Wrap Text
Audited Financial Report for the financial Year ended 31 Dec 2017
Kore Potash plc
(Incorporated in England and Wales)
Registration number 10933682
ASX share code: KP2
AIM share code: KP2
JSE share code:KP2
ISIN: GB00BYP2QJ94
(“Kore Potash” or the “Company”)
FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
CONTENTS
CORPORATE DIRECTORY 3
REVIEW OF OPERATIONS AND STRATEGIC REPORT 4
DIRECTORS' REPORT 13
INDEPENDENT AUDITORS' REPORT 37
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 43
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 44
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 45
CONSOLIDATED STATEMENT OF CASH FLOW 47
NOTES TO THE FINANCIAL STATEMENTS 48
2
CORPORATE DIRECTORY
COMPANY REGISTRATION NUMBER
United Kingdom 10933682
NON-EXECUTIVE CHAIRMAN NON-EXECUTIVE DIRECTORS
David Hathorn Jonathan Trollip
Leonard Math
MANAGING DIRECTOR AND CEO Timothy Keating
Sean Bennett Pablo Altimiras
David Netherway
JOINT COMPANY SECRETARY
Henko Vos
Francesca Wilson
PRINCIPAL & REGISTERED OFFICE (UK)) PRINCIPAL & REGISTERED OFFICE (AUSTRALIA)
25 Moorgate, London, Level 3, 88 William Street,
United Kingdom EC2R 6AY Perth WA 6000
Telephone: +44 20 7131 4000 Telephone: +61 (8) 9463 2463
SOUTH AFRICA OFFICE SINTOUKOLA POTASH S.A
33 Ballyclare Drive 24 Avenue Charles de Gaulle
Ballywoods Office Park Immeuble Atlantic Palace
Cedarwood House BP 662 Pointe Noire
Bryanston Johannesburg République du Congo
2021 South Africa Telephone: +242 222 9419
Telephone: +27 11 469 9140
SHARE REGISTRY (UK) SHARE REGISTRY (AUSTRALIA)
Computershare Investor Services Plc Computershare Investor Services Pty Ltd
The Pavilions, Bridgwater Road Level 11, 172 St George’s Terrace
Bristol BS99 6ZZ Perth WA 6000
United Kingdom Telephone: +618 9323 2000
Telephone: +44 (0)370 707 1258
SHARE REGISTRY (JOHANNESBURG) NOMINATED ADVISER AND BROKER ON AIM
Computershare Investor Services (Pty Ltd) Cannacord Genuity Limited
15 Bierman Avenue 88 Wood Street
Rosebank 2196 London EC2V 7QR
South Africa United Kingdom
JSE SPONSOR AUDITORS
Rencap Securities (Pty) Limited Deloitte LLP
6th Floor, Tower Block 2 2 New Street Square
102 Rivonia Road, Sandton London EC4A 3BZ
South Africa United Kingdom
Ph: +44 (0)20 7936 3000
SECURITIES EXCHANGE LISTING
London Stock Exchange (AIM) Australian Securities Exchange (ASX)
Code: KP2 Code: KP2
Johannesburg Stock Exchange (JSE)
Code: KP2
WEBSITE: www.korepotash.com
3
REVIEW OF OPERATIONS AND STRATEGIC REPORT FOR KORE POTASH AND ITS CONTROLLED ENTITIES
SUMMARY OF KEY DEVELOPMENTS
- The Kola Definitive Feasibility Study (“DFS”) commenced on 22 February 2017 with a world class consortium of French
engineering and construction companies and is due to be completed at the end of Q2 2018 or early Q3 2018.
- On 27 April 2017 the Company’s Australian subsidiary Kore Potash Limited (“Kore”) closed a $5m raising at AU$0.25
from Summit Investments PCC (“Summit”) and its Nominees at a significant premium to the November 2016 strategic
investment (AU$0.25 compared to AU$0.20) and a 56% premium to the then share price. Summit also received 5m
options at AU$0.30.
- An updated Mineral Resource Estimate was completed for the Kola Deposit [1], including a combined Measured and
Indicated sylvinite Mineral Resource of 508 Mt grading 35.4% KCl, making Kola one of the highest grading potash
deposits globally.
- The Company’s 97% owned RoC subsidiary Sintoukola Potash SA (“SPSA”) was awarded a Mining Licence for Dougou
covering Dougou and the Dougou Extension Prospect.
- A Mining Convention was signed on 8 June 2017 by the Government covering Kola, Dougou and Dougou Extension.
- Exploration drilling at Kola and Dougou Extension during 2017 was highly successful. 10 exploration drillholes were
completed totalling 4000.5 metres. The highest grading intersections to date at Kola (63% KCl) were made, including
sylvinite several km south of the current resource extent. At Dougou Extension, multiple sylvinite intersections were made
in wide-spaced holes supporting Company’s view that there is potential to define a 2nd sylvinite deposit.
- On 22 May 2017, Kore Potash announced that it had appointed Rothschild & Co (London) as its adviser on the project
debt finance facility to build and commission the plant and associated infrastructure at Sintoukola.
- The Scheme of Arrangement between Kore and its shareholders, in relation to the re-domicile from Australia to the UK,
was approved by shareholders on 27 October 2017, the Federal Court of Australia on 6 November 2017, and was
implemented on 20 November 2017. As a result Kore Potash plc is the new parent and Kore Potash Limited is the wholly-
owned subsidiary of Kore Potash plc. Kore Potash plc was listed on the ASX on 7 November 2017 with Kore Potash
Limited being removed from the official list of ASX Limited on 1 December 2017.
- Kore appointed a new Chief Operating Officer, Gavin Chamberlain on 1 October 2017, and a new Chief Financial Officer,
John Crews on 22 May 2017.
- David Netherway was appointed as an independent Non-Executive Director on 12 December 2017.
- Kore received a Letter of Support from BPIFrance Assurance Export (“BPIFrance”) for French export credit insurance for
the French component of the procurement for the Kola project construction which is estimated to be in the region of
US$500-700m.
- On 20 February 2018 the Company announced SPSA had been awarded the ‘Sintoukola 2’ Exploration Permit by the
government of the RoC.
- On 29 March 2018 Kore was listed on the AIM market of the London Stock Exchange as well as the Johannesburg Stock
Exchange having appointed Canaccord Genuity Limited as its adviser in the UK and Rencap Securities (Pty) Limited in
South Africa.
Note:
[1] Announcement dated 6 July 2017: Updated Mineral Resource for the High Grade Kola Deposit
4
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
CORPORATE ACTIVITIES
- In May 2017, Kore appointed John Crews as its Chief Financial Officer. John was previously Chief Financial Officer and
Chief Operating Officer at UBS South Africa. In addition, he was also responsible for the finance function across MENA,
Israel, Turkey and Nigeria and also served on a number of boards within the region. John graduated from the University
of Orange Free State and qualified as a Chartered Accountant with KPMG in 1997.
- Gavin Chamberlain joined Kore as Chief Operating Officer in October 2017. Gavin was Director of Operations at Amec
Foster Wheeler Africa. He has over 30 years’ experience in the delivery of large mining projects across Africa. He also
has specific experience as Project Director in executing a US$2.2bn uranium project in Africa. His other roles include
time spent in civil construction, project management and as managing director of an EPC construction company focussed
on mining. Gavin qualified with a BSc (Eng) Civil Engineering degree and is a registered Professional Engineer with the
Engineering Council of South Africa. He is also a registered Professional Project Manager with PMI and is registered as a
Construction Project Management Professional with the SACPCMP.
- Mr David Netherway was appointed as an independent Non-Executive Director of the Company in December 2017. Mr
Netherway is a mining engineer with over 40 years of experience in the mining industry. He was involved in the
construction and development of the New Liberty, Iduapriem, Siguiri, Kiniero, Samira Hill & Bonikro gold mines in West
Africa and has extensive international mining experience including in Australia, Canada, China, Kazakhstan, Brazil, India,
Nepal, Oman and Malaysia. Mr Netherway served as the CEO of Shield Mining until its takeover by Gryphon Minerals.
Prior to that, he was the CEO of Toronto listed Afcan Mining Corporation, a China focused gold mining company that was
sold to Eldorado Gold in 2005. He was also the Chairman of Afferro Mining which was acquired by IMIC in 2013. He has
held senior management positions in a number of mining companies, including Golden Shamrock Mines, Ashanti
Goldfields Ltd and Semafo Inc. Mr Netherway is currently the Chairman of Altus Strategies plc. (AIM: ALS), Canyon
Resources Ltd (ASX: CAY) and Kilo Goldmines Ltd (TSX-V: KGL) and a Non-Executive Director of Avesoro Resources
Inc. (TSX & AIM: ASO).
- BPIFrance, the French government export credit agency, has issued a Letter of Support (“LoS”) confirming in principle
support under the export credit insurance guarantee scheme of the French State (“ECA cover”) for the construction of the
Kore Group’s flagship potash development asset, Kola. The LoS is based on the construction of Kola through an
Engineering, Procurement and Construction (“EPC”) contract with the existing consortium of French engineering and
construction companies, and the EPC having substantial French content. The LoS is subject to further in-depth due
diligence and is not legally binding. Kore Potash and the French Consortium (“FC”) estimate that the French element of
procurement for the construction, which will be eligible for ECA financing, will be in the region US$500-700m. The
Company is also in discussions with other ECAs in relation to the provision of additional ECA financing.
5
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY
Kola Sylvinite Project
DFS Scope and Update
The Definite Feasibility Study is scheduled for completion late Q2 early Q3 2018. This study addresses the bulk infrastructure,
mining, ore transport, processing plant and marine export of product. The bulk infrastructure is looking at power supply from an
existing power station via a new overhead power line, the installation of a gas pipeline from an existing gas facility at M’boundi,
the construction of new and upgrade of some exiting roads to facilitate both the construction of the project and serve the longer-
term requirements of operations.
The mining is a conventional underground potash mine accessed through 2 vertical shafts. The one shaft for intake air and men
and material access. The other shaft is for exhaust air and two high lift conveyors to get the ore out of the mine. The mine will
have underground workshop facilities so once the equipment goes underground it will remain there for its life. The production
schedule is based on 5 working faces at steady state production. The ore transport from the mine to the process plant is via a
35km overland conveyor. This conveyor has been designed with the requirements of the ESIA for animal movement and
community access to land in mind.
The processing plant will be capable of producing 2mtpa of an 80/20 split between granular and standard MOP. The lower
impurities found in this orebody in relation to other potash ore bodies has required some additional test work to be completed to
validate the float portion of the plant. The marine facilities have been designed to allow transhipment of product via a dedicated
jetty with barge loading facility, protected by its own breakwater. The barges then take the product to a transhipment zone
where it is transferred to ships for export.
Exploration
During 2017, six drillholes were completed at the Kola Deposit, totalling 2061.7 metres. The program was highly successful; all
except one contained high grade sylvinite and results included the highest grading intersections to date for the project.
EK_49 to EK_51 were drilled to provide additional data to support the update to the Kola Mineral Resource Estimate. The
results of these holes were reported on the 23rd of January [2] and 7th March 2017 [3]. All contained Sylvinite of mineable thickness,
including and intersection of Hangingwall Seam (HWS) of 4.05 m grading 63.0% KCl (initially reported as being 58.9% KCl
based on gamma data).
EK_52 to EK_54 were drilled to test for extensions and new areas of sylvinite HWS at Kola. EK_52 was unsuccessful
intersecting carnallitite only. EK_53 and EK_54 were very successful, both intersecting very high grade sylvinite [4] (Table 1).
These two holes were located 1.5 and 7.0 km southeast ‘on strike’ from the current Measured and Indicated Resource, thereby
demonstrating the potential opportunity for significant expansion of the Kola deposit and the presence of areas of exceptional
grade. They highlight the possible future upside to the project economics if further exploration is carried out and is successful.
Notes:
[2] Announcement dated 23 January 2017: Drilling at Kola intersects very high-grade sylvinite of 58.9% KCl
[3] Announcement dated 7 March 2017: Further Excellent Sylvinite Intersections in drill-holes at Kola; Drilling about to commence at the very High Grade
Dougou Extension Prospect
[4] Announcement dated 7 December 2017: High grade assay results returned for Kola
6
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY (CONT)
Table 1. Sylvinite intersections in all holes drilled at Kola during 2017
Drillhole Depth from Depth to true Seam grade
(m) (m) thickness (KCl%)
(m)
EK_49 255.9 259.9 4.1 HWS 63.0
EK_50 252.6 254.4 1.9 US 26.9
EK_51 267.5 272.4 4.7 US 36.8
EK_51 276.1 281.6 5.3 LS 28.2
EK_52 no sylvinite
EK_53 350.6 353.0 2.2 HWS 61.9
EK_54 297.2 300.5 3.3 HWS 60.0
Kola Mineral Resource Estimate (MRE)
On 6 July 2017 an updated MRE was announced for the Kola Deposit [5], including a combined Measured and Indicated Sylvinite
Mineral Resource of 508 Mt grading 35.4% KCl (Table 2). This estimate provides the basis for the ongoing Kola DFS. The MRE
was completed by Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group. An MRE for carnallitite was also
made (Table 3) though is not part of the current mine plan.
The lower tonnage compared with the 2012 Measured and Indicated resource (Table 3) reflects an adjustment to the extent
of the Indicated Resource category, and the use of true thickness for dipping intersections. This is largely offset by the 7%
higher grade which, at over 35% KCl is on par with the world’s highest grading operating potash mines. The Indicated resource
includes 29.6 Mt of Sylvinite HWS with an average grade of 58.5% KCl. The deposit remains open in most directions, as
demonstrated by the results of the exploration drill-holes EK_53 and EK_54 described above.
Note:
[5] Announcement dated 6 July 2017: Updated Mineral Resource for the High Grade Kola Deposit
7
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY (CONT)
Table 2. July 2017 MRE for Kola sylvnite by seam
July 2017 - Kola Deposit Potash Mineral Resources - SYLVINITE
Million Tonnes KCl Mg Insolubles
% % %
Measured - - - -
Indicated 29.6 58.5 0.05 0.16
Hangingwall Seam
Meas. + Ind. 29.6 58.5 0.05 0.16
Inferred 18.2 55.1 0.05 0.16
Measured 153.7 36.7 0.04 0.14
Indicated 169.9 34.6 0.04 0.14
Upper Seam
Meas. + Ind. 323.6 35.6 0.04 0.14
Inferred 220.7 34.3 0.04 0.15
Measured 62.0 30.7 0.19 0.12
Indicated 92.5 30.5 0.13 0.13
Lower Seam
Meas. + Ind. 154.5 30.6 0.15 0.13
Inferred 59.9 30.5 0.08 0.11
Measured - - - -
Indicated - - - -
Footwall Seam
Meas. + Ind. - - - -
Inferred 41.2 28.5 0.33 1.03
Total Measured + Indicated sylvinite 507.7 35.4 0.07 0.14
Total Inferred sylvinite 340.0 34.0 0.08 0.25
Tonnes are rounded to the nearest hundred thousand. The average density of the sylvinite is 2.10. Structural anomaly zones have been excluded.
Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, marketing, or other relevant issues.
Changes to Potash Mineral Resources and Reserves
Table 3 provides a comparison of the Company’s Mineral Resources and Mineral Reserves, year-on-year between 2016 and
2017, as per ASX Listing rule 5.21.4. The Kola MRE has changed following the update in July 2017. The Dougou MRE remains
unchanged since 2015. The following are noted:
- The Company’s total potash Mineral Resources have increased from 5.32 Bt to 5.95 Bt reflecting an increase in the
Inferred resource of carnallitite at Kola.
- The combined Measured and Indicated resources for sylvinite and carnallitite have decreased slightly from 2.39 Bt to
2.36 Bt.
- The Measured and Indicated resource for Sylvinite only has reduced from 573 Mt to 508 Mt but at a 7% higher grade.
- The updated mineral reserves will be announced after completion of the ongoing Kola DFS, by early Q3 2018. The
2012 PFS defined proven and probable reserves of 152 Mt grading 31.7% KCl. As a formality, the latter are no longer
reported as reserves, being considered an ‘historical estimate’.
8
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY (CONT)
Table 3. Comparison of Potash Mineral Resources and Potash Mineral Reserves year-on-year between 2016 and 2017
POTASH MINERAL RESOURCES END 2016 END 2017
Contained Contained
Million Grade Million Grade
Category KCl (million KCl (million
Tonnes (KCl %) Tonnes KCl %
tonnes) tonnes)
Measured 264 33.7 89 216 34.9 75
Indicated 309 32.6 101 292 35.7 104
Kola Sylvinite Measured + Indicated 573 33.1 190 508 35.4 180
Deposit
Inferred 475 32.5 154 340 34.0 116
TOTAL 1,048 32.8 344 848 34.8 295
Measured 295 17.8 53 341 17.4 59
Indicated 449 18.7 84 441 18.7 83
Kola Carnallitite Measured + Indicated 744 18.3 137 783 18.1 142
Deposit
Inferred 473 18.8 89 1,266 18.7 236
TOTAL 1,217 18.5 226 2,049 18.5 378
Measured 148 20.1 30 148 20.1 30
Indicated 920 20.7 190 920 20.7 190
Dougou
Measured + Indicated 1,068 20.6 220 1,068 20.6 220
Carnallitite
Deposit
Inferred 1,988 20.8 414 1,988 20.8 414
TOTAL 3,056 20.7 634 3,056 20.7 634
Measured 707 24.2 171 705 23.3 165
Indicated 1,678 22.3 375 1,653 22.8 377
TOTAL MINERAL Measured + Indicated 2,385 22.9 546 2,358 23.0 542
RESOURCES
Inferred 2,936 22.3 656 3,594 21.3 766
TOTAL 5,321 22.6 1,202 5,953 22.0 1,307
POTASH MINERAL RESERVES END 2016 END 2017
Contained Contained
Million Grade Million Grade
Category KCl (million KCl (million
Tonnes (KCl %) Tonnes (KCl %)
tonnes) tonnes)
Proven 88 31.7 27.8 - - -
Kola Sylvinite
Probable 64 31.7 20.2 - - -
Deposit
TOTAL 152 31.7 48.1 - - -
Notes: The Mineral Resource estimates are reported in accordance with the JORC code 2012 edition. The Kola Mineral Resource was reported on the 6
July 2017, and was prepared by Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group. Resources are reported at a cut-off grade of 10%
KCl. The Dougou Mineral Resource was prepared by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (“ERCOSPLAN“) and reported in
the ASX announcement dated 9 February 2015. The form and context of the Competent Person’s findings as presented in this document have not
materially changed since the resource was first reported. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues. The Mineral
resources are considered to have reasonable expectation for eventual economic extraction using underground mining methods. The Kola Mineral Reserve,
now considered a historical estimate, was first reported on the 19 September 2012 as defined by a Pre-Feasibility Study completed by SRK Consulting [6]
Note:
[6] NI 43-101 Technical Report. PFS for the Kola Deposit, 17 September 2012 (SRK Consulting)
9
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY (CONT)
Dougou Extension Prospect
Strong results from exploration at Dougou Extension Prospect
In March 2017 the Company commenced drilling to follow up on two previous drill-holes ED_01 and ED_03 (drilled in 2012 and
2014) both of which contained intersections of sylvinite hosted by the HWS of 57.7% and 59.5% KCl over thickness of 4.5 and
4.2 m respectively [7].
Between March and September 2017, the Company completed an additional 4 widely-spaced (2 to >4 km) holes (DX_01 to
DX_04) totalling 1938.8 metres. As reported on September 11 2017, three of these holes intersected layers of flat-lying
sylvinite [8]. DX_01 returned 8.75m grading 27.2% KCl hosted by the Top Seam, a layer found 12-15 m above the HWS. DX_03
(5km away from DX_01) intersected the same seam giving 4.87m grading 29.9% KCl. Drillhole DX_02 contained HWS grading
61.6% KCl but of a thickness of 0.93m.
The results of the 2017 drilling confirmed the widespread presence of sylvinite but that it is largely hosted by the Top Seam in
addition to the HWS. The area delineated by all six of the Company’s holes to date at the Prospect, is approximately 8km by
5km and open laterally.
Based on the exploration to date, the Company is of the view that Dougou Extension has the potential to host a second high-
grade sylvinite deposit which would add to the Company’s flagship Kola Potash Deposit. For the potential delineation of mineral
resources further exploration is required; none is planned at present as the Company is focussed on the completion of the Kola
DFS.
Dougou Mining Licence awarded
The Company’s 97% owned RoC subsidiary Sintoukola Potash SA (SPSA) was awarded a Mining Licence for Dougou [9], which
includes the Dougou Carnallitite Deposit and the Dougou Extension Prospect (Figure 1). The Licence was issued on 9 May
2017 under decree 2017-139 issued for a period of 25 years from the Gazette date of 18 May 2017. The licence covers 456
km2. A Scoping Study completed for the Dougou Deposit in 2015 indicated favourable economics based on solution mining of
the carnallitite [10].
New Exploration Permit
SPSA was awarded a new Exploration Licence, Sintoukola 2, by Presidential Decree 2018-34 dated 9 February 2018 granting
exploration rights for 3 years which can be renewed twice for periods of 2 years each, covering an area of 294.4km2 adjoining
the Dougou Mining Lease, covering prospective ground for sylvinite to the northwest of the latter. Having now received the
adjoining Sintoukola 2 Exploration Permit which adjoins the Dougou Extension Prospect the Company plans to update the
Exploration Target first reported in 2012 [11], using all available drillhole and seismic data.
Notes:
[7] Announcement dated 20 October 2014: Elemeantal Minerals Announces Exceptional Results from Dougou Yangala Drilling
[8] Announcement dated 11 September 2017: Dougou Extension Prospect Sylvinite intersections up to 8.8 m thick within a zone of 8 by 5 km, open laterally
[9] Announcement dated 18 May 2017: Dougou Mining Lease granted
[10] Announcement dated 17 February 2015: Results for the Dougou Potash Project Scoping Study
[11] Announcement dated 27 January 2015: Elemental Minerals Announces an Exploration Target for the High Grade Sylvinite Hangingwall Seam at the
Yangala Prospect
10
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY (CONT)
A copy of the announcement containing the schematics of Figure 1: Location of the Sintoukola Project showing the Kola Project, Dougou Project, the Dougou Extension Prospect
and also the recently acquired Sintoukola 2 permit, is available on the Kore Potash website: www.korepotash.com
11
REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT)
OPERATIONAL AND EXPLORATION ACTIVITY (CONT)
COMPETENT PERSON STATEMENT
The information relating to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves in this report was
compiled by Mr. Andrew Pedley the Company’s Chief Geologist, a registered scientist (Pr. Sci. Nat) with the South African
Council for Natural Scientific Professions and member of the Geological Society of South Africa. The information is based on, or
extracted from previous reports, as referred to in footnotes herein, and available to view on the Company’s website. The
Mineral Resource Estimate for the Kola Deposit was prepared by Competent Person Mr. Garth Kirkham, P.Geo., a Member of
the Association of Professional Engineers and Geoscientists of British Columbia. The Mineral Resource Estimate for the
Dougou Deposit was prepared by Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists
and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the
European Federation of Geologists. Results relating to Exploration results for drilling at Kola in 2017 and all exploration at the
Dougou Extension Prospect were first prepared by Mr. Andrew Pedley. The Company confirms that it is not aware of any new
information or data that materially affects the information included in the original market announcements 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.
FORWARD-LOOKING STATEMENTS
This report contains statements that are "forward-looking". Generally, the words "expect," “potential”, "intend," "estimate," "will"
and similar expressions identify forward-looking statements. By their very nature and whilst there is a reasonable basis for
making such statements regarding the proposed placement described herein; forward-looking statements are subject to known
and unknown risks and uncertainties that may cause our actual results, performance or achievements, to differ materially from
those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance.
Statements in this report regarding the Company's business or proposed business, which are not historical facts, are "forward
looking" statements that involve risks and uncertainties, such as resource estimates and statements that describe the
Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated
condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they
involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in
such statements.
Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are
made.
12
DIRECTORS’ REPORT
Your Directors present their annual report on Kore Potash plc (“Kore Potash” or the “Company”) and its controlled entities
(“Group” or “Consolidated Entity”) for the financial year ended 31 December 2017.
Directors
The names of directors of the Group in office at any time during or since the end of the year are:
David Hathorn Non-Executive Chairman
Sean Bennett Managing Director and CEO
Jonathan Trollip Non-Executive Director
Leonard Math Non-Executive Director
Timothy Keating Non-Executive Director
Pablo Altimiras Non-Executive Director
David Netherway Non-Executive Director (appointed on 12 December 2017)
Directors have been in office of the Group since the start of the financial year to the date of this report unless otherwise stated.
In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders implemented on 20
November 2017, all of the current directors of Kore Potash Limited have been appointed to the Board of Kore Potash plc. The
Board of the Company and the Group now consists of David Hathorn, Sean Bennett, Jonathan Trollip, Leonard Math, Timothy
Keating, Pablo Altimiras and David Netherway who was appointed on 12 December 2017. David Hathorn and Sean Bennett
were appointed as the directors of Kore Potash plc on the date of incorporation of the Company on 25 August 2017.
Joint Company Secretary
Mrs Francesca Wilson (appointed on 29 November 2017)
Mr Henko Vos
Mr Lawrence Davidson (resigned on 25 January 2018)
Principal Activities and Significant Changes in Nature of Activities
The principal activity of the Group during the financial year was exploration for potash minerals prospects and project
development at the Company’s Sintoukola Potash Permit in the Republic of Congo (RoC).
Operating Results
The net loss of the Group for the year ended 31 December 2017 after providing for income tax amounted to USD 4,344,322 (31
December 2016: USD 4,259,666).
Dividends Paid or Recommended
In respect of the year ended 31 December 2017, no dividends have been paid or declared since the start of the financial year
and the Directors do not recommend the payment of a dividend in respect of the financial year.
Review of Operations and Strategic Report
Please refer to pages 4 to 12 of the Financial Report.
Significant Changes in State of Affairs
On 31 August 2017, Kore Potash Limited announced that it proposed to re-domicile in the United Kingdom by way of a scheme
of arrangement (Scheme) between Kore Potash Limited and its shareholders. The Scheme was approved by the shareholders
on 27 October 2017 and the Federal Court of Australia on 6 November 2017. On 20 November 2017, the Scheme was
implemented and as a result Kore Potash plc, which was incorporated on 25 August 2017, is the new parent and Kore Potash
Limited is the wholly-owned subsidiary of Kore Potash plc. Kore Potash plc was listed on the ASX on 7 November 2017 with
Kore Potash Limited being removed from the official list of ASX Limited on 1 December 2017.
In accordance with the Scheme, Kore Potash plc issued 768,158,142 ordinary shares (initially to be held in the form of CHESS
Depository Interests) (CDIs) as consideration for the transfer of Kore Potash Limited shares to Kore Potash plc under the
Scheme on 21 November 2017. Kore Potash plc also completed the issue of 58,191,226 Unlisted Options and 48,077,728
Performance Rights/Shares to the previous holders of options and performance rights/shares in Kore Potash Limited in
consideration for the cancellation of those Kore Potash Limited Unlisted Options and Performance Rights/Shares.
13
DIRECTORS’ REPORT (CONT)
Principal Risks
The Company’s business strategy for the financial year ahead and, in the foreseeable future, is to continue exploration activities
on the Company’s existing potash mineral projects in the Republic of Congo. The Company’s business strategy is subject to
numerous risks, some outside the Board’s and management’s control. These risks can be specific to the Company, generic to
the mining industry and generic to the stock market as a whole. The key risks, expressed in summary form, affecting the Group
and its future performance include but are not limited to:
- country risk in Republic of Congo
- geological and technical risk posed to exploration and commercial exploitation success;
- change in potash commodity prices and market conditions;
- environmental and occupational health and safety risks;
- government policy changes;
- retention of key staff; and
- capital requirement and lack of future funding.
This is not an exhaustive list of risks faced by the Company or an investment in it. There are other risks generic to the stock
market and the world economy as whole and other risks generic to the mining industry, all of which can impact on the
Company. The management of risks is integrated into the development of the Company’s strategic and business plans and is
reviewed and monitored constantly by the Board.
Significant Events Subsequent to Reporting Date
On 20 February 2018, Kore Potash plc has been informed that it was awarded the Sintoukola 2 Exploration Permit, dated 9
February 2018, by the government of the RoC. The Exploration Permit is held wholly by the Company’s 97% subsidiary
Sintoukola Potash S.A. This Permit is valid for three years, following which it may be renewed twice, each time for a further
period of two years.
On 20 March 2018, the Company held a General Meeting to approve a capital raising of up to US$20 million in order to satisfy
the working capital requirements in connection with the AIM listing. On 26 March 2018, a total of US$12,894,659 was raised
from existing and new investors through the placing and direct subscription of 83,523,344 ordinary shares in the Company at a
placing price of AU$0.20 per new ordinary share. In addition, the Company raised US$250,000 from the Chairman, David
Hathorn, through a convertible loan note that will convert into ordinary shares upon shareholder approval at the next general
meeting of the Company. Placees with Placing Shares on AIM were granted 8,250,000 equity warrants and Placees with
Placing Shares on JSE will be granted 4,644,659 equity warrants pending SARB approval if such approval is required, on the
basis of one equity warrant for every US$1.00 invested in the Placing exercisable at AUS$0.30 for one ordinary share with a 3
year subscription period.
The Company was listed on the AIM market and JSE on 29 March 2018.
There are no other significant events that have occurred since reporting date requiring separate disclosure.
Political Contributions and Charitable Donations
During the year the Group did not make any political contributions and charitable donations.
Annual General Meeting (“AGM”)
This report and financial statements will be presented to shareholders for their approval at the AGM. The Notice of the AGM will
be distributed to shareholders together with the Annual Report.
Auditors
A resolution to reappoint Deloitte LLP, and authorise the Directors to agree their remuneration, will be proposed at the next
Annual General Meeting.
14
DIRECTORS’ REPORT (CONT)
The Use of Financial Instruments by the Group
The Group has exposure to the following risks from their use of financial instruments:
- market risk,
- credit risk, and
- liquidity risks.
For more details of the financial risk management objectives and policies of the Group, please refer to Note 15 to the financial
statements.
Key Performance Indicators
Given the nature of the business and that the Group is on an exploration and development phase of operations, the Directors
are of the opinion that analysis using KPIs is not appropriate for an understanding of the development, performance or position
of our businesses at this time. The primary KPI is cash and capital management.
Corporate Governance
The Board is committed to maintaining high standards of corporate governance. The Board has given consideration to the code
provisions set out in the UK Corporate Governance Code (the "UK Code") issued by the Financial Conduct Authority and in
accordance with the AIM Rules for Companies (the "AIM Rules"). Whilst the Company is not required to comply with the UK
Code, the Company’s corporate governance procedures take due regard of the principles of Good Governance set out in the
UK Code in relation to the size and the stage of development of the Company. The Board has also given consideration to the
ASX Corporate Governance Principles and Recommendations (ASX Corporate Governance Council, 3rd Edition).
The Board has a Nomination and Remuneration Committee which comprises of three members, all of whom are Independent
Directors including the Chairman. The Nomination & Remuneration Committee undertakes a rigorous and transparent selection
process as per the recruitment and diversity policy to appoint or re-appoint a Director to the Board. Included in this process are
appropriate reference checks which include but not limited to character reference, police clearance certificate and bankruptcy to
ensure that the Board remains appropriate for that of an AIM and ASX quoted company.
In carrying out its role, the Committee needs to take cognisance of regulations regarding Directors and Executives
appointments, particularly the relevant provisions of Australian, UK and South African and Republic of Congo employment law
as well as the Corporations Act (Australia), the UK Companies Act and the Companies Act 71 of 2008 (South Africa).
The Committee undertakes procedures to ensure a transparent process for setting remuneration for Directors and Senior staff,
that is appropriate in the context of the current size and nature of the Company’s operations. The broad remuneration policy is
to ensure that remuneration properly reflects the relevant person’s duties and responsibilities, and that the remuneration is
competitive in attracting, retaining and motivating people of the highest quality. The Board believes that the best way to achieve
this objective is to provide Executive Directors and Executives with a remuneration package that reflects the person’s
responsibilities, duties and personal performance.
The Board has established a separate Audit & Risk Committee. All the members are Non-Executive and Independent Directors
including the Chairman. The Board considers that the Audit & Risk Committee members collectively bring the range of skills,
knowledge and experience necessary to direct the Committee. The Committee undertakes procedures to verify and safeguard
the integrity of the Company’s corporate reporting, that are appropriate in the context of the current size and nature of the
Company’s operations. The Board is also responsible for approving, reviewing and monitoring the Company’s risk management
policy. The principal areas of risk for the Company are in:
- Occupational health and safety and work related safety risks; and
- Financial risk in the areas of maintaining sufficient funding for the continuation of operations.
Further information on the Company’s corporate governance policies is available on the Company’s website
www.korepotash.com.
Employment Policies
The Group will be committed to promoting policies which ensure that high calibre employees are attracted, retained and
motivated, to ensure the ongoing success for the business. Employees and those who seek to work within the Group are
treated equally regardless of gender, age, marital status, creed, colour, race or ethnic origin.
15
DIRECTORS’ REPORT (CONT)
Health and Safety
The Group’s aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective, there is a
Health, Safety and Environmental Committee to review the health and safety policy and risks of the Group and make
recommendations to the Board. The Group provides training and support to employees and set demanding standards for
workplace safety.
Payment to Suppliers
The Group’s policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the
agreement provided the supplier has met the terms and conditions. Under normal operating conditions, suppliers are paid within
60 days of receipt of invoice.
Future Developments
The Group will continue its mineral exploration activities with the objective of finding mineralised resources, particularly potash
and the development of the Kola deposit. The Company will also consider the acquisition of further prospective exploration
interests.
Environmental Issues
The Group operates within the resources sector and conducts its business activities with respect for the environment while
continuing to meet the expectations of shareholders, employees and suppliers. In respect of the current year under review, the
Directors are not aware of any particular or significant environmental issues which have been raised in relation to the Group’s
operations. The Group holds exploration tenements in the Republic of Congo. The Group’s operations are subject to
environmental legislation in this jurisdiction in relation to its exploration activities.
Unissued shares under Options
Share options outstanding at the date of this report:
Exercise Price Number of
Exercise AUD Options
Period
On or before 15 April 2018 0.33 6,691,226
On or before 26 June 2018 0.33 1,500,000
On or before 15 November 2019 0.30 50,000,000
58,191,226
The holders of these options do not have the right, by the virtue of the option, to participate in any share issue or interest issue
of the Company.There were no exercise of unlisted options during the year. Please refer to Note 12(a) for options issued during
the year and the issue price of these options.
Performance Rights
Performance rights outstanding at the date of this report:
Class Expiry Number of Rights
Class C (Emp) 16/09/2019 1,886,996
Former Project Director Performance Rights 06/12/2020 2,255,000
Chairman Performance Rights 01/03/2021 11,000,000
Managing Director Performance Rights 01/03/2021 6,906,250
Non-Executive Director Performance Rights 30/06/2021 3,000,000
2016 Award Performance Shares 31/05/2019 1,405,000
Employee Performance Shares (Short Term) 31/05/2019 3,747,005
Employee Performance Shares (Long Term) 31/05/2019 11,734,853
Managing Director Performance Rights 31/05/2019 660,000
42,595,104
The performance rights holders do not hold any voting rights or rights to participate in dividends unless the rights have vested
and were converted to fully paid ordinary shares.
16
DIRECTORS’ REPORT (CONT)
Information on Directors
David Hathorn Mr. Hathorn joined the Group in November 2015. He was the Chief Executive Officer of
Non-Executive Chairman Mondi group between 2000 and May 2017 having joined the group in 1991. The Mondi
CA group is an international packaging and paper group employing around 25,000 across
more than 30 countries listed on the London Stock Exchange and the Johannesburg
Stock Exchange. Prior to the demerger of Mondi from Anglo American PLC, Mr. Hathorn
was a member of the Anglo American group executive committee from 2003 and an
executive director of Anglo American PLC from 2005, serving on several of the boards of
the group's major mining operations.
Interest in Shares and Options 21,568,105 Fully Paid Ordinary Shares
25,000 Redeemable Preference Shares
2,049,416 Unlisted Options exercisable at AUD 0.30 each expiring 15 November 2019
11,000,000 Performance Rights each expiring 1 March 2021
Directorships held in other listed None
entities
Former directorships of listed CEO of Mondi Group from 1 May 2007 and resigned on 11 May 2017
companies in last three years
Sean Bennett Mr. Bennett joined the Group in November 2015. He was previously CEO of UBS South
Managing Director and CEO Africa. He joined SG Warburg in London in 1995 (now UBS Investment Bank). He moved
ACA to South Africa in 2008 with HSBC, where he was Co-Head of HSBC Global Banking for
Africa before re-joining UBS in 2011. Mr. Bennett has over 20 years' experience in
advising a wide range of companies, state owned enterprises and Governments,
including a number of large mining houses such as BHP, South32 and Sibanye. He has
been involved in transactions around the globe as well as numerous countries across
Africa.
Interest in Shares and Options 2,250,600 Fully Paid Ordinary Shares
25,000 Redeemable Preference Shares
100,000 Unlisted Options exercisable at AUD 0.30 each expiring 15 November 2019
7,566,250 Performance Rights each expiring 1 March 2021
Directorships held in other listed None
entities
Former directorships of listed None
companies in last three years
17
DIRECTORS’ REPORT (CONT)
Information on Directors (Cont)
Jonathan Trollip Mr. Trollip joined the Group in April 2016. Mr. Trollip is a globally experienced Director
Non-Executive Director (both executive and non-executive) with over 30 years of commercial, corporate,
B.A (Hons) LLM, FAICD governance and legal and transactional expertise. He is currently Non-Executive
Chairman of ASX listed Global Value Fund Ltd, Future Generation Investment Company
Ltd, Spicers Limited, Plato Income Maximiser Ltd, Spheria Emerging Companies Ltd and
Antipodes Global Investment Company Ltd and a non-executive director of Propel
Funeral Partners Limited. He also holds various private company directorships in the
commercial and not-for-profit sectors.
Interest in Shares & Options 575,003 Fully Paid Ordinary Shares
57,091 Unlisted Options exercisable at AUD0.30 each expiring 15 November 2019
2,000,000 Performance Rights each expiring 30 June 2021
Directorships held in other listed Future Generation Investment Company Limited (from October 2013)
entities Global Value Fund Limited (from April 2014)
Antipodes Global Investment Company Limited (from July 2016)
Spicers Limited (from 6 September 2017)
Propel Funeral Partners Limited (from 19 September 2017)
Plato Income Maximiser Limited (from 20 February 2017)
Spheria Emerging Companies Limited (from November 2017)
Former directorships of listed None
companies in last three years
Leonard Math Mr. Math joined the Group in April 2014. Mr. Math graduated from Edith Cowan University
Non-Executive Director in 2003 with a Bachelor of Business majoring in Accounting and Information Systems. He
B.Com., CA is a member of the Institute of Chartered Accountants. In 2005 he worked as an auditor at
Deloitte before joining GDA Corporate as Manager of Corporate Services. He has
extensive experience in relation to public company responsibilities including ASX and
ASIC compliance, control and implementation of corporate governance, statutory
financial reporting and shareholder relations within both the retail and institutional sectors.
He is currently the Company Secretary of ASX listed Gulf Manganese Corporation.
Interest in Shares & Options 183,600 Unlisted Options exercisable at AUD 0.33 each expiring 15 April 2018
1,000,000 Performance Rights each expiring 30 June 2021
Directorships held in other listed None
entities
Former directorships of listed Kangaroo Resources Limited (resigned 1 December 2015)
companies in last three years Mako Hydrocarbons Limited (delisted / deregistered / liquidated on 4 April 2016)
RMA Energy Limited (resigned January 2017)
Global Gold Holdings Limited (resigned 1 February 2017)
Okapi Resources Limited (resigned 28 November 2017)
18
DIRECTORS’ REPORT (CONT)
Information on Directors (Cont)
Timothy Keating Mr. Keating joined the Group in November 2016 following the completion of the strategic
Non-Executive Director investment in the Group by SGRF. Mr. Keating is Head of Mining Investment Private
BSc Equity at SGRF, a sovereign wealth fund of the Sultanate of Oman. Prior to joining SGRF
in 2015, Mr Keating was CEO of African Nickel Limited, a nickel sulphide development
company where he grew the business through several acquisitions, project development
and fund raisings. He also worked at Investec Bank for the Commodities and Resource
Finance Team (2004 – 2010) and at Black Mountain Mine owned by Anglo American plc,
in South Africa. He is a Non-Executive Director of Kenmare Resources plc.
Interest in Shares & Options None
Directorships held in other listed Kenmare Resources plc (from October 2016)
entities
Former directorships of listed None
companies in last three years
Pablo Altimiras Mr. Altimiras joined the Group in November 2016 following the completion of the strategic
Non-Executive Director investment in the Group by SQM. Mr. Altimiras is an Industrial Civil Engineer from the
Pontificia Universidad Católica de Chile where he also earned an MBA. He joined SQM
during 2007 as Chief of Logistics Projects and in 2009 was promoted to Regulatory
Affairs Director. In 2010 he assumed the position of Business Development vice manager
and after 2 years took up the position of Development and Planning manager. In 2016 he
was appointed Vice-President of Development and Planning. Pablo is also board member
of Minera EXAR, an Argentinian company currently developing a lithium project in Jujuy
Province, Argentina and a board member of SQM Australia Pty Ltd, a SQM subsidiary
that is developing a lithium project in Western Australia.
Interest in Shares & Options None
Directorships held in other listed None
entities
Former directorships of listed None
companies in last three years
19
DIRECTORS’ REPORT (CONT)
Information on Directors (Cont)
David Netherway Mr. Netherway joined the Group in December 2017 and is a mining engineer with over 40
Non-Executive Director years of experience in the mining industry. He was involved in the construction and
B.Eng (Mining), CDipAF, development of the New Liberty, Iduapriem, Siguiri, Samira Hill and Kiniero gold mines in
West Africa and has mining experience in Africa, Australia, China, Canada, India and the
(Appointed on 12 December Former Soviet Union. Mr Netherway served as the CEO of Shield Mining until its takeover
2017) by Gryphon Minerals. Prior to that, he was the CEO of Toronto listed Afcan Mining
Corporation, a China focused gold mining company that was sold to Eldorado Gold in
2005. He was also the Chairman of Afferro Mining which was acquired by IMIC in 2013.
Mr Netherway has held senior management positions in a number of mining companies
including Golden Shamrock Mines, Ashanti Goldfields and Semafo Inc. Mr Netherway is
currently the Chairman of AIM listed Altus Strategies plc, ASX-listed Canyon Resources
Ltd and TSX-V listed Kilo Goldmines Ltd, and a non-executive director of TSX and AIM
listed Avesoro Resources Inc. He also holds various private company directorships.
Interest in Shares & Options None
Directorships held in other listed Altus Strategies plc (ALS:AIM) (from August 2017)
entities Kilo Goldmines Ltd (KGL:TSX-V) (from July 2011)
Canyon Resources Ltd (from March 2014)
Avesoro Resources Inc. (ASO: TSX & AIM) (from April 2011)
Former directorships of listed Altus Global Gold Ltd (AGG-CISX) (from October 2011 to February 2016)
companies in last three years Altus Resource Capital Limited (ARCL: LSE/SFM, CISX) (from April 2009 to June 2015)
Crusader Resources Limited (from July 2011 to May 2015)
Joint Company Secretaries
Henko Vos Mr Vos is a member of the Governance Institute of Australia and Certified Practicing
B.Compt, CPA, ACIS, RCA Accountants Australia with more than 15 years’ experience working within public practice,
specifically within the area of corporate and accounting services both in Australia and
South Africa. He holds similar secretarial roles in various other listed public companies in
both industrial and resource sectors. Mr Vos is an employee of Nexia Perth, a mid-tier
corporate advisory and accounting practice.
Mrs Francesca Wilson Mrs Wilson is chartered secretary with over 12 years’ experience gained in a variety of in-
BSc, ACIS house and professional service environments, and more recently, offering value-add,
tailored company secretarial services through her independent consultancy. She has
(Appointed on particular expertise in supporting clients seeking a listing on the London Stock Exchange,
29 November 2017) with a successful track record of ensuring the robust implementation of corporate
governance frameworks appropriate to satisfy compliance with the regulatory regime. Mrs
Wilson is an Associate of the Institute of Chartered Secretaries and Administrators
(ICSA).
Lawrence Davidson Mr Davidson graduated from the University of the Witwatersrand in Johannesburg, South
B.Comm, Finance Africa in 1991, and has held senior financial management roles for the past 20 years. He
recently occupied the position of managing director of DF2 Consulting (Pty) Ltd., a South
(Resigned on African financial and management consulting company, a position he had held for the
25 January 2018) past 5 years. Prior to this Mr Davidson was a management consultant to Barclays Bank
plc, as part of their Barclays Africa integration team. Mr Davidson spent the early part of
his career within the investment banking field, holding various financial management
positions at Gensec Bank Ltd., a specialist South African investment bank, and was part
of a group of employees to successfully set up and manage Gensec Bank’s Irish
domiciled operation, Gensec Ireland Ltd., in Dublin, Ireland during 1999-2001.
20
DIRECTORS’ REPORT (CONT)
Meetings of Directors
The number of meetings of the Company’s Directors and the number of meetings attended by each Director during the year
ending 31 December 2017 are:
Director Board of Directors’ Meetings Audit & Risk Committee Meetings
Number eligible to Number Number eligible Number
attend attended to attend attended
D Hathorn 12* 12 2 2
S Bennett 12* 12 2 2
J Trollip 8 8 2 2
L Math 8 8 2 2
T Keating 8 8 1 1
P Altimiras 8 7 - -
David Netherway(i) - - - -
(i) Appointed 12 December 2017
* includes Board meetings of both Kore Potash Limited and Kore Potash plc, the latter including meetings before other Directors
were appointed.
There were 12 Directors' meetings (6 of which were of Kore Potash Limited and 6 of which were of Kore Potash plc) and 2 audit
and risk committee meetings held during the year.
Non-Audit Services
The Board of Directors is satisfied that the provision of non-audit services during the year as disclosed in Note 19 is compatible
with the general standard of independence for auditors. The Directors are satisfied that non-audit services did not compromise
the external auditor’s independence for the following reasons:
- all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely
affect the integrity and objectivity of the auditor; and
- the nature of the services provided do not compromise the general principles relating to auditor independence under all
relevant independence rules.
Indemnifying Officers
The Group has agreed to indemnify the Directors of the Company, against all liabilities to another person that may arise from
their position as directors of the Company and its controlled entities, except where the liability arises out of conduct involving a
lack of good faith.
During the financial year the Group agreed to pay an annual insurance premium of USD 28,916 (2016: USD 29,373) in respect
of directors’ and officers’ liability and legal expenses’ insurance contracts, for directors, officers and employees of the Company.
The insurance premium relates to:
- costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever the
outcome; and
- other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty.
21
DIRECTORS’ REPORT (CONT)
Remuneration Report
Key Management Personnel of the Company and the Group
This report details the nature and amount of remuneration for key management personnel of the Group. Key management
personnel during the financial year 2017 were:
David Hathorn (i) Non-Executive Chairman (appointed 20 November 2015)
Sean Bennett (i) Managing Director and CEO (appointed 20 November 2015)
Jonathan Trollip (ii) Non-Executive Director (appointed 21 April 2016)
Leonard Math (ii) Non-Executive Director (appointed 24 April 2014)
Timothy Keating (ii) Non-Executive Director (appointed 15 November 2016)
Pablo Altimiras (ii) Non-Executive Director (appointed 15 November 2016)
David Netherway Non-Executive Director (appointed 12 December 2017)
Henko Vos Joint Company Secretary (appointed 16 November 2016)
Francesca Wilson Joint Company Secretary (appointed 29 November 2017)
John Crews Chief Financial Officer (appointed 22 May 2017)
Gavin Chamberlain Chief Operating Officer (appointed 1 October 2017)
Julien Babey Business Development and Head of RoC (appointed 1 January 2016)
Lawrence Davidson Chief Financial Officer and Risk Officer (resigned 1 January 2018)
Joint Company Secretary (resigned 25 January 2018)
Werner Swanepoel Project Director (resigned 23 November 2017)
(i) David Hathorn and Sean Bennett were appointed as the directors of Kore Potash plc on the date of incorporation of the
Company on 25 August 2017.
(ii) In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders, Jonathan Trollip,
Leonard Math, Timothy Keating and Pablo Altimiras were appointed as the directors of Kore Potash plc on 17 November
2017.
This remuneration report, which forms part of the Directors’ Report, sets out information about the remuneration of Kore
Potash’s key management personnel for the financial year ended 31 December 2017. The term ‘key management personnel’
refers to those persons having authority and responsibility for planning, directing and controlling the activities of the
Consolidated Entity, directly or indirectly, including any director (whether executive or otherwise) of the Consolidated Entity. The
prescribed details for each person covered by this report are detailed below under the following headings:
- key management personnel
- remuneration policy
- relationship between the remuneration policy and company performance
- remuneration of key management personnel
22
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Voting and Comments Made at the Group’s Annual General Meeting held in May 2017
Kore Potash received more than 99.8% of “yes” votes on its remuneration report for the 2016 financial year.
The Group did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Remuneration Policy
The remuneration policy of Kore Potash has been designed to align director and executive objectives with shareholder and
business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key
performance areas affecting the Group’s financial results. The Board of Kore Potash believes the remuneration policy to be
appropriate and effective in its ability to attract and retain high calibre executives and directors to run and manage the Group.
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was
developed by the Board. All executives receive a base salary (which is based on factors such as length of service and
experience) and superannuation. The Board reviews executive packages annually by reference to the Group’s performance,
executive performance and comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract
and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder
wealth. Executives are also entitled to participate in the employee share and option arrangements.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based
on market practice, duties and accountability. Independent external advice is sought when required. During the financial year,
no independent external advice was sought for the purpose of determining the remuneration of the key management personnel.
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at
the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the Group. However, to align
directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and are able to
participate in employee option plans. The Board has adopted the Kore Potash Performance Rights Plan to establish an
incentive plan aiming to create a stronger link between employee performance and reward and increasing shareholder value by
enabling the participants of the plan to have a greater involvement with, and share in the future growth and profitability of the
Company.
Key Terms of Employment Contracts
Key Terms of Employment Contracts for the financial year ending 31 December 2017:
Base Salary Term of
Name per Annum Agreement Notice Period
Sean Bennett (Managing Director and CEO) USD 300,000 No fixed term 6 month notice period
John Crews (Chief Financial Officer) USD 240,000 No fixed term 3 month notice period
Gavin Chamberlain (Chief Operating Officer) USD 275,000 No fixed term 3 month notice period
Julien Babey (Business Development and Head of RoC) USD 220,000 No fixed term 3 month notice period
23
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Key Management Personnel Remuneration - Audited
The remuneration for each director and key management personnel of the Group during the year ended 31 December 2017
was as follows:
1 January 2017 to 31 December 2017 single figure table
Post-
Employment Share Based
Short-Term Benefits Benefits Payments
Fees/Basic Annual Benefits in
Salary Bonus kind Superannuation Options / Rights Total
USD USD USD USD USD USD
Executive Director
S Bennett 309,000 - - - 411,784 720,784
Non-Executive Directors
D Hathorn - - - - 344,579 344,579
J Trollip 44,121 - - 13,652 38,535 96,308
L Math 46,161 - - - 19,267 65,428
T Keating 46,513 - - - - 46,513
P Altimiras 46,860 - - - - 46,860
D Netherway (i) 10,100 - - - - 10,100
502,755 - - 13,652 814,165 1,330,572
Executives
L Davidson (ii) 250,000 - - - 93,737 343,737
J Crews (iii) 144,954 - - - 104,494 249,448
G Chamberlain (iv) 68,983 - - - - 68,983
H Vos (v) 117,387 - - - - 117,387
F Wilson (vi) 13,383 - - - - 13,383
W Swanepoel (vii) 443,024 - - - 104,754 547,778
J Babey (viii) 226,600 - - - 168,983 395,583
1,264,331 - - - 471,968 1,736,299
Total 1,767,086 - - 13,652 1,286,133 3,066,871
(i) Appointed 12 December 2017.
(ii) Resigned 25 January 2018. He was paid severance pay of USD50,000.
(iii) Appointed 22 May 2017.
(iv) Appointed 1 October 2017.
(v) Nexia Perth Pty Ltd has been engaged to provide accounting, administrative and company secretarial services on commercial terms.
Mr Vos is currently employed by Nexia Perth.
(vi) Appointed 29 November 2017. FKW Consulting Ltd has been engaged to provide company secretarial services on commercial terms.
Mrs Francesca Wilson is currently employed by FKW Consulting Ltd.
(vii) Resigned on 23 November 2017. Included in his basic salary is his severance pay, ex gratia pay and outstanding annual leave pay of
$206,986, included above.
Sean Bennett is the highest paid director and details of his remuneration are disclosed above.
24
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Key Management Personnel Remuneration - Audited
The remuneration for each director and key management personnel of the Group during the year ended 31 December 2016
was as follows:
1 January 2016 to 31 December 2016 single figure table
Post-
Employment
Short-Term Benefits Benefits
Share Based
Fees/Basic Annual Benefits Payments –
Salary Bonus in kind Superannuation Options / Rights Total
USD USD USD USD USD USD
Executive Director
S Bennett 304,880 - - - 508,898 813,778
Non-Executive Directors
D Hathorn - - - - 475,323 475,323
J Trollip (i) 35,903 - - 3,376 19,194 58,473
L Math (iii) 112,904 - - - 10,531 123,435
T Keating (iv) 5,420 - - - - 5,420
P Altimiras (iv) 5,420 - - - - 5,420
RS Middlemas (ii) 63,864 - - - 1,914 65,778
528,391 - - 3,376 1,015,860 1,547,627
Executives
L Davidson 182,500 - - - 63,307 245,807
H Vos (iii) 6,106 - - - - 6,106
W Swanepoel 250,000 - - - 311,286 561,286
J Babey 220,000 - - - 87,057 307,057
658,606 - - - 461,650 1,120,256
Total 1,186,997 - - 3,376 1,477,510 2,667,883
(i) Appointed 21 April 2016.
(ii) Resigned 21 April 2016.
(iii) Nexia Perth Pty Ltd has been engaged to provide directorship, accounting, administrative and company secretarial services on
commercial terms. Mr Leonard Math was an employee with Nexia Perth up until his resignation date as joint company secretary on 16
November 2016. On the same day, Mr Henko Vos was appointed as joint company secretary in Mr Math’s place. Mr Vos is also
currently employed by Nexia Perth. The total amount paid for Mr Math’s directors fees is USD 44,078.
(iv) Appointed 15 November 2016.
25
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Share-based payments granted as compensation to key management personnel - Audited
Employee Share Option Plan and Employee Performance Rights Plan
Kore Potash operates an ownership-based scheme for executives and senior employees of the Consolidated Entity. In
accordance with the provisions of the plans, as approved by shareholders at a previous general meeting, executives and senior
employees may be granted performance rights and/or options to purchase parcels of ordinary shares at an exercise price
determined by the Remuneration Committee.
Each employee share option converts into one ordinary share of Kore Potash on exercise. No amounts are paid or payable by
the recipient on receipt of the option, aside from when the option is exercised. The options carry neither rights to dividends nor
voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Each employee
performance rights will be converted into one ordinary share of Kore Potash upon vesting conditions being met. No amounts
are paid or payable by the recipient on receipt of the performance rights. The performance rights carry neither rights to
dividends nor voting rights.
The performance rights/options granted expire as determined by the Remuneration Committee, or immediately following the
resignation of the executive or senior employee, whichever is the earlier.
Summary information for Options in existence during 2017
During the financial year, the following options as share-based payment arrangements were in existence:
Fair Value at Exercise
Grant Number of Grant Date Price
Date Vesting Date Options Expiry Date AUD AUD
Option Series 19* 22/05/2013 22/05/2014 83,333 22/05/2017 $0.2181 $0.90
Option Series 20* 22/05/2013 22/05/2015 83,333 22/05/2017 $0.2181 $0.90
Option Series 21* 22/05/2013 22/05/2016 83,334 22/05/2017 $0.2181 $0.90
Option Series 22 9/04/2014 10/04/2014 2,169,671 15/04/2018 $0.1242 $0.33
Option Series 23 9/04/2014 10/04/2015 1,760,778 15/04/2018 $0.1391 $0.33
Option Series 24 9/04/2014 10/04/2016 1,760,777 15/04/2018 $0.1522 $0.33
Option Series 25 12/05/2014 10/04/2014 333,333 15/04/2018 $0.0948 $0.33
Option Series 26 12/05/2014 10/04/2015 333,333 15/04/2018 $0.1073 $0.33
Option Series 27 12/05/2014 10/04/2016 333,334 15/04/2018 $0.1194 $0.33
Option Series 28 30/05/2014 10/04/2014 500,000 26/06/2018 $0.1177 $0.33
Option Series 29 30/05/2014 10/04/2015 500,000 26/06/2018 $0.1303 $0.33
Option Series 30 30/05/2014 10/04/2016 500,000 26/06/2018 $0.1432 $0.33
* Option Series expired during the financial year.
There are no performance criteria that need to be met in relation to options granted above before the beneficial interest vests in
the recipient. However, the executives and senior employees receiving the options meet the vesting conditions only if they
continue to be employed with the Company at the vesting date.
Please refer to Note 22 for further details of the options granted as detailed above.
There were no exercise of options during the year.
26
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Share-based payments granted as compensation to key management personnel - Audited (Cont)
Summary information for Rights in existence during 2017
During the financial year, the following performance rights as share-based payment arrangements were in existence:
Fair Value at
Number of Grant Date
Grant Date Vesting Date Rights Expiry Date AUD
Rights Series 4 * 17/09/2015 1 Dec 2016 2,666,090 16/09/2017 $0.1451
Rights Series 5 * 17/09/2015 Refer below 2,666,090 16/09/2018 $0.1507
Rights Series 6* 17/09/2015 Refer below 2,666,090 16/09/2019 $0.1510
Rights Series 7 * 07/12/2015 Refer below 5,000,000 06/12/2020 $0.1753
Rights Series 8 * 20/11/2015 Refer below 13,000,000 01/03/2021 $0.1596
Rights Series 9 * 20/11/2015 Refer below 8,500,000 01/03/2021 $0.1867
Rights Series 10 30/06/2016 Refer below 2,000,000 30/06/2021 $0.1258
Rights Series 11 30/06/2016 Refer below 1,000,000 30/06/2021 $0.1258
Rights Series 12* 29/05/2017 Refer below 2,000,000 31/05/2019 $0.1700
Rights Series 13 31/05/2017 Refer below 660,000 31/05/2019 $0.1700
Rights Series 14* 29/05/2017 Refer below 4,482,005 31/05/2019 $0.1700
Rights Series 15 29/05/2017 Refer below 11,734,853 31/05/2019 $0.17/$0.104
* Vested and converted to fully paid ordinary shares during the year – Please refer to Note 22 for more details of the conversion.
The above Performance Rights have nil exercise price.
There are various performance criteria that need to be met in relation to performance rights granted above before the beneficial
interest vests in the recipient. However, if the executives and senior employees receiving the performance rights ceased to be
employed by the Company, the Board of Directors will determine if the performance rights vest immediately, cancelled or vest
upon vesting condition being achieved.
Please refer to Note 22 for the various vesting dates for the performance rights granted above.
Performance Rights Series 12, 13 14 and 15 were granted as compensation during the year.
27
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Share-based payments granted as compensation to key management personnel – Audited (Cont)
Summary information for Options/Rights held by key management personnel during 2017
The following grants of share-based payment compensation to directors and key management personnel relate to the current
financial year:
No. % of 2017
Options / Options / Vested % of % of Compensation
Options / Rights Rights Rights Total No. During Grant Grant Consisting of
Series Grant Date Issue Date Granted the Year Vested Forfeited Rights
Directors
D Hathorn Rights Series 8 20/11/2015 2/03/2016 13,000,000 1,000,000 7.69 - 100.00
S Bennett Rights Series 9 20/11/2015 2/03/2016 8,500,000 531,250 6.25 - 53.58
Rights Series 13 31/05/2017 1/06/2017 660,000 - - - 3.55
J Trollip Rights Series 10 30/06/2016 6/07/2016 2,000,000 - - - 40.01
L Math Rights Series 11 30/06/2016 6/07/2016 1,000,000 - - - 29.45
Executives
J Crews (i) Rights Series 12 29/05/2017 29/05/2017 100,000 - - - 1.56
Rights Series 14 29/05/2017 29/05/2017 (v) - - - 23.25
Rights Series 15 29/05/2017 29/05/2017 (v) - - - 17.08
G Chamberlain (ii) 100,000 p rights (v) (v) (v) - - - -
Rights Series 14 29/05/2017 29/05/2017 (v) - - - -
Rights Series 15 29/05/2017 29/05/2017 (v) - - - -
L Davidson (iii) Rights Series 5 17/09/2015 17/09/2015 376,374 376,374 100.00 - 7.10
Rights Series 6 17/09/2015 17/09/2015 376,374 376,374 100.00 - 8.68
Rights Series 12 29/05/2017 29/05/2017 165,000 165,000 100.00 - 6.35
Rights Series 14 29/05/2017 29/05/2017 (vi) - - 100.00 5.20
Rights Series 15 29/05/2017 29/05/2017 (vi) - - 100.00 (0.05)
W Swanepoel (iv) Option Series 24 9/04/2014 9/04/2014 720,000 - - - -
Rights Series 7 07/12/2015 29/02/2016 5,000,000 - - 44.90 (1.12)
Rights Series 12 29/05/2017 29/05/2017 350,000 350,000 100.00 - 8.44
Rights Series 14 29/05/2017 29/05/2017 490,000 490,000 100.00 - 11.80
J Babey Rights Series 5 17/09/2015 17/09/2015 521,957 521,957 100.00 - 8.55
Rights Series 6 17/09/2015 17/09/2015 521,957 - - - 3.82
Rights Series 12 29/05/2017 29/05/2017 350,000 - - - 3.45
Rights Series 14 29/05/2017 29/05/2017 (v) - - - 14.66
Rights Series 15 29/05/2017 29/05/2017 (v) - - - 12.24
(i) Appointed 22 May 2017.
(ii) Appointed 1 October 2017.
(iii) Resigned 25 January 2018.
(iv) Resigned 23 November 2017.
(v) To be approved and finalised by the Board of Directors.
(vi) The Performance Rights were forfeited before the numbers were finalised by the Board upon his resignation.
For more information on the Options / Rights Series, please refer to Note 22.
28
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Share-based payments granted as compensation to key management personnel – Audited (Cont)
Options/Rights granted during 2017
There were no options granted to key management personnel during the year. The following table summarises the performance
rights granted to key management personnel during the year:
Number of Rights Value of Rights / Market Price of
Granted at Grant Granted at Grant Rights Granted at
Options / Rights Date Date (1) Grant Date (2)
Series Number USD USD
Directors
Sean Bennett Rights Series 13 660,000 83,569 83,530
Executives
John Crews Rights Series 12 100,000 12,647 12,653
Lawrence Davidson Rights Series 12 165,000 20,867 20,878
Werner Swanepoel Rights Series 12 350,000 44,264 44,286
Rights Series 14 490,000 61,969 62,000
Julien Babey Rights Series 12 350,000 44,264 44,286
(1) The value of options or rights granted during the period is recognised in compensation over the vesting period of the grant, in accordance with IFRS 2.
(2) Sean Bennett was granted 660,000 performance rights on 31 May 2017 when the market price of the Company’s shares was AUD 0.17 and the foreign
exchange rate was AUD 1: USD 0.74448.
John Crews was granted 100,000 performance rights on 29 May 2017 when the market price of the Company’s shares was AUD 0.17 and the foreign
exchange rate was AUD 1: USD 0.74430.
Lawrence Davidson was granted 165,000 performance rights on 29 May 2017 when the market price of the Company’s shares was AUD 0.17 and the
foreign exchange rate was AUD 1: USD 0.74430.
Werner Swanepoel was granted 840,000 performance rights on 29 May 2017 when the market price of the Company’s shares was AUD 0.17 and the
foreign exchange rate was AUD 1: USD 0.74430.
Julien Babey was granted 350,000 performance rights on 29 May 2017 when the market price of the Company’s shares was AUD 0.17 and the foreign
exchange rate was AUD 1: USD 0.74430.
29
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Share-based payments granted as compensation to key management personnel – Audited (Cont)
Options/Rights vested during 2017
There were no exercise/lapsed of options that were granted to key management personnel as part of their compensation during
the year. The following table summarises the value of performance rights to key management personnel vested during the year:
Market Price of Market Price of
Rights at Grant Rights at Vesting
Rights Vested Date Date (1)
Rights Series Number USD USD
Directors
D Hathorn Rights Series 8 2,000,000 286,540 206,686
S Bennett Rights Series 9 1,062,500 152,224 109,802
Executives
L Davidson Rights Series 4 376,374 53,892 46,086
Rights Series 5 376,374 53,892 52,111
Rights Series 6 376,374 53,892 31,705
Rights Series 12 165,000 20,878 13,899
W Swanepoel Rights Series 7 250,000 34,839 30,612
Rights Series 12 350,000 44,286 29,483
Rights Series 14 490,000 62,000 41,277
J Babey Rights Series 4 521,957 74,738 63,913
Rights Series 5 521,957 74,738 72,268
(1) David Hathorn was awarded 1,000,000 shares on 3 February 2017 when the market price of the Company’s shares was AUD 0.16 and the foreign
exchange rate was AUD 1: USD 0.7653. He was also awarded 1,000,000 shares on 20/12/2017 when the market price of the Company’s shares was
AUD 0.11 and the foreign exchange rate was AUD 1: USD 0.7658.
Sean Bennett was awarded 531,250 shares on 3 February 2017 when the market price of the Company’s shares was AUD 0.16 and the foreign
exchange rate was AUD 1: USD 0.7653. He was also awarded 531,250 shares on 20/12/2017 when the market price of the Company’s shares was
AUD 0.11 and the foreign exchange rate was AUD 1: USD 0.7658.
Lawrence Davidson was awarded 376,374 shares each on 3 February 2017, 30 June 2017 and 20 December 2017 respectively when the market price
of the Company’s shares was AUD 0.16, AUD 0.18 and AUD 0.11 respectively and the foreign exchange rate was AUD 1: USD 0.7653, AUD 1: USD
0.7692 and AUD 1: USD 0.7658. He was also awarded another 165,000 shares on 20 December 2017.
Werner Swanepoel was awarded 250,000 shares on 3 February 2017 when the market price of the Company’s shares was AUD 0.16 and the foreign
exchange rate was AUD 1: USD 0.7653. He was also awarded 350,000 and 490,000 shares on 20 December 2017 when the market price of the
Company’s shares was AUD 0.11 and the foreign exchange rate was AUD 1: USD 0.7658.
Julien Babey was awarded 521,957 shares each on 3 February 2017 and 30 June 2017 when the market price of the Company’s shares was AUD 0.16
and AUD 0.18 respectively and the foreign exchange rate was AUD 1: USD 0.7653 and AUD 1: USD 0.7692.
There were no performance rights to key management personnel which lapsed during the year.
Shares issued on exercise of options or performance rights
10,753,774 shares were issued during the year ended 31 December 2017 following the vesting of the performance rights.
No shares were issued from the exercise of unlisted options during the year ended 31 December 2017.
30
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Shareholdings (ordinary shares) - Audited
The numbers of ordinary shares in the Company held during the financial year by key management personnel, including shares
held by entities they control, are set out below.
31 December 2017 Options Other
Balance at Received as Exercised / Rights Movements Balance at
1 Jan 2017 Remuneration Converted (i) (ii) 31 Dec 2017
Directors
David Hathorn (i) 17,243,516 - 2,000,000 2,324,589 21,568,105
Sean Bennett 1,188,100 - 1,062,500 - 2,250,600
Jonathan Trollip (i) 200,000 - - 375,003 575,003
Leonard Math - - - - -
Timothy Keating - - - - -
Pablo Altimiras - - - - -
David Netherway - - - - -
18,631,616 - 3,062,500 2,699,592 24,393,708
Executives
John Crews - - - - -
Gavin Chamberlain - - - - -
Lawrence Davidson (ii) 58,334 - 1,294,122 (1,352,456) -
Henko Vos - - - - -
Francesca Wilson - - - - -
Werner Swanepoel 450,000 - 1,090,000 (1,540,000) -
Julien Babey - - 1,043,914 - 1,043,914
508,334 - 3,428,036 (2,892,456) 1,043,914
Total 19,139,950 - 6,490,536 (192,864) 25,437,622
(i) Off-market acquisition.
(ii) Shares held at the end of the resignation date.
31 December 2016 Options Other
Balance at Received as Exercised/ Rights Movements Balance at
1 Jan 2016 Remuneration Converted (i) (ii) (iii) 31 Dec 2016
Directors
David Hathorn (i) 4,106,516 - - 13,137,000 17,243,516
Sean Bennett (i) - - 531,250 656,850 1,188,100
Jonathan Trollip (ii) - - - 200,000 200,000
Leonard Math - - - - -
Timothy Keating - - - - -
Pablo Altimiras - - - - -
Robert Samuel Middlemas (iii) 337,122 - - (337,122) -
4,443,638 - 531,250 13,656,728 18,631,616
Executives
Lawrence Davidson 58,334 - - - 58,334
Henko Vos - - - - -
Werner Swanepoel 200,000 - 250,000 - 450,000
Julien Babey - - - - -
258,334 - 250,000 - 508,334
Total 4,701,972 - 781,250 13,656,728 19,139,950
(i) Shares acquired as part of the USD 45 million capital raising.
(ii) Shares acquired externally via an on-market purchase.
(iii) Shares held at the end of the resignation date on 21 April 2016.
31
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Shareholdings (preference shares) – Audited (Cont)
The numbers of preference shares in the Company held during the financial year by key management personnel, including
shares held by entities they control, are set out below.
31 December 2017 Options Other
Balance at Received as Exercised / Rights Movements Balance at
1 Jan 2017 Remuneration Converted (i) 31 Dec 2017
Directors
David Hathorn (i) - - - 25,000 25,000
Sean Bennett (i) - - - 25,000 25,000
Jonathan Trollip - - - - -
Leonard Math - - - - -
Timothy Keating - - - - -
Pablo Altimiras - - - - -
David Netherway - - - - -
- - - 50,000 50,000
Executives
John Crews - - - - -
Gavin Chamberlain - - - - -
Lawrence Davidson - - - - -
Henko Vos - - - - -
Francesca Wilson - - - - -
Werner Swanepoel - - - - -
Julien Babey - - - - -
- - - - -
Total - - - 50,000 50,000
(i) David Hathorn and Sean Bennett were each issued during 2017 25,000 Redeemable (Non-Voting) Preference Shares at £1.00 each in
the Kore Potash plc (held directly). Under the Scheme of Arrangement, each Director has given an irrevocable undertaking to pay the
Company the sum of GBP 25,000 on or before the date that is five years from the date of the undertaking or, if sooner, immediately
upon a written demand or demands by the Company. Upon completion of the Scheme of Arrangement, the Redeemable Preference
Shares will be cancelled and amount payable by the Directors will be offset by an amount payable by the Company back to the
Directors.
32
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Options and rights over equity instruments granted as compensation - Audited
The numbers of options and rights over ordinary shares in the Company held during the financial year by key management
personnel, including options and rights held by entities they control, are set out below.
31 December 2017 Other Vested and
Balance at Received as Movements Balance at exercisable at
1 Jan 2017 Remuneration Rights Vested (i) (ii) 31 Dec 2017 year end
Directors
David Hathorn (i) 15,000,000 - (2,000,000) 49,416 13,049,416 2,049,416
Sean Bennett 8,068,750 660,000 (1,062,500) - 7,666,250 100,000
Jonathan Trollip (i) 2,000,000 - - 57,091 2,057,091 57,091
Leonard Math 1,183,600 - - - 1,183,600 183,600
Timothy Keating - - - - - -
Pablo Altimiras - - - - - -
David Netherway - - - - - -
26,252,350 660,000 (3,062,500) 106,507 23,956,357 2,390,107
Executives
John Crews - 100,000 - - 100,000 -
Gavin Chamberlain (iii) - - - - - -
Lawrence Davidson (ii) 1,849,122 165,000 (1,294,122) (720,000) - -
Henko Vos - - - - - -
Francesca Wilson - - - - - -
Werner Swanepoel (ii) 5,470,000 840,000 (3,335,000)* (2,975,000) - -
Julien Babey 2,419,204 350,000 (1,043,914) - 1,725,290 853,333
9,738,326 1,455,000 (5,673,036) (3,695,000) 1,825,290 853,333
Total 35,990,676 2,115,000 (8,735,536) (3,588,493) 25,781,647 3,243,440
(i) Off-market acquisition.
(ii) Options held at the end of the resignation date. * Includes 2,245,000 Performance Rights cancelled on his resignation.
(iii) To be finalised and issued.
31 December 2016
Other Vested and
Balance at Received as Movements Balance at exercisable
1 Jan 2016 Remuneration Rights Vested) (i) (ii) (iii) 31 Dec 2016 at year end
Directors
David Hathorn (i) 322,824 13,000,000 (322,824) 2,000,000 15,000,000 3,000,000
Sean Bennett (i) - 8,500,000 (531,250) 100,000 8,068,750 631,250
Jonathan Trollip - 2,000,000 - - 2,000,000 -
Leonard Math 183,600 1,000,000 - - 1,183,600 183,600
Timothy Keating - - - - - -
Pablo Altimiras - - - - - -
Robert Samuel Middlemas (ii) 472,242 - (72,242) (400,000) - -
978,666 24,500,000 (926,316) 1,700,000 26,252,350 3,814,850
Executives
Lawrence Davidson 1,861,623 - (12,501) - 1,849,122 1,096,374
Henko Vos - - - - - -
Werner Swanepoel 5,720,000 - (250,000) - 5,470,000 970,000
Julien Babey 2,919,204 - (500,000) - 2,419,204 1,375,290
10,500,827 - (762,501) - 9,738,326 3,441,664
Total 11,479,493 24,500,000 (1,688,817) 1,700,000 35,990,676 7,256,514
(i) Options acquired as part of the USD 45 million capital raising.
(iv) Options held at the end of the resignation date on 21 April 2016.
33
DIRECTORS’ REPORT (CONT)
Remuneration Report (Cont)
Other transactions with Key Management Personnel during the financial year ended 31 December 2017
No key management personnel has entered into a material contract (apart from employment) with the Company and the Group.
No amount of remuneration is outstanding at 31 December 2017 (31 December 2016: nil).
David Hathorn (Chairman) and Sean Bennett (Managing Director and CEO) were each issued with 25,000 Redeemable (Non-
Voting) Preference Shares at £1.00 each in Kore Potash plc (held directly). Under the Scheme of Arrangement, both Directors
have given an irrevocable undertaking to pay the Company the sum of GBP 25,000 on or before the date that is five years from
the date of the undertaking or, if sooner, immediately upon a written demand or demands by the Company. At 31 December
2017, the amount owing by the two Directors to the Company was USD 65,631 (GBP 50,000). Upon completion of the Scheme
of Arrangement, the Redeemable Preference Shares will be cancelled and amount payable by the Directors will be offset by an
amount payable by the Company back to the Directors.
The Company paid US$13,652 to Piaster Pty Ltd as trustee for the Trollip Family Superannuation Fund for Mr Jonathan
Trollip’s director fees. Mr Trollip is a director of and has a beneficial interest in Piaster Pty Ltd.
Nexia Perth Pty Ltd has been engaged to provide accounting, administrative and company secretarial services for the Group on
commercial terms. Mr Henko Vos, who is based in Perth, Australia has been appointed as joint company secretary and is also
currently an employee with Nexia Perth. During the year, the total amounts paid to Nexia Perth by the Group for providing
accounting, administration and company secretarial services were USD 117,387 (2016: USD 68,826).
FKW Consulting Ltd has been engaged to provide company secretarial services for Kore Potash plc on commercial terms. Mrs
Francesca Wilson, who is based in London, UK has been appointed as joint company secretary and is also currently an
employee with FKW Consulting Ltd during the year. During the year, the total amounts paid to FKW Consulting Ltd by the
Group for providing company secretarial services were USD 13,383 (2016: nil).
There were no other transactions with key management personnel and its related parties.
- End of Remuneration Report -
Proceedings on Behalf of Group
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which
the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings.
The Group was not a party to any such proceedings during the year.
Statement of disclosure of information to auditors
As at the date of this report the serving Directors confirm that:
(a) so far as each Director is aware, there is no relevant audit information of which the Company’s auditors are unaware,
and
(b) they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
34
DIRECTORS’ REPORT (CONT)
Going concern
The consolidated entity incurred a loss of USD 4,344,322 (2016: USD 4,259,666) and experienced net cash outflows from
operating and investing activities of USD 33,024,083 (2016: USD 8,907,255) for the year ended 31 December 2017. Cash and
cash equivalents totaled USD 16,455,490 as at 31 December 2017 (USD 42,609,786 as at 31 December 2016).
On 26 March 2018, in connection with the AIM and JSE listings, a total of US$12,894,659 was raised from existing and new
investors through the placing and direct subscription of 83,523,344 ordinary shares in the Company at a placing price of
AU$0.20 per new ordinary share. In addition, the Company raised US$250,000 from the Chairman, David Hathorn, through a
convertible loan note that will convert into ordinary shares upon shareholder approval at the next general meeting of the
Company. The Company was listed on the AIM market and JSE on 29 March 2018.
The above mentioned fundraise has significantly improved the Group’s liquidity position and the Directors have prepared a cash
flow forecast for the period ending 31 March 2019, which indicates the Group will have sufficient cash flow to meet working
capital requirements through to 31 March 2019 including corporate costs, exploration expenditure, and Definitive Feasibility
Study (“DFS”) costs related to the Kola Project. As described in Note 18 of the financial statements, the only committed costs in
this period relate to the DFS and operating lease commitments with the remaining planned expenditure discretionary.
Furthermore, the Group is forecast to be able to meet all capital requirements beyond this period for a further six months based
on current forecasts.
The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the
opinion that there are reasonable grounds to believe that the operational and financial plans in place are achievable and
accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due. The
Directors will continue to pursue further capital raising initiatives in order to have sufficient funds to fund additional exploration
and evaluation activities on the Dougou (inclusive of Dougou extension) project and the ‘Sintoukola 2’ Exploration Permit.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are
required to prepare the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the parent company
financial statements under IFRSs as adopted by the EU. Under company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit
or loss of the Company and the Group for that period. In preparing these financial statements, International Accounting
Standard 1 requires that Directors:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other events and conditions on the entity's financial position and
financial performance; and
- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
35
DIRECTORS’ REPORT (CONT)
Responsibility statement
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the
European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company
and the Group and the undertakings included in the consolidation taken as a whole;
- the strategic report includes a fair review of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and
- the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the company’s position and performance, business model and
strategy.
This responsibility statement was approved by the board of directors on 29 March 2018 and is signed on its behalf by:
Signed Signed
____________________________ _________________________________
Non-Executive Chairman Managing Director and CEO
David Hathorn Sean Bennett
29 March 2018 29 March 2018
36
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC
Report on the audit of the financial statements
Opinion
In our opinion:
- the financial statements give a true and fair view of the state of the Group’s and
of the parent company’s affairs as at 31 December 2017, of the Group’s loss for
the year then ended and of the parent company’s loss for the 5 month period
then ended;
- the Group financial statements have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union;
- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Kore Potash plc (the ‘parent company’) and its
subsidiaries (the ‘Group’) which comprise:
- the consolidated statement of profit or loss;
- the consolidated statement of comprehensive income;
- the consolidated and parent company statements of financial position;
- the consolidated and parent company statements of changes in equity;
- the consolidated cash flow statement; and
- the related notes 1 to 24.
The financial reporting framework that has been applied in their preparation is applicable law
and IFRSs as adopted by the European Union and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the
auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year were:
- Going Concern
- Impairment of Exploration and Evaluation assets
Materiality We used a materiality of $3 million for our audit of the Group financial
statements, which was determined on the basis of net assets.
Scoping We have performed a full scope audit which covered 100% of the net
asset value of the Group.
37
Conclusions relating to going concern
We are required by ISAs (UK) to report in respect of the following We have nothing to
matters where: report in respect of these
- the directors’ use of the going concern basis of accounting matters aside from the
in preparation of the financial statements is not matters discussed in the
appropriate; or Key Audit Matters section
- the directors have not disclosed in the financial statements below
any identified material uncertainties that may cast
significant doubt about the Group’s or the parent
company’s ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised
for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team.
These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Going concern
Key audit matter Throughout the audit, we considered going concern to be a key audit
description matter as a result of the risk associated with the listing and capital raise,
and the company’s reliance on this raise to continue funding its
exploration programme.
Following the successful capital raise on 26 March 2018, the financial
statements have been prepared on a going concern basis as management
is confident that the financial plans in place are achievable following the
significant improvement in the Group’s liquidity.
The key assumptions in our assessment include the expected size of the
capital raise (both the listing and loan notes issuance), costs associated
with the raise and ongoing costs, including DFS costs, throughout the
going concern period.
Further details are included within the Directors’ report on [page 36] and
note 1b to the financial statements.
How the scope of We responded to this key audit matter by:
our audit
responded to the - Obtaining management’s cash flow forecasts for the going concern
key audit matter period approved by the board
- Assessing and challenging the key assumptions within
management’s going concern forecasts, including the expected
size of the capital raise (both the listing and loan notes issuance),
costs associated with the raise and the forecast costs to fund the
Group’s exploration programme throughout the going concern
period by obtaining supporting evidence, including signed
contracts and other third party documentation, for planned cash
flows as discussed above.
- Assessing management's reasonable worst case scenarios and
38
considering whether any other possible adverse circumstances
should be incorporated.
We have also reviewed the management disclosure within the financial
statements relating to going concern.
Key observations Based on our procedures performed we are satisfied that the going
concern assumption remains appropriate based on the successful capital
raise and listing on 29 March 2018.
Impairment in Exploration and Evaluation Assets
Key audit matter At 31 December 2017, the Group holds $140 million of exploration and
description evaluation (E&E) assets on its balance sheet.
The assessment of the carrying value of the E&E assets requires
management to exercise judgement as described in the ‘Critical
Accounting Estimates and Judgements’ section of the financial statements.
This assessment includes a number of factors (including IFRS 6 paragraph
20 requirements) in line with IFRS 6 Exploration for and Evaluation of
Mineral Resources.
Further details are included within the Directors’ report on [page 36], and
note 9 to the financial statements.
How the scope of We responded to this key audit matter by:
our audit
responded to the
key audit matter - Evaluated management’s assessment of the E&E assets held on
the balance sheet at 31 December;
- Obtained and reviewed management’s budgets for its E&E assets
- Challenged management’s impairment considerations with
reference to IFRS 6 to assess whether the capitalised costs are
appropriate in line with IFRS 6 requirements and management
policy; and
- Challenged management to provide evidence of licence validity,
appraisal activity and the project status by obtaining the
exploration licence renewal and other key documentation.
Key observations
Based on our procedures performed we are satisfied that management’s
assessment that no impairment is required in respect of the capitalised
E&E costs at 31 December 2017 is appropriate.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the
results of our work.
39
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Group financial statements Parent company financial
statements
Materiality $3 million $2.75 million
Basis for Our materiality is determined based Our materiality is determined based
determining on 2% of net assets. on 2% of net assets.
materiality
Rationale The Group’s net asset value is the key The company primarily holds an
for the metric in its financial statements. As it investment in the Group’s underlying
benchmark is a pre-revenue business, an income business. On this basis net assets is
applied statement metric was determined to considered to be the most relevant
be inappropriate. metric.
The announcement with the graph is available on the Kore Potash website at www.korepotash.com
We determined that we would report to the Audit Committee all audit differences in excess of $150k
for the Group, as well as differences below that threshold that, in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
Our Group audit focussed on the exploration assets and the parent company which were subject to
full scope audits. The extent of the audit procedures was based on the identified risks of material
misstatement and on the materiality of the Group’s three business units which fall under one
reporting segment and a parent company. Our audit procedures covered 100% of the Group’s net
assets. The materiality applied to the components ranged from $1 million to $2 million.
The full scope audit of the Group’s operations which are included in the sub-consolidation below the
parent company was performed by the component team in Australia under the direct supervision of
the Group audit team. The Group team took responsibility for the audit work in respect of the
Group’s going concern assessment, consolidation process as well as the Group and Company
financial statements. The Group team planned and oversaw the work performed by component
auditors; the procedures performed included a review of the reports provided on the results of the
work undertaken by the component audit team as well as a detailed review and challenge of the
underlying work to ensure compliance with the relevant professional standards. Throughout the
audit we maintained a high level of involvement in the work of the component auditor through
regular communication and calls with both the component auditor and the Group’s management. 50
40
Other information
The directors are responsible for the other information. The other We have nothing to report in respect of these matters.
information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and
the parent company’s ability to continue as a going concern, disclosing as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on
the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
41
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and the directors' report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and or the parent company and their environment
obtained in the course of the audit, we have not identified any material misstatements in the strategic
report or the directors' report.
Opinion on other matter prescribed by our engagement letter
In our opinion the part of the Directors' Remuneration Report to be audited has been properly prepared
in accordance with the provisions of the Companies Act 2006 that would have applied were the Company
a quoted company.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
- we have not received all the information and explanations We have nothing to report in respect of these matters.
we require for our audit; or
- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
- the parent company financial statements are not in agreement with
accounting records and returns.
Directors' remuneration
Under the Companies Act 2006 we are also required to report if in our We have nothing to report in respect of these matters.
opinion certain disclosures of directors' remuneration have not been
made.
Signed
Timothy Biggs, FCA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
29 March 2018
42
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017
AND PARENT COMPANY STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE 5 MONTH PERIOD ENDED 31 DECEMBER 2017
Parent Consolidated Entity
Note Dec 2017 Dec 2017 Dec 2016
USD USD USD
Continuing Operations
Other income 2 - 50,858 20,949
Net realised and unrealised foreign exchange gains - 2,864,226 213,582
Directors remuneration - (365,371) (310,501)
Equity compensation benefits 3(a) (75,546) (1,919,924) (1,777,625)
Salaries, employee benefits and consultancy expense 3(b) - (1,595,607) (1,243,365)
London listing and re-domicile expenses - (1,549,554) -
Administration expenses (16,774) (1,746,603) (1,156,793)
Interest and finance expenses - (39,378) (5,913)
Loss before income tax expense (92,320) (4,301,353) (4,259,666)
Income tax 4 - (42,969) -
Loss for the year from continuing operations (92,320) (4,344,322) (4,259,666)
Other comprehensive income/(loss)
Items that may be classified subsequent to profit
or loss
Exchange differences on translating foreign operations - 13,590,884 (3,360,183)
Other comprehensive income/(loss) for the year - 13,590,884 (3,360,183)
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR
THE YEAR (92,320) 9,246,562 (7,619,849)
Loss attributable to:
Owners of the Company (92,320) (4,344,322) (4,259,666)
(92,320) (4,344,322) (4,259,666)
Total comprehensive (loss)/income attributable to:
Owners of the Company (92,320) 9,246,562 (7,619,849)
(92,320) 9,246,562 (7,619,849)
Basic and diluted loss per share (cents per share) 23 (0.57) (0.91)
The accompanying notes form part of these financial statements.
43
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
Parent Consolidated Entity
Note Dec 2017 Dec 2017 Dec 2016
USD USD USD
CURRENT ASSETS
Cash and cash equivalents 5 - 16,455,490 42,609,786
Trade and other receivables 6 65,631 299,399 208,465
TOTAL CURRENT ASSETS 65,631 16,754,889 42,818,251
NON CURRENT ASSETS
Trade and other receivables 6 - 139,163 86,889
Property, plant and equipment 8 - 413,801 374,316
Exploration and evaluation expenditure 9 - 140,254,520 95,798,269
Investment in subsidiary 7 139,350,094 - -
TOTAL NON CURRENT ASSETS 139,350,094 140,807,484 96,259,474
TOTAL ASSETS 139,415,725 157,562,373 139,077,725
CURRENT LIABILITIES
Trade and other payables 10 10,000 3,276,317 200,736
TOTAL CURRENT LIABILITIES 10,000 3,276,317 200,736
NON CURRENT LIABILITIES
Trade and other payables 10 6,774 - -
TOTAL NON CURRENT LIABILITIES 6,774 - -
TOTAL LIABILITIES 16,774 3,276,317 200,736
NET ASSETS 139,398,951 154,286,056 138,876,989
EQUITY
Contributed equity – Ordinary Shares 11 771,396 771,396 200,572,926
Redeemable Preference Shares 65,631 65,631 -
Reserves 12 138,654,244 206,805,823 13,941,197
Accumulated losses (92,320) (53,356,794) (75,637,134)
TOTAL EQUITY 139,398,951 154,286,056 138,876,989
The accompanying notes from part of these financial statements. These Financial Statements for Kore Potash plc, registered
number 10933682, were approved by the Board of Directors on 29 March 2018 and were signed on its behalf by:
Signed Signed
___________________________ _______________________________
David Hathorn Sean Bennett
Non-Executive Chairman Managing Director and CEO
44
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Consolidated Entity Ordinary Merger Redeemable Accumulated Option Foreign Total
Shares Reserve Preference Losses Reserve Currency Equity
Shares Translation
Reserve
Note USD USD USD USD USD USD USD
Balance at 1 January 2016 154,657,058 - - (71,377,468) 32,106,965 (18,978,448) 96,408,107
Loss for the period - - - (4,259,666) - - (4,259,666)
Other comprehensive loss for the year - - - - - (3,360,183) (3,360,183)
Total comprehensive loss for the year - - - (4,259,666) - (3,360,183) (7,619,849)
Share issue (net of costs) 45,915,868 - - - 2,395,238 - 48,311,106
Share based payments 12(a) - - - - 1,777,625 - 1,777,625
Balance at 31 December 2016 200,572,926 - - (75,637,134) 36,279,828 (22,338,631) 138,876,989
Loss for the period - - - (4,344,322) - - (4,344,322)
Other comprehensive income for the year - - - - - 13,590,884 13,590,884
Total comprehensive (loss)/income for the year - - - (4,344,322) - 13,590,884 9,246,562
Transfer of previously lapsed options 12(a) - - - 26,624,662 (26,624,662) - -
Redeemable Preference Shares - - 65,631 - - - 65,631
Share issue (net of costs) 3,937,270 - - - 239,680 - 4,176,950
Share based payments 12(a) - - - - 1,919,924 - 1,919,924
Scheme of Arrangement 12(d) (203,738,800) 203,738,800 - - - - -
Balance at 31 December 2017 771,396 203,738,800 65,631 (53,356,794) 11,814,770 (8,747,747) 154,286,056
The accompanying notes form part of these financial statements.
45
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Parent Ordinary Merger Redeemable Accumulated Option Reorganisation Total
Shares Reserve Preference Losses Reserve Reserve Equity
Shares
Note USD USD USD USD USD USD USD
Balance at 25 August 2017 (date of incorporation) - - - - - - -
Loss for the period - - - (92,320) - - (92,320)
Other comprehensive loss for the period - - - - - - -
Total comprehensive loss for the period - - - (92,320) - - (92,320)
Redeemable Preference Shares issue - - 65,631 - - - 65,631
Share issuance under Scheme of Arrangement 11, 12 771,396 203,738,800 - - 11,739,224 (76,899,326) 139,350,094
Share based payments 12(a) - - - - 75,546 - 75,546
Balance at 31 December 2017 771,396 203,738,800 65,631 (92,320) 11,814,770 (76,899,326) 139,398,951
The accompanying notes form part of these financial statements.
46
STATEMENTS OF CASH FLOW
FOR THE YEAR ENDED 31 DECEMBER 2017
Parent Consolidated Entity
Note 31 Dec 2017 31 Dec 2017 31 Dec 2016
USD USD USD
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash used in operating activities 14 - (4,957,110) (2,626,531)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment (94,262) -
Payments for exploration activities - (28,023,569) (6,301,673)
Interest received - 50,858 20,949
Net cash used in investing activities - (28,066,973) (6,280,724)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares (net of costs) - 4,176,950 48,311,106
Net cash provided by financing activities - 4,176,950 48,311,106
Net (decrease)/increase in cash & cash equivalents held - (28,847,133) 39,403,851
Cash and cash equivalents at beginning of financial year - 42,609,786 3,058,606
Foreign currency differences - 2,692,837 147,329
Cash and cash equivalents at end of financial year 5 - 16,455,490 42,609,786
The transactions for Kore Potash plc were executed and fully funded by its subsidiary, Kore Potash Limited.
The accompanying notes form part of these financial statements.
47
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Kore Potash plc (“the Company”) is a public company incorporated and registered in England and Wales and listed on the
Australian Securities Exchange (ASX), the AIM market operated by the London Stock Exchange, and a secondary listing
on the Johannesburg Stock Exchange (JSE). The consolidated financial statements of the Company as at and for the year
ended 31 December 2017 comprise the Company and its subsidiaries (together referred to as the “Group”). The Group is
involved in mining and exploration activity in the Republic of Congo.
On 31 August 2017, Kore Potash Limited announced that it proposed to re-domicile in the United Kingdom by way of a
scheme of arrangement (Scheme) between Kore Potash Limited and its shareholders. The Scheme was approved by the
shareholders on 27 October 2017 and the Federal Court of Australia on 6 November 2017. On 20 November 2017, the
Scheme was implemented and as a result Kore Potash plc is the new parent and Kore Potash Limited is the wholly-owned
subsidiary of Kore Potash plc.
The registered office in the United Kingdom is 25 Moorgate, London, United Kingdon EC2R 6AY. The registered office in
Australia is Level 3, 88 William Street, Perth 6000 WA.
Basis of Preparation
(a) Statement of Compliance
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”). The Company’s financial statements have been prepared in accordance with IFRS as adopted by the European
Union. The principal accounting policies adopted by the Group and Company are set out below.
The financial statements were authorised for issue by the Directors on 29 March 2018.
(b) Going Concern
The consolidated entity incurred a loss of USD 4,344,322 (2016: USD 4,259,666) and experienced net cash outflows from
operating and investing activities of USD 33,024,083 (2016: USD 8,907,255) for the year ended 31 December 2017. Cash
and cash equivalents totaled USD 16,455,490 as at 31 December 2017 (USD 42,609,786 as at 31 December 2016).
On 26 March 2018, in connection with the AIM and JSE listings, a total of US$12,894,659 was raised from existing and
new investors through the placing and direct subscription of 83,523,344 ordinary shares in the Company at a placing price
of AU$0.20 per new ordinary share. In addition, the Company raised US$250,000 from the Chairman, David Hathorn,
through a convertible loan note that will convert into ordinary shares upon shareholder approval at the next general
meeting of the Company. The Company was listed on the AIM market and JSE on 29 March 2018.
The above mentioned fundraise has significantly improved the Group’s liquidity position and the Directors have prepared a
cash flow forecast for the period ending 31 March 2019, which indicates the Group will have sufficient cash flow to meet
working capital requirements through to 31 March 2019 including corporate costs, exploration expenditure, and Definitive
Feasibility Study (“DFS”) costs related to the Kola Project. As described in Note 18 of the financial statements, the primary
committed costs in this period relate to the DFS, operating lease commitments and salary costs with the remaining planned
expenditure discretionary. Furthermore, the Group is forecast to be able to meet all capital requirements beyond this period
for a further six months based on current forecasts.
The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of
the opinion that there are reasonable grounds to believe that the operational and financial plans in place are achievable
and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due
for at least 12 months from the approval of these accounts. The Directors will continue to pursue further capital raising
initiatives in order to have sufficient funds to fund additional, currently uncommitted exploration and evaluation activities on
the Dougou (inclusive of Dougou extension) project and the ‘Sintoukola 2’ Exploration Permit.
48
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(c) Basis of Measurement
The consolidated financial statements have been prepared on the basis of historical cost as explained in the accounting
policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and
services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or estimated
using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the
characteristics of the asset or liability if market participants would take those characteristics into account when pricing the
asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
(d) 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 of the Company is US dollars. The functional
currency of the subsidiaries are:
Kore Potash Limited – US dollars (USD)
Sintoukola Potash SA - CFA Franc BEAC (XAF)
Kore Potash South Africa (Pty) Ltd – South African RAND
The presentational currency of the Group is US dollars.
(e) Foreign Currency Transactions and Balances
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange
ruling at the reporting date.
All differences in the consolidated financial report are taken to the Statement of Profit or Loss and Other Comprehensive
Income with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a
foreign entity. These are taken directly to equity until the disposal of a net investment, at which time they are recognised in
the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rate at the date the fair value was determined.
As at the reporting date, the assets and liabilities of the foreign subsidiaries are translated into the reporting currency of the
Company at the rate of exchange ruling at the reporting date and the profit or loss in the Statement of Profit or Loss and
Other Comprehensive Income are translated at the weighted average exchange rates for the period. The exchange
differences on the retranslation are taken directly to a separate component of equity.
49
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(e) Foreign Currency Transactions and Balances (Cont)
On disposal of a foreign entity, the deferred cumulative amount recognised in equity is recognised in the profit or loss in
the Statement of Profit or Loss and Other Comprehensive Income. The functional currency for Sintoukola is expected to
change to US dollars upon the commencement of mining.
(f) Basis of Consolidation
Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting policies.
Control is achieved when the Company:
- has power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control listed above. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the
Group, other than in the event of a Group re-organisation as occurred during the year as described below.
The acquisition of Kore Potash Limited by Kore Potash plc is considered outside the scope of IFRS 3 Business
Combinations and accordingly has been accounted for as a common control transaction. The investment in Kore Potash
Limited acquired by Kore Potash plc as a result of the internal reorganisation was recognised at a value consistent with the
carrying value of the equity items in the Kore Potash Limited accounts immediately prior to the Scheme. In the Parent
entity, the difference between the carrying amount of share capital and options issued by Kore Potash plc under the
Scheme and the investment in Kore Potash Limited has been recognised in a Reorganisation Reserve.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and
profit and losses resulting from intra-Group transactions have been eliminated in full.
The acquisition of subsidiaries has been accounted for using the purchase method of accounting, other than in the Group
re-organisation described above. The purchase method of accounting involves allocating the cost of the business
combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of
acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their
acquisition.
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are
presented separately in the consolidated Statement of Profit or Loss and Other Comprehensive Income and within equity
in the consolidated Statement of Financial Position.
In the Company’s financial statements, investments in subsidiaries are carried at cost. A list of controlled entities is
contained in Note 7 to the financial statements.
(g) Income Tax
The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or
disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting
date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will
be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect
on accounting or taxable profit or loss.
50
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(g) Income Tax (Cont)
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is
settled. Deferred tax is recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income
except where it relates to items that are recognised directly in equity, in which case the deferred tax is adjusted directly
against equity.
Deferred income tax assets are recognised to the extent it is probable that future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no
adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
(h) Property, Plant and Equipment
Property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment
losses.
The carrying amount of property, plant and equipment is reviewed annually by the Directors to ensure it is not in excess of
the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash
flows which will be received from the assets employment and subsequent disposal.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their estimated useful lives to the
Group commencing from the time the asset is held ready for use. The depreciation rates used for the plant and equipment
is in the range of 20% - 40%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at
each reporting date. Depreciation of property, plant and equipment in Sintoukola Potash SA is included in Capitalised
Exploration and Evaluation Expenditure.
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 the
carrying amount. These gains or losses are included in the profit or loss in the Statement of Profit or Loss and Other
Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset
are transferred to retained earnings.
(i) Impairment of Assets
(i) Financial Assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is
impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have
had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between
its carrying amount, and the present value of the estimated future cash flows discounted at the effective interest rate.
An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. The
remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All
impairment losses are recognised either in the profit or loss in the Statement of Profit or Loss and Other
Comprehensive Income or revaluation reserves in the period in which the impairment arises.
(ii) Exploration and Evaluation Assets
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of the asset may exceed its recoverable amount at the reporting date. Refer to Note (p) for further
details.
51
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(i) Impairment of Assets (Cont)
(iii) Non-financial Assets Other Than Exploration and Evaluation Assets
The carrying amounts of the Group’s non-financial assets, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in the profit or loss in the Statement of Profit or Loss and
Other Comprehensive Income. In respect of other assets, impairment losses recognised in prior periods are assessed
at each reporting date for any indications that the loss has decreased or no longer exist. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss has been recognised.
(j) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue
can be reliably measured.
Interest income is recognised in the Statement of Profit or Loss and Other Comprehensive Income using the effective
interest method.
(k) Trade and Other Receivables
Trade and other receivables are initially measured at fair value plus any direct attributable transaction costs. Subsequent to
initial recognition, trade and other receivables are measured at amortised cost using the effective interest method, less any
impairment losses.
Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible
are written off. A provision for doubtful debts is raised when the risk of non-collection is considered probable.
(l) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the entity prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, trade and other payables are measured at amortised cost using the effective
interest rate method.
(m) Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid
investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant
risk of changes in value.
52
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(n) Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used
for financial assets held by the entity is the current bid price; the appropriate quoted market price for financial liabilities is
the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on
market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used
for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine
fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to the entity for similar financial instruments.
(o) Value-added Tax (VAT) / Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of VAT / GST, except where the amount of VAT / GST
incurred is not recoverable from the Tax Office. In these circumstances the VAT / GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of VAT / GST.
Cash flows are presented in the Statement of Cash Flow on a gross basis, except for the VAT / GST component of
investing and financing activities, which are disclosed as operating cash flows.
(p) Capitalisation of Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the following conditions are satisfied:
- the rights to tenure of the area of interest are current; and
- at least one of the following conditions is also met:
a) the exploration and evaluation expenditures are expected to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale; or
b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and
active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies,
exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of
assets used in exploration and evaluation activities. General and administrative costs are only included in the
measurement of exploration and evaluation costs where they are related directly to operational activities in a particular
area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying
amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the
relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but
only to the extent that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in previous years.
53
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(p) Capitalisation of Exploration and Evaluation Expenditure (Cont)
Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration
and evaluation asset is assessed for impairment and the balance is classified as a development asset. The point at which
an area of interest is considered developmental is based on finalisation of a definitive feasibility study, a bankable
feasibility study and the finalisation of appropriate funding.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to
abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are
amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular
review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest.
Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the
costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining or petroleum permits.
Such costs have been determined using estimates of future costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and
future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within
one year of abandoning the site.
(q) Share Based Payments
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of
the equity instruments at the grant date. The fair value grant rate is independently determined using the different option pricing
models that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of
dilution, the tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the option.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding
increase in equity.
Upon the exercise of options, the balance of the share based payments relating to those options is transferred to share capital.
(r) Employee Benefits
(i) Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave are recognised 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.
(ii) Pension contributions
Contributions are made by the Group to pension funds as stipulated by statutory requirements and are charged as
expenses when incurred.
(iii) Employee benefit on costs
Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs
when the employee benefits to which they relate are recognised as liabilities.
54
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(s) Earnings per Share
(i) Basic earnings per share
Basic earnings per share is determined by dividing the net profit after income tax attributable to members 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 year, adjusted for bonus elements in ordinary
shares issued during the year.
(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.
(t) 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. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
(u) Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the application of the Group’s accounting policies, which are described in this note, the directors are required to make
judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
Critical accounting judgement
Impairment of exploration and evaluation assets
The ultimate recoupment of the value of exploration and evaluation assets, the Company’s investment in
subsidiaries, and loans to subsidiaries is dependent on the successful development and commercial exploitation, or
alternatively, sale, of the exploration and evaluation assets.
On a regular basis, management consider whether there are indicators as to whether the asset carrying values
exceed their recoverable amounts. This consideration includes assessment of the following:
(a) expiration of the period for which the entity has the right to explore in the specific area of interest with no plans
for renewal;
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is
neither budgeted nor planned;
(c) exploration for and evaluation activities have not led to the discovery of commercially viable quantities of
mineral resources and the entity has decided to discontinue such activities in the specific area;
(d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
55
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(u) Critical Accounting Estimates and Judgements (Cont)
Critical accounting judgement (Cont)
Impairment of exploration and evaluation assets (Cont)
Management judgement is required to determine whether the expenditures which are capitalised as exploration and
evaluation assets will be recovered by future exploitation or sale or whether they should be impaired. In assessing
this, management determines the possibility of finding recoverable ore reserves related to a particular area of
interest, which is a subject to significant uncertainties. Many of the factors, judgements and variables involved in
measuring resources are beyond the Group’s control and may prove to be incorrect over time. Subsequent changes
in resources could impact the carrying value of exploration and evaluation assets.
Where an impairment indicator is identified, the determination of the recoverable amount requires the use of
estimates and judgement in determining the inputs and assumptions used in determining the recoverable amounts.
The key areas of judgement and estimate include:
? Recent exploration and evaluation results and resource estimates;
? Environmental issues that may impact on the underlying tenements;
? Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.
Key source of estimation uncertainty
Share based payment transactions
The Group makes equity settled share-based payments to certain employees and consultants, which are measured
at fair value at the date of grant and expensed on a straight line basis over the vesting period, based on the Group’s
estimate of shares that will eventually vest. The fair values are determined using the Black Scholes Option Pricing
Model, the Cox, Ross and Rubinstein Binomial Option Pricing Model or the Monte Carlo Option Pricing Model.
Vesting assumptions are reviewed during each reporting period to ensure they reflect current expectations.
(v) Segment Reporting
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the Board of Directors, which is responsible for
allocating resources and assessing performance of the operating segments.
(w) New and Revised Accounting Standards and Interpretations Adopted
In the period ended 31 December 2017, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by IASB that are relevant to the Company and effective for the current annual reporting period. As a
result of this review, the Directors have determined that there is no material impact of the new and revised Standards and
Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies. New and
revised Standards and amendments thereof and Interpretations effective for the current financial reporting period that are
relevant to the Group include:
- Disclosure Initiative (Amendments to IAS 7).
- Recognition of Deferred Tax Assets or Unrealised Losses (Amendments to IAS 12).
- Annual Improvements to IFRSs 2014-2016 Cycle-various standards (Amendments to IFRS 12).
56
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Basis of Preparation (Cont)
(x) New and Revised Accounting Standards and Interpretations in issue but not yet Adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2017
reporting periods. Those which may have a significant impact to the Group are set out below. The Group does not plan to
adopt these standards early.
IFRS 9 Financial Instruments
IFRS 9 Financial Instruments: Recognition and Measurement and is effective for annual reporting periods beginning on or
after 1 January 2018, with early adoption permitted.
The new standard results in changes to accounting policies for financial assets and liabilities covering classification and
measurement, hedge accounting and impairment. The Group has assessed these changes and determined that based on
the current financial assets and liabilities held at reporting date.
The changes in the Group's accounting policies from the adoption of IFRS 9 will be applied from 1 January 2018 onwards.
The Group does not expect a significant effect on the financial statements resulting from the change of this standard as the
Group’s financial assets and liabilities are all short term in nature. The classification and measurement of financial assets is
now based on the entity’s business model for managing the financial asset, and the contractual cash flow characteristics of
the financial asset. The treatment of financial liabilities is materially consistent with that required by IAS 39 with the
exception of the treatment of modification or exchange of financial liabilities which do not result in de-recognition.
Management has concluded that this is not expected to have a material impact on the financial statements.
IFRS 15 Revenue
IFRS 15 established a comprehensive framework for determining whether, how much and when revenue is recognised. It
replaces existing revenue recognition guidance, including IAS 18 Revenue.
IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.
The Group does not expect a significant effect on the financial statements resulting from the change of this standard
because it is a pre-revenue business.
IFRS 16 Leases
IFRS 16 replaces the current IFRS 17 Leases standard. IFRS 16 removes the classification of leases as either operating
leases or finance leases - for the lessee - effectively treating all leases as finance leases. Most leases will be capitalised on
the balance sheet by recognising a 'right-of-use' asset and a lease liability for the present value obligation. This will result
in an increase in the recognised assets and liabilities in the statement of financial position as well as a change in expense
recognition, with interest and deprecation replacing operating lease expense.
Lessor accounting remains similar to current practice, i.e. lessors continue to classify leases as finance and operating
leases.
The impact of IFRS 16 has not been determined as yet by the Consolidated Entity. The changes in the Group's accounting
policies from the adoption of IFRS 16 will be applied from 1 January 2019 onwards.
57
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
NOTE 2: OTHER INCOME
Interest - 50,858 20,949
Total Income - 50,858 20,949
NOTE 3: LOSS FOR THE YEAR
Expenses
(a) Equity based payments – directors, key management personnel
and other employees 75,546 1,919,924 1,777,625
75,546 1,919,924 1,777,625
(b) Salaries, employee benefits and consultancy expense
Salaries and wages (d) - 819,817 250,501
Employee benefits – Health insurance benefits - 234,486 130,413
Consultants - 541,304 862,451
- 1,595,607 1,243,365
(c) Average number of employees Number Number Number
Operational - 151 59
Head Office - 21 19
- 172 78
(d) Salaries and wages USD USD USD
Salaries and wages - 719,381 250,051
Social security costs / superannuation - - -
Termination payment - 100,436 -
- 819,818 250,051
Total staff costs for the Group in the year ended 31 December 2017 were $3,433,660 (2016: $743,814). The staff costs
incurred at a subsidiary, Sintoukola Potash S.A., of $2,714,279 for the year have been capitalised as Exploration and
Exploration Asset (2016: $493,763).
NOTE 4: INCOME TAX EXPENSE
The components of tax expense comprise:
Current tax – foreign tax - 42,969 -
Deferred tax - - -
- 42,969 -
58
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
NOTE 4: INCOME TAX EXPENSE (CONT)
The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in
the financial statements as follows:
Loss before tax from continuing operations (92,320) (4,301,353) (4,259,666)
Parent company tax on loss from continuing operations at the UK
corporation tax rate of 19.25% (17,541) - -
Group tax on loss from continuing operations at the Australian
corporation tax rate of 30% (2016: 30%) - (1,290,406) (1,277,900)
Tax effect of:
Different tax rates of subsidiaries operating in different jurisdictions (23,286) -
Non-deductible expenses, net 14,354 (69,485) 533,410
Deferred tax asset not recognised 3,187 1,851,349 744,490
Prior year tax losses utilised - (425,203) -
17,541 1,333,375 1,277,900
Income tax expense - 42,969 -
The statutory tax rate of Kore Potash plc is 19.25%, representing the blended UK tax rate. The Group is subject to
varying statutory rates, primarily being Australia (30%) and South Africa (28%).
The Group has tax losses of $12,460,470 (2016: $8,425,800) that are available for offset against future taxable profits in
the companies in which the losses arose. These tax losses which mainly arose from the Australian entity can be carried
forward indefinitely to be offset against future years’ profits. A deduction for prior years’ losses will be denied where the
company cannot satisfy a ‘continuity of ownership’ test or, failing this, the alternative ‘same business test’. Deferred tax
assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in
the Group due to the uncertainty of recovery.
NOTE 5: CASH AND CASH EQUIVALENTS
Cash at bank - 16,455,490 42,609,786
- 16,455,490 42,609,786
NOTE 6: TRADE AND OTHER RECEIVABLES
Current
GST and VAT recoverable - 47,031 40,087
Prepayments - 91,569 84,975
Other receivables - 95,168 83,403
Amount due from directors in respect of preference shares issued 65,631 65,631 -
65,631 299,399 208,465
Non-Current
Deposits - 139,163 86,889
- 139,163 86,889
59
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 7: CONTROLLED ENTITIES Country of Percentage Investment Percentage Investment
Incorporation Owned Owned
Controlled Entities
31 Dec 2017 31 Dec 2017 31 Dec 2016 31 Dec 2016
% USD % USD
Held directly:
Kore Potash Limited Australia 100 139,350,094 - -
Held through Kore Potash Limited:
Kore Potash South Africa (Pty) Ltd South Africa 100 1,192 100 10
Sintoukola Potash S.A. Republic of 97 9,387,413 97 9,387,413
Congo
The principal activity of Kore Potash Limited during the financial year was for administrational and operational support for the
exploration for potash minerals prospects. The registered office of Kore Potash Limited is Level 3, 88 William Street, Perth
WA 6000.
The principal activity of Sintoukola Potash S.A. during the financial year was exploration for potash minerals prospect. The
registered office is 24 Avenue Charles de Gaulle, Immeuble Atlantic Palace BP 662 Pointe Noire , République du Congo.
The principal activity of Kore Potash South Africa (Pty) Ltd during the financial year was for South African administrational and
operational support for the exploration for potash minerals prospects. The registered office is 33 Ballyclare Drive, Ballywoods
Office Park, Cedarwood House, Bryanston 2021 South Africa.
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
NOTE 8: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment – at cost - 1,947,447 1,635,906
Less accumulated depreciation - (1,533,646) (1,261,590)
- 413,801 374,316
Reconciliation:
Opening balance - 374,316 399,152
Additions - 97,091 68,620
Depreciation capitalised under exploration and evaluation - (87,961) (80,699)
Depreciation expensed - (16,612) -
Foreign exchange differences - 46,967 (12,757)
Closing balance at period end - 413,801 374,316
NOTE 9: EXPLORATION AND EVALUATION EXPENDITURE
Opening balance - 95,798,269 93,068,160
Exploration and evaluation expenditure capitalised during the year - 30,688,177 5,968,759
Foreign exchange differences - 13,768,074 (3,238,650)
Closing balance at period end - 140,254,520 95,798,269
Exploration and evaluation expenditure relating to:
Kola mining project - 118,082,437 83,452,721
Dongou mining project - 22,172,083 12,345,548
- 140,254,520 95,798,269
60
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 9: EXPLORATION AND EVALUATION EXPENDITURE (CONT.)
On 8 June 2017, a new mining convention was signed by the Group and the Government of the Republic of Congo
(“RoC”). The convention governs the conditions of construction, operation and mine closure of the Kola and Dougou
(including Dougou Extension) mining projects. The terms and conditions of the mining convention include key investment
promotion provisions, including the following:
- Corporate tax concessions applicable for the first 10 years of each mining permit as production capacity is
extended, which includes zero corporation tax for the first five years from profitability, and a corporation tax rate of
7.5% for the next five years;
- An ongoing corporation tax rate of 15% for the rest of the life of mine;
- Exemptions from withholding taxes including interest, dividends and capital gains during the term of the mining
convention;
- VAT and import duty exemptions (including all subcontractors) during construction;
- Royalties of 3% payable to the RoC, which is based on an equivalent to EBITDA;
- Guarantee from the RoC that it will facilitate and support the implementation of the project, as defined in the
convention (for example, in granting the necessary consents to permit export of the final product through the use of
a dedicated jetty); and
- The RoC to be granted a 10% carried equity interest in the project companies, which are currently wholly-owned by
Kore Potash Limited’s 97%-owned subsidiary, Sintoukola Potash S.A. SARL.
The mining convention has a term which covers the life of the Kola and Dougou mining permits including any extension
(25 years plus 15 year extension, renewable indefinitely upon proven mineable ore resources). The Group was awarded
the Sintoukola 2 Exploration Permit dated 9 February 2018 by the government of the RoC.
The ultimate recoupment of costs carried forward for exploration expenditure phases is dependent on the successful
development and commercial exploitation, or alternatively, the sale of the respective areas of interest.
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
NOTE 10: TRADE AND OTHER PAYABLES
Current
Trade and other creditors - 520,947 77,275
Accruals 10,000 2,710,325 123,461
Income tax payable - 45,045 -
10,000 3,276,317 200,736
Non-Current
Amount due to a subsidiary 6,774 - -
6,774 - -
Trade and other creditors are non-interest bearing and are normally settled on 30 day terms.
The amount due to a subsidiary is interest-free and has no fixed term of repayment.
61
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
Consolidated Entity
Dec 2017 Dec 2016
USD USD
NOTE 11: ISSUED CAPITAL
771,395,768 Fully Paid Ordinary Shares (par value $0.001) (31 December 771,396 200,572,926
2016: 728,944,470 Fully Paid Ordinary Shares with no par value in line with
Australian Company Law)
Fully Paid Ordinary Shares 771,396 200,572,926
At 31 December 2016, Kore Potash Limited was the parent company of the Group and had 728,944,470 Fully Paid Ordinary
Shares in issuance with a nominal value of US$200,572,926.
As described on page 13 of the Financial Report, Kore Potash plc became the Group’s parent company on 20 November
2017 in accordance with the Scheme of Arrangement with Kore Potash Limited and its shareholders (‘the Scheme’). In line
with UK Company Law, Kore Potash plc shares have a par value of US$0.001. Under the Scheme, Kore Potash plc issued
768,158,142 ordinary shares (initially to be held in the form of Chess Depositary Interests (CDIs)) as consideration for the
transfer of Kore Potash Limited shares to Kore Potash plc. Subsequently on 20 December 2017, 3,237,624 ordinary shares
(CDIs) were issued by Kore Potash plc on conversion of certain Performance Rights.
As a result, the Group’s Fully Paid issued capital has a nominal value of US$771,396 at 31 December 2017. The shares in
Kore Potash plc were issued on a 1:1 basis with shares in Kore Potash Limited which had a nominal value of
US$204,510,196 at the date of the commencement of the Scheme. The surplus value of US$203,738,800 compared to the
nominal value of the Kore Potash plc shares has been recognised in a new Merger Reserve. Please refer to Note 12(d) for
details.
NOTE 12: RESERVES
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
Option Reserve (a) 11,814,770 11,814,770 36,279,828
Foreign Currency Translation Reserve (b) - (8,747,747) (22,338,631)
Reorganisation Reserve (c) (76,899,326) - -
Merger Reserve (d) 203,738,800 203,738,800 -
Total Reserve 138,654,244 206,805,823 13,941,197
(a) Option Reserve
Opening balance - 36,279,828 32,106,965
Transfer from Kore Potash Limited (i) 11,739,224 - -
Value of lapsed options transferred to
Accumulated Losses - (26,624,662) -
Share based payment vesting expense (ii)(iii) 75,546 1,919,924 1,777,625
Free attaching options issued (iii)(iv) - 239,680 2,395,238
Closing balance 11,814,770 11,814,770 36,279,828
62
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 12: RESERVES (CONT)
(a) Option Reserve (Cont)
(i) In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders, 58,191,226
Unlisted Options and 48,077,728 Performance Rights/Shares, valued at $11,739,224 were issued on 20 November
2017 from Kore Potash plc to the holders of Unlisted Options or Performance Rights/Shares in Kore Potash Limited
in consideration for the cancellation of those Kore Potash Limited Unlisted Options and Performance Rights/Shares.
(ii) The value of the above Parent entity’s share-based payments refer to the value of Performance Rights
vested/cancelled after the Unlisted Options and Performance Rights/Shares were transferred from Kore Potash
Limited to Kore Potash plc. On 20 December 2017, 3,237,624 Performance Rights and Performance Shares vested
and converted into 3,237,624 Chess Depositary Interests (CDI’s) and 2,245,000 Performance Rights previously
granted were cancelled following the resignation of Werner Swanepoel (Project Director). The share based
payments of these Performance Rights and Shares was $75,545.
(iii) For parameters used in the valuation of these options see Note 22.
(iv) The cost of $2,395,238 in 2016 relates to the value of the free attaching unlisted options provided to shareholders
who participated in the Rights Issue completed on 15 November 2016. A total of 45,000,000 unlisted options
exercisable at AUD 0.30 expiring 15 November 2019 were issued with a Black Scholes valuation method of AUD
0.0704 per option. The volatility used was 84.33% with risk-free interest rate of 1.84%.
(v) The cost of $239,680 in 2017 relates to the value of the free attaching unlisted options provided to shareholders
who participated in the rights issue completed on 27 April 2017 (26,504,000 shares issued at AUD 0.25 each). A
total of 5,000,000 unlisted options exercisable at AUD 0.30 expiring 15 November 2019 were issued with a Black
Scholes valuation method of AUD 0.0642 per option. The volatility used was 85.68% with risk-free interest rate of
1.76%.
63
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 12: RESERVES (CONT)
(a) Option Reserve (Cont)
Movement in Option Reserve of the Consolidated Entity
No. of No. of
Date Details Options Rights US$
1 Jan 2016 Opening balance 88,740,487) 12,998,270) 32,106,965
9 Jan 2016 Lapsing of unlisted options (333,332) -) -
15 Jan 2016 Lapsing of listed options (78,911,086) -) -
19 Jan 2016 Exercise of listed options (4,843) -) -
13 Feb 2016 Lapsing of unlisted options (300,000) -) -
29 Feb 2016 Vesting of performance rights -) (250,000) -
2 Mar 2016 Issue of performance rights -) 21,500,000) -
2 Mar 2016 Vesting of performance rights -) (531,250) -
1 Apr 2016 Lapsing of unlisted options (500,000) -) -
23 Apr 2016 Lapsing of unlisted options (250,000) -) -
30 Jun 2016 Issue of performance rights -) 3,000,000) -
15 Nov 2016 Issue of free attaching unlisted options 45,000,000) -) 2,395,238
31 Dec 2016 Share-based payment vesting
expenses -) -) 1,777,625
31 Dec 2016 Balance at 31 Dec 2016 53,441,226) 36,717,020) 36,279,828
3 Feb 2017 Exercise of performance rights -) (7,516,150) -
27 Apr 2017 Issue of free attaching unlisted options 5,000,000) -) 239,680
22 May 2017 Lapsing of unlisted options (250,000) -) -
29 May 2017 Issue of performance rights -) 18,216,858) -
1 Jun 2017 Issue of performance rights -) 660,000) -
30 Jun 2017 Share-based payment vesting
expenses -) - 906,265
20 Dec 2017 Exercise of performance rights -) (3,237,624) -
20 Dec 2017 Cancellation of performance rights -) (2,245,000) -
1 Dec 2017 Share-based payment vesting
expenses -) -) 1,013,659
31 Dec 2017 Transfer value of lapsed options to
Accumulated Losses -) -) (26,624,662)
31 Dec 2017 Closing balance 58,191,226) 42,595,104) 11,814,770
The option reserve is used to accumulate proceeds received from the issuing of options and accumulate the value of
options issued in consideration for services rendered and to record the fair value of options issued but not exercised. The
reserve is transferred to accumulated losses upon expiry or recognised as share capital if exercised.
64
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 12: RESERVES (CONT.)
Parent Consolidated Entity
(b) Foreign Currency Translation Reserve Dec 2017 Dec 2017 Dec 2016
USD USD USD
Movements during the period
Opening balance - (22,338,631) (18,978,448)
Currency translation differences arising during the year - 13,590,884 (3,360,183)
Closing balance - (8,747,747) (22,338,631)
Foreign currency translation reserve
The foreign currency translation reserve is used to record currency differences arising from the translation of the financial
statements of the foreign subsidiary.
(c) Reorganisation Reserve
In accordance with the Scheme of Arrangement (‘the Scheme’), Kore Potash plc is the new parent and Kore Potash
Limited is the wholly-owned subsidiary of Kore Potash plc. Kore Potash plc has elected to account for the acquisition of
Kore Potash Limited as a common control transaction. As a consequence, no acquisition accounting under IFRS 3
Business Combination has arisen. The investment in Kore Potash Limited acquired by Kore Potash plc as a result of the
internal reorganisation was recognised at a value consistent with the carrying value of the equity items in the Kore
Potash Limited accounts immediately prior to the Scheme. In the Parent entity, the difference between the carrying
amount of share capital and options issued by Kore Potash plc under the Scheme and the investment in Kore Potash
Limited totalling USD 76,899,326 has been recognised in a Reorganisation Reserve in the parent company accounts.
(d) Merger Reserve
As described above in Note 11, as part of the Scheme Kore Potash plc issued 771,395.768 shares with a par value of
$0.001 each in respect of the shares on Kore Potash Limited, which had issued share capital at the date of the
transaction with a value of US$204,510,196. As a result of this transaction, a Merger Reserve of US$203,738,800 was
created in both the Parent and Consolidated Entity.
NOTE 13: DIVIDENDS
No dividends have been proposed or paid during the year (2016: Nil).
65
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 14: NOTES TO STATEMENT OF CASH FLOWS
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
Reconciliation of cash flows from operating activities:
Loss for the year (92,320) (4,344,322) (4,259,666)
Adjustments for:
Depreciation expensed - 16,612 -
Equity compensation benefits 75,546 1,919,924 1,777,625
Net realised foreign exchange gain - (2,864,226) (213,582)
Interest received not classified as operating activities cash inflow - (50,858) (20,949)
Operating loss before changes in working capital
(Increase)/decrease in receivables - (8,176) 11,362
Increase in tax payable - 42,970 -
Increase in payables 16,774 330,966 78,679
Net cash used in operating activities - (4,957,110) (2,626,531)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Overview
The Group has exposure to the following risks from their use of financial instruments:
- market risk,
- credit risk, and
- liquidity risks.
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the business. The Group will use different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate,
foreign exchange and other price risks and ageing analysis for credit risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital. 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 the risks.
(a) Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising the return.
(i) Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and are exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and
cashflow forecasting.
66
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT)
As a result of the operating activities in Congo and the ongoing funding of overseas operations from Australia, the Group's
Statement of Financial Position can be affected by movements in the Congolese Franc (CFA) / US Dollar (USD) exchange
rate, Australian Dollar (AUD) / US Dollar (USD) exchange rate and the Euro (EUR) / US Dollar (USD) exchange rate. EUR
is held to hedge the Definitive Feasibility Study (DFS) payments.
A substantial portion of the Group's transactions are denominated in USD, with historically, the majority of costs relating to
drilling activities also denominated in the unit's functional currency.
The summary quantitative data about the Group’s financial instruments’ exposure to significant currency risk as presented
in USD is as follows:
31 December 2017 31 December 2016
EUR AUD ZAR GBP EUR AUD ZAR
FINANCIAL ASSETS
Cash at bank 13,805,462 49,158 100,778 - 18,965,020 339,158 33,908
Receivables - 47,031 - 65,631 - 40,087 -
FINANCIAL LIABILITIES
Payables (2,184,134) (189,924) (846) (52,956) - (113,418) -
Net exposure 11,621,328 (93,735) 99,932 12,675 18,965,020 265,827 33,908
Sensitivity analysis
A reasonably possible strengthening (weakening) of the EUR, AUD and ZAR against USD at 31 December 2017 would
have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or
loss by the amounts shown below. This analysis assumes all other variables, in particular interest rates, remain constant.
The impact of the possible strengthening (weakening) of the GBP and any other currencies against USD is minimal and is
not analysed.
Equity Profit or Loss
Strengthening Weakening Strengthening Weakening
Gain/(Loss) Gain/(Loss) (Gain)/Loss (Gain)/Loss
USD USD USD USD
31 December 2017
EUR (5% movement) 581,066 (581,066) (581,066) 581,066
AUD (5% movement) (4,687) 4,687 4,687 (4,687)
ZAR (5% movement) 4,997 (4,997) (4,997) 4,997
There was minimal currency risk for the Parent at 31 December 2017.
67
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT)
(ii) Interest rate risk
The Group is exposed to movements in market interest rates on short term deposits.
The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial
assets and financial liabilities is set out in the following table:
Weighted Average Floating Interest Non-Interest
Effective Interest Rate Rate Bearing
Dec 2017 Dec 2016 Dec 2017 Dec 2016 Dec 2017 Dec 2016
% % USD USD USD USD
FINANCIAL ASSETS
Cash at bank 0.04% 0.21% 16,455,490 42,609,786 - -
Receivables - - - 346,993 295,354
Total financial assets 16,455,490 42,609,786 346,993 295,354
FINANCIAL LIABILITIES
Non-derivative
Payables - - 3,267,317 200,736
Total financial liabilities - - 3,267,317 200,736
Sensitivity analysis
A change of 100 basis point in interest rates at the reporting date would have increased (decreased) equity or profit or loss
by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. This analysis is performed the same basis for the Consolidated Entity for 2016.
Profit or Loss
100bp 100bp
Increase Decrease
USD USD
31 December 2017
Variable rate instrument 164,555 (164,555)
31 December 2016 426,098 (426,098)
Variable rate instrument
All receivables and payables in the Parent at 31 December 2017 are non-interest bearing.
68
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT)
Financial assets
Trade receivables from other entities are carried at cost less any allowance for doubtful debts. Other receivables are
carried at cost. Interest is recorded as income using the effective interest rate method.
Financial liabilities
Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the
group.
Net fair value of financial assets and liabilities
The carrying amount of financial assets and liabilities at 31 December 2017 and 31 December 2016 is equivalent to the
fair value.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s receivables from customers and cash and investment
deposits. The Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient
collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties
having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any
provisions for losses, represents the Group’s maximum exposure to credit risk.
(c) Liquidity and capital risk
The Group’s total capital is defined as the shareholders’ net equity plus any net debt. The objectives when managing the
Group’s capital is to safeguard the business as a going concern, to maximise returns to shareholders and to maintain an
optimal capital structure in order to reduce the cost of capital.
The Group does not have a target debt / equity ratio, but has a policy of maintaining a flexible financing structure so as to
be able to take advantage of investment opportunities when they arise. There are no externally imposed capital
requirements.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior
year.
69
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT)
The table below analyses the Group’s financial liabilities into maturity groupings based on the remaining period from the
balance date to the contractual maturity date.
31 Dec 2017 Within 1 1-3 3-12
Month Months Months
USD USD USD
Non-derivatives
Non-interest bearing
Trade and other payables 3,267,317 - -
Total Financial Liabilities 3,267,317 - -
31 Dec 2016 Within 1 1-3 3-12
Month Months Months
USD USD USD
Non-derivatives
Non-interest bearing
Trade and other payables 200,736 - -
Total Financial Liabilities 200,736 - -
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to
the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash
flows.
If the Group anticipates a need to raise additional capital within 6 months to meet forecasted operational activities, then the
decision on how the Company will raise future capital will depend on market conditions existing at that time.
70
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT)
(d) Fair Value of Financial Instruments
This note provides information about how the Group determines fair values of various financial assets and financial
liabilities.
The Directors consider that carrying amounts at financial assets and financial liabilities recognised in the consolidated
financial statements approximate to their fair value.
Fair value hierarchy as at 31 December 2017
Level 1 Level 2 Level 3 Total
USD USD USD USD
Financial assets
Loans and receivables:
- Trade and other receivables 346,993 - - 346,993
Total 346,993 - - 346,993
Financial liabilities
Financial liabilities held at amortised cost:
- Trade and other payables 3,267,317 - - 3,267,317
Total 3,267,317 - - 3,267,317
Fair value hierarchy as at 31 December 2016
Level 1 Level 2 Level 3 Total
USD USD USD USD
Financial assets
Loans and receivables:
- Trade and other receivables 295,354 - - 295,354
Total 295,354 - - 295,354
Financial liabilities
Financial liabilities held at amortised cost:
- Trade and other payables 200,736 - - 200,736
Total 200,736 - - 200,736
The financial asset ($65,631) and financial liabilities ($16,774) of the Parent recognised in the financial statements at 31
December 2017 approximate to their fair value measured within Level 1.
71
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 16: SEGMENT INFORMATION
Management has determined that the Company and the Group has one reporting segment being mineral exploration in
central Africa.
As the Group is focused on mineral exploration, management make resource allocation decisions by reviewing the working
capital balance, comparing cash balances to committed exploration expenditure and reviewing the current results of
exploration work performed. This internal reporting framework is the most relevant to assist the Board with making
decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the results of
exploration work that has been performed to date and capital available to the Company.
NOTE 17: EVENTS SUBSEQUENT TO REPORTING DATE
On 20 February 2018, Kore Potash plc has been informed that it was awarded the Sintoukola 2 Exploration Permit, dated 9
February 2018, by the government of the RoC. The Exploration Permit is held wholly by the Company’s 97% subsidiary
Sintoukola Potash S.A. This Permit is valid for three years, following which it may be renewed twice, each time for a further
period of two years.
On 20 March 2018, the Company held a General Meeting to approve a capital raising of up to US$20 million in order to
satisfy the working capital requirements in connection with the AIM listing. On 26 March 2018, a total of US$12,894,659
was raised from existing and new investors through the placing and direct subscription of 83,523,344 ordinary shares in
the Company at a placing price of AU$0.20 per new ordinary share. In addition, the Company raised US$250,000 from the
Chairman, David Hathorn, through a convertible loan note that will convert into ordinary shares upon shareholder approval
at the next general meeting of the Company. Placees with Placing Shares on AIM were granted 8,250,000 equity warrants
and Placees with Placing Shares on JSE will be granted 4,644,659 equity warrants pending SARB approval if such
approval is required, on the basis of one equity warrant for every US$1.00 invested in the Placing exercisable at AUS$0.30
for one ordinary share with a 3 year subscription period.
The Company was listed on the AIM market and JSE on 29 March 2018.
There are no other significant events that have occurred since reporting date requiring separate disclosure.
NOTE 18: COMMITMENTS FOR EXPENDITURE
Leasing Arrangements
Operating leases relate to leases of offices and other property with lease terms of up to 5 years. The Group does not have
an option to purchase the leased property at the expiry of the lease periods.
Non-Cancellable Operating Lease Commitments
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
Not later than 1 year - 115,483 -
Later than 1 year and not later than 5 years - 85,632 128,800
Later than 5 years - - -
- 201,115 128,800
No liabilities have been recognised in respect of non-cancellable operating leases.
72
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 18: COMMITMENTS FOR EXPENDITURE (CONT)
Exploration and Evaluation Expenditure Commitments
In order to maintain current rights of tenure to exploration and mining licences, the Group is required to perform respective
minimum exploration and development work to meet the minimum expenditure requirements.
The Group has satisfied the minimum exploration expenditure requirements under the new mining convention signed by
the Company and the RoC on 8 June 2017, to maintain its rights to tenure in relation to the Kola and Dougou (including
Dougou Extension) mining projects. The Group plans to develop the Kola and Dougou mining licenses as an aggregated
area for the mining site development in accordance with the mining convention signed on 8 June 2017. In addition, one of
the key investment promotion provisions for the mining convention includes that the RoC is to be granted a 10% carried
equity interest in the project companies, which are currently wholly-owned by Kore Potash Limited’s 97%-owned
subsidiary, Sintoukola Potash S.A. SARL.
If the Group decides to relinquish certain licences and/or does not meet the obligations of the new mining convention,
assets recognised in the statement of financial position may require review to determine the appropriateness of the
carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these
obligations.
Kola Definitive Feasibility Study Commitment
On 28 February 2017 the Company signed a contract with TechnipFMC, VINCI Construction Grands Projets, Egis and
Louis Dreyfus Armateur (the “French Consortium”), for the implementation of the Kola Definitive Feasibility Study (the
“DFS”). The DFS is scheduled to be completed in mid-2018.
At the date of this report, the Group also had the following DFS commitment:
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
Not later than 1 year - 9,259,776 -
Later than 1 year and not later than 5 years - - -
Later than 5 years - - -
- 9,259,776 -
73
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 19: AUDITORS’ REMUNERATION
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
Fees payable to the Company’s auditor and their associates
for the audit of the Company’s annual accounts
Deloitte – Audit 35,000 103,679 67,351
Total audit fees 35,000 103,679 67,351
Fees payable to the Company’s auditor and their associates
for other services to the Group
Half-year review - 40,763 39,188
Services in connection with the AIM listing - 411,015 -
Tax, Research and Development consulting - 34,188 58,303
Total non-audit services - 485,966 97,491
NOTE 20: RELATED PARTY TRANSACTIONS
Loans to key management personnel and its related parties
David Hathorn (Chairman) and Sean Bennett (Managing Director and CEO) each holds 25,000 Redeemable (Non-Voting)
Preference Shares at £1.00 each in the Kore Potash plc (held directly). Under the Scheme of Arrangement, both Directors
have given an irrevocable undertaking to pay the Company the sum of GBP 25,000 on or before the date that is five years
from the date of the undertaking or, if sooner, immediately upon a written demand or demands by the Company. At 31
December 2017, the amount owing by the two Directors to the Company was USD 65,631 (GBP 50,000). Upon completion
of the Scheme of Arrangement, the Redeemable Preference Shares will be cancelled and amount payable by the Directors
will be offset by an amount payable by the Company back to the Directors.
Other transactions with the Company and the Group
No key management personnel has entered into a material contract (apart from employment) with the Company and the
Group. Please refer to the Remuneration Report in the Directors’ Report for the remuneration paid to the key management
personnel. No amount of remuneration is outstanding at 31 December 2017 (31 December 2016: nil).
The Company paid US$13,652 to Piaster Pty Ltd as trustee for the Trollip Family Superannuation Fund for Mr Jonathan
Trollip’s director fees. Mr Trollip is a director of and has a beneficial interest in Piaster Pty Ltd.
Nexia Perth Pty Ltd has been engaged to provide accounting, administrative and company secretarial services for the
Group on commercial terms. Mr Henko Vos, who is based in Perth, Australia has been appointed as joint company
secretary and is also currently an employee with Nexia Perth. During the year, the total amounts paid to Nexia Perth by the
Group for providing accounting, administration and company secretarial services were USD 117,387 (2016: USD 68,826).
FKW Consulting Ltd has been engaged to provide company secretarial services for Kore Potash plc on commercial terms.
Mrs Francesca Wilson, who is based in London, UK has been appointed as joint company secretary and is also currently
an employee with FKW Consulting Ltd during the year. During the year, the total amounts paid to FKW Consulting Ltd by
the Group for providing company secretarial services were USD 13,383 (2016: nil).
There were no other transactions with key management personnel and its related parties.
74
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 21: KEY MANAGEMENT PERSONNEL DISCLOSURES
The following were key management personnel of the Company and the Group at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period.
David Hathorn Non-Executive Chairman (appointed 20 November 2015)
Sean Bennett Managing Director and CEO (appointed 20 November 2015)
Jonathan Trollip Non-Executive Director (appointed 21 April 2016)
Leonard Math Non-Executive Director (appointed 24 April 2014)
Timothy Keating Non-Executive Director (appointed 15 November 2016)
Pablo Altimiras Non-Executive Director (appointed 15 November 2016)
David Netherway Non-Executive Director (appointed 12 December 2017)
In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders implemented on 20
November 2017, all of the current directors of Kore Potash Limited have been appointed to the Board of Kore Potash plc.
The Board of the Company and the Group now consists of David Hathorn, Sean Bennett, Jonathan Trollip, Leonard Math,
Timothy Keating, Pablo Altimiras. David Hathorn and Sean Bennett were appointed as the directors of Kore Potash plc on
the date of incorporation of the Company on 25 August 2017. David Netherway who was appointed on 12 December 2017.
Henko Vos Joint Company Secretary (appointed 16 November 2016)
Francesca Wilson Joint Company Secretary (appointed 29 November 2017)
John Crews Chief Financial Officer (appointed 22 May 2017)
Julien Babey Business Development and Head of RoC
Lawrence Davidson Chief Financial Officer and Risk Officer (resigned on 1 January 2018)
Joint Company Secretary (resigned 25 January 2018)
Werner Swanepoel Project Director (resigned 23 November 2017)
Key management personnel compensation
The key management personnel compensation included in “Directors Remuneration”, “Equity Compensation Benefits”
“Employee and Consultant Expenses” and “Exploration Expenditure” is as follows:
Consolidated
Dec 2017 Dec 2016
USD USD
Short-term employee benefits 1,510,100 1,186,997
Post-employment benefits 13,652 3,376
Termination benefits 256,986 -
Equity compensation benefits 1,286,133 1,477,510
3,066,871 2,667,883
There were seven Directors who held office at the end of the year. (2016: six Directors who held office at the end of the
end of the year). Details of Directors’ remuneration are provided in the Directors’ Remuneration Report on pages 24 of this
Annual Report.
Individual directors and executives compensation disclosures
Information regarding individual directors and executives’ compensation and equity instruments disclosures is provided in
the Remuneration Report section of the Directors’ Report. Apart from the details disclosed in this note, no director has
entered into a material contract with the Company or the Group since the end of the previous financial year and there were
no material contracts involving directors’ interests existing at year-end.
75
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 22: SHARE-BASED PAYMENTS
Recognised share-based payment expense
The expense recognised for employee and consultant services during the year is shown in the table below:
Parent Consolidated Entity
Dec 2017 Dec 2017 Dec 2016
USD USD USD
Expense arising from equity-settled share-based
payment transactions 75,545 1,919,924 1,777,625
Parent
In accordance with the Scheme of Arrangement between Kore Potash Limited and its shareholders, 58,191,226 Unlisted
Options and 48,077,728 Performance Rights/Shares were issued on 20 November 2017 from Kore Potash plc to the
holders of Unlisted Options or Performance Rights/Shares in Kore Potash Limited in consideration for the cancellation of
those Kore Potash Limited Unlisted Options and Performance Rights/Shares.
The value of the above Parent entity’s share-based payments refer to the value of Performance Rights vested/cancelled
after the Unlisted Options and Performance Rights/Shares were transferred from Kore Potash Limited to Kore Potash plc.
On 20 December 2017, 3,237,624 Performance Rights and Performance Shares vested and converted into 3,237,624
Chess Depositary Interests (CDI’s) and 2,245,000 Performance Rights previously granted were cancelled following the
resignation of Werner Swanepoel (Project Director). The share based payments of $75,545 relate to key management
personnel.
Consolidated Entity
The Group granted shares rights and options to key management personnel and other employees as part of as an
incentive for future services and as a reward for past services. The table above shows the vesting expense recognised
during the year of US$1,919,924 (2016: $1,777,625).
Details of the share options outstanding during the year are as follows:
2017 2016
Weighted Weighted
Number of average Number of average
share exercise share exercise
options price options price
Outstanding at beginning at year 8,441,226 $0.35 9,824,558 $0.46
Granted during the year - - - -
Forfeited during the year - - - -
Exercised during the year - - - -
Lapsed during the year (250,000) $0.90 (1,383,332) $1.17
Outstanding at the end of the year 8,191,226 $0.33 8,441,226 $0.35
The share options outstanding at 31 December 2017 had a weighted average exercise price of $0.33 and a weighted
average contractual life of 118 days.
76
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 22: SHARE-BASED PAYMENTS (CONT)
Share based payment arrangements in existence
The following share based payment arrangements were in existence during the current and prior periods:
Fair Value at Exercise
Grant Number of Grant Date Price
Date Vesting Date Options Expiry Date AUD AUD
Option Series 7 * 31/05/2012 23/04/2013 83,333 23/04/2016 $0.3569 $1.12
Option Series 8 * 31/05/2012 23/04/2014 83,333 23/04/2016 $0.3897 $1.12
Option Series 9 * 31/05/2012 23/04/2015 83,334 23/04/2016 $0.4149 $1.12
Option Series 10 * 12/03/2012 09/01/2013 166,666 09/01/2016 $0.6948 $1.09
Option Series 11 * 12/03/2012 09/01/2014 166,666 09/01/2016 $0.7647 $1.09
Option Series 13 * 12/03/2012 09/01/2013 100,000 09/01/2016 $0.6748 $1.29
Option Series 14 * 12/03/2012 09/01/2014 100,000 09/01/2016 $0.7406 $1.29
Option Series 15 * 12/03/2012 09/01/2015 100,000 09/01/2016 $0.7847 $1.29
Option Series 16 * 30/03/2012 01/04/2013 166,666 01/04/2016 $0.8324 $1.18
Option Series 17 * 30/03/2012 01/04/2014 166,667 01/04/2016 $0.8324 $1.18
Option Series 18 * 30/03/2012 01/04/2015 166,667 01/04/2016 $0.8324 $1.18
Option Series 19 ** 22/05/2013 22/05/2014 83,333 22/05/2017 $0.2181 $0.90
Option Series 20 ** 22/05/2013 22/05/2015 83,333 22/05/2017 $0.2181 $0.90
Option Series 21 ** 22/05/2013 22/05/2016 83,334 22/05/2017 $0.2181 $0.90
Option Series 22 9/04/2014 10/04/2014 2,169,671 15/04/2018 $0.1242 $0.33
Option Series 23 9/04/2014 10/04/2015 1,760,778 15/04/2018 $0.1391 $0.33
Option Series 24 9/04/2014 10/04/2016 1,760,777 15/04/2018 $0.1522 $0.33
Option Series 25 12/05/2014 10/04/2014 333,333 15/04/2018 $0.0948 $0.33
Option Series 26 12/05/2014 10/04/2015 333,333 15/04/2018 $0.1073 $0.33
Option Series 27 12/05/2014 10/04/2016 333,334 15/04/2018 $0.1194 $0.33
Option Series 28 30/05/2014 10/04/2014 500,000 26/06/2018 $0.1177 $0.33
Option Series 29 30/05/2014 10/04/2015 500,000 26/06/2018 $0.1303 $0.33
Option Series 30 30/05/2014 10/04/2016 500,000 26/06/2018 $0.1432 $0.33
* Option Series expired during the previous financial year.
** Option Series expired during the current financial year.
77
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 22: SHARE-BASED PAYMENTS (CONT)
Share based payment arrangements in existence (Cont)
The following share based payment arrangements were in existence during the current and prior periods (Cont):
Fair Value at
Number of Grant Date
Grant Date Vesting Date Rights Expiry Date AUD
Rights Series 4 (1) 17/09/2015 1 Dec 2016 2,666,090 16/09/2017 $0.1451
Rights Series 5 (2) 17/09/2015 Refer below 2,666,090 16/09/2018 $0.1507
Rights Series 6 (3) 17/09/2015 Refer below 2,666,090 16/09/2019 $0.1510
Rights Series 7 (4) 07/12/2015 Refer below 5,000,000 06/12/2020 $0.1753
Rights Series 8 (5) 20/11/2015 Refer below 13,000,000 01/03/2021 $0.1596
Rights Series 9 (6) 20/11/2015 Refer below 8,500,000 01/03/2021 $0.1867
Rights Series 10 6/07/2016 None vested 2,000,000 30/06/2021 $0.1258
Rights Series 11 6/07/2016 None vested 1,000,000 30/06/2021 $0.1258
Rights Series 12 (7) 29/05/2017 Refer below 2,000,000 31/05/2019 $0.17
Rights Series 13 31/05/2017 None vested 660,000 31/05/2019 $0.17
Rights Series 14 (8) 29/05/2017 Refer below 4,482,005 31/05/2019 $0.17
Rights Series 15 29/05/2017 None vested 11,734,853 31/05/2019 $0.17/$0.104
(1) Fully vested on 1 December 2016 pursuant to the satisfaction of performance criteria. Performance Rights were converted to fully
paid ordinary shares on 3 February 2017.
(2) On 3 February 2017, 402,720 Performance Rights vested and were converted into fully paid ordinary shares. In addition, on 30
June 2017, 2,263,370 Performance Rights vested and were converted into fully paid ordinary shares.
(3) On 30 June 2017, 402,720 Performance Rights vested and were converted into fully paid ordinary shares. In addition, on 20
December 2017, 376,374 Performance Rights vested and were converted to fully paid ordinary shares on the resignation of Mr
Lawrence Davidson.
(4) 250,000 Performance Rights vested and were converted to fully paid ordinary shares on 29 February 2016. In addition, on 3
February 2017, 250,000 fully paid ordinary shares were issued to Mr Werner Swanepoel following the vesting of the Performance
Rights due to one year of service being completed on 7 December 2016. On 20 December 2017, 2,245,000 of these
Performance Rights were cancelled following his resignation.
(5) On 3 February 2017, 1,000,000 fully paid ordinary shares were issued following vesting of one year service conditions on 20
November 2016. On 20 December 2017, 1,000,000 fully paid ordinary shares were issued to Mr David Hathorn following the
vesting of the Performance Rights due to his two year of service being completed on 20 November 2017.
(6) 531,250 performance rights vested and converted to fully paid ordinary shares on 2 March 2016. In addition, on 3 February 2017,
531,250 fully paid ordinary shares were issued to Mr Sean Bennett following vesting of one year service conditions on 20
November 2016. On 20 December 2017, 531,250 Fully Paid Ordinary Shares were issued to him following the vesting of the
Performance Rights due to one year of service being completed on 20 November 2017.
(7) On 20 December 2017, 595,000 Performance Rights vested and were converted into ordinary shares following the resignation of
certain employees.
(8) On 20 December 2017, 735,000 Performance Rights vested and were converted into ordinary shares following the resignation of
certain employees.
The Performance Rights outstanding at 31 December 2017 had a weighted average remaining contractual life of 2.4 years.
78
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 23: LOSS PER SHARE
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic earnings per share.
Classification of securities as potential ordinary shares – share options and rights outstanding
The Company has granted share options in respect of a total of 58,441,226 ordinary shares at 31 December 2017 (31
December 2016: 53,441,226) and 42,595,104 performance rights (31 December 2016: 36,717,020). Options and rights are
considered to be potential ordinary shares. However, as the Company and Group are in a loss position they are anti-
dilutive in nature, as their exercise will not result in a diluted earnings per share that shows an inferior view of earnings
performance of the Company and Group than is shown by basic earnings per share. The rights and options have not been
included in the determination of basic earnings per share.
Parent Consolidated Entity
31 Dec 2017 31 Dec 2017 31 Dec 2016
USD USD USD
Earnings reconciliation
Loss attributable to ordinary shareholders (92,320) (4,344,322) (4,259,666)
Number Number Number
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares at period end 756,305,819 756,305,819 466,008,687
Basic and diluted loss per share (cents per share) (0.00) (0.57) (0.91)
On 26 March 2018, the Company issued 83,523,344 shares to be admitted to trading on the AIM market on 29 March
2018. The calculation of basic and diluted loss per share have not been adjusted for this.
Headline earnings/loss per share
It is a JSE listing requirement to disclose headline earnings/loss per share, a non-IFRS measure. It is considered to be a
useful metric as it presents the earnings/loss per share after removing the effect of re-measurements to assets and
liabilities (for example impairment of property, plant and equipment) otherwise recognised in the profit/loss for the year.
During the current and prior year there was no difference between earnings/loss per share and headline earnings/loss per
share and therefore no reconciliation between the two measures has been presented.
NOTE 24: CONTINGENT LIABILITIES AND ASSETS
As at the date of this report, the Company’s subsidiary, Sintoukola Potash S.A. SARL (“SP") is in litigation before the
Administrative Chamber of the Supreme Court of the Republic of Congo and before the Labour Tribunal. These two
proceedings result from an action taken by a former employee, as well as a group of 31 claimants following the
retrenchment of these 32 employees on 20 November 2014. The retrenchment was approved by the local regulator
(Dispute Commission) which is empowered by the law to assess and authorise such retrenchment following detailed due
diligences carried out in accordance with the law as well as an hearing of SP and the employees’ Representatives (the
Dispute Commission is composed of the Employees and Employers Unions headed by the local Labour Authorities).
The Company is of the view that the retrenchment was validly authorised since the procedure was compliant with
applicable regulations and was never challenged until SP encountered an issue with the implementation of the
retrenchment relating to the rights to the individual employee mentioned above. The recourse introduced before the
Ministry of Labour by the individual and the group of 31 former employees, to challenge the Dispute Commission’s
authorisation, was made on 15 May 2015 even though neither disputed the retrenchment process when heard by the
Dispute Commission.
79
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2017 (CONT)
NOTE 24: CONTINGENT LIABILITIES AND ASSETS (CONT)
SP had not been officially notified of the recourse before the Minister of Labour and had not been consulted at all before
the Minister notified SP on 2 September 2016 that the authorisation to proceed with the retrenchment had been cancelled.
SP’s sole recourse to dispute the Government’s decision adopted by the Minister of Labour was legal proceedings before
the Supreme Court (two legal proceedings are currently pending for suspending and cancelling the Minister’s decision due
to abuse of power).
In the meantime and following various requests by the former employees to settle the matter which were rejected by SP,
on 17 March 2017, some individuals among the former employees introduced an action before the Labour Tribunal in an
attempt to settle the case. On 28 March 2017, the Labour Tribunal found that conciliation between the parties could not be
implemented and the proceedings must commence before the Tribunal. SP has submitted its findings on the merits on 7
July 2017 disputing (i) the representation of the claimants due to the absence of power of attorney of the former employees
and (ii) the proceeding before the Labour Tribunal until the Supreme Court renders its decision for the same case. On 7
July 2017, the Labour Tribunal required the claimants to submit their findings at a new session on 13 October 2017.
At the 13 October 2017 hearing, the staff representatives disputed the legal representation of their lawyer who was hired
by the individual employee mentioned above. While the tribunal requested Sintoukola to submit their findings by
December 8th, 2017, Sintoukola has instructed its lawyers to settle the case amicably through the President of the Labour
Tribunal which is a common practice in Republic of Congo.
While Sintoukola is waiting for the Labour Tribunal’s decision, whose next hearing has been postponed a number of times,
Sintoukola has settled the case amicably with 4 employees who have waived any further recourse whatsoever, the
individual mentioned above being one among them. The offer to the remaining employees, to settle the case amicably,
expired on 31 January 2018. The company is of the view that the retrenchment was compliant with applicable legislation,
as outlined above, and as such has not raised a liability. Furthermore, the Directors have concluded that any possible
exposure and cash outflow from the Group would be immaterial.
There are no other significant contingent liabilities or assets.
03 April 2018
JSE Sponsor: Rencap Securities (Pty) Limited
80
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