be used for de-icing, processed
Rock Salt can be used as table salt.
A FEED for Colluli was undertaken to provide offtakers and
funders with a high level of study detail and accuracy and is the
final study stage before project execution. FEED firmly establishes
Colluli as the most progressed, economically attractive, and
fundable SOP greenfield development project globally (ASX
announcement 29 January 2018). The FEED results reaffirm the
outstanding project economics of Colluli. Industry leading capital
intensity achieved in the DFS (ASX announcement 30 November 2015)
further reduced as a result of lower development capital
requirements for Module I and increased annual production rate.
This, combined with forecast first quartile operating costs,
resulted in a Project Net Present Value (NPV(10) ) of US$902M and
Internal Rate of Return (IRR) of 29.9%. The Danakali economic
outcomes were an NPV(10) of US$439M and IRR of 31.3%.
Mining Agreement Executed and Mining Licenses Awarded
The Project is fully permitted and ready to advance into
engineering and construction upon securing funding.
CMSC entered into a mining agreement (Mining Agreement) with the
Eritrean Ministry of Energy and Mines (MoEM) and was awarded mining
licenses (Mining Licenses) for the exploitation of mineral
resources within the Colluli tenements (ASX announcement 1 February
2017).
The Mining Agreement is applicable to the entire 1.3Bt JORC-2012
compliant Mineral Resource and provides exclusive rights to CMSC to
apply for mining licenses to exploit the potassium, magnesium,
calcium and sodium salts within the resource, as well as
bromine.
The award of the Mining Licenses follows the completion of a
series of pre-requisites including the completion and submission of
the DFS, submission of a comprehensive social and environmental
impact assessment and associated management plans, a series of pre
and post DFS stakeholder engagements with local and regional
communities and stakeholders, and the signing of the Mining
Agreement.
A Social and Environmental Impact Assessment (SEIA) and
associated Social and Environmental Management Plans (SEMPs) have
been completed to ensure consistency with the Equator Principles.
Stakeholder engagements have been completed throughout the study
phases, and the Project has strong support from local communities.
Following a period of consultation and further works, between the
Eritrean Ministry of Land, Water & Environment and CMSC, the
SEMPs finalised by CMSC have were signed off in August 2018
following an extensive review process. The SEMPs are a cornerstone
of the environmental, social and safety management system being
developed by CMSC and provide the foundation for compliance.
MARKETING AND PROJECT FINANCE UPDATE
Off-take
A binding take-or-pay offtake agreement has been reached with
EuroChem Trading GmbH (EuroChem) for up to 100% of Module I SOP
production from the Colluli Potash Project. EuroChem will take,
pay, market and distribute up to 100% (minimum 87%) of Colluli
Module I SOP production. The term of the agreement is 10 years from
the date of commissioning of the Colluli SOP processing plant, with
an option to extend for a further 3 years if agreed by EuroChem and
CMSC. EuroChem is an outstanding partner with global reach and
extensive fertiliser expertise and experience, and the agreement is
instrumental in unlocking project funding.
Project Financing
Danakali successfully executed a mandate to provide fully
underwritten debt finance facilities of US$200M to fund the
construction and development of the Colluli Potash Project. African
development financial institutions African Export-Import Bank
(Afreximbank) and Africa Finance Corporation (AFC) are acting as
Mandated Lead Arrangers. The execution of the mandate is a critical
project financing and execution milestone.
Following the execution of the US$200M debt mandate, remaining
key debt funding milestones include the finalisation of key
operational contracts and final credit approval from debt
financiers. The Project is "shovel ready" and Danakali continues to
evaluate strategies to raise final funding required to commence
construction at Colluli.
Key Operational Contracts
The following operational contracts are defined as project
documents, and are necessary to advance the completion of debt due
diligence referred to above.
Mining - Mining contract technical and commercial evaluation
complete
Following a comprehensive bidding process for the Colluli mining
contract, the technical and commercial compliance process is
complete. Participating bidders visited Eritrea, the Port of
Massawa, and the future Colluli mine site. A comprehensive review
of the Colluli mine plan and selected mining method was also
undertaken.
The technical and commercial compliance was evaluated and
confirmed by AMC Consultants.
The mining bids have been shortlisted to two competitive bids
from highly qualified bidders. Commercial negotiations are
currently in progress.
Power - Finalising negotiations with preferred power
provider
Inglett and Stubbs International has been appointed as the
preferred power provider with commercial terms materially
agreed.
EPCM - Evaluations underway, preliminary negotiations expected
in March 2019 Quarter
CMSC has confirmed DRA Global as the preferred Engineering,
Procurement and Construction Management (EPCM) contractor for
Colluli. DRA is a high quality multi-disciplinary global Project
Management and Engineering group with strong African experience and
EPCM delivery capability. The commercial and legal position is
materially agreed.
CORPORATE
LSE Main Market Listing
The Company's ordinary shares were admitted to the Standard
Segment of the Official List of the Financial Conduct Authority and
to trading on the LSE Main Market at 8.00am BST on 24 July 2018
(LSE:DNK).
Board Changes
Mr Seamus Cornelius was appointed as Executive Chairman on 14
June 2018. Mr Cornelius has served as Non-Executive Chairman of
Danakali since July 2013. He has a high degree of expertise in
cross-border transactions, particularly in the resources and
finance sectors.
Mr Cornelius is a member of the Company's Audit Committee, and
Technical and Risk Committee, and is the Chairman of the CMSC (the
50:50 joint venture between Danakali and ENAMCO and 100% owner of
the Colluli Potash Project. Mr Cornelius has to this point been an
integral part of the Company's progression from Scoping Study
through to Front End Engineering Design, signing of a Mining
Agreement, awarding of Mining Licences, and, as announced on
Tuesday, 12 June 2018, the achievement of a binding take-or-pay
offtake agreement with EuroChem.
Management Changes
Mr Danny Goeman resigned as Chief Executive Officer (CEO) of the
company with effect from 3 August 2018. The Company is well
advanced in the recruitment of a new CEO.
Shares
During the year, the Company issued the following fully paid ordinary
shares:
* 10,381,821 shares on exercise of unlisted options at
$0.35 each
* 400,000 shares on exercise of unlisted options at
$0.405 each
* 200,000 shares on exercise of unlisted options at
$0.450 each
* 738,346 shares on cashless exercise of 1,949,000
unlisted options at $0.405 each
* 116,586 shares on cashless exercise of 750,000
unlisted options at $0.527 each
* 458,338 shares on cashless exercise of 2,350,000
unlisted options at $0.550 each
* 65,000 shares on vesting of performance rights (Class
6: 10,000; Class 7: 20,000; Class 8: 35,000)
* 364,620 shares issued in lieu of fees to corporate
advisors
At 31 December 2018, there were a total of 264,422,398 fully paid
ordinary shares on issue.
Options
There were no unlisted options issued during the year.
The following unlisted options were exercised and converted to
shares during the year:
* 10,381,821 unlisted options exercised at $0.35 each
raising $3,633,637
* 400,000 unlisted options exercised at $0.405 each
raising $162,000
* 200,000 unlisted options exercised at $0.450 each
raising $90,000
* 1,949,000 unlisted options with an exercise price of
$0.405 were cashless exercised
* 750,000 unlisted options with an exercise price of
$0.527 were cashless exercised
* 2,350,000 unlisted options with an exercise price of
$0.550 were cashless exercised
The following unlisted options expired or lapsed during the year:
* 75,000 unlisted options at $0.350 each expired on 29
May 2018
* 100,000 unlisted options at $0.558 each lapsed on 3
August 2018
At 31 December 2018, there were a total of 2,990,000 unlisted options
on issue at various exercise prices and expiry dates.
Performance Rights
There were no performance rights issued during the year.
The following performance rights vested and were converted to shares
during the year:
* 10,000 Class 6 performance rights
* 20,000 Class 7 performance rights
* 35,000 Class 8 performance rights
The following performance rights lapsed during the year:
* 28,000 Class 1 performance rights
At 31 December 2018, there were a total of 1,315,000 performance
rights on issue in the following classes:
* 280,000 Class 1 performance rights
* 800,000 Class 4 performance rights
* 100,000 Class 5 performance rights
* 40,000 Class 6 performance rights
* 30,000 Class 7 performance rights
* 65,000 Class 8 performance rights
Annual General Meeting
The Company's annual general meeting was held on 11 May 2018
(AGM). For more information, refer to the Notice of AGM and Results
available via the Company's website.
Sustainable Development Framework
Danakali and CMSC have a strong commitment to sustainable
development which is underpinned by the principles that mineral
projects should be financially, technically and environmentally
sound and socially responsible.
The company has implemented a Sustainable Development Framework
to govern its Corporate Social Responsibilities (CSR) and
Sustainability and is aligned with its Corporate Governance
Framework. The policies developed using this framework directly
supported the management plans associated with the SEIA and SEMP
for the project.
Danakali has committed to release a CSR report. This report
details the policies and frameworks in place to ensure that
Danakali continues to operate in a sustainable manner.
Danakali framework and policies are endorsed and adopted by
joint venture partner, CMSC.
RESERVE AND RESOURCE OVERVIEW
Colluli has a JORC-2012 compliant resource of 1.289 billion
tonnes as shown in Table 1 as at 31 December 2018. Apart from the
inclusion of Kieserite (announced 15 August 2016), there have been
no changes to the Mineral Resource since 25 February 2015.
The Colluli JORC-2012 compliant mineral resource estimate as at
31 December 2018 is as follows:
Table 1: Colluli Mineral Resource Estimate announced on 25
February 2015 with Kieserite added(announced on 15 August 2016)
Tonnes Density K(2) O Equiv. Kieserite
Rock Unit Mt t/m(3) % %
------- -------- -------------- ----------
Sylvinite 265 2.2 12% 0.03%
------- -------- -------------- ----------
Upper Carnallitite 51 2.1 12% 3%
------- -------- -------------- ----------
Lower Carnallitite 347 2.1 7% 22%
------- -------- -------------- ----------
Kainitite 626 2.1 12% 1%
------- -------- -------------- ----------
Total 1,289 2.1 11% 7%
------- -------- -------------- ----------
Within the JORC-2012 compliant, 1.289 billion tonnes, Mineral
Resource Estimate, the JORC-2012 compliant Ore Reserve Estimate for
Colluli's potassium sulphate potash fertiliser is approximately 1.1
billion tonnes comprising 285 million tonnes of Proved and 815
million tonnes of Probable Ore Reserve and is shown below in Table
2. The Ore Reserve was updated in line with FEED and this update is
included below (ASX announcement 19 February 2018).
The Colluli JORC-2012 compliant Ore Reserve estimate by potash
mineral as at 31 December 2018 is as follows:
Table 2: JORC-2012 Colluli Potassium Sulphate Ore Reserve
announced on 29 January 2018 and 19 February 2018
Proved Probable Total
K(2) K(2)
K(2) K(2) K(2) SO(4) SO(4)
O Equiv O Equiv O Equiv Equiv Equiv
Occurrence Mt % Mt % Mt % % Mt(1)
---- --------- ---- --------- ------ --------- ------- -------
Sylvinite
(KCl.NaCl) 77 15.0% 173 12.1% 250 13.0%
---- --------- ---- --------- ------ --------- ------- -------
Carnallitite
(KCl.MgCl(2)
.H(2) O) 77 6.9% 279 7.8% 356 7.6%
---- --------- ---- --------- ------ --------- ------- -------
Kainitite
(KCl.MgSO(4)
.H(2) O) 131 11.8% 363 11.2% 494 11.4%
---- --------- ---- --------- ------ --------- ------- -------
Total 285 11.3% 815 10.3% 1,100 10.5% 18.5 203
---- --------- ---- --------- ------ --------- ------- -------
(1) Equivalent K(2) SO(4) (SOP) calculated by multiplying %K(2)
O by 1.85
In addition to potassium sulphate, substantial quantities of
rock salt exist. A JORC-2012 compliant Rock Salt Mineral Resource
Estimate of over 300 million tonnes has been completed for the area
considered for mining in the DFS as shown in Table 3. There have
been no changes to the Mineral Resource estimate since 23 September
2015.
As at 31 December 2018, the JORC-2012 compliant Rock Salt
Mineral Resource is as follows:
Table 3: JORC 2012 Colluli Rock Salt Mineral Resource announced
on 23 September 2015
Classification Tonnes NaCl K Mg CaSO(4) Insolubles
(Mt)
Measured 28 97.2% 0.05% 0.05% 2.2% 0.23%
------- ------ ------ ------ -------- -----------
Indicated 180 96.6% 0.07% 0.06% 2.3% 0.24%
------- ------ ------ ------ -------- -----------
Inferred 139 97.2% 0.05% 0.05% 1.8% 0.25%
------- ------ ------ ------ -------- -----------
Total 347 96.9% 0.06% 0.05% 2.1% 0.24%
------- ------ ------ ------ -------- -----------
SAFETY
Danakali is committed to ensuring all work activities are
carried out safely with all practical measures taken to remove
risks to health, safety and welfare of workers, contractors,
authorised visitors, and anyone else who may be affected by the
Group's activities.
Since the Company commenced exploration in 2010, no injuries
have been reported. This safety performance, along with a strong
safety culture, bodes well for the company as it moves into the
construction and production phases at Colluli.
ENVIRONMENT
The Group is subject to environmental regulation in respect to
its exploration and development activities. Danakali aims to ensure
the appropriate standard of environmental care is achieved, and in
doing so, that it is aware of and is in compliance with relevant
environmental legislation. There were no breaches of environmental
legislation for the period under review.
EVENTS OCCURRING AFTER THE BALANCE DATE
No matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly
affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in future
financial years.
ACTIVITIES PLANNED FOR 2019
The following key activities are scheduled over the coming year:
* Appointment of new Company CEO
* Finalise credit approval from debt financiers
* Finalise contract with preferred EPCM contractor DRA
Global
* Determine preferred mining services contractor and
finalise negotiations
* Finalise contract with preferred power provider
Inglett & Stubbs International
* Finalise arrangements with commercial lenders
* Finalise funding to advance Colluli to construction
FINANCE REVIEW
The Group recorded a net loss after tax of $6,944,413 for the
financial year to 31 December 2018 compared to a loss of $6,839,936
for the financial year to 31 December 2017. As the Group is still
in the exploration and development stage, revenue streams mainly
relate to interest earned on investing of surplus funds from
capital raisings. The net losses after tax reflect the Groups'
exploration and development expenditure on the Colluli Potash
Project and ongoing administration costs.
Total consolidated cash on hand at the end of the financial year
was $9,550,585 (31 December 2017: $15,559,980).
Operating activities utilised $3,430,463 (31 December 2017: $1,279,679
utilised) of net cash flows. Net cash outflow from investing activities
of $6,464,570 (31 December 2017: $7,721,815) was primarily in relation
to expenditure made to advance the Colluli Project in relation
to:
* Completion of the FEED
* Completion of off-take agreement negotiations
* Advancing financing negotiations
* Advancing key operational contracts
Net cash inflow from financing activities of $3,885,638 in the
financial year to 31 December 2018 was attributable to
consideration received upon exercise of options (31 December 2017:
$13,656,714 funds received in respect of a placement of shares and
the exercise of options).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no other significant changes in the Company's state
of affairs other than that referred to in the financial statements
or notes thereto.
DEVELOPMENTS AND EXPECTED RESULTS
Details of important developments occurring in this financial
year have been covered in the Review of Operations section of the
Directors' Report. The Group will continue to invest in the Colluli
Potash Project to advance activities in the exploration, evaluation
and development of the project with the objective of developing a
significant mining operation. Any significant information or data
will be released to the market and the shareholders pursuant to the
Continuous Disclosure rules as and when they arise.
DIVIDS
No dividends were paid or declared during the financial year to
31 December 2018. No recommendation for payment of dividends has
been made.
DIRECTORS' MEETINGS
The number of meetings of the Company's Board of Directors held
during the financial year ended 31 December 2018 and the number of
meetings attended by each Director were:
Board of Directors Audit Committee Remuneration Technical and
and Nomination Risk Committee
Committee
Total Total Total Total Total Total Total Total
meetings attended meetings attended meetings attended meetings attended
held / held / held / held /
eligible eligible eligible eligible
Director to attend to attend to attend to attend
----------- ---------- ----------- ---------- ----------- ---------- ----------- ----------
S Cornelius 13 13 2 2 - - 1 1
P Donaldson 13 13 - - 6 5 1 1
J Fitzgerald 13 12 2 2 6 6 - -
J Zhang 13 8 - - - - - -
R Connochie 13 12 - - - - 1 1
A Liebenberg 13 10 2 2 6 6 - -
----------- ---------- ----------- ---------- ----------- ---------- ----------- ----------
OPTIONS
At the date of this report, unissued ordinary shares in respect
of which options are outstanding are as follows:
Number of options
------------------------------------------------------------ -----------------
Balance at the beginning of the year 19,195,821
Movements of share options during the financial year
ended 31 December 2018:
Exercised, exercisable at $0.405, expiry date 13 May
2018 (2,349,000)
Exercised, exercisable at $0.350, expiry date 30 March
2018 (9,656,821)
Exercised, exercisable at $0.350, expiry date 13 May
2018 (725,000)
Exercised, exercisable at $0.527, expiry date 29 May
2018 (750,000)
Exercised, exercisable at $0.550, expiry date 31 May
2018 (600,000)
Exercised, exercisable at $0.450, expiry date 23 June
2018 (200,000)
Exercised, exercisable at $0.550, expiry date 4 November
2018 (750,000)
Exercised, exercisable at $0.550, expiry date 31 December
2018 (1,000,000)
Cancelled, exercisable at $0.350, expiry date 13 May
2018 (75,000)
Cancelled, exercisable at $0.558, expiry date 8 August
2019 (100,000)
Share options outstanding at 31 December 2018 2,990,000
Movements since the financial year ended 31 December
2018:
Issued, exercisable at $1.031, expiry date 24 January
2022 1,724,015
Total number of share options outstanding as at the
date of this report 4.714.015
-----------------
Expiry date Exercise price Number of options
----------------------------- ------------------------- -----------------
8 August 2019 $0.558 900,000
7 October 2019 $0.543 250,000
19 May 2020 $0.940 1,440,000
20 June 2019 $0.960 400,000
24 January 2022 $1.031 1,724,015
-----------------
Total number of share options outstanding at the date
of this report 4,714,015
-----------------
No option holder has any right under the option to participate
in any share issue of the Company or any other entity.
The following remuneration options were granted (or agreed to be
granted subject to receipt of shareholder approval in the case
of director options) to key management personnel of the Company
since the end of the financial year and up to the date of this
report:
* 301,040 unlisted options at $1.031 each expiring 24
January 2022 to director Seamus Cornelius or his
nominee
* 583,000 unlisted options at $1.108 each expiring 13
March 2022 to nominee of Stuart Tarrant
No other options were granted to key management personnel of the
Company since the end of the financial year.
PERFORMANCE RIGHTS
Details of performance rights over unissued shares in Danakali
Ltd as at the date of this report are set out below:
Number of rights
----------------------------------------------------- ----------------
Balance at the beginning of the year 1,408,000
Movements of performance rights during the financial
year ended 31 December 2018:
Issued -
Vested and Exercised (a) (65,000)
Forfeited (b) (28,000)
Performance rights outstanding at 31 December 2018 1,315,000
Movements since the financial year ended 31 December
2018:
None -
Total number of performance rights as at the date of
this report 1,315,000
----------------
Note:
(a) Performance rights vested upon announcement of binding a
offtake agreement (10,000 rights), associated with completion of
FEED (20,000 rights), LSE listing (30,000 rights), and in respect
of investor roadshows (5,000 rights).
(b) Performance rights forfeited in respect of former employees.
No performance rights holder has any right to participate in any
other share issue of the company or any other entity.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Indemnification
An indemnity agreement has been entered into with each of the
directors and company secretary of the Company named earlier in
this report. Under the agreements, the Company has agreed to
indemnify those officers against any claim or for any expense or
cost which may arise as a result of work performed in their
respective capacities to the extent permitted by law. There is no
monetary limit to the extent of this indemnity.
Insurance
During the period, the Company paid an insurance premium in
respect of Directors' and Officers' insurance. The premiums relate
to costs and expenses incurred by the relevant officers in
defending proceedings, whether civil or criminal and whatever their
outcome, and other liabilities that may arise from their position,
with the exception of conduct involving a wilful breach of duty or
improper use of information or position to gain a personal
advantage. Premiums totalling $56,384 (2017: $35,625) were paid in
respect of directors' and officers' liability cover. The insurance
policies outlined above do not contain details of the premiums paid
in respect of individual officers of the Company.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst and Young, as part of the terms of
its audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst and Young during or since the
financial year.
NON--AUDIT SERVICES
The Board has considered the non-audit services provided during
the financial year by the auditor and is satisfied that the
provision of those non-audit services is compatible with, and did
not compromise, the auditor's independence requirements of the
Corporations Act 2001.
All non-audit services provided during the financial year were
subject to the corporate governance procedures adopted by the
Company and have been reviewed by the Board to ensure they do not
impact the integrity and objectivity of the auditor; and the
non-audit services provided do not undermine the general principles
relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants, as they did not involve
reviewing or auditing the auditor's own work, acting in a
management or decision making capacity for the Company, acting as
an advocate for the Company or jointly sharing risks and
rewards.
During the period, Ernst and Young, the Company's auditors, performed
the following services in addition to their statutory duties:
* Preparation and lodgement of income tax returns
* Assistance with preparation of employee share scheme
reporting
* General tax advice
* Corporate advisory services
* LSE listing
2018 2017
$ $
----------------------------------- ------- ------
(a) Audit services
Ernst and Young 44,837 41,391
44,837 41,391
------- ------
(b) Non-audit services
Ernst and Young - LSE listing 123,332 -
Ernst and Young - Other 55,973 6,000
179,305 6,000
------- ------
CORPORATE GOVERNANCE
The Company's corporate governance statement can be found at the
following URL:
http://www.danakali.com.au/our-business/corporate-governance.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the
Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to intervene in any proceedings to which the
Company is a party, for the purpose of taking responsibility on
behalf of the company for all or any part of those proceedings.
No proceedings have been brought or intervened in or on behalf
of the Company with leave of the Court under section 237 of the
Corporations Act 2001.
AUDITOR'S INDEPENCE DECLARATION
A copy of the auditor's independence declaration as required
under section 307C of the Corporations Act 2001 is set out
separately in this report.
REMUNERATION REPORT (AUDITED)
The Remuneration Report outlines the director and executive
remuneration arrangements of the Group in accordance with the
requirements of the Corporations Act 2001 (Cth) and its
Regulations. For the purposes of this report, Key Management
Personnel (KMP) of the Group are defined as those persons having
authority and responsibility for planning, directing and
controlling the major activities of the Group, directly or
indirectly, including any director (whether executive or otherwise)
of the Company. For the purposes of this report, the term
'Executive' includes the Chief Executive Officer and key management
personnel of the Group.
The Key Management Personnel of Danakali Ltd and the Group during
the financial year to 31 December 2018 were:
Directors
S Cornelius Executive Chairman (Transitioned from Non-Executive
Chairman to Executive Chairman 14 June 2018)
P Donaldson Non-Executive Director
J Fitzgerald Non-Executive Director
J Zhang Non-Executive Director
R Connochie Non-Executive Director
A Liebenberg Non-Executive Director
Named Key Management Personnel
D Goeman Chief Executive Officer (Appointed 21 December 2017) (Resigned
3 August 2018)
S Tarrant Chief Financial Officer
C Grant-Edwards Joint Company Secretary
M Chapman Joint Company Secretary
All of the above persons were key management personnel during
the financial year to 31 December 2018 unless otherwise stated. The
information provided in this remuneration report has been audited
as required by section 308 (3C) of the Corporations Act 2001.
Key Elements of Key Management Personnel Remuneration
Strategy
The remuneration strategy for Danakali Ltd is designed to provide
rewards that achieve the following:
* Attract, retain, motivate and reward KMP;
* Reward KMP for Company and individual performance
against targets set by reference to appropriate
benchmarks;
* Link reward with the strategic goals and performance
of the Company;
* Provide remuneration that is competitive by market
standards;
* Align executive interests with those of the Company's
shareholders; and
* Comply with applicable legal requirements and
appropriate standards of governance.
The Company is satisfied that its remuneration framework
reflects current business needs, shareholder views and contemporary
market practice and is appropriate to attract, motivate, retain and
reward employees.
A summary of the key elements of the current remuneration
arrangement is as follows:
Remuneration Component Item Purpose Link to
Performance
Fixed Remuneration Provide competitive Executive performance
* Base salary remuneration with and remuneration
reference to the packages are reviewed
role and responsibilities, at least annually
* Superannuation contributions market and experience, by the Board and
to attract high Remuneration and
calibre people. Nomination Committee.
* Other benefits The review process
includes consideration
of the individual's
performance in
addition to the
overall performance
of the Group.
------------------------------------ --------------------------- --------------------------
Performance Based Provide reward Award of STI linked
Short Term Incentive * Cash bonus to KMP for the directly to achievement
(STI) achievement of of KPI's and performance
individual and targets.
Group performance
targets linked
to the Company's
strategic objectives.
------------------------------------ --------------------------- --------------------------
Performance Based: Provide reward Award of LTI linked
Long Term Incentive * Shares to KMP for their directly to achievement
(LTI) continued service of strategic Company
and their contribution objectives.
* Options to achieving corporate
objectives set
by the Board to
* Performance Rights ensure the long-term
growth of the
Company.
------------------------------------ --------------------------- --------------------------
The Remuneration Report has been set out under the following headings:
a) Decision Making Authority for Remuneration
b) Principles Used to Determine the Nature and Amount of Remuneration
c) Voting and Comments Made at the Last Annual General Meeting
d) Details of Remuneration
e) Service Agreements
f) Details of Share Based Compensation
g) Equity Instruments Held by Key Management Personnel
h) Loans to Key Management Personnel
i) Other Transactions with Key Management Personnel
j) Additional Information
a) Decision Making Authority for Remuneration
The Company's remuneration policy and strategies are overseen by
the Remuneration and Nomination Committee on behalf of the Board.
The Remuneration and Nomination Committee is responsible for making
recommendations to the Board on all aspects of remuneration arrangements
for key management personnel including:
* the Company's remuneration policy and framework;
* the remuneration arrangements for the Chief Executive
Officer and other KMP;
* the terms and conditions of long term incentives and
short-term incentives for the Chief Executive Officer
and other KMP;
* the terms and conditions of employee incentive
schemes; and
* the appropriate remuneration to be paid to
non-executive Directors.
The Remuneration and Nomination Committee Charter is approved by
the Board and is published on the Company's website. Remuneration
levels of the Directors and Key Management Personnel are set by
reference to other similar sized mining and exploration companies
with similar risk profiles and are set to attract and retain KMP
capable of managing the Group's operations.
Remuneration levels for the Chief Executive Officer and key
management personnel are determined by the Board based upon
recommendations from the Remuneration and Nomination Committee.
Remuneration of non-executive directors is determined by the Board
within the maximum levels approved by the shareholders from time to
time.
b) Principles Used to Determine the Nature and Amount of
Remuneration
The Company's remuneration practices are designed to attract,
retain, motivate and reward high calibre people capable of
delivering the strategic objectives of the Company. The Company's
Key Management Personnel remuneration framework aligns their
remuneration with the achievement of strategic objectives and the
creation of value for shareholders and conforms with market
practice for delivery of reward.
The Remuneration and Nomination Committee ensures that the
remuneration of Key Management Personnel is competitive and
reasonable, acceptable to shareholders and aligns remuneration with
performance. The structure and level of remuneration for key
management personnel is conducted annually by the Remuneration and
Nomination Committee relative to the Company's circumstances, size,
nature of business and performance.
Remuneration of Non-Executive Directors
Fees and payments to non-executive Directors reflect the demands
which are made on, and the responsibilities of the directors.
Non-executive Directors are remunerated with both cash salary and
option grants to enable the company to preserve cash reserves and
to align the Directors interests to those of the shareholders. The
Board views this approach to be reasonable relative to the stage of
development of its flagship project. Non-executive directors' fees
and payments are reviewed annually by the Board. The Board at times
receives advice from independent remuneration consultants to ensure
non-executive Directors fees and payments are appropriate and in
line with the market. No advice was received during the period.
The general principles of non-executive Directors compensation
are:
* Non-executive Directors are paid a base fee ($40,000
per annum) prior to any statutory superannuation
payments;
* Additional fees are paid to Directors who serve on
the board sub-committees;
* Under the current remuneration structure and subject
to shareholder approval, a grant of Options may be
made;
* Any options granted and approved will be struck at
significant premium to VWAP; and
* Adjustments may be made in the event that a specific
non-executive Director's contribution warrants an
adjustment. Such adjustments are at the
recommendation of the board.
Fees for the non-executive directors are determined within an
aggregate directors' fee pool limit of $400,000 as approved by
shareholders on 17 November 2014.
Remuneration of Chairman
Chairman's fees are determined independently to the fees of
non-executive directors based on comparative roles in the external
market and the specific requirements that the Company has of the
Chairman.
The Chairman is not present at any of the discussions relating
to the determination of his own remuneration.
Remuneration of Key Management Personnel
The Company's remuneration and reward framework is designed to
ensure reward structures are aligned with shareholders' interest
by:
* Being market competitive to attract and retain high
calibre individuals;
* Rewarding high individual performance;
* Recognising the contribution of each key management
personnel to the contributed growth and success of
the Company; and
* Ensuring that long term incentives are linked to
shareholder value.
To achieve these objectives, the remuneration of key management
personnel may comprise a fixed salary component and an 'at risk'
variable component linked to performance of the individual and the
Company as a whole. Fixed remuneration comprises base salary,
superannuation contributions and other defined benefits. 'At risk'
variable remuneration comprises both short term and long-term
incentives.
The remuneration and reward framework for key management personnel
may consist of the following areas:
i) Fixed Remuneration
ii) Variable Short-Term Incentives
iii) Variable Long-Term Incentives
The combination of these would comprise the key management personnel's
total remuneration.
i) Fixed Remuneration
The fixed remuneration for each senior executive is influenced
by the nature and responsibilities of each role and knowledge,
skills and experience required for each position. Fixed remuneration
provides a base level of remuneration which is market competitive
and comprises a base salary and statutory superannuation. It is
structured as a total employment cost package, which may be delivered
as a combination of cash and prescribed non-financial benefits
at the executives' discretion.
Key management personnel are offered a competitive base salary
that comprises the fixed component of pay and rewards. External
remuneration consultants may provide analysis and advice to ensure
base pay is set to reflect the market for a comparable role. No
external advice was taken this period. Base salary for key management
personnel is reviewed annually to ensure the executives' pay is
competitive with the market. The pay of key management personnel
is also reviewed on promotion. There is no guaranteed pay increase
included in any key management personnel's contract.
ii) Variable Remuneration - Short Term Incentives (STI)
The Danakali Ltd Short-Term Incentive Scheme applies to executives
in the Company and is designed to link any STI payment with the
achievement by each Key Management Personnel of specified key performance
indicators (KPI's) which are in turn linked to the Company's strategic
objectives and targets.
The Board has the discretion to reduce or suspend any bonus payments
where Company circumstances render it appropriate.
Given the current phase of Danakali's life cycle, the Board deems
that LTI's are the most appropriate incentive measure to align
KMP performance with company objectives. No KPI's were set and
no STI's granted in the current period.
iii) Variable Remuneration - Long Term Incentives (LTI)
At the 11 May 2019 AGM, the Company failed to obtain shareholder
approval of its proposed Long Term Incentive Plan (LTIP). There
were no long term incentives provided to directors and employees
during the current period under the LTIP or otherwise.
In previous financial years, long term incentives were provided
to directors and employees through the issue of options and performance
rights. The Company previously issued performance rights to its
employees (including KMP) under the Performance Rights Plan (PRP).
The PRP was re-approved by shareholders at the general meeting
held 17 November 2014. The PRP provided incentives, which promote
the long-term performance and growth of the Company. The performance
conditions were chosen to strengthen the links between the Company
objectives and the role performed by its Directors and employees.
The PRP was designed to increase the range of potential incentives
available to Directors and employees and to recognise their contribution
to the Company's success.
Under the PRP, performance rights were granted over ordinary shares
in the Company on an annual basis, up until 17 November 2017 (three
years from re-approval date of PRP). The vesting conditions in
respect of performance rights issued to KMP under the PRP that
are outstanding at 31 December 2018 are as follows:
Class 4:
* 800,000 upon commencement of construction of the
production facility.
Class 6:
* 15,000 upon Endeavour Financial being paid its first
milestone success fee which is linked to the granting
of Credit Approval for the Colluli project finance;
and
* 25,000 upon execution of Colluli project finance
facility documents.
Class 7:
* 15,000 upon completion of a strategic investment on
satisfactory terms; and
* 15,000 upon execution of Colluli project finance
facility documents.
Details of options issued to key management personnel can be found
in section f(i) below.
Details of performance rights issued to key management personnel
can be found in section f(ii) below.
Further performance rights details can be found in Note 22 to the
financial statements.
All performance rights will automatically expire on the earlier
of the expiry date or the date the holder ceases to be an employee
of the Company, unless the Board determines to vary the expiry
date in the event the holder ceased to be an employee because of
retirement, redundancy, death or total and permanent disability
and such other cases the Board may determine. Performance rights
granted under the PRP will carry no dividend or voting rights.
When the vesting conditions have been met, each performance right
will be converted into one ordinary share.
c) Voting and Comments Made at the Last Annual General Meeting
The Company received approximately 99% of votes in favour of its
Remuneration Report for the financial year ending 31 December 2017
and received no specific feedback on its Remuneration Report at the
Annual General Meeting or throughout the period.
d) Details of Remuneration
Details of the remuneration of the directors and other key
management personnel of Danakali Ltd are set out in the following
table. The disclosed directors' fees are inclusive of committee
fees.
Key management personnel of the Company for the financial year
to 31 December 2018:
Financial Year Short-Term Post-Employment Long LTI (d) Total Options
to Term Share Based Payments percentage
31 December Benefits of total
2018 remuneration
Long
Service
Salary Annual Super- Leave Options Performance
and Fees Leave (e) annuation (f) Shares (g) Rights (g)
$ $ $ $ $ $ $ $ %
--------- ---------- --------------- -------- ------- ------- ----------- --------- ------------
Non-Executive
Directors
S Cornelius
(a) 43,269 - - - - - - 43,269 -
P Donaldson 171,819 - 6,293 - - - 3,600 181,712 -
J Fitzgerald 56,154 - 5,335 - - - - 61,489 -
J Zhang 38,987 - - - - - - 38,987 -
R Connochie 44,987 - - - - - - 44,987 -
A Liebenberg 64,987 - - - - 17,101 - 82,088 21%
Executive
Directors
S Cornelius
(a) 110,878 - - - - - - 110,878 -
Other Key
Management
Personnel
D Goeman (b) 225,406 - 14,729 (8,178) - - - 231,957 -
S Tarrant 261,082 9,915 24,146 10,377 - - 3,880 309,400 -
C
Grant-Edwards
(c) 43,000 - - - - - - 43,000 -
M Chapman (c) 43,000 - - - - - - 43,000 -
TOTAL 1,103,569 9,915 50,503 2,199 - 17,101 7,480 1,190,767 1%
Note:
(a) Mr S Cornelius transitioned from the role of Non-Executive Chairman to Executive Chairman on
14 June 2018.
(b) Mr Goeman resigned as Chief Executive Officer on 3 August 2018. At resignation Mr Goeman retained
900,000 unlisted vested options exercisable at $0.558 expiring 8 August 2019.
(c) Company secretarial services are provided through Bellatrix Corporate Pty Ltd. Fees charged
are on an arms-length basis.
(d) The recorded values of options will only be realised by the KMP's in the event the Company's
share price exceeds the option exercise price. The recorded values of performance rights will only
be realised by the KMP's in the event the Company achieves its stated objectives, which is expected
to create further value for shareholders.
(e) Annual leave amount included in this table refers to movements during the year.
(f) Long service leave amount included in this table refers to movements during the year.
(g) This amount refers to the share-based payment expense recorded in the statement of comprehensive
income during the period in respect of the Director Options and performance rights (refer details
below).
Key management personnel of the Company for the financial year
to 31 December 2017:
Financial Year Short-Term Post-Employment Long LTI (j) Total Options
to Term Share Based Payments percentage
31 December Benefits of total
2017 remuneration
Long
Service
Salary Annual Super- Leave Performance
and Fees Leave (k) annuation (l) Shares Options Rights
$ $ $ $ $ $ $ $ %
--------- ---------- --------------- -------- ------- -------- ----------- --------- ------------
Non-Executive
Directors
S Cornelius 88,762 - - - - 60,734 - 149,496 41
P Donaldson
(a) 1,534 - 146 - - - - 1,680 -
J Fitzgerald 56,298 - 5,348 - - 50,612 - 112,258 45
J Zhang 41,013 - - - - 20,245 - 61,258 33
R Connochie
(b) 39,944 - - - - 101,224 - 141,168 72
A Liebenberg
(c) 13,622 - - - - - - 13,622 -
L Cornelius
(d) 39,049 - 3,710 - - 38,465 7,050 88,274 44
A Kiernan (e) 5,667 - 538 - - - 4,500 10,705 -
Executive
Directors
P Donaldson
(a) 347,481 4,235 29,452 (25,917) - 20,245 266,189 (m) 641,685 3
Other Key
Management
Personnel
D Goeman (f) 252,878 18,336 24,023 6,533 - 99,330 - 401,100 25
S Tarrant (g) 133,846 9,942 12,715 2,417 - - 49,513 208,433 -
C
Grant-Edwards
(h) 9,000 - - - - - - 9,000 -
M Chapman (h) 9,000 - - - - - - 9,000 -
C Els (i) 161,564 - 13,637 (5,403) - (78,691) - 91,107 (82)
TOTAL 1,199,658 32,513 89,569 (22,370) - 312,164 327,252 1,938,786 16
Note:
(a) Mr Donaldson transitioned from role of Executive Director to Non-Executive Director 21 December
2017. Annual leave entitlements owing to Mr Donaldson at date of transition of $105,536 were paid
out in January 2018.
(b) Mr Connochie was appointed Non-Executive Director 6 February 2017.
(c) Mr Liebenberg was appointed Non-Executive Director 2 October 2017.
(d) Mr L Cornelius resigned as Non-Executive Director 17 November 2017. The share price on the
date of resignation was $0.70. At resignation Mr Cornelius retained 50,000 Class 1 performance
rights, 400,000 unlisted options exercisable at $0.405 expiring 13 May 2018, 190,000 unlisted options
exercisable at $0.94 expiring 19 May 2020 and 500,000 unlisted option exercisable at $0.35 expiring
30 March 2018. The value of Mr Cornelius's options and performance rights had been fully amortised
at the date of resignation.
(e) Mr Kiernan resigned as Non-Executive Director 6 February 2017. The share price on the date
of resignation was $0.745. At resignation Mr Kiernan retained 75,000 Class 2 performance rights,
400,000 unlisted options exercisable at $0.405 expiring 13 May 2018, 50,000 unlisted options exercisable
at $0.35 expiring 13 May 2018 and 1,300,000 unlisted option exercisable at $0.278 expiring 17 November
2017. The value of Mr Kiernan's options and performance rights had been fully amortised at the
date of resignation.
(f) Mr Goeman was appointed Chief Executive Officer 21 December 2017.
(g) Mr Tarrant was appointed Chief Financial Officer 12 June 2017.
(h) Ms Grant-Edwards and Ms Chapman were appointed joint Company Secretary 7 July 2017. Company
secretarial services are provided through Bellatrix Corporate Pty Ltd. Fees charged are on an arms-length
basis.
(i) Mr Els resigned as Chief Financial Officer on 12 June 2017 and Company Secretary 7 July 2017.
The options held by Mr Els at resignation were cancelled.
(j) The recorded values of options will only be realised by the KMP's in the event the Company's
share price exceeds the option exercise price. The recorded values of performance rights will only
be realised by the KMP's in the event the Company achieves its stated objectives, which is expected
to create further value for shareholders.
(k) Annual leave amount included in this table refers to movements during the year.
(l) Long service leave amount included in this table refers to movements during the year.
(m) The amount disclosed in the 31 December 2017 financial report was $394,800 which was based
on an incorrect calculation. This comparative figure has been adjusted to reflect the value based
on the corrected calculation.
The relative proportions of remuneration that are linked to
performance and those that are fixed are as follows:
Financial Year to 31 December 2018
Name Fixed Remuneration At risk - STI At risk - LTI
------------------- -------------- --------------
Non-Executive Directors
S Cornelius 100% - -
P Donaldson 98% - 2%
J Fitzgerald 100% - -
J Zhang 100% - -
R Connochie 100% - -
A Liebenberg 79% - 21%
Executive Directors
S Cornelius 100% - -
Other Key Management
Personnel
D Goeman 100% - -
S Tarrant 99% - 1%
C Grant-Edwards 100% - -
M Chapman 100% - -
------------------- -------------- --------------
e) Service Agreements
Remuneration and other terms of employment for the executive
managers are formalised in employment contracts. Other major
provisions of the agreements relating to remuneration are set out
below.
S Cornelius, Executive Chairman (Transitioned from Non-Executive
to Executive Chairman 14 June 2018):
* Under an executive services agreement for the
provision of executive duties, the term of which will
be three months after the appointment of a new CEO,
Mr Cornelius received:
o For the period 14 June 2018 to 31 October 2018: $40,875
o For the period 1 November 2018 to 31 December 2018: $23,667
* In addition, Mr Cornelius remains entitled to receive
his pre-existing director fees (approximately $89,000
per annum)
S Tarrant, Chief Financial Officer
* Appointed 12 June 2017
* Original agreement was for a fixed term expiring 31
August 2018. Effective 1 June 2018, Mr Tarrant was
engaged as a permanent full-time employee under a
revised employment agreement.
* For the period 1 January 2018 to 31 May 2018: Base
salary of $240,000 per annum plus statutory
superannuation
* For the period 1 June 2018 to 31 December 2018:
Remuneration of $300,000 per annum inclusive of
statutory superannuation
* Notice period of three months, required to be given
by either party for termination
D Goeman, Chief Executive Officer:
* Appointed 21 December 2017 (Resigned 3 August 2018)
* No set term of agreement
* Base salary of $330,000 per annum plus statutory
superannuation
* Notice period of six months, required to be given by
either party for termination
f) Details of Share Based Compensation
(i) Options
On 19 October 2018, the Directors agreed to issue 500,000
unlisted options with no vesting conditions to Mr Andre Liebenberg
at an exercise price of $0.912 each and an expiry date of 11 May
2020, subject to receipt of shareholder approval (Director
Options).
Shareholder approval for the issue of the Director Options will
be sought at an upcoming general meeting of the Company. The grant
date is therefore after the period in which services have begun to
be rendered. Therefore, the grant date fair value presented in the
31 December 2018 financial statements is provisional, estimated by
reference to the period end share price. Once the date of the grant
is known, this provisional estimate of the grant date fair value
will be revised.
There were no new options granted to key management personnel
during the year, other than the 500,000 options granted to a
director, subject to receipt of shareholder approval (the Director
Options).
The terms and conditions of each grant of options constituting
key management personnel remuneration that remain on issue to
current key management personnel at 31 December 2018 are set out in
the following table. The Director Options have been included in
this table:
Value
Vesting and per option Vested
first exercise Number Exercise at grant and exercisable
Grant date date Expiry date of Options price date %
19 May 2017
19 May 2017 (a) 19 May 2020 1,250,000 $0.940 $0.202 100%
----------------- ------------- ------------ --------- ------------ -----------------
19 October On or before 500,000
2018 31 May 2019 11 May 2020 (b) $0.912 $0.105 -
----------------- ------------- ------------ --------- ------------ -----------------
Total Options 1,750,000
------------------------------------------------- ------------ --------- ------------ -----------------
Note:
(a) The options were issued in recognition of skill and expertise
brought to the Company and therefore, there were no conditions
attached to the options.
(b) Options will be issued following receipt of shareholder approval.
The options are to be issued in recognition of skill and expertise
brought to the Company and therefore, there will be no conditions
attached to the options.
Details of options over ordinary shares in the Company, provided
as remuneration to key management personnel are set out in the
following table.
Options will automatically expire on the earlier of the expiry
date or the date the holder ceases to be an employee of the Company,
unless the Board determines to vary the expiry date in the event
the holder ceased to be an employee because of retirement, redundancy,
death or total and permanent disability and such other cases the
Board may determine.
When exercisable, each option is convertible into one ordinary
share. Further information on the options is set out in note 22.
Number
Year Value Number of of options
in which Number of options options forfeited
Year options of options at grant vested during Vested during
Name of grant vest granted date the period and exercisable the period
S Cornelius 2017 2017 300,000 $60,734 300,000 100% -
----------- ----------- ------------ ------------ --------------- ---------------- ------------
P Donaldson 2017 2017 100,000 $20,245 100,000 100% -
----------- ----------- ------------ ------------ --------------- ---------------- ------------
J Fitzgerald 2017 2017 250,000 $50,612 250,000 100% -
----------- ----------- ------------ ------------ --------------- ---------------- ------------
Z Jing 2017 2017 100,000 $20,245 100,000 100% -
----------- ----------- ------------ ------------ --------------- ---------------- ------------
R Connochie 2017 2017 500,000 $101,224 500,000 100% -
----------- ----------- ------------ ------------ --------------- ---------------- ------------
A Liebenberg 2018 2019 500,000 $52,476 - - -
----------- ----------- ------------ ------------ --------------- ---------------- ------------
Total Options 1,750,000 1,250,000 -
----------------------------------------- ------------ ------------ --------------- ---------------- ------------
A total of 2,900,000 remuneration options were cashless
exercised by key management personnel during the year, as
follows:
Name Cashless Exercise
Number Amount Number Fair value
of options paid of shares of shares
exercised acquired acquired
------------ ------- ----------- -----------
S Cornelius 1,250,000 - 405,781 $290,750
------------ ------- ----------- -----------
P Donaldson 500,000 - 189,417 $123,500
------------ ------- ----------- -----------
J Fitzgerald 1,150,000 - 268,119 $171,550
------------ ------- ----------- -----------
Total Options 2,900,000 - 863,317 $585,800
--------------- ------- ----------- -----------
(ii) Performance Rights
There were no new performance rights granted to key management
personnel during the year.
The terms and conditions of each grant of performance rights
constituting key management personnel remuneration that remain on
issue at 31 December 2018 are as set out in the following
table:
Performance rights Number of performance Performance
granted rights vested rights cancelled
Year In prior In current Total
Name of grant Class Number periods period Unvested
--------- ----------- ----------- -----------
Class
P M Donaldson 2014 4 2,450,000 1,650,000 - - 33%
Class
S Tarrant 2017 6 50,000 - 10,000 - 80%
Class
S Tarrant 2017 7 50,000 - 20,000 - 60%
----------- --------- ----------- ----------- ----------- ------------------ ----------
The performance rights on issue to key management personnel, as
set out above, vest, subject to the following vesting conditions:
Class 4:
* 300,000 upon completion of a Prefeasibility Study and
the release of the study results to market (vested
March 2015);
* 650,000 upon completion of a Definitive Feasibility
Study and release of study results to market (vested
November 2015);
* 700,000 upon awarding of the Colluli mining licence
(vested February 2017); and
* 800,000 upon commencement of construction of the
production facility.
Class 6:
* 10,000 upon successful completion of a dual listing
of the Company on the London stock exchange (vested
during 2018 and shares issued July 2018);
* 15,000 upon Endeavour Financial being paid its first
milestone success fee which is linked to a letter of
finance support from a lending institution; and
* 25,000 upon term sheets being signed for the project
financing of the Colluli project.
Class 7:
* 10,000 upon market announcement of a binding offtake
agreement to support debt funding of the project
(vested during 2018 and shares issued June 2018);
* 10,000 upon market announcement on completion of FEED
(vested during 2018 and shares issued March 2018);
* 15,000 upon completion of a strategic investment at
greater than 30-day VWAP plus 10%; and
* 15,000 on signing a debt terms sheet for project
financing or debt is secured form a strategic
investor.
No performance rights held by key management personnel were forfeited
during the year.
g) Equity Instruments Held by Key Management Personnel
(i) Shares
No shares were granted as remuneration during the year ended 31
December 2018.
The number of shares in the Company held during the financial
period by each director of Danakali Ltd and other key management
personnel of the Group, including their personally related parties,
are set out in the following tables.
Financial Balance Granted Received Received On market Other (c) Balance
Year to at as on exercise on conversion purchases/ at
31 December 31 December compensation of of performance (sales) 31 December
2018 2017 remuneration rights 2018
options (b)
Shares
Directors
S Cornelius 9,798,184 - 405,781 - - 125,000 10,328,965
P Donaldson 2,718,334 - 189,417 - - 50,000 2,957,751
J Fitzgerald 258,334 - 268,119 - - - 526,453
J Zhang - - - - - - -
R Connochie - - - - - - -
A Liebenberg - - - - - - -
Other Key
Management
Personnel
D Goeman
(a) - - - - - - -
S Tarrant 200,874 - - 30,000 (41,017) - 189,857
C
Grant-Edwards - - - - - - -
M Chapman - - - - - - -
TOTAL 12,975,726 - 863,317 30,000 (41,017) 175,000 14,003,026
Note:
(a) Upon his resignation on 3 August 2018, Mr Goeman held nil shares
(b) Via cashless exercise
(c) Shares issued upon traditional exercise of non-remuneration
unlisted options at $0.35 expiry date 13 May 2018
(ii) Options
The numbers of options over ordinary shares in the Company held
during the financial period by each director of Danakali Ltd and
other Key Management Personnel of the Group, including their
personally related parties, are set out in the following
tables.
Financial Balance Granted Exercised Expired Other Balance Vested Unvested
Year to at / Cancelled at and
31 December 31 December 31 December exercisable
2018 2017 2018
Options
Directors
S Cornelius 1,675,000 - (1,375,000) - - 300,000 300,000 -
P Donaldson 650,000 - (550,000) - - 100,000 100,000 -
J Fitzgerald 1,475,000 - (1,150,000) (75,000) - 250,000 250,000 -
J Zhang 100,000 - - - - 100,000 100,000 -
R Connochie 500,000 - - - - 500,000 500,000 -
A Liebenberg
(a) - 500,000 - - - 500,000 - 500,000
Other Key
Management
Personnel
D Goeman
(b) 1,000,000 - - (100,000) (900,000) - - -
S Tarrant - - - - - - - -
C - -
Grant-Edwards - - - - - -
M Chapman - - - - - - - -
------------ ------- ----------- ------------ --------- ------------ -------------- --------
TOTAL 5,400,000 500,000 (3,075,000) (175,000) (900,000) 1,750,000 1,250,000 500,000
------------ ------- ----------- ------------ --------- ------------ -------------- --------
Note:
(a) Refers to 500,000 unlisted options with no vesting conditions
granted to director at an exercise price of $0.912 each and an
expiry date of 11 May 2020, subject to receipt of shareholder approval
(the Director Options).
(b) Upon his resignation on 3 August 2018, Mr Goeman held 900,000
vested options.
(iii) Performance Rights held by Key Management Personnel
Movements in Performance Rights held by Key Management Personnel
are as set out in the following table:
Financial Year Balance Granted Vested Cancelled Other Unvested
to At 31 December as Remuneration Balance
31 December 2018 2017 at 31 December
2018
Performance Rights
Directors
S Cornelius - - - - - -
P Donaldson 800,000 - - - - 800,000
J Fitzgerald - - - - - -
J Zhang - - - - - -
R Connochie - - - - - -
A Liebenberg - - - - - -
Other Key
Management Personnel
D Goeman (a) - - - - - -
S Tarrant 100,000 - (30,000) - - 70,000
C Grant-Edwards - - - - - -
M Chapman - - - - - -
--------------- ---------------- -------- ----------- ------- -------------------
TOTAL 900,000 - (30,000) - - 870,000
--------------- ---------------- -------- ----------- ------- -------------------
Note:
(a) Upon his resignation on 3 August 2018, Mr Goeman held nil performance
rights
h) Loans to Key Management Personnel
There were no loans to key management personnel during the
period.
i) Other Transactions with Key Management Personnel
There were no other transactions with key management personnel
during the period.
j) Additional Information
The remuneration structure has been set up with the objective of
attracting and retaining the highest calibre staff who contribute
to the success of the Company's performance and individual rewards.
The remuneration policies seek a balance between the interests of
stakeholders and competitive market remuneration levels. The
overall level of key management personnel compensation takes into
account the performance of the Group over a number of years and the
stage of activities the Company is engaged in.
During the period, there was a high level of corporate and
project development activity to progress the Colluli Potash
Project. The remuneration paid during the period is commercially
reasonable for an exploration and development stage mining company.
Company performance is measured against a comparable list of
companies operating in the same market segment.
The Group is still in the exploration and development stage and
revenue streams only relate to interest earned on investing surplus
funds from capital raisings. The net losses after tax reflect the
ongoing costs of the Group's exploration programs and development
on the Colluli Potash Project. The table below shows the
performance of the Group over the last 5 reporting periods:
Financial 31 Dec 2018 31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014
Year (a)
Basic (loss)/income
EPS (Cents) (2.66) (2.85) (2.35) (4.01) 2.18
------------- ------------- ------------- ------------- ------------
Share Price $0.740 $0.715 $0.48 $0.29 $0.19
------------- ------------- ------------- ------------- ------------
(Loss)/income
for the period ($6,944,413) ($6,839,936) ($4,925,558) ($6,792,685) $2,999,972
------------- ------------- ------------- ------------- ------------
Note:
(a) 31 December 2014 was a six-month transitional period while
adjusting to a December year end.
The Company continues to review its remuneration framework to
ensure it reflects current business needs, shareholder views and
contemporary market practice and remains appropriate to attract,
motivate, retain and reward employees.
- - OF REMUNERATION REPORT - -
Signed in accordance with a resolution of the directors.
Seamus Cornelius
EXECUTIVE CHAIRMAN
Perth, 20 March 2019
Competent Persons and Responsibility Statements
Competent Persons Statement (Sulphate of Potash and Kieserite
Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 1,289Mt @11% K(2) 0 Equiv.
and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K(2) 0
Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K(2) 0
Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K(2) 0
Equiv. and 9% Kieserite of Inferred Resource.
The information relating to the Colluli Mineral Resource
estimate is extracted from the report entitled "Colluli Review
Delivers Mineral Resource Estimate of 1.289Bt" disclosed on 25
February 2015 and the report entitled "In excess of 85 million
tonnes of Kieserite defined within Colluli Project Resource adds to
multi agri-commodity potential" disclosed on 15 August 2016, which
are available to view at www.danakali.com.au. The Company confirms
that it is not aware of any new information or data that materially
affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources or
Ore Reserves, that all material assumptions and technical
parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The
Company confirms that the form and context in which the Competent
Person's findings are presented have not been materially modified
from the original market announcement.
Competent Persons Statement (Sulphate of Potash Ore Reserve)
Colluli Proved and Probable Ore Reserve is reported according to
the JORC Code and estimated at 1,100Mt @ 10.5% K(2) O Equiv. The
Ore Reserve is classified as 285Mt @ 11.3% K(2) O Equiv. Proved and
815Mt @ 10.3% K(2) O Equiv. Probable. The Colluli SOP Mineral
Resource includes those Mineral Resources modified to produce the
Colluli SOP Ore Reserves.
The information relating to the January 2018 Colluli Ore Reserve
is extracted from the report entitled "Colluli Ore Reserve update"
disclosed on 19 February 2018 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
Competent Persons Statement (Rock Salt Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 347Mt @ 96.9% NaCl. The
Mineral Resource estimate contains 28Mt @ 97.2% NaCl of Measured
Resource, 180Mt @ 96.6% NaCl of Indicated Resource and 139Mt @
97.2% NaCl of Inferred Resource.
The information relating to the Colluli Rock Salt Mineral
Resource estimate is extracted from the report entitled "+300M
Tonne Rock Salt Mineral Resource Estimate Completed for Colluli"
disclosed on 23 September 2015 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
AMC Consultants Pty Ltd (AMC) independence
In reporting the Mineral Resources and Ore Reserves referred to
in this public release, AMC acted as an independent party, has no
interest in the outcomes of Colluli and has no business
relationship with Danakali other than undertaking those individual
technical consulting assignments as engaged, and being paid
according to standard per diem rates with reimbursement for
out-of-pocket expenses. Therefore, AMC and the Competent Persons
believe that there is no conflict of interest in undertaking the
assignments which are the subject of the statements.
Quality control and quality assurance
Danakali exploration programs follow standard operating and
quality assurance procedures to ensure that all sampling techniques
and sample results meet international reporting standards. Drill
holes are located using GPS coordinates using WGS84 Datum, all
mineralisation intervals are downhole and are true width
intervals.
The samples are derived from HQ diamond drill core, which in the
case of carnallite ores, are sealed in heat-sealed plastic tubing
immediately as it is drilled to preserve the sample. Significant
sample intervals are dry quarter cut using a diamond saw and then
resealed and double bagged for transport to the laboratory.
Halite blanks and duplicate samples are submitted with each
hole. Chemical analyses were conducted by Kali-Umwelttechnik GmBH,
Sondershausen, Germany, utilising flame emission spectrometry,
atomic absorption spectroscopy and ion chromatography.
Kali-Umwelttechnik (KUTEC) has extensive experience in analysis of
salt rock and brine samples and is certified according by DIN EN
ISO/IEC 17025 by the Deutsche Akkreditierungsstelle GmbH (DAR). The
laboratory follows standard procedures for the analysis of potash
salt rocks chemical analysis (K(+) , Na(+) , Mg(2+) , Ca(2+) ,
Cl(-) , SO(4) (2-) , H(2) O) and X-ray diffraction (XRD) analysis
of the same samples as for chemical analysis to determine a
qualitative mineral composition, which combined with the chemical
analysis gives a quantitative mineral composition.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company's intentions.
All statements in this document, other than statements of
historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company's filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company's ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions in
connection with the distribution of this announcement. Any failure
to comply with such restrictions may constitute a violation of the
securities laws of any jurisdiction outside the United Kingdom.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
FOR THE YEARED 31 DECEMBER 2018
2018 2017
------------------------------------------------
Notes $ $
------------------------------------------------ ----- ----------- -----------
REVENUE
Interest revenue calculated using the effective
interest rate method 4 172,252 221,189
Accretion relating to the unwinding of
discount on joint venture loan 8 - 1,362,780
Sundry 1,959 4,218
EXPENSES
Depreciation expense (8,282) (3,588)
Administration expenses 5 (2,747,713) (1,684,367)
Share based payment expense 22 (91,257) (988,573)
Loss on re-measurement of loan to joint
venture carried at amortised cost 8 - (216,909)
Net loss on financial assets at fair value
through profit or loss 8 (4,862,775) -
Share of net loss of joint venture 10 (389,239) (5,111,085)
Foreign exchange gain/(loss) 980,642 (423,601)
LOSS BEFORE INCOME TAX (6,944,413) (6,839,936)
Income tax expense 7 - -
----------- -----------
LOSS FOR THE YEAR (6,944,413) (6,839,936)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit
or loss in subsequent periods
Share of foreign currency translation reserve
relating to equity accounted investment 10,14 873,940 (933,753)
----------- -----------
OTHER COMPREHENSIVE INCOME FOR THE YEAR,
NET OF TAX 873,940 (933,753)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (6,070,473) (7,773,689)
=========== ===========
Earnings per share for loss attributable
to the ordinary equity holders of the Company:
Basic loss per share (cents per share) 17 (2.66) (2.85)
Diluted loss per share (cents per share) 17 (2.66) (2.85)
The above Consolidated Statement of Profit or Loss and Other
Comprehensive Income should be read in conjunction with the
accompanying notes.
2018 2017
Notes $ $
------------------------------ ----- ------------ ------------
CURRENT ASSETS
Cash and cash equivalents 6 9,550,585 15,559,980
Receivables 8 108,477 174,321
Prepayments 17,474 50,094
TOTAL CURRENT ASSETS 9,676,536 15,784,395
------------ ------------
NON--CURRENT ASSETS
Receivables 8 9,283,670 12,216,952
Investment in joint venture 10 19,829,489 13,811,946
Plant and equipment 9 22,952 15,110
TOTAL NON--CURRENT ASSETS 29,136,111 26,044,008
------------ ------------
TOTAL ASSETS 38,812,647 41,828,403
------------ ------------
CURRENT LIABILITIES
Trade and other payables 11 223,854 1,097,087
Provisions 12 86,180 166,219
TOTAL CURRENT LIABILITIES 310,034 1,263,306
------------ ------------
NON-CURRENT LIABILITIES
Provisions 12 58,903 27,811
------------ ------------
TOTAL NON-CURRENT LIABILITIES 58,903 27,811
TOTAL LIABILITIES 368,937 1,291,117
------------ ------------
NET ASSETS 38,443,710 40,537,286
============ ============
EQUITY
Issued capital 13 79,576,117 75,415,034
Reserves 14 13,211,353 12,521,599
Accumulated losses 15 (54,343,760) (47,399,347)
------------ ------------
TOTAL EQUITY 38,443,710 40,537,286
============ ============
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes
Consolidated Statement of Changes in Equity
FOR THE YEARED 31 DECEMBER 2018
Reserves
------------------------------------ -----
Share Based Foreign Currency Accumulated
Issued Capital Payments Translation Losses Total Equity
Notes $ $ $ $ $
------------------------------------ ----- -------------- ----------- ---------------- ------------ ------------
BALANCE AT 1 JANUARY 2018 75,415,034 11,416,109 1,105,490 (47,399,347) 40,537,286
Loss for the period - - - (6,944,413) (6,944,413)
Other comprehensive income 14 - - 873,940 - 873,940
-------------- ----------- ---------------- ------------ ------------
Total comprehensive income for the
period - - 873,940 (6,944,413) (6,070,473)
Transactions with owners in their
capacity as owners:
Shares issued 13 4,161,083 - - - 4,161,083
Costs of capital raised 13 - - - - -
Options and performance rights
issued 14 - (184,186) - - (184,186)
-------------- ----------- ---------------- ------------ ------------
BALANCE AT 31 DECEMBER 2018 79,576,117 11,231,923 1,979,430 (54,343,760) 38,443,710
============== =========== ================ ============ ============
BALANCE AT 1 JANUARY 2017 61,758,320 10,427,536 2,039,243 (40,559,411) 33,665,688
Loss for the period - - - (6,839,936) (6,839,936)
Other comprehensive income 14 - - (933,753) - (933,753)
-------------- ----------- ---------------- ------------ ------------
Total comprehensive income for the
period - - (933,753) (6,839,936) (7,773,689)
Transactions with owners in their
capacity as owners:
Shares issued 13 14,328,083 - - - 14,328,083
Costs of capital raised 13 (671,369) - - - (671,369)
Options and performance rights
issued 14 - 988,573 - - 988,573
-------------- ----------- ---------------- ------------ ------------
BALANCE AT 31 DECEMBER 2017 75,415,034 11,416,109 1,105,490 (47,399,347) 40,537,286
============== =========== ================ ============ ============
The above Consolidated Statement of Changes in Equity should be
read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
FOR THE YEARED 31 DECEMBER 2018
2018 2017
----------------------------------------------
Notes $ $
---------------------------------------------- ----- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 171,783 231,693
Realised foreign exchange gain 38,504 71,924
Payments to suppliers and employees (3,640,750) (1,583,296)
NET CASH OUTFLOW USED IN OPERATING ACTIVITIES 16 (3,430,463) (1,279,679)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Funding of joint venture (6,448,446) (7,711,037)
Payments for plant and equipment (16,124) (10,778)
NET CASH OUTFLOW USED IN INVESTING ACTIVITIES (6,464,570) (7,721,815)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares 3,885,638 14,328,083
Costs of capital raised - (671,369)
NET CASH INFLOW FROM FINANCING ACTIVITIES 3,885,638 13,656,714
----------- -----------
NET INCREASE / (DECREASE) IN CASH (6,009,395) 4,655,220
Cash at the beginning of the financial
year 15,559,980 10,904,760
CASH AT THE OF THE YEAR 6 9,550,585 15,559,980
=========== ===========
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes.
Notes to the Consolidated Financial Statements
FOR THE YEARED 31 DECEMBER 2018
1. GENERAL INFORMATION
Danakali Ltd (Danakali or the Company) is a for profit company
limited by shares, incorporated and domiciled in Australia, and
whose shares are publicly traded on the Australian Securities
Exchange (ASX) and the London Stock Exchange (LSE). The
consolidated financial report of the group as at, and for the year
ended 31 December 2018 comprises the Company and its subsidiaries
(together referred to as the Group). The address of the registered
office is Level 11, 125 St George's Terrace, Perth, WA, 6000.
The financial statements are presented in the Australian
currency.
The financial report of Danakali for the year ended 31 December
2018 was authorised for issue by the Directors on 20 March 2019.
The directors have the power to amend and reissue the financial
statements.
The nature of the operations and principal activities of the
consolidated entity are described in the Directors' Report.
2. BASIS OF PREPARATION
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated.
These general purpose consolidated financial statements have
been prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting
Standards Board, Australian Accounting Interpretations and the
Corporations Act 2001.
The consolidated financial statements of the Danakali Ltd Group
also comply with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board
(IASB).
These financial statements have been prepared under the
historical cost convention, except for the loan to the joint
venture that has been measured at fair value.
(a) New standards, interpretations and amendments adopted by the Group
The Group applied all new and amended Accounting Standards and
Interpretations that were effective as at 1 January 2018,
including:
AASB 9 Financial Instruments (AASB 9)
The Group has adopted AASB 9 retrospectively with the date of
initial application being 1 January 2018. In accordance with the
transitional provisions in AASB 9, comparative figures have not
been restated which continues to be reported under AASB 139
Financial Instruments: Recognition and Measurement ("AASB 39").
AASB 9 replaces parts of AASB 139, bringing together all three
aspects of the accounting for financial instruments: classification
and measurement; impairment; and hedge accounting. The accounting
policies have been updated to reflect the application of AASB 9 for
the period from 1 January 2018 (see note 2(l) for details of the
new accounting policy for receivables).
Classification and Measurement
Under AASB 9, debt instruments are subsequently measured at fair
value through profit or loss (FVPL), amortised cost, or fair value
through other comprehensive income (FVOCI). The classification is
based on two criteria: the Group's business model for managing the
assets; and whether the instruments' contractual cash flows
represent 'solely payments of principal and interest' on the
principal amount outstanding (the 'SPPI criterion'). The SPPI test
is applied to the entire financial asset, even if it contains an
embedded derivative. Consequently, a derivative embedded in a debt
instrument is not accounted for separately.
At the date of initial application, existing financial assets
and liabilities of the Group were assessed in terms of the
requirements of AASB 9. The assessment was conducted on instruments
that had not been derecognised as at 1 January 2018. In this
regard, the Group has determined that the adoption of AASB 9 has
impacted the classification of financial instruments at 1 January
2018 as follows:
Class of financial instrument Original measurement New measurement category
presented in the statement category under AASB139 under AASB 9 (from
of financial position (prior to 1 January 1 January 2018)
2018)
Cash and cash equivalents Loans and receivables Financial assets at
amortised cost
------------------------ -------------------------
Trade and other receivables Loans and receivables Financial assets at
amortised cost
------------------------ -------------------------
Loan receivable Loans and receivables Financial assets at
Fair Value Through
Profit and Loss
------------------------ -------------------------
Trade and other payables Financial liability Financial liabilities
at amortised cost at amortised cost
------------------------ -------------------------
The change in classification of financial instruments has not
resulted in any re-measurement adjustments at 1 January 2018 and
has had no impact on the measurement of carrying value of the
amount disclosed.
The loan to Colluli Mining Share Company (see note 8) failed the
SPPI test due to the limited recourse nature of the loan.
Accordingly, on adoption of AASB 9, the loan has been classified as
a financial asset at FVPL.
Impairment of financial assets
In relation to the financial assets carried at amortised cost,
AASB 9 requires an expected credit loss model to be applied as
opposed to an incurred credit loss model under AASB 39. The
expected credit loss model requires the Group to account for
expected credit losses and changes in those expected credit losses
at each reporting date to reflect changes in credit risk since
initial recognition of the financial asset. In particular, AASB 9
requires the Group to measure the loss allowance at an amount equal
to lifetime expected credit loss ("ECL") if the credit risk on the
instrument has increased significantly since initial recognition.
On the other hand, if the credit risk on the financial instrument
has not increased significantly since initial recognition, the
Group is required to measure the loss allowance for that financial
instrument at an amount equal to the ECL within the next 12
months.
As at 1 January 2018, the directors of the Company reviewed and
assessed the Group's existing financial assets for impairment using
reasonable and supportable information. The result of the
assessment is as follows:
Items existing as Credit risk attributes
at 1 January 2018 Cumulative additional
that are subject loss allowance
to the impairment recognised on
provisions of AASB 1 January 2018
9 $'000:
Cash and cash equivalents All bank balances are assessed -
and deposits to have low credit risk as they
are held with a reputable financial
institution with a Moody's Credit
Rating of AA3.
---------------------------------------- ----------------------
Security Bond The security is assessed to -
have low credit risk as they
are held with a reputable institution.
---------------------------------------- ------------------------
Receivables at amortised As these receivables have short -
cost term maturities, the Group has
concluded that the lifetime
ECL for these assets would be
negligible and therefore no
loss allowance was required
at 1 January 2018.
---------------------------------------- ------------------------
Hedge accounting
The Group has not applied hedge accounting.
AASB 15 Revenue from Contracts with Customers (AASB 15)
The Group has adopted AASB 15 with the date of initial
application being 1 January 2018.
AASB 15 supersedes AASB 118 Revenue, AASB 111 Construction
Contracts and related Interpretations and it applies to all revenue
arising from contracts with customers, unless those contracts are
in the scope of other standards. The new standard establishes a
five-step model to account for revenue arising from contracts with
customers. Under AASB 15, revenue is recognised at an amount that
reflects the consideration to which an entity expects to be
entitled in exchange for transferring goods or services to a
customer.
At 1 January 2017 and at 1 January 2018 it was determined that
the adoption of AASB 15 had no impact on the Group as the entity
does not generate revenue.
AASB 2016-5 Amendments to Australian Accounting Standards -
Classification and Measurement of Share-based Payment
Transactions
The Group has adopted AASB 2016-5 with the date of initial
application being 1 January 2018.
This standard amends AASB 2 Share-based Payment, clarifying how
to account for certain types of share-based payment transactions.
The amendments provide requirements on the accounting for:
* The effects of vesting and non-vesting conditions on
the measurement of cash-settled share-based payments
* Share-based payment transactions with a net
settlement feature for withholding tax obligations
* A modification to the terms and conditions of a
share-based payment that changes the classification
of the transaction from cash-settled to
equity-settled
At 1 January 2017 and at 1 January 2018 it was determined that
the adoption of AASB 2016-5 had no impact on the Group as the Group
had no share-based payment transactions with features described in
the amendment.
AASB Interpretation 22 Foreign Currency Transactions and Advance
Consideration
The Group has adopted Interpretation 22 with the date of initial
application being 1 January 2018.
The Interpretation clarifies that in determining the spot
exchange rate to use on initial recognition of the related asset,
expense or income (or part of it) on the derecognition of a
non-monetary asset or non-monetary liability relating to advance
consideration, the date of the transaction is the date on which an
entity initially recognises the non-monetary asset or non-monetary
liability arising from the advance consideration. If there are
multiple payments or receipts in advance, then the entity must
determine a date of the transaction for each payment or receipt of
advance consideration.
At 1 January 2017 and at 1 January 2018 it was determined that
the adoption of Interpretation 22 had no impact on the Group.
(b) New accounting standards and interpretations not yet effective
Australian Accounting Standards that have recently been issued
or amended but are not yet effective and have not been adopted by
the Group for the annual reporting year ended 31 December 2018 are
outlined in the table below. The potential effect of these
Standards is yet to be fully determined.
Reference Title Summary Application date
of for Group
standard*
------------ ----------
AASB 2014-10 Amendments The amendments clarify that 1 January 1 January
to a full gain or loss is recognised 2022 2022
Australian when a transfer to an associate
Accounting or joint venture involves
Standards - a business as defined in
Sale or AASB 3 Business Combinations.
Contribution Any gain or loss resulting
of Assets from the sale or contribution
between of assets that does not
an Investor constitute a business, however,
and its is recognised only to the
Associate extent of unrelated investors'
or Joint interests in the associate
Venture or joint venture.
AASB 2015-10 deferred the
mandatory effective date
(application date) of AASB
2014-10 so that the amendments
were required to be applied
for annual reporting periods
beginning on or after 1
January 2018 instead of
1 January 2016. AASB 2017-5
further defers the effective
date of the amendments made
in AASB 2014-10 to periods
beginning on or after 1
January 2022.
------------- ------------------------------------------------------------ ------------ ----------
AASB 16 Leases The key features of AASB 1 January 1 January
16 are as follows: 2019 2019
Lessee accounting
* Lessees are required to recognise right-of-use assets
and lease liabilities for all leases with a term of
more than 12 months, unless the underlying asset is
of low value.
* Assets and liabilities arising from a lease are
initially measured on a present value basis. The
measurement includes non-cancellable lease payments
(including inflation-linked payments), and also
includes payments to be made in optional periods if
the lessee is reasonably certain to exercise an
option to extend the lease, or not to exercise an
option to terminate the lease.
* AASB 16 contains disclosure requirements for lessees.
Lessor accounting
* AASB 16 substantially carries forward the lessor
accounting requirements in AASB 117. Accordingly, a
lessor continues to classify its leases as operating
leases or finance leases, and to account for those
two types of leases differently.
* AASB 16 also requires enhanced disclosures to be
provided by lessors that will improve information
disclosed about a lessor's risk exposure,
particularly to residual value risk.
AASB 16 supersedes:
a) AASB 117 Leases
b) Interpretation 4 Determining
whether an Arrangement contains
a Lease
c) SIC-15 Operating Leases-Incentives
d) SIC-27 Evaluating the
Substance of Transactions
Involving the Legal Form
of a Lease
The new standard will be
effective for annual periods
beginning on or after 1
January 2019. The Group
has not yet performed its
detailed assessment on the
impact of this new standard
on the basis that it is
not material to the financial
statements.
------------- ------------------------------------------------------------ ------------ ----------
AASB Uncertainty The Interpretation clarifies 1 January 1 January
Interpretation over Income the application of the recognition 2019 2019
23, and Tax and measurement criteria
relevant Treatments in AASB 112 Income Taxes
amending when there is uncertainty
standards over income tax treatments.
The Interpretation specifically
addresses the following:
* Whether an entity considers uncertain tax treatments
separately
* The assumptions an entity makes about the examination
of tax treatments by taxation authorities
* How an entity determines taxable profit (tax loss),
tax bases, unused tax losses, unused tax credits and
tax rates
* How an entity considers changes in facts and
circumstances.
------------- ------------------------------------------------------------ ------------ ----------
AASB 2017-7 Amendments This Standard amends AASB 1 January 1 January
to 128 Investments in Associates 2019 2019
Australian and Joint Ventures to clarify
Accounting that an entity is required
Standards - to account for long-term
Long-term interests in an associate
Interests or joint venture, which
in in substance form part of
Associates the net investment in the
and Joint associate or joint venture
Ventures but to which the equity
method is not applied, using
AASB 9 Financial Instruments
before applying the loss
allocation and impairment
requirements in AASB 128.
------------- ------------------------------------------------------------ ------------ ----------
AASB 2018-1 Australian The amendments clarify certain 1 January 1 January
Amendments requirements in: 2019 2019
to * AASB 3 Business Combinations and AASB 11 Joint
Australian Arrangements - previously held interest in a joint
Accounting operation
Standards
- Annual
Improvements * AASB 112 Income Taxes - income tax consequences of
2015-2017 payments on financial instruments classified as
Cycle equity
* AASB 123 Borrowing Costs - borrowing costs eligible
for capitalisation.
------------- ------------------------------------------------------------ ------------ ----------
Not yet Conceptual The revised Conceptual Framework 1 January 1 January
issued Framework includes some new concepts, 2020 2020
by the for provides updated definitions
AASB Financial and recognition criteria
Reporting for assets and liabilities
and and clarifies some important
relevant concepts. It is arranged
amending in eight chapters, as follows:
standards * Chapter 1 - The objective of financial reporting
* Chapter 2 - Qualitative characteristics of useful
financial information
* Chapter 3 - Financial statements and the reporting
entity
* Chapter 4 - The elements of financial statements
* Chapter 5 - Recognition and derecognition
* Chapter 6 - Measurement
* Chapter 7 - Presentation and disclosure
* Chapter 8 - Concepts of capital and capital
maintenance
Amendments to References
to the Conceptual Framework
in IFRS Standards has also
been issued, which sets
out the amendments to affected
standards in order to update
references to the revised
Conceptual Framework. The
changes to the Conceptual
Framework may affect the
application of IFRS in situations
where no standard applies
to a particular transaction
or event. In addition, relief
has been provided in applying
IFRS 3 and developing accounting
policies for regulatory
account balances using IAS
8, such that entities must
continue to apply the definitions
of an asset and a liability
(and supporting concepts)
in the 2010 Conceptual Framework,
and not the definitions
in the revised Conceptual
Framework.
------------- ------------------------------------------------------------ ------------ ----------
AASB 2018-7 Definition This Standard amends AASB 1 January 1 January
of 101 Presentation of Financial 2020 2020
Material Statements and AASB 108
(Amendments Accounting Policies, Changes
to AASB 101 in Accounting Estimates
and AASB and Errors to align the
108) definition of 'material'
across the standards and
to clarify certain aspects
of the definition. The amendments
clarify that materiality
will depend on the nature
or magnitude of information.
An entity will need to assess
whether the information,
either individually or in
combination with other information,
is material in the context
of the financial statements.
A misstatement of information
is material if it could
reasonably be expected to
influence decisions made
by the primary users.
------------- ------------------------------------------------------------ ------------ ----------
(c) Going concern
The financial statements have been prepared on a going concern
basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
At balance date, the Group had cash and cash equivalents of
$9,550,585 (31 December 2017: $15,559,980) and a net working
capital surplus of $9,366,502 (31 December 2017: $14,521,089).
Whilst the existing cash reserves are sufficient to cover the
working capital requirements of the Group for the next 12 months,
it is anticipated that the Group will commence execution of the
project development during this period and as such, additional
funding will be necessary to carry out these planned
activities.
Under the mining agreement entered into between the Government
of the State of Eritrea and Colluli Mining Share Company (CMSC)
dated 31 January 2017 (Mining Agreement), CMSC is obliged to spend
US$200 million on infrastructure and mine development within the
area of the Colluli project mining licences in the 36 months
following the provision of formal notice to the Ministry of Energy
and Mines that development has commenced. The notice, not a primary
obligation under the mining agreement, was scheduled to be
submitted by 30 October 2018 and then 31 December 2018. CMSC will
now submit the notice once sufficient funding has been raised to
allow the advancement of infrastructure and mine development.
At the date of this report, the directors are satisfied there
are reasonable grounds to believe that the Group will be able to
continue its planned activities and the Group will be able to meet
its obligations as and when they fall due. The directors are
confident that the Group will be able to obtain the additional
funding requirement via equity raising and the securing of debt. If
it appeared that such financing was likely to be delayed, the
directors would seek to defer its planned capital expenditure on
the project and, if necessary, seek an extension of the deadline to
meet its expenditure obligations pursuant to the Colluli Mining
Agreement.
Should the Group not achieve the matters set out above, there is
uncertainty whether the Group would continue as a going concern and
therefore whether it would realise its assets and extinguish its
liabilities in the normal course of business and at the amounts
stated in the financial report. The financial statements do not
include any adjustment relating to the recoverability or
classification of recorded asset amounts or to the amounts or
classification of liabilities that might be necessary should the
Group not be able to continue as a going concern.
(d) Principles of consolidation
Subsidiaries are all 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. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control
ceases.
The acquisition method of accounting is used to account for
business combinations by the Group. Intercompany transactions,
balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
(e) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the full Board of Directors.
(f) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
Australian dollars, which is Danakali's functional and presentation
currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in profit or loss.
(iii) Foreign operations
The results and financial position of foreign operations (none
of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
* assets and liabilities for each statement of
financial position presented are translated at the
closing rate at the date of that statement of
financial position;
* income and expenses for each statement of
comprehensive income are translated at average
exchange rates (unless that is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case
income and expenses are translated at the dates of
the transactions); and
* all resulting exchange differences are recognised in
other comprehensive income.
When a foreign operation is sold or any borrowings forming part
of the net investment are repaid, a proportionate share of such
exchange differences is reclassified to profit or loss, as part of
the gain or loss on sale where applicable.
(g) Interest revenue
Interest revenue is recognised using the effective interest rate
method.
(h) Income tax
The income tax expense or revenue for the period is the tax
payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company's subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial
statements at the reporting date. However, the deferred income tax
is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or
substantially enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realised, or
the deferred income tax liability is settled.
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.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same
taxation authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
(i) Leases
Leases of property, plant and equipment where the Group, as
lessee, has substantially all the risks and rewards of ownership
are classified as finance leases. Finance leases are capitalised at
the lease's inception at the fair value of the leased property or,
if lower, the present value of the minimum lease payments. The
corresponding rental obligations, net of finance charges, are
included in other short-term and long-term payables. Each lease
payment is allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and
equipment acquired under finance leases is depreciated over the
shorter of the asset's useful life and the lease term.
Leases where a significant portion of the risks and rewards of
ownership are not transferred to the Group as lessee are classified
as operating leases. Payments made under operating leases (net of
any incentives received from the lessor) are charged to profit or
loss on a straight-line basis over the period of the lease.
(j) Impairment of assets
Assets are reviewed for impairment annually to determine if
events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are consolidated at the lowest levels for which
there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets (cash-generating
units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at
each reporting date.
(k) Cash and cash equivalents
For Consolidated Statement of Cash Flows presentation purposes,
cash and cash equivalents includes cash on hand, deposits held at
call with financial institutions and, other short--term highly
liquid investments with original maturities of three months or less
that are readily convertible to known amounts of cash and which are
subject to insignificant risk of changes in value.
(l) Receivables (new policy applied from 1 January 2018 due to adoption of AASB 9)
(i) Initial recognition
Receivables are initially recognised and measured at fair value.
Receivables that are held to collect contractual cash flows and are
expected to give rise to cash flows representing solely payments of
principal and interest are classified and subsequently measured at
amortised cost. Receivables that do not meet the criteria for
amortised cost are measured at fair value through profit or loss.
This latter category includes the loan to Colluli Mining Share
Company.
(ii) Subsequent measurement
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
Financial assets at fair value through profit or loss are
carried in the statement of financial position at fair value with
net changes in fair value recognised in the statement of profit or
loss.
(iii) Impairment
The group assesses on a forward looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost. The amount of expected credit losses is updated at
each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument. The expected
credit losses on financial assets are estimated based on the
Group's historic credit loss experience, adjusted for factors that
are specific to the debtors, general economic conditions and an
assessment of both the current as well as forecast conditions at
the reporting date.
In relation to all other receivables measured at amortised cost,
the Group applies the credit loss model. The expected credit loss
model requires the Group to account for expected credit losses and
changes in those expected credit losses at each reporting date to
reflect changes in credit risk since initial recognition of the
financial asset. In particular, the Group measures the loss
allowance at an amount equal to lifetime expected credit loss
("ECL") if the credit risk on the instrument has increased
significantly since initial recognition. On the other hand, if the
credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the
loss allowance for that financial instrument at an amount equal to
the ECL within the next 12 months.
The Group considers an event of default has occurred when a
financial asset is more than 90 days past due or external sources
indicate that the debtor is unlikely to pay its creditors,
including the Group. A financial asset is credit impaired when
there is evidence that the counterparty is in significant financial
difficulty or a breach of contract, such as a default or past due
event has occurred. The Group writes off a financial asset when
there is information indicating the counterparty is in severe
financial difficulty and there is no realistic prospect of
recovering the contractual cash flow.
(m) Receivables (old policy applied to 31 December 2017)
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with
maturities greater than 12 months after the reporting date which
are classified as non-current assets. Loans and receivables are
measured at amortised cost and are included in receivables in the
statement of financial position.
(n) Investment in joint venture
A joint venture is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.
The Group's investment in a joint venture is accounted for using
the equity method.
Under the equity method, the investment in a joint venture is
initially recognised at cost. The carrying amount of the investment
is adjusted to recognise changes in the Group's share of net assets
of the joint venture since the acquisition date. Goodwill relating
to the joint venture is included in the carrying amount of the
investment and is neither amortised nor individually tested for
impairment.
The statement of profit or loss reflects the Group's share of
the results of operations of the joint venture. Any change in other
comprehensive income of those investees is presented as part of the
Group's other comprehensive income. In addition, when there has
been a change recognised directly in the equity of the joint
venture, the Group recognises its share of any changes, when
applicable, in the statement of changes in equity. Unrealised gains
and losses resulting from transactions between the Group and the
joint venture are eliminated to the extent of the interest in the
joint venture.
The aggregate of the Group's share of profit or loss of a joint
venture is shown on the face of the statement of profit or loss
outside operating profit and represents profit or loss after tax
and non-controlling interests in the subsidiaries of the joint
venture.
The financial statements of the joint venture are prepared for
the same reporting period as the Group. When necessary, adjustments
are made to bring the accounting policies in line with those of the
Group.
After application of the equity method, the Group determines
whether it is necessary to recognise an impairment loss on its
investment in its joint venture. At each reporting date, the Group
determines whether there is objective evidence that the investment
in the joint venture is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference between
the recoverable amount of the joint venture and its carrying value,
then recognises the loss as 'Share of profit of the equity
accounted investment' in profit or loss.
Upon loss of joint control over a joint venture, the Group
measures and recognises any retained investment at its fair value.
Any difference between the carrying amount of the joint venture
upon loss of joint control and the fair value of the retained
investment and proceeds from disposal is recognised in profit or
loss.
(o) Plant and equipment
All plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a
separate asset is de-recognised when replaced. All other repairs
and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation of plant and equipment is calculated using the
straight-line basis so as to write off the net cost or other
revalued amount of each asset over its expected useful life to its
estimated residual value.
The assets' residual values and useful lives are reviewed, and
adjusted prospectively if appropriate, at each reporting date.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit or
loss. When revalued assets are sold, it is Group's policy to
transfer the amounts included in other reserves in respect of those
assets to retained earnings.
(p) Exploration and evaluation costs
Acquired exploration and evaluation costs are capitalised.
Ongoing exploration and evaluation costs are expensed in the period
they are incurred.
(q) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial period
which are unpaid. The amounts are unsecured, non-interest bearing
and are paid on normal commercial terms.
(r) Employee benefits
(i) Wages and salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary
benefits, and other short terms benefits expected to be settled
within 12 months of the reporting date are recognised in other
payables in respect of employees' services up to the reporting date
and are measured at the amounts expected to be paid when the
liabilities are settled.
The liability for long service leave is recognised in the
provision for employee benefits and measured as the present value
of expected future payments to be made in respect of services
provided by employees up to the reporting date.
(ii) Share-based payments
The Group provides benefits to employees (including directors)
of the Group in the form of share-based payment transactions,
whereby employees render services in exchange for options or rights
over shares ('equity-settled transactions') refer to note 22.
The cost of these equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. The fair value of options is determined by an internal
valuation using a Black-Scholes option pricing model. The fair
value of performance rights determined by consideration of the
Company's share price at the grant date.
The cost of equity-settled transactions is recognised, together
with a corresponding increase in equity, over the period in which
the performance and service conditions are fulfilled, ending on the
date on which the relevant employees become fully entitled to the
award ('vesting date').
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the
number of options or rights that, in the opinion of the directors
of the Company, will ultimately vest. This opinion is formed based
on the best available information at balance date. No adjustment is
made for the likelihood of market performance conditions being met
as the effect of these conditions is included in the determination
of fair value at grant date.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition or awards with non-vesting conditions.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award and designated as
a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the
original award.
(s) Issued capital
Ordinary shares are classified as equity. 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.
(t) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit or
loss attributable to owners of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the financial
period, adjusted for bonus elements in ordinary shares issued
during the period.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after-income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares.
(u) Critical accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Group's accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements are:
(i) Impairment
The Group assesses impairment of all assets at each reporting
date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. The major assets are
tested for impairment when there is objective evidence of
impairment. As at 31 December 2018 the Group assessed that, no
indicator of impairment existed (31 December 2017: Nil).
(ii) Interest in Joint Arrangement and measurement of loan
receivable
The Group accounts for its 50% interest in CMSC as a joint
venture using the equity method.
Danakali holds 3 of 5 CMSC Board seats, however in reference to
certain material decisions which are reserved for Majority
Shareholder approval it has been determined that the interest in
CMSC is more appropriately classified as an interest in a joint
venture and has been accounted for using the equity method. These
shareholder voting rights are considered to be substantive rights
particularly in the early stages of the project development.
The assumptions applied in determining the fair value of the
loan to the joint venture includes determining the timing of cash
receipts and the discount rate applied. The fair value of the loan
has been measured using valuation techniques under a discounted
cash flow (DCF) model, as fair value cannot be measured on quoted
prices in active markets. The inputs to a DCF are taken from
observable markets where possible, but where this is not feasible,
a degree of judgment is required in establishing fair value.
Judgements include consideration of inputs including foreign
exchange risk, interest rate risk, and credit risk. At 31 December
2018 a discount rate of 25% was applied, based on management's
judgement of the underlying risks. The timing of cash receipts has
been adjusted according to management's best estimate and it is
currently estimated that receipts commence in the December 2023
quarter.
Further context is detailed in note 10.
(iii) Share based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value of options is
determined by an internal valuation using a Black-Scholes option
pricing model, using the assumptions detailed in note 22.
The fair value of performance rights is determined by the share
price at the date of grant and consideration of the probability of
the vesting condition being met.
(iv) Fair value measurement of financial instruments
When the fair values of financial assets and financial
liabilities recorded in the statement of financial position cannot
be measured based on quoted prices in active markets, their fair
value is measured using valuation techniques including the
discounted cash flow (DCF) model. The inputs to these models are
taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair
values. Judgements include considerations of inputs such as
discount rate, exchange rate, repayment terms etc. Changes in
assumptions relating to these factors could affect the reported
fair value of financial instruments. See note 8 for further
disclosures.
(v) Provision for Expected Credit Loss (ECL)
The accounting estimates and judgments related to the impairment
of receivables is a critical accounting estimate because the
underlying assumptions used for assessed impairment can change from
period to period and may significantly affect the Group's results
of operations.
In assessing assets for impairments, management judgment is
required, particularly in relation to economic and financial
conditions, the timing of the completion of construction, timing of
project financing and alignment to the indicative debt financing
terms and changes to expected cash flows can occur.
The determination for a provision for expected credit loss is
determined using the credit loss model. THe use of this model
incorporates numerous estimates and judgements. The group performs
a regular review of the models and underlying data and
assumptions.
(v) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount
of associated GST, unless the GST incurred is not recoverable from
the taxation authority. In this case, it is recognised as part of
the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of
GST receivable or payable. The net amount of GST recoverable from,
or payable to, the taxation authority is included with other
receivables or payables in the Consolidated Statement of Financial
Position.
Cash flows are presented on a gross basis. The GST components of
cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are
presented as operating cash flows.
(w) Government grants
Government grants are recognised where there is reasonable
assurance that the grant will be received, and all attached
conditions will be complied with. When the grant relates to an
expense item, it is recognised as income on a systematic basis over
the periods that the related costs, for which it is intended to
compensate, are expensed. When the grant relates to an asset, it is
recognised as income in equal amounts over the expected useful life
of the related asset.
3. SEGMENT INFORMATION
The Group operates in the mining industry in Eritrea. For
management purposes, the Group is organised into one main operating
segment which involves the exploration of minerals in Eritrea. All
of the Group's activities are interrelated and discrete financial
information is reported to the Board (Chief Operating Decision
Maker) as a single segment.
Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment. The financial results from
this segment are equivalent to the financial statements of the
Group as a whole.
The Group's non-current assets are geographically located in
Eritrea.
4. REVENUE
2018 2017
$ $
---------- ------- -------
Interest 172,252 221,189
------- -------
5. EXPENSES
2018 2017
$ $
---------------------------------------- --------- ---------
Employee benefits (net of recharges) 309,176 267,256
Director fees 439,612 295,631
Compliance and regulatory expenses (a) 1,386,915 392,626
Lease payments relating to operating
leases 91,893 144,152
Other administration expenses 520,117 584,702
--------- ---------
2,747,713 1,684,367
--------- ---------
(a) Expenditure in the areas of legal, consultants and other
compliance and regulatory expenses increased during the year as a
result of the LSE listing and corporate transactions.
6. CASH AND CASH EQUIVALENTS
2018 2017
$ $
------------------------- --------- ----------
Cash at bank and in hand 9,550,585 15,559,980
--------- ----------
Cash at bank earns interest at floating rates based on daily
bank deposit rates.
Short-term deposits are made for varying periods of between one
day and three months depending on the immediate cash requirements
of the Group and earn interest at the respective short-term deposit
rates.
7. INCOME TAX
2018 2017
$ $
--------------------------------------------- ---- ----
(a) Income tax recognised in profit or loss
Current tax - -
Deferred tax - -
Total tax benefit/(expense) - -
==== ====
(b) Reconciliation of income tax expense to prima facie tax
payable
Loss before income tax expense (6,944,413) (6,839,936)
----------- -----------
Prima facie tax benefit at the Australian
tax rate of 27.5% (2017: 27.5%) (1,909,712) (1,880,982)
Adjustment of under-provision of deferred
tax in prior year (433,978) -
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Share-based payments 25,096 271,858
Share of net loss of equity accounted associate 107,041 1,405,548
Accretion relating to the unwinding of discount
on joint venture loan - (315,115)
Net loss on financial assets at fair value
through profit or loss 1,337,263 -
Movements in unrecognised temporary differences
and tax effect of current year tax losses: 874,290 518,691
Income tax expense/(benefit) - -
=========== ===========
(c) Deferred Income Tax
Deferred income tax at 31 December relates to the following:
Statement of Statement of
Financial Position Comprehensive Income
2018 2017 2018 2017
$ $ $ $
-------------------------- ----------- ----------- ----------- ----------
Deferred Tax Liabilities:
Interest receivable (129) - (129) 3,151
Deferred Tax Assets:
Provision for employee
entitlements 39,898 53,358 (13,460) 213
Accrued expenditure 1,973 12,309 (10,336) 5,709
s.40-880 expenditure 188,041 270,029 (81,988) 87,420
Revenue tax losses 5,228,743 4,248,669 980,074 (411,724)
Deferred tax assets
not brought to account
as realisation is not
probable (5,458,526) (4,584,365) (874,161) 315,231
----------- ----------- ----------- ----------
- - - -
=========== =========== =========== ==========
8. RECEIVABLES
2018 2017
$ $
------------------------------------------ --------- ----------
Current
Net GST receivable 31,863 112,705
Accrued interest 469 -
Other receivables 1,895 2,366
Security bonds 74,250 59,250
--------- ----------
108,477 174,321
--------- ----------
Non-Current
Loan to Colluli Mining Share Company - at
fair value 9,283,670 -
Loan to Colluli Mining Share Company - at
amortised cost - 12,216,952
--------- ----------
Carrying value of loans 9,283,670 12,216,952
Impairment of receivables - -
--------- ----------
9,283,670 12,216,952
--------- ----------
Danakali's wholly owned subsidiary, STB Eritrea Pty Ltd, is
presently funding the Colluli Mining Share Company (CMSC) for the
development of the Colluli Potash Project and 50% of the funding is
represented in the form of a shareholder loan.
Repayment of this loan, as defined in the CMSC Shareholders
Agreement, will be made preferentially from future operating cash
flows. The shareholder loan is denominated in USD, non-interest
bearing, unsecured and subordinate to any loans from third party
secured lenders, under which CMSC may enter into in order to fund
the Project Development Capital. For accounting purposes, the value
of the loan has been discounted by applying a market effective
interest rate of 25% (2017: effective interest rate of 25%).
During the year ended 31 December 2018, the repayment profile of
the receivable was updated to consider the timing of the completion
of construction, timing of project financing and alignment to the
indicative debt financing terms. This resulted in a loss on
financial assets at fair value through profit or loss of $4,862,775
(see note 10).
During the year ended 31 December 2017, the repayment profile of
the receivable was updated to consider the results generated by the
completion of the Front-End Engineering Design (FEED) on 29 January
2018 and timing of the completion of construction. This resulted in
a loss on the re-measurement of the loan amounting to $216,909 (see
note 10).
The undiscounted underlying loan balance at 31 December 2018 is
$33,571,559 (USD 23,676,610) (31 December 2017: $27,176,517) (USD
21,216,239).
2018 2017
$ $
------------------------------------------------ ----------- ------------------
Reconciliation of movement in loan to Colluli
Mining Share Company
Opening carrying amount at beginning of the
year 12,216,952 9,519,503
Additional loans during the year 987,356 1,881,697
Foreign exchange gain/(loss) 942,137 (330,121)
Loss on re-measurement of loan to joint venture
carried at amortised cost - (216,909)
Accretion relating to the unwinding of discount
on joint venture loan - 1,362,780
Net loss on financial assets at fair value
through profit or loss (4,862,775) -
----------- ------------------
Closing carrying amount at end of the year 9,283,670 12,216,952
----------- ------------------
9. PLANT AND EQUIPMENT
2018 2017
$ $
--------------------------------------- -------- --------
Plant and equipment
Gross carrying value - at cost 74,561 58,437
Accumulated depreciation (51,609) (43,327)
Net book amount 22,952 15,110
======== ========
Plant and equipment
Opening net book amount at beginning
of the year 15,110 7,920
Additions 16,124 10,778
Disposals - -
Depreciation charge (8,282) (3,588)
Closing net book amount at end of the
year 22,952 15,110
======== ========
10. INVESTMENT IN JOINT VENTURE
The Group has an interest in the following joint
arrangement:
Equity Interest Carrying Value
2018 2017 2018 2017
Project Activities % % $ $
-------- -------------------- -------- ------- ---------- ----------
Colluli
Potash Mineral Exploration 50 50 19,829,489 13,811,946
-------- -------------------- -------- ------- ---------- ----------
The group acquired an interest in Colluli Mining Share Company
(CMSC) at the date of its incorporation on 5 March 2014. This
acquisition was in accordance with the Shareholders Agreement
entered into with the Eritrean National Mining Corporation (ENAMCO)
and executed in November 2013. CMSC was incorporated in Eritrea, in
accordance with the Shareholders Agreement, to hold the Colluli
project with Danakali and ENAMCO holding 50% of the equity
each.
Under the terms of the Shareholders Agreement, at the date of
incorporation of CMSC, consideration for the acquisition of shares
in CMSC equated to half of the allowable historical exploration
costs transferred to CMSC by STB Eritrea Pty Ltd, a wholly owned
subsidiary of Danakali Limited. The balance of the allowable
historic exploration costs transferred to CMSC are recoverable via
a shareholder loan account (see note 8).
The Group's 50% interest in CMSC is accounted for as a joint
venture using the equity method. The following tables summarise the
financial information of the Group's investment in CMSC at 31
December 2018.
2018 2017
$ $
-------------------------------------------- ---------- -----------
Reconciliation of movement in investments
accounted for using the equity method:
Opening carrying amount at beginning of the
year 13,811,946 13,502,312
Additional investment during the year 5,532,842 6,354,472
Share of net (loss)/profit for the year (389,239) (5,111,085)
Other comprehensive income for the year 873,940 (933,753)
---------- -----------
Closing carrying amount at end of the year 19,829,489 13,811,946
---------- -----------
Summarised financial information of joint venture:
2018 2017
$ $
----------------------------------------------------- ----------- ------------
Financial position (Aligned to Danakali accounting
policies)
Current Assets:
Cash 110,666 43,901
Other current assets 104,928 83,582
----------- ------------
215,594 127,483
----------- ------------
Non-current assets
Fixed Assets 135,013 108,727
Mineral Property 31,125,894 27,610,315
----------- ------------
31,260,907 27,719,042
----------- ------------
Current liabilities
Trade & other payables and provisions (311,850) (250,832)
----------- ------------
(311,850) (250,832)
----------- ------------
Non-current liabilities
Loan from Danakali Ltd - at amortised cost (9,283,670) (12,216,952)
----------- ------------
(9,283,670) (12,216,952)
----------- ------------
NET ASSETS 21,880,981 15,378,741
=========== ============
Group's share of net assets 10,940,491 7,689,371
=========== ============
Reconciliation of Equity Investment:
Group's share of net assets 10,940,491 7,689,371
Share of initial contribution on establishment
of the Joint Venture not recognised by Danakali (4,305,107) (4,305,107)
Outside shareholder interest in equity contributions
by Danakali 13,194,105 10,427,682
----------- ------------
Carrying amount at the end of the period 19,829,489 13,811,946
----------- ------------
2018 2017
$ $
------------------------------------------------ ----------- ------------
Financial performance
Interest expense relating to the unwinding
of discount on joint venture loan (3,859,850) (1,362,780)
Gain on re-measurement of loan to joint venture
carried at amortised cost 8,722,625 216,909
Exploration and evaluation expenditure (5,641,253) (9,076,298)
----------- ------------
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (778,478) (10,222,169)
----------- ------------
Group's share of total loss for the year (389,239) (5,111,085)
=========== ============
During the year ended 31 December 2018 no dividends were paid or
declared (2017: Nil).
Colluli Mining Share Company has the following commitments or
contingencies at 31 December 2018:
Government
Under the mining agreement entered into between the Government
of the State of Eritrea and Colluli Mining Share Company (CMSC)
dated 31 January 2017, CMSC is obliged to spend US$200 million on
infrastructure and mine development within the area of the Colluli
project mining licences in the 36 months following the provision of
formal notice to the Ministry of Energy and Mines that development
has commenced.
Funding
CMSC successfully executed a mandate to provide fully
underwritten debt finance facilities of US$200M to fund the
construction and development of the Project. African development
financial institutions African Export-Import Bank (Afreximbank) and
Africa Finance Corporation (AFC) are acting as Mandated Lead
Arrangers (MLAs).
Under the terms of the mandate, CMSC is responsible to pay all
reasonable costs and expenses related to external technical,
financial, insurance, tax and legal consultants required by the
MLAs to assist in the due diligence. The mandate letter includes
various fees, payable by CMSC to the MLAs, based on various future
outcomes, including termination by CMSC.
11. TRADE AND OTHER PAYABLES
2018 2017
$ $
----------------- ------- ---------
Trade payables 122,362 925,470
Accrued expenses 65,868 103,453
Other payables 35,624 68,164
223,854 1,097,087
======= =========
12. PROVISIONS
2018 2017
$ $
---------------------- ------- -------
Current
Employee entitlements 86,180 166,219
Non-Current
Employee entitlements 58,903 27,811
------- -------
145,083 194,030
======= =======
Employee entitlements relate to the balance of annual leave and
long service leave accrued by the Group's employees. Recognition
and measurement criteria have been disclosed in note 2.
13. ISSUED CAPITAL
2018 2017
Number Number
of shares $ of shares $
--------------------------------------------------------------- ----------- ---------- ----------- ----------
(a) Share capital
Ordinary shares fully paid 264,422,398 79,576,117 251,697,687 75,415,034
----------- ---------- ----------- ----------
Total issued capital 264,422,398 79,576,117 251,697,687 75,415,034
=========== ========== =========== ==========
(b) Movements in ordinary share
capital
Balance at the beginning of the
year 251,697,687 75,415,034 224,494,677 61,758,320
Issued during the year:
* Issued at $0.278 per share on option exercise - - 4,600,000 1,278,800
* Issued at $0.350 per share on option exercise 10,381,821 3,633,640 1,356,365 474,728
* Issued at $0.405 per share on option exercise 400,000 162,000 351,000 142,155
* Issued at $0.408 per share on option exercise - - 200,000 81,600
* Issued at $0.450 per share on option exercise 200,000 90,000 - -
* Issued at $0.652 per share via cashless exercise of
1,949,000 options with an exercise price of $0.405 738,346 - - -
* Issued at $0.624 per share via cashless exercise of
750,000 options with an exercise price of $0.527 116,586 - - -
* Issued at $0.648 per share via cashless exercise of
1,600,000 options with an exercise price of $0.550 241,974 - - -
* Issued at $0.773 per share via cashless exercise of
750,000 options with an exercise price of $0.550 216,364 - - -
* Issued on vesting of performance rights 65,000 - 775,000 -
* Issued at $0.755 per share in lieu of advisor fees 268,817
(refer note 22(b)) 356,049 (a) - -
* Issued at $0.773 per share in lieu of advisor fees
(refer note 22(b)) 8,571 6,626 (b)
* Issued at $0.620 per share pursuant to placement - - 19,920,645 12,350,800
* Costs of capital raised - - - (671,369)
----------- ---------- ----------- ----------
Balance at the end of the year 264,422,398 79,576,117 251,697,687 75,415,034
=========== ========== =========== ==========
Note:
(a) The fair value for the consideration of these shares was
calculated taking into accounts the Company's valuation on
admission to the LSE, the Company's share price and the USD/AUD
exchange rate on the date of issue.
(b) The fair value for the consideration of these shares was
calculated taking into accounts the Company's 10-day VWAP share
price and the GBP/AUD exchange rate on the date of issue.
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends
and the proceeds on winding up of the Company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have
a limited amount of authorised capital.
2018 2017
Options Options
------------------------------------------------------------------- ----------- -----------
(d) Movements in options on issue
Balance at beginning of the year 19,195,821 25,213,186
Issued during the year:
* Exercisable at $0.940, on or before 19 May 2020 - 1,440,000
* Exercisable at $0.960, on or before 20 June 2019 - 400,000
Exercised, cancelled or expired during the
year:
* Exercised, exercisable at $0.278 on or before 17
November 2017 - (4,600,000)
* Exercised, exercisable at $0.350 on or before 30
March 2018 (9,656,821) (1,356,365)
* Exercised, exercisable at $0.350 on or before 13 May
2018 (725,000) (351,000)
* Exercised, exercisable at $0.405 on or before 13 May
2018 (2,349,000) -
* Exercised, exercisable at $0.408 on or before 4
November 2018 - (200,000)
* Exercised, exercisable at $0.450 on or before 23 June
2018 (200,000) -
* Exercised, exercisable at $0.527 on or before 29 May
2018 (750,000) -
* Exercised, exercisable at $0.550 on or before 31 May
2018 (600,000) -
* Exercised, exercisable at $0.550 on or before 4
November 2018 (750,000) -
* Exercised, exercisable at $0.550 on or before 31
December 2018 (1,000,000) -
* Expired, exercisable at $0.350, on or before 13 May
2018 (75,000) -
* Cancelled, exercisable at $0.558, on or before 8
August 2019 (100,000) -
* Cancelled, exercisable at $0.408 on or before 4
November 2018 - (800,000)
* Cancelled, exercisable at $0.543 on or before 7
October 2019 - (550,000)
----------- -----------
Balance at end of the year 2,990,000 19,195,821
=========== ===========
14. RESERVES
2018 2017
$ $
------------------------------------------- ---------- ----------
(a) Reserves
Share-based payments reserve
Balance at beginning of the year 11,416,109 10,427,536
Employee and contractor share options and
performance rights (note 22) (184,186) 988,573
Balance at end of the year 11,231,923 11,416,109
---------- ----------
Foreign currency translation reserve
Balance at beginning of the year 1,105,490 2,039,243
Currency translation differences arising
during the year/ period 873,940 (933,753)
---------- ----------
Balance at end of the year 1,979,430 1,105,490
---------- ----------
Total reserves 13,211,353 12,521,599
========== ==========
(b) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the fair
value of share options and performance rights issued.
Foreign currency translation reserve
The foreign currency translation reserve records the exchange
differences arising on translation of a foreign joint
arrangement.
15. ACCUMULATED LOSSES
2018 2017
$ $
--------------------------------- ------------ ------------
Balance at beginning of the year (47,399,347) (40,559,411)
Loss for the year (6,944,413) (6,839,936)
Balance at end of the year (54,343,760) (47,399,347)
------------ ------------
16. STATEMENT OF CASH FLOWS
2018 2017
$ $
----------------------------------------------------- ----------- -----------
(a) Reconciliation of net loss after income
tax to net cash outflow from operating activities
Net loss for the year (6,944,413) (6,839,936)
Non--Cash Items:
Depreciation of plant and equipment 8,282 3,588
Loss of disposal of plant and equipment - -
Share-based payment expense 91,257 988,573
Accretion relating to the unwinding of discount
on joint venture loan - (1,362,780)
Share of net loss of associate 389,239 5,111,085
Foreign exchange loss/(gain) (942,138) 495,525
Loss on re-measurement of loan to joint venture
carried at amortised cost - 216,909
Net loss on financial assets at fair value
through profit or loss (4,862,775) -
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables 17,602 (33,890)
Decrease/(increase) in trade and other payables (864,120) 124,368
Increase/(decrease) in provisions (48,947) 16,879
Net cash outflow from operating activities (3,430,463) (1,279,679)
----------- -----------
(b) Funding of joint venture operations
Cash contribution to joint venture operations
during the period (6,448,446) (7,711,037)
----------- -----------
17. EARNINGS PER SHARE
(a) Reconciliation of earnings used in calculating earnings per
share (EPS)
2018 2017
$ $
----------------------------------------------- ----------- -----------
Loss attributable to the owners of the Company
used in calculating basic and diluted loss
per share (6,944,413) (6,839,936)
----------- -----------
(b) Weighted average number of shares used as the
denominator
2018 2017
No. of Shares No. of Shares
---------------------------------------------- ------------- -------------
Weighted average number of ordinary shares
used as the denominator in calculating basic
and diluted loss per share 261,076,051 239,710,693
------------- -------------
As the Group incurred a loss for the period, the options on
issue have an anti-dilutive effect, therefore the diluted EPS is
equal to the basic EPS. A total of 2,990,000 (2017: 19,195,821)
share options and 1,315,000 (2017: 1,408,000) performance rights
which could potentially dilute basic EPS in the future have been
excluded from the diluted EPS calculation because they are
anti-dilutive for the current year presented.
18. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to market, liquidity and credit
risks arising from its financial instruments.
The Group's management of financial risk is aimed at ensuring
net cash flows are sufficient to meet all of its financial
commitments and maintain the capacity to fund the Colluli project
and ancillary exploration activities. The Board of Directors has
overall responsibility for the establishment and oversight of the
risk management framework. Management monitors and manages the
financial risks relating to the operations of the Group through
regular reviews of risks.
Market (including foreign exchange and interest rate risks),
liquidity and credit risks arise in the normal course of business.
These risks are managed under Board approved treasury processes and
transactions.
The principal financial instruments as at reporting date include
cash, receivables and payables.
This note presents information about exposures to the above
risks, the objectives, policies and processes for measuring and
managing risk, and the management of capital.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions
and recognised assets and liabilities denominated in a currency
that is not the entity's functional currency and net investments in
foreign operations. The Group has not formalised a foreign currency
risk management policy however, it monitors its foreign currency
expenditure in light of exchange rate movements. The international
operations are at the start-up stage and there is limited exposure
at the reporting date to assets and liabilities denominated in
foreign currencies.
The loan of $9,283,670 (2017: $12,216,952) to Colluli Mining
Share Company is denominated in US Dollar.
The following table demonstrates the sensitivity to a reasonably
possible change in US Dollar exchange rates, with all other
variables held constant. A strengthening of the Australian Dollar
rate results in an increased loss before tax. The Group's exposure
to foreign currency changes for all other currencies is not
material.
Change in Effect on
USD Rate Loss before
% tax
$
-------------------------- ---------- -------------
Year to 31 December 2018 +5% (464,183)
-5% 464,183
Year to 31 December 2017 +5% (610,848)
--------------------------
-5% 610,848
-------------------------- ---------- -------------
(ii) Interest rate risk
The Group is exposed to movements in market interest rates on
cash. The Group's policy is to monitor the interest rate yield
curve out to six months to ensure a balance is maintained between
the liquidity of cash assets and the interest rate return. The
entire balance of cash for the Group of $9,550,585 (2017:
$15,559,980) is subject to interest rate risk. The floating
interest rates fluctuate during the period depending on current
working capital requirements. The weighted average interest rate
received on cash by the Group was 1.30% (2017: 1.51%).
The Group is also exposed to movements in market interest rates
on the loan to Colluli Mining Share Company held at fair value
through profit or loss.
Sensitivity analysis
At 31 December 2018, if interest rates had changed by -/+ 80
basis points from the weighted average rate for the period with all
other variables held constant, post-tax loss for the Group would
have been $105,766 higher/lower (2017: $117,048 higher/lower) as a
result of lower/higher interest income from cash and cash
equivalents. The fair value of the loan has been determined using a
discounted cash flow methodology. Due to the significant unobserved
inputs the fair value is categorised as level 3 in the fair value
hierarchy. The fair value of the loan is sensitive to the discount
rate applied. A 50bps movement in the discount rate would change
the valuation by $209,105.
(b) Liquidity risk
The Group manages liquidity risk by continuously monitoring
forecast and actual cash flows and ensuring sufficient cash and
marketable securities are available to meet the current and future
commitments of the Group. Due to the nature of the Group's
activities, being mineral exploration, the Group does not have
ready access to credit facilities, with the primary source of
funding being equity raisings.
The Board of Directors constantly monitors the state of equity
markets in conjunction with the Group's current and future funding
requirements, with a view to initiating appropriate capital
raisings as required.
The financial liabilities of the Group are confined to trade and
other payables as disclosed in the Consolidated Statement of
Financial Position. All trade and other payables are non-interest
bearing and due within 12 months of the reporting date.
(c) Credit risk
The Group's significant concentration of credit risk is cash,
which is held with the major Australian bank with AA2 credit
rating, accordingly the credit risk exposure is minimal. The
maximum exposure to credit risk at balance date is the carrying
amount of cash receivables as disclosed in the Consolidated
Statement of Financial Position and Notes to the Consolidated
Financial Statements.
Other than the loan to Colluli Mining Share Company, the Group
does not presently have any material debtors. A formal credit risk
management policy is not maintained in respect of debtors.
(d) Fair values
Set out below is an overview of financial instruments, other
than cash and short-term deposits, held by the group as at 31
December 2018:
Fair value
through other
At amortised through profit comprehensive
cost and loss income
$ $ $
-------------------------- ------------- --------------- ---------------
Financial Assets:
Receivables 108,477 - -
------------- --------------- ---------------
Total current 108,477 - -
------------- --------------- ---------------
Receivable - 9,283,670 -
------------- --------------- ---------------
Total non-current - 9,283,670 -
------------- --------------- ---------------
Total Assets 108,477 9,283,670 -
============= =============== ===============
Financial liabilities:
Trade and other payables 223,854 - -
------------- --------------- ---------------
Total current 223,854 - -
------------- --------------- ---------------
Total Liabilities 223,854 - -
============= =============== ===============
Set out below is a comparison of the carrying amount and fair
values of financial instruments as at 31 December 2018:
Carrying
Value Fair Value
$ $
-------------------------- ---------- -----------
Financial Assets:
Receivables 108,477 108,477
---------- -----------
Total current 108,477 108,477
---------- -----------
Receivable 9,283,670 9,283,670
---------- -----------
Total non-current 9,283,670 9,283,670
---------- -----------
Total Assets 9,392,147 9,392,147
========== ===========
Financial liabilities:
Trade and other payables 223,854 223,854
---------- -----------
Total current 223,854 223,854
---------- -----------
Total Liabilities 223,854 223,854
========== ===========
Set out below is an overview of financial instruments, other
than cash and short-term deposits, held by the group as at 31
December 2017:
Fair value
through other
At amortised through profit comprehensive
cost and loss income
$ $ $
------------------------- ------------- --------------- ---------------
Financial Assets:
Receivables 174,321 - -
------------- --------------- ---------------
Total current 174,321 - -
------------- --------------- ---------------
Receivable 12,216,952 - -
------------- --------------- ---------------
Total non-current 12,216,952 - -
------------- --------------- ---------------
Total Assets 12,391,273 - -
============= =============== ===============
Financial liabilities:
Trade and other payables 1,097,087 - -
------------- --------------- ---------------
Total current 1,097,087 - -
------------- --------------- ---------------
Total Liabilities 1,097,087 - -
============= =============== ===============
Set out below is an overview of financial instruments, other
than cash and short-term deposits, held by the group as at 31
December 2017:
Carrying
Value Fair Value
$ $
-------------------------- ----------- -----------
Financial Assets:
Receivables 174,321 174,321
----------- -----------
Total current 174,321 174,321
----------- -----------
Receivable 12,216,952 12,216,952
----------- -----------
Total non-current 12,216,952 12,216,952
----------- -----------
Total Assets 12,391,273 12,391,273
=========== ===========
Financial liabilities:
Trade and other payables 1,097,087 1,097,087
----------- -----------
Total current 1,097,087 1,097,087
----------- -----------
Total Liabilities 1,097,087 1,097,087
=========== ===========
The current receivables and payables carrying values
approximates fair values due to the short-term maturities of these
instruments.
The fair value of the long-term receivable was determined by
discounting future cashflows using a current market interest rate
of 25% (2017 - effective interest rate of 25%). The timing of cash
receipts has been adjusted according to management's best estimate
and it is currently estimated that receipts commence in the
December 2023 quarter. The fair value measurement for 2018 (2017 -
disclosure only) is categorised as Level 3 in the fair value
hierarchy as the estimated market interest rate is an unobserved
input in the valuation. An unobserved input is used to the extent
that relevant observable inputs are not available, thereby allowing
for situations in which there is little, if any, market activity
for the asset or liability at measurement date.
19. CAPITAL MANAGEMENT
The Group's objectives when managing capital are to safeguard
its ability to continue as a going concern, so that it may continue
to provide returns for shareholders and benefits for other
stakeholders.
Capital managed by the Board includes Shareholder equity, which
was $37,427,542 (2017: $40,537,286). The focus of the Group's
capital risk management is the current working capital position
against the requirements of the Group to meet exploration and
project development programmes plus corporate overheads. The
Group's strategy is to ensure appropriate liquidity is maintained
to meet anticipated operating requirements, with a view to
initiating appropriate capital raisings as required.
20. CONTINGENCIES
There are no material contingent liabilities or contingent
assets of the Group at balance date.
21. COMMITMENTS
2018 2017
$ $
--------------------------------------------------------- --- ------ ------
Lease commitments: Group as lessee
Operating leases (non--cancellable):
Minimum lease payments
* within one year 11,667 70,000
* later than one year but not later than five years - 11,667
------ ------
Aggregate lease expenditure contracted for
at reporting date but not recognised as liabilities 11,667 81,667
------ ------
Total Commitments 11,667 81,667
====== ======
Operating Leases:
The minimum future payments above relate to non-cancellable
operating leases for offices. On 18 January 2018, the Company
extended the Churchill avenue office lease by 12 months commencing
on 1 March 2018 for a total annual cost of $70,000.
22. SHARE-BASED PAYMENTS
(a) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions
recognised during the period were as follows:
2018 2017
$ $
-------------------------------------------------- --------- -------
Shares 275,443 -
Options issued to directors, employees and
contractors 31,894 591,446
Performance Rights issued to directors, employees
and contractors (216,080) 397,127
--------- -------
91,257 988,573
========= =======
(b) Shares
During the year, the Company issued a total of 364,620 shares to
advisors in consideration for services rendered (refer note 13(b).
The share-based payment expense recorded in respect of these shares
was determined in reference to the prevailing market value of the
shares at time of issue.
(c) Options
The Group provides benefits to employees (including directors),
contractors and consultants of the Group in the form of share-based
payment transactions, whereby employees, contractors and
consultants render services in exchange for options to acquire
ordinary shares.
Options granted carry no dividend or voting rights. When
exercisable, each option is convertible into one ordinary share of
the Company with full dividend and voting rights. Set out below is
a summary of the options granted (being those the subject of
share-based payments).
2018 2017
Weighted
Number of average exercise Number of Weighted average
options price options exercise price
----------------------------- ----------- ----------------- ----------- ----------------
Outstanding at the beginning
of the year 8,739,000 $0.591 13,400,000 $0.414
Granted 500,000 $0.912 1,840,000 $0.944
Exercised (5,649,000) $0.483 (5,151,000) $0.292
Expired (100,000) $0.558 (1,350,000) $0.463
----------- ----------------- ----------- ----------------
Outstanding at end of the
year 3,490,000 $0.811 8,739,000 $0.591
----------- ----------------- ----------- ----------------
Exercisable at end of the
year 2,990,000 $0.794 8,389,000 $0.592
----------- ----------------- ----------- ----------------
Movements within specific classes of unlisted options (being
those the subject of share-based payments) during the year is as
follows:
Unlisted Options - Class Opening Granted Exercised Exercised Lapsed Closing
balance (subject / Expired balance
to shareholder
approval)
31 Dec (Traditional) (Cashless) 31 Dec 2018
2017
(i)
----------------------------- --------- --------------- -------------- ----------- ---------- ------------
Exercise price $0.405 expiry
date 13/05/2018 2,349,000 - (400,000) (1,949,000) - -
Exercise price $0.527 expiry
date 29/05/2018 750,000 - - (750,000) - -
Exercise price $0.550 expiry
date 31/05/2018 600,000 - - (600,000) - -
Exercise price $0.450 expiry
date 23/06/2018 200,000 - (200,000) - - -
Exercise price $0.550 expiry
date 04/11/2018 750,000 - - (750,000) - -
Exercise price $0.550 expiry
date 31/12/2018 1,000,000 - - (1,000,000) - -
Exercise price $0.558 expiry 900,000
date 08/08/2019 1,000,000 - - - (100,000) (ii)
Exercise price $0.543 expiry 250,000
date 07/10/2019 250,000 - - - - (ii)
Exercise price $0.940 expiry 1,440,000
date 19/05/2020 1,440,000 - - - - (ii)
Exercise price $0.960 expiry 400,000
date 20/06/2019 400,000 - - - - (ii)
Exercise price $0.912 expiry
date 11/05/2020 - 500,000 - - - 500,000
--------- --------------- -------------- ----------- ---------- ------------
3,490,000
8,739,000 500,000 (600,000) (5,049,000) (100,000) (iii)
--------- --------------- -------------- ----------- ---------- ------------
(i) During the year, 1,313,270 ordinary shares were issued on
the cashless exercise of 5,049,000 unlisted options previously
granted as compensation to directors, employees and advisors. The
number of shares issued was calculated using the cashless exercise
mechanism in accordance with the terms and conditions as amended
and approved by shareholders at the Company's annual general
meeting held 11 May 2018.
(ii) Vested options.
(iii) The number of unlisted options on issue at 31 December
2018 is 2,990,000 (as detailed at note 13(d)). This table includes
reference to an additional 500,000 unlisted options (being the
Director Options as referred to below), the issue of which remains
subject to shareholder approval.
Remaining contractual life
The weighted average remaining contractual life of share options
outstanding at the end of the period was 0.97 years (31 December
2017: 1.05 years), with exercise prices ranging from $0.543 to
$0.96.
Options granted during the year
On 19 October 2018, the Directors agreed to issue 500,000
unlisted options with no vesting conditions to Mr Andre Liebenberg
at an exercise price of $0.912 each and an expiry date of 11 May
2020, subject to receipt of shareholder approval (Director
Options).
Shareholder approval for the issue of the Director Options will
be sought at an upcoming general meeting of the Company. The grant
date is therefore after the period in which services have begun to
be rendered. Therefore, the grant date fair value presented in the
31 December 2018 financial statements is provisional, estimated by
reference to the period end share price. Once the date of the grant
is known, this provisional estimate of the grant date fair value
will be revised.
There were no new options granted to key management personnel
during the year, other than the 500,000 options granted to a
director, subject to receipt of shareholder approval (the Director
Options).
A summary of options granted during the year ended 31 December
2018 is included in the following table. The weighted average fair
value of the options granted during the year ended 31 December 2018
was $0.105. The value was calculated by using the Black
&Scholes Option Pricing Model applying the following inputs, to
produce the fair value per option:
Share
Price
at Risk Free
Number Grant Expiry Fair Value Exercise Grant Interest Estimated
of Options Date Date per Option Price Date Rate Volatility
500,000 19/10/2018(1) 11/05/2020 $0.105(2) $0.912 $0.740 1.95% 45.17%
-------------- ----------- ------------ --------- ------- ---------- ------------
(1) Options will be issued following receipt of shareholder
approval
(2) Fair value per option will be updated upon receipt of
shareholder approval
A summary of options granted during the year ended 31 December
2017 is included in the following table. The weighted average fair
value of the options granted during the year ended 31 December 2017
was $0.20. The value was calculated by using the Black &Scholes
Option Pricing Model applying the following inputs, to produce the
fair value per option:
Share
Price
at Risk Free
Number Grant Expiry Fair Value Exercise Grant Interest Estimated
of Options Date Date per Option Price Date Rate Volatility
1,440,000 19/05/2017 19/05/2019 $0.202 $0.940 $0.690 1.780% 56%
400,000 20/06/2017 20/06/2019 $0.193 $0.960 $0.785 1.660% 55%
----------- ----------- ------------ --------- ------- ---------- ------------
Historical volatility has been used as the basis for determining
expected share price volatility as it assumed that this is
indicative of future trends, which may not eventuate. The life of
the options is based on historical exercise patterns, which may not
eventuate in the future.
(d) Performance Rights
The Company has a Performance Rights Plan which was re-approved
at the annual general meeting of the Company held 17 November 2014.
The purpose of the Plan is to provide recognition to employees and
advisors of the Company and its subsidiaries for their continued
and ongoing support of the Company.
Movements in the number of performance rights on issue during
the year is as follows:
Performance Rights - Class Opening Granted Vested Cancelled Closing
balance balance
31 Dec 2017 31 Dec 2018
--------------------------- ------------ ------- -------- --------- ------------
Class 1 308,000 - - (28,000) 280,000
Class 4 800,000 - - - 800,000
Class 5 100,000 - - - 100,000
Class 6 50,000 - (10,000) - 40,000
Class 7 50,000 - (20,000) - 30,000
Class 8 100,000 - (35,000) - 65,000
1,408,000 - (65,000) (28,000) 1,315,000
------------ ------- -------- --------- ------------
Movements in the number of performance rights during the period
year is as follows:
Performance Rights - Class Opening Granted Vested Cancelled Closing
balance balance
31 Dec 2016 31 Dec 2017
--------------------------- ------------ ------- --------- --------- ------------
Class 1 308,000 - - - 308,000
Class 2 150,000 - (75,000) (75,000) -
Class 4 1,500,000 - (700,000) - 800,000
Class 5 - 100,000 - - 100,000
Class 6 - 50,000 - - 50,000
Class 7 - 50,000 - - 50,000
Class 8 - 100,000 - - 100,000
1,958,000 300,000 (775,000) (75,000) 1,408,000
------------ ------- --------- --------- ------------
Under the Performance Rights Plan, shares are issued in the
future subject, to the performance-based vesting conditions being
met. The 1,315,000 Performance Rights on issue at 31 December 2018
are subject to the following performance conditions:
Class 1:
* 308,000 upon completion of securing finance for the
development of the Colluli Potash Project.
Class 4:
* 800,000 upon commencement of construction of the
production facility.
Class 5:
* 20,000 upon commencement of the first development
work on the ground at the Colluli site within 1 week
of the scheduled development time;
* 60,000 upon 6-month construction mark if safety,
costs and schedule are all on target; and
* 20,000 upon completion of commissioning and
completion of performance testing (performance
testing to meet contractual requirements).
Class 6:
* 15,000 upon Endeavour Financial being paid its first
milestone success fee which is linked to a letter of
finance support from a lending institution; and
* 25,000 upon term sheets being signed for the project
financing of the Colluli project.
Class 7:
* 15,000 upon completion of a strategic investment at
greater than 30-day VWAP plus 10%; and
* 15,000 on signing a debt terms sheet for project
financing or debt is secured form a strategic
investor.
Class 8:
* 5,000 on completion of an approval and issued CSR
report befitting an ASX200 company prior to the
London listing;
* 50,000 on securing a strategic equity partner; and
* 10,000 on finalising broker mandates which support
the equity capital market strategy.
Subject to achievement of either one of these performance
conditions, one share will be issued for each Performance Right
that has vested.
23. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Danakali
Limited.
(b) Subsidiary
Interests in the subsidiary is set out in note 25.
(c) Investment in Joint Venture
Transactions with Colluli Mining Share Company are set out in
note 8 and note 10 of this report.
(d) Key management personnel compensation
2018 2017
$ $
---------------------------------------- --------- ---------
Short-term benefits 1,113,484 1,232,171
Post-employment and long-term benefits 52,702 67,199
Share-based payments 24,581 639,416
--------- ---------
1,190,767 1,938,786
--------- ---------
(e) Transactions with directors, director related entities and
other related parties
There were no material related party transactions.
24. REMUNERATION OF AUDITORS
During the year, the following fees were paid or payable for
services provided by the auditor of the Company, its related
practices and non-related audit firms:
2018 2017
$ $
------------------------------- ------- ------
(a) Audit services
Ernst and Young 44,837 41,391
44,837 41,391
------- ------
(b) Non-audit services
Ernst and Young - LSE listing 123,332 -
Ernst and Young - Other 55,973 6,000
179,305 6,000
------- ------
25. SUBSIDIARY
Interest in subsidiary
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiary in accordance
with the accounting policy:
(a) (a) (a)
(a) (a) (a)
Equity Holding
------------ --------------------- --------------- ---------
2018 2017
Country of Class of
Name Principal Activities Incorporation Shares % %
------------ --------------------- --------------- --------- ------- -------
STB Eritrea Investment in
Pty Ltd Potash Exploration Australia Ordinary 100 100
------------ --------------------- --------------- --------- ------- -------
The proportion of ownership interest is equal to the proportion
of voting power held.
26. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Danakali
Limited. The information presented here has been prepared using
accounting policies consistent with those presented in note 2.
2018 2017
$ $
-------------------------------------- ------------ ------------
Current assets 9,676,536 15,784,395
Non-current assets 29,136,115 26,044,008
------------ ------------
Total assets 38,812,651 41,828,403
------------ ------------
Current liabilities 310,034 1,263,306
Non-current liabilities 58,903 27,811
------------ ------------
Total liabilities 368,937 1,291,117
------------ ------------
Net Assets 38,443,714 40,537,286
------------ ------------
Issued capital 79,576,117 75,415,034
Share-based payments reserve 11,231,923 11,416,109
Accumulated losses (52,364,326) (46,293,857)
------------ ------------
Total equity 38,443,714 40,537,286
------------ ------------
Loss for the year (6,070,468) (7,773,689)
------------ ------------
Total Comprehensive loss for the year (6,070,468) (7,773,689)
------------ ------------
27. DIVIDS
No dividends were paid during the financial period. No
recommendation for payment of dividends has been made.
28. EVENTS OCCURRING AFTER THE BALANCE DATE
No matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly
affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in future
financial years.
Directors' Declaration
In the Directors' opinion:
(a) the financial statements and notes of Danakali Limited for
the financial year ended 31 December 2018 are in accordance with
the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations
2001 and other mandatory professional reporting requirements;
and
(ii) giving a true and fair view of the Group's financial position
as at 31 December 2018 and of its performance for the year ended
on that date;
(b) the financial statements and notes also comply with International
Financial Reporting Standards as disclosed in note 2;
(c) there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and payable
subject to achieving the matters set out in note 2(c); and
The directors have been given the declarations by the Chief Executive
Officer and Chief Financial Officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the
directors.
Seamus Cornelius
EXECUTIVE CHAIRMAN
Perth, 20 March 2019
ASX Additional Information
Additional information required by Australian Securities
Exchange Ltd and not shown elsewhere in this report is as
follows.
The information is current as at 28 February 2019.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of
holding:
Holders Securities %
1 -- 1,000 562 236,386 0.09%
1,001 -- 5,000 802 2,066,893 0.78%
5,001 -- 10,000 353 2,681,629 1.01%
10,001 -- 100,000 624 20,593,083 7.79%
100,001 and over 165 238,844,407 90.33%
------- ----------- -------
TOTAL 2,506 264,422,398 100.00%
======= =========== =======
The number of shareholders holding less than a marketable parcel
was 402.
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary
shares are:
Listed ordinary shares
------------------------------------------
Number of shares Percentage
of ordinary
shares
-------------------------------------- ---------------- ------------
1 J P Morgan Nominees Australia Ltd 52,705,900 19.93
2 Citicorp Nominees Pty Ltd 38,974,793 14.74
3 HSBC Custody Nominees (Australia) Ltd 24,757,993 9.36
4 Liam Cornelius 14,479,997 5.48
5 Element 25 Limited 8,400,097 3.18
6 Computershare Clearing Pty Ltd 5,907,545 2.23
Merrill Lynch (Australia) Nominees Pty
7 Ltd 5,449,266 2.06
8 Well Efficient Ltd 5,000,000 1.89
9 BNP Paribas Noms Pty Ltd 4,480,660 1.69
10 Seamus Cornelius 4,425,883 1.67
11 Kongming Investments Ltd 4,178,992 1.58
12 Alpha Boxer Limited 4,025,000 1.52
13 Ranguta Ltd 3,295,685 1.25
14 Paul Donaldson 2,957,751 1.12
15 BNP Paribas Nominees Pty Ltd 2,674,976 1.01
16 John Joseph Wallace 2,498,983 0.95
17 Duketon Consolidated Pty Ltd 2,456,500 0.93
18 Dongarra Ltd 2,313,398 0.87
19 Anthony Maslin + Marite Norris 2,095,000 0.79
20 National Nominees Ltd 2,007,152 0.76
193,085,571 73.01
================ ============
(c) Substantial shareholders
The names of substantial shareholders who have notified the
Company in accordance with section 671B of the Corporations Act
2001 are:
Number of Shares
---------------------------------- ----------------
Well Efficient Ltd 35,000,000
JP Morgan Asset Management (UK) 20,200,000
The Capital Group Companies, Inc. 15,011,458
Liam Cornelius 14,479,997
---------------------------------- ----------------
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote
per share without restriction. Holders of unlisted options and
performance rights do not have voting rights.
(e) Unquoted securities
At 28 February 2019 the Company has on issue 4,714,015 unlisted
options over ordinary shares and 1,315,000 performance rights.
The names of security holders holding more than 20% of an
unlisted class of security are listed below.
Unlisted Options
$0.558 $0.543 $0.94 $0.96 $1.031
Holder 8/8/2019 7/10/2019 19/5/2020 20/6/2019 24/01/2022
----------
Mr Seamus Cornelius - - 300,000 - -
---------- ----------- ----------- ----------- ------------
Mr Danny Goeman 900,000 - - - -
---------- ----------- ----------- ----------- ------------
Mr James Durrant - 250,000 - - -
---------- ----------- ----------- ----------- ------------
Mr Robert Connochie - - 500,000 - -
---------- ----------- ----------- ----------- ------------
Mr Hanns Huster - - - 200,000 -
---------- ----------- ----------- ----------- ------------
Mr Cedric Middleton - - - 200,000 -
---------- ----------- ----------- ----------- ------------
Toni-Louise
Gianatti - - - - 455,800
---------- ----------- ----------- ----------- ------------
Redgate Beach
Investments
Pty Ltd <Redgate
Beach Invest
A/C> - - - - 823,772
---------- ----------- ----------- ----------- ------------
Holders individually
less than 20% - - 640,000 - 444,443
---------- ----------- ----------- ----------- ------------
Total 900,000 250,000 1,440,000 400,000 1,724,015
---------- ----------- ----------- ----------- ------------
Performance Rights
Class
Holder Class 1 Class 4 5 Class 6 Class 7 Class 8
--------
Mr Zeray Lake 75,000 - - - - -
-------- -------- -------- -------- -------- --------
Mascots International 85,000 - - - - -
Ltd
-------- -------- -------- -------- -------- --------
Mr Paul Donaldson - 800,000 - - - -
-------- -------- -------- -------- -------- --------
Mr Tony Harrington - - 100,000 - - -
-------- -------- -------- -------- -------- --------
Mr Stuart Tarrant - - - 40,000 30,000 -
-------- -------- -------- -------- -------- --------
Redgate Beach
Investments Pty
Ltd - - - - - 65,000
-------- -------- -------- -------- -------- --------
Holders individually 120,000 - - - - -
less than 20%
-------- -------- -------- -------- -------- --------
Total 280,000 800,000 100,000 40,000 30,000 65,000
-------- -------- -------- -------- -------- --------
(f) Schedule of Interests in Mining Tenements
Tenement: Colluli, Eritrea
License Type: Exploration License
Nature of Interest: Owned
Current Equity: 50%
About Danakali
Danakali Limited (ASX: DNK) (Danakali, or the Company) is an
ASX-listed potash company focused on the development of the Colluli
Potash Project (Colluli or the Project). The Project is 100% owned
by the Colluli Mining Share Company (CMSC), a 50:50 joint venture
between Danakali and the Eritrean National Mining Corporation
(ENAMCO).
The Project is located in the Danakil Depression region of
Eritrea, East Africa, and is 75km from the Red Sea coast, making it
one of the most accessible potash deposits globally. Mineralisation
within the Colluli resource commences at just 16m, making it the
world's shallowest potash deposit. The resource is amenable to open
pit mining, which allows higher overall resource recovery to be
achieved, is generally safer than underground mining, and is highly
advantageous for modular growth.
The Company has completed a Front End Engineering Design (FEED)
for the production of potassium sulphate, otherwise known as SOP.
SOP is a chloride free, specialty fertiliser which carries a
substantial price premium relative to the more common potash type;
potassium chloride (or MOP). Economic resources for production of
SOP are geologically scarce. The unique composition of the Colluli
resource favours low energy input, high potassium yield conversion
to SOP using commercially proven technology. One of the key
advantages of the resource is that the salts are present in solid
form (in contrast with production of SOP from brines) which reduces
infrastructure costs and substantially reduces the time required to
achieve full production capacity.
The resource is favourably positioned to supply the world's
fastest growing markets. A binding take-or-pay offtake agreement
has been confirmed with EuroChem Trading GmbH (EuroChem) for up to
100% (minimum 87%) of Colluli Module I SOP production.
A non-binding indicative term sheet and mandate for the
provision of US$200M in senior debt funding to CMSC has been
executed with Mandated Lead Arrangers Africa Export Import Bank
(Afreximbank) and Africa Finance Corporation (AFC).
The Company's vision is to bring Colluli into production using
the principles of risk management, resource utilisation and
modularity, using the starting module (Module I) as a growth
platform to develop the resource to its full potential.
Competent Persons Statement (Sulphate of Potash and Kieserite
Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 1,289Mt @11% K(2) 0 Equiv.
and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K(2) 0
Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K(2) 0
Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K(2) 0
Equiv. and 9% Kieserite of Inferred Resource.
The information relating to the Colluli Mineral Resource
estimate is extracted from the report entitled "Colluli Review
Delivers Mineral Resource Estimate of 1.289Bt" disclosed on 25
February 2015 and the report entitled "In excess of 85 million
tonnes of Kieserite defined within Colluli Project Resource adds to
multi agri-commodity potential" disclosed on 15 August 2016, which
are available to view at www.danakali.com.au. The Company confirms
that it is not aware of any new information or data that materially
affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources or
Ore Reserves, that all material assumptions and technical
parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The
Company confirms that the form and context in which the Competent
Person's findings are presented have not been materially modified
from the original market announcement.
Competent Persons Statement (Sulphate of Potash Ore Reserve)
Colluli Proved and Probable Ore Reserve is reported according to
the JORC Code and estimated at 1,100Mt @ 10.5% K(2) O Equiv. The
Ore Reserve is classified as 285Mt @ 11.3% K(2) O Equiv. Proved and
815Mt @ 10.3% K(2) O Equiv. Probable. The Colluli SOP Mineral
Resource includes those Mineral Resources modified to produce the
Colluli SOP Ore Reserves.
The information relating to the January 2018 Colluli Ore Reserve
is extracted from the report entitled "Colluli Ore Reserve update"
disclosed on 19 February 2018 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
Competent Persons Statement (Rock Salt Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 347Mt @ 96.9% NaCl. The
Mineral Resource estimate contains 28Mt @ 97.2% NaCl of Measured
Resource, 180Mt @ 96.6% NaCl of Indicated Resource and 139Mt @
97.2% NaCl of Inferred Resource.
The information relating to the Colluli Rock Salt Mineral
Resource estimate is extracted from the report entitled "+300M
Tonne Rock Salt Mineral Resource Estimate Completed for Colluli"
disclosed on 23 September 2015 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
AMC Consultants Pty Ltd (AMC) independence
In reporting the Mineral Resources and Ore Reserves referred to
in this public release, AMC acted as an independent party, has no
interest in the outcomes of Colluli and has no business
relationship with Danakali other than undertaking those individual
technical consulting assignments as engaged, and being paid
according to standard per diem rates with reimbursement for
out-of-pocket expenses. Therefore, AMC and the Competent Persons
believe that there is no conflict of interest in undertaking the
assignments which are the subject of the statements.
Quality control and quality assurance
Danakali exploration programs follow standard operating and
quality assurance procedures to ensure that all sampling techniques
and sample results meet international reporting standards. Drill
holes are located using GPS coordinates using WGS84 Datum, all
mineralisation intervals are downhole and are true width
intervals.
The samples are derived from HQ diamond drill core, which in the
case of carnallite ores, are sealed in heat-sealed plastic tubing
immediately as it is drilled to preserve the sample. Significant
sample intervals are dry quarter cut using a diamond saw and then
resealed and double bagged for transport to the laboratory.
Halite blanks and duplicate samples are submitted with each
hole. Chemical analyses were conducted by Kali-Umwelttechnik GmBH,
Sondershausen, Germany, utilising flame emission spectrometry,
atomic absorption spectroscopy and ion chromatography.
Kali-Umwelttechnik (KUTEC) has extensive experience in analysis of
salt rock and brine samples and is certified according by DIN EN
ISO/IEC 17025 by the Deutsche Akkreditierungsstelle GmbH (DAR). The
laboratory follows standard procedures for the analysis of potash
salt rocks chemical analysis (K(+) , Na(+) , Mg(2+) , Ca(2+) ,
Cl(-) , SO(4) (2-) , H(2) O) and X-ray diffraction (XRD) analysis
of the same samples as for chemical analysis to determine a
qualitative mineral composition, which combined with the chemical
analysis gives a quantitative mineral composition.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company's intentions.
All statements in this document, other than statements of
historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company's filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company's ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions in
connection with the distribution of this announcement. Any failure
to comply with such restrictions may constitute a violation of the
securities laws of any jurisdiction outside the United Kingdom.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GLGDXCSDBGCG
(END) Dow Jones Newswires
March 20, 2019 03:02 ET (07:02 GMT)
Danakali (LSE:DNK)
Historical Stock Chart
From Apr 2024 to May 2024
Danakali (LSE:DNK)
Historical Stock Chart
From May 2023 to May 2024