PhosEnergy Limited ACN 164 573 728 OFFER INFORMATION … · 2014. 7. 16. · phosenergy limited acn...

PhosEnergy Limited ACN 164 573 728

OFFER INFORMATION STATEMENT GENERAL OFFER

OFFER INFORMATION STATEMENT FOR THE OFFER OF UP TO 2,925,000 SHARES AT AN ISSUE PRICE OF $0.20 PER SHARE TO RAISE UP TO $585,000. THE OFFER IS NOT

UNDERWRITTEN.

IT IS PROPOSED THAT THE LAST DATE FOR APPLICATIONS AND APPLICATION MONIES TO BE RECEIVED IS 5.00PM (ACST) ON 15 AUGUST 2014. THE DIRECTORS RESERVE THE RIGHT TO

CLOSE THE OFFER EARLIER OR EXTEND THIS DATE WITHOUT NOTICE.

IMPORTANT NOTICE

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION.

THIS IS AN IMPORTANT DOCUMENT THAT SHOULD BE READ IN ITS ENTIRETY AND IN CONJUNCTION WITH THE JUNE 2014 FINANCIAL REPORT.

PLEASE NOTE AN OFFER INFORMATION STATEMENT IS NOT A PROSPECTUS AND, UNDER THE CORPORATIONS ACT, HAS A LOWER LEVEL OF DISCLOSURE REQUIREMENTS THAN A PROSPECTUS. INVESTORS SHOULD READ THE OFFER INFORMATION STATEMENT IN ITS

ENTIRETY AND SEEK APPROPRIATE PROFESSIONAL INVESTMENT ADVICE BEFORE ACCEPTING THE OFFER.

IF YOU ARE IN DOUBT ABOUT WHAT TO DO, YOU SHOULD CONSULT YOUR PROFESSIONAL ADVISER WITHOUT DELAY.

CORPORATE DIRECTORY

PhosEnergy Limited

Registered and Corporate Office 22B Beulah Road Norwood SA 5067

Postal Address 22B Beulah Road Norwood SA 5067 Ph 08 8110 0700 Fax 08 8110 0777

Share Registry – Australia

Boardroom Pty Ltd Level 7, 207 Kent Street Sydney NSW 2000

Ph 02 9290 9600 Fax 02 9279 0664

Legal adviser

Bellanhouse Legal Suite 1, 6 Richardson Street West Perth WA 6005

Ph 08 9486 1018

Auditor

HLB Mann Judd Level 4, 130 Stirling Street Perth WA 6000

Ph 08 9227 7500 Fax 08 9227 7533

KEY STATISTICS

Offer Price for a Share: $0.20 per share

Maximum number of Shares to be issued: 2,925,000

Gross Proceeds of Offer (if fully subscribed): $585,000

Proposed closing date of Offer: 5:00pm Australian Central Standard (Adelaide) Time on 15 August 2014

IMPORTANT INFORMATION & KEY DATES

This Offer Information Statement is dated 16 July 2014 and was lodged with the Australian and Securities Investments Commission (ASIC) on that date. The fact that ASIC has not objected to the issue of this Offer Information Statement is not to be taken as an endorsement by ASIC and ASIC takes no responsibility for its contents.

This Offer Information Statement is subject to an Exposure Period. The Exposure Period is a 7 day period (excluding public holidays) from the date of this Offer Information Statement, commencing on 16 July 2014. ASIC may extend the Exposure Period by a further 7 days. No applications for Shares will be accepted until the Exposure Period has expired and no preference will be given to Shareholders who lodge their Application Forms during the Exposure Period. The Company will make this Offer Information Statement generally available to the public during the Exposure Period by placing a copy on PhosEnergy Limited's website.

The following are key dates relating to the Offer that you need to be aware of:

(a) Offer Information Statement and Application Form made available to Shareholders on 24 July 2014

(b) Closing Date for Receipt of Application Form 5:00pm ACST on 15 August 2014

(c) Share Certificates dispatched to Shareholders on 22 August 2014

These dates are indicative only and are subject to change. The Company reserves the right to amend this indicative timetable at any time and in particular, subject to the Corporations Act 2001 (Cth) (Corporations Act), to extend the latest date for receipt of Application Forms, to accept late Application Forms either generally or in particular cases, or to cancel the Offer without prior notice. No Shares will be issued on the basis of this Offer Information Statement later than 13 months after the date of this Offer Information Statement. Certain words and terms used in this Offer Information Statement have defined meanings, which are described in the Glossary of this Offer Information Statement. Money as expressed in this Offer Information Statement is in Australian dollars unless otherwise indicated. Any discrepancies between totals in tables and sums of components in tables in this Offer Information Statement and between those figures and figures referred to in other parts of this document are due to rounding. All references to time in this Offer Information Statement are to Australian Central Standard (Adelaide) Time unless otherwise stated.

TABLE OF CONTENTS

Section ............................................................................................. Page No

1. Details of the Offer ............................................................................. 1

2. Subscribing for Shares .......................................................................... 3

3. Company Operations ............................................................................ 4

4. Effect of the Offer on Control ................................................................ 5

5. Risk Factors ...................................................................................... 6

6. Financial Information ........................................................................... 9

7. Additional Information ....................................................................... 10

8. Glossary ......................................................................................... 15

9. Annexure ....................................................................................... 16

1. Details of the Offer

1.1 The Offer

By this Offer Information Statement, the Company offers for subscription up to 2,925,000 Shares at an issue price of $0.20 each to raise up to $585,000 (Offer).

The Shares offered will rank equally with the existing Shares on issue.

1.2 Purpose

Cameco Corporation (Cameco) has funded development of the PhosEnergy Process through a US$16.5 million staged earn-in since entering into a strategic alliance agreement with the Company in 2009. In total, over US$22 million has been spent on developing the technology by the Company and its partners.

PhosEnergy Limited is now required to contribute its 27% share of development expenditure, with Cameco committing to funding the remaining 73%. For further details on the Company and PhosEnergy Process refer to section 3.1.

The new capital raised under the Offer will allow PhosEnergy to:

(a) fund, in part, the Company's share of additional funding required to progress development and commercialisation of the PhosEnergy Process through to the end of 2014; and

(b) increase the Company's working capital to support ongoing activities.

1.3 Application of Funds

The Company will contribute its share of additional funding to progress development of the PhosEnergy Process through to the end of 2014.

The Company recently conducted a placement to sophisticated and institutional investors of the Company to raise approximately $415,000 (Placement). Shares were issued pursuant to the Placement at an issue price of $0.20.

Messrs Kiernan, Goyder and Jones, all Directors of the Company, have contributed approximately $155,000 through the Placement.

The combined total to be raised pursuant to the Offer and the Placement (if the Offer is fully subscribed) is $1,000,000.

1.4 Applicants

To qualify for the Offer, an Applicant must have an address in Australia or New Zealand. A copy of this Offer Information Statement has been sent to all Shareholders with a registered address in Australia or New Zealand.

1.5 Underwriting

The Offer is not underwritten.

1.6 Allotment of Shares

Shares under the Offer are expected to be allotted by 22 August 2014 (subject to variation at the discretion of the Company).

The Directors will determine the recipients of the issued Shares in their sole discretion. The Directors reserve the right to reject any application or to allocate any applicant fewer Shares than the number applied for. Where the number of Shares issued is less than the number applied for, or where no issue is made, surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the Closing Date.

1.7 Application Monies

Until Shares are issued, the Company will hold the Application Monies on trust in a designated bank account in Australia.

Any interest accrued on Application Monies will be retained by the Company and will not be paid to the relevant Applicants including if the Offer is cancelled or withdrawn.

1.8 Applicants outside of Australia

The Shares being offered under this Offer Information Statement are being offered to applicants with registered addresses in Australia and New Zealand. The Offer will not be offered to residents outside of Australia and New Zealand. PhosEnergy has determined that it is not economically viable for it to make offers to residents outside of Australia and New Zealand due to the cost of meeting compliance requirements with securities laws in each applicable jurisdiction in which non-resident applicants reside.

1.9 Taxation Implications

Applicants should be aware that there may be taxation implications of participating in the Offer and subscribing for Shares. The taxation consequences of participating in the Offer and/or acquiring Shares may vary depending on the individual circumstances of each Applicant. Applicants should consult their own professional taxation advisers to obtain advice in relation to the taxation laws and regulations applicable to their personal circumstances.

1.10 Risks

There are a number of risks associated with an investment in the Company which may affect its financial performance, financial position, cash flows, distributions, growth prospects and Share value.

The key risk factors have been summarised in section 5.

2. Subscribing for Shares

2.1 Applications

Applications for Securities under the Offer must be made using the Application Form. Payment for the Shares must be made in full at the issue price of $0.20 per Share. Applications for Shares must be for a minimum of 5,000 Shares and thereafter in multiples of 1,000 Shares. Completed Application Forms and accompanying cheques must be mailed or delivered to:

PhosEnergy Limited 22B Beulah Road Norwood SA 5067 Cheques or bank/money orders should be made payable to "PhosEnergy Limited – Share Subscription Account" and crossed "Not Negotiable". Completed Application Forms must reach the above address by no later than the Closing Date.

Subscription monies can be paid by Electronic Funds Transfer (EFT) to the following account with the Shareholder name (as it appears on the register) as the transaction narration:

Bank: Commonwealth Bank of Australia BSB: 065-000 Account Number: 11937115 Account Name: PhosEnergy Limited – Share Subscription Account Narration: Name of Shareholder (as recorded on the share register)

The Company reserves the right to close the Offer early.

If you have any questions about the Offer, please call the Company on +61 (0)8 81100700 at any time from 9:00am to 5.00pm (ACST) Monday to Friday during the Offer Period (ending 5.00pm (ACST) on 15 August 2014), or any other date as may be determined by the Company.

3. Company Operations

3.1 Background

PhosEnergy Limited (PhosEnergy) is an Australian based unlisted public company. The Company became an independent entity as a result of a demerger with Uranium Equities Limited (Uranium Equities) on 13 September 2013.

PhosEnergy and its strategic alliance partner Cameco have developed the PhosEnergy Process which is designed to recover uranium as a by-product from phosphate fertiliser production at an estimated bottom quartile cash cost.

The PhosEnergy Process is protected by several patents in the USA and internationally where there is significant current or potential future phosphate fertilizer production.

PhosEnergy has a 27 percent beneficial interest in the PhosEnergy Process with the balance held by Cameco. The interest is held through investments in US based entities which control Urtek LLC, the operating entity. Funding for ongoing development is now met proportionately between the partners following Cameco completing its US$16.5 million earn-in to the technology (Refer section 7.3 for further details).

Both PhosEnergy and Cameco have the right to market their proportional share of any future uranium offtake.

In August 2013, an agreement was reached with a US-based fertilizer producer to evaluate the commercial viability of the PhosEnergy Process on one of the producers operating fertilizer facilities. This agreement covers the on-site operation of the PhosEnergy demonstration plant (Demonstration Plant) with the results providing key inputs to the preparation of a pre-feasibility study estimate to be undertaken (Pre-Feasibility Study).

In early 2014 the Demonstration Plant was located onto the fertilizer producer’s site and connected directly to the facility’s production stream. Continuous operations commenced on 10 March 2014 and were completed on 23 May 2014.

3.2 PhosEnergy Limited – Proposed Activities

A second campaign of operation has begun and will operate until mid-August 2014 to further optimise the process configuration.

The Company will complete a Pre-Feasibility Study on potential future operations at the US based fertilizer facility in the latter half of calendar year 2014.

The Pre-Feasibility Study will include capital and operating cost estimates, a detailed risk assessment of the project and financial sensitivity analyses to allow the parties to assess the economic viability of the PhosEnergy Process and make a commercial decision on progressing further toward a full scale operation.

3.3 Key People - PhosEnergy

(a) Anthony Kiernan, Non-Executive Chairman

Mr Kiernan is a corporate advisor with extensive experience in the administration and operation of listed public companies. Mr Kiernan is Chairman of BC Iron Limited and Venturex Resources Limited and a director of Chalice Gold Mines Limited and South Boulder Mines Limited.

Richard Hacker has been appointed as Mr Kiernan’s alternate Director. Mr Hacker does not hold, either directly or indirectly, any Shares and will not be subscribing for Shares pursuant to the Offer.

(b) Bryn Jones, Managing Director

Mr Jones is an Industrial Chemist who has been instrumental in the development of the Company’s uranium from phosphoric acid technology, the "PhosEnergy Process". Mr Jones has extensive experience in the uranium industry, particularly in the development and operation of In-Situ Recovery (ISR) mines gained during his time at Heathgate Resources, the operator of the Beverley Uranium Mine. Mr Jones has also worked for Worley Parsons on the Olympic Dam Expansion Project and consulted on various ISR operations around the world.

(c) Tim Goyder, Non-Executive Director

Mr Goyder has over 30 years' experience in the resource industry. He has been involved in the formation and management of a number of publicly-listed companies and is currently Executive Chairman of Chalice Gold Mines Limited and Uranium Equities and Chairman of Liontown Resources Limited.

(d) Tom Pool, Non-Executive Director

Mr Pool is a mining engineer with more than 35 years' experience in the resources industry, the last 25 years of which has focused on assessment and evaluation of projects in the uranium and nuclear fuels sector. Mr Pool is Chairman of International Nuclear Inc based in Golden, Colorado, having previously held senior positions with Nuclear Fuels Corporation and the Concord Group of Companies.

4. Effect of the Offer on Control

The equity of existing Shareholders who do not participate in the Offer will be diluted. It is anticipated that the Offer will not have an impact on the control of the Company.

The Company notes that Tim Goyder, a Director of the Company, currently holds a 18.8% interest in the issued capital of the Company. Mr Goyder’s interest in the Company will not increase above 19.9% as a result of the Offer. Therefore, the Offer will not have an impact on the control of the Company.

5. Risk Factors

A decision to invest in the Company is a decision which is subject to a number of risks, both specific to its business activities and of a general nature. The summary of risk factors set out below is not exhaustive. Applicants should consider these risks carefully and, if they are in any doubt, should consult their stockbroker or other professional adviser.

5.1 Specific Risks

The Company's business is centred on the development of the PhosEnergy Process and there is no guarantee that the technology will achieve commercial status due to a range of possible commercialisation risks which include, but are not limited to:

(a) Additional requirements for capital

The future capital requirements of the Company will depend on many factors including the results of future pre-feasibility studies, Demonstration Plant operations and successful commercial negotiations with phosphate fertilizer producers. In the event that the Offer is not sufficiently subscribed, the Company may be required to seek additional funding by way of a loan, a convertible note, a combination of both or by alternate means.

(b) Technical Risks

Results achieved to date at laboratory and Demonstration Plant scale may not translate to an effective commercial scale technology for use in extracting uranium from phosphate fertilizer production. In addition, there is a risk that other competing technologies are favoured for use by phosphate fertilizer producers.

(c) Access to Phosphate Fertilizer Facilities

There is a risk that even if feasibility studies indicate that the technology is commercial and presents an acceptably low risk to existing operations, PhosEnergy and Cameco may be unable to successfully negotiate an agreement for the use of the PhosEnergy Process with one or more phosphate fertilizer producers.

(d) Investor Risk

PhosEnergy is currently an unlisted public company and as such, any investment into PhosEnergy has limited investment liquidity and shareholders may not be able to sell their shares.

(e) Budget Risk

The costs of the Company are based on certain assumptions with respect to the method and timing of operations. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions.

(f) Operations Risk

The Company has guaranteed its 27% share of a US$5 million performance guarantee over operations at the US based fertilizer facility. There is a risk

that Demonstration Plant operations interrupt or cause other impacts on fertilizer production incurring restitution costs.

(g) Uranium as a source of energy

Nuclear energy is in direct competition with other sources of energy including gas, coal and hydro-electricity. Furthermore, any potential growth of the nuclear power industry (and increase in demand for uranium) beyond its current level will depend on the continued and increased acceptance of nuclear technology as a means of generating electricity. One of the arguments in favour of nuclear energy is its lower emissions of carbon dioxide per unit of power generated compared to coal and gas. Alternative energy systems such as wind or solar also have no or very low carbon emissions but to date these have not been cost effective enough to be used for large scale base load power.

(h) Reliance on key management

The Company is reliant on key personnel employed or engaged by the Company. Loss of such personnel may have a materially adverse impact on the performance of the Company.

The Board is aware of the need to have sufficient management to properly supervise the operations of the Company and (if successful) the development of the PhosEnergy Process and the Board will continually monitor the management roles in the Company.

(i) Environmental risk

Uranium extraction and processing is an industry that has become subject to increasing environmental responsibility and liability. Future legislation and regulations governing uranium production may impose significant environmental obligations on the Company. The Company intends to conduct its activities in a responsible manner which minimises its impact on the environment, and in accordance with applicable laws.

5.2 General Risks

(a) General Economic risks

General economic conditions, movements in interest and inflation rates, commodity prices and currency exchange rates may have an adverse effect on the Company's operations and any future development activities, as well as on its ability to fund those activities.

The price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general.

Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

(b) Changes in Government Policies and Legislation

Any material adverse changes in government policies or legislation of Australia, United States of America or any other country that the Company may acquire economic interests in may affect the viability and profitability of the Company.

(c) Insurance

The Company will, where possible and economically practicable, endeavour to mitigate some project and business risks by procuring relevant insurance cover. However, such insurance cover may not always be available or economically justifiable and the policy provisions and exclusions may render a particular claim by the Company outside the scope of the insurance cover.

(d) Patents and proprietary rights

The ability of the Company to obtain patents, maintain trade secret protection and operate without infringing the proprietary rights of third parties is an integral part of the Company's business. The granting of a patent does not guarantee that the rights of others are not infringed or that competitors will not develop technology to avoid the patented technology.

5.3 Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Offer Information Statement.

Therefore, the Shares to be issued pursuant to this Offer Information Statement carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

Potential investors should consider that the investment in the Company is highly speculative and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Offer Information Statement.

6. Financial Information

The Company’s audited financial statements for the year ended 30 June 2014 are set out in the Annexure to this Offer Information Statement.

There have been no material transactions between that date and the date of this Offer not otherwise disclosed within this document.

7. Additional Information

7.1 Impact on Capital Structure of PhosEnergy

The impact of a full acceptance of all Shares offered under the Offer will be dependent upon the number of Shares issued pursuant to the Offer and the Placement. An example of the impact of the Offer and Placement (based on up to 5,000,000 Shares being issued) is summarised below:

Impact on Capital Structure Shares on Issue

Existing number of fully paid ordinary Shares on issue: 33,000,000

Number of Shares to be issued under the Offer and Placement:1

5,000,000

Number of Shares following the Offer and the Placement:1 38,000,000

Note:

1 The figures outlined are based on the Offer being fully subscribed, and the Shares issued as

a result of the Offer and the Placement totalling 5,000,000 Shares. The actual impact on the capital structure of the Company will be dependent upon the number of Shares subscribed for under the Offer.

7.2 Rights and Liabilities Attaching to Shares

Shares issued pursuant to this Offer Information Statement will be fully paid ordinary shares in the capital of the Company and will rank equally with the existing Shares on issue, including for any dividend issued. Neither the Shares nor the existing Shares on issue are listed on any stock exchange, so no ready public market will exist for their sale.

The rights that will attach to the Shares are as set out in the Constitution, namely:

(a) the right to receive notice of, and attend and vote at all general meetings of the Company;

(b) the right to receive dividends;

(c) in the event of a winding up, the right to participate equally in the distribution of assets of the Company; and

(d) in the event of a reduction of capital, the right to participate equally in the distribution of assets of the Company, subject to the terms of the reduction.

The Constitution may only be varied by a special resolution passed by at least 75% of Shareholders present (and entitled to vote).

7.3 Material Contracts Summary

(a) Strategic Alliance Agreement

The Company was assigned Uranium Equities' interest in its strategic alliance agreement (Strategic Agreement) with Cameco upon the demerger of PhosEnergy in September 2013. The Strategic Agreement with Cameco was originally entered into in November 2009 to facilitate funding and commercialisation of the PhosEnergy Process. Cameco have finalised their US$16.5 million investment under this Strategic Agreement to earn a 63% interest in the technology. Cameco subsequently invested a further US$4.5 million to acquire an additional 10% interest with PhosEnergy holding the remaining 27%.

Both parties have the right to market their share of any future uranium offtake. Cameco also has pre-emptive rights over any sale of the Company’s interest in the technology.

(b) Demerger Agreements

The Company entered into a management and services agreement with Uranium Equities (Management Agreement) upon the demerger of PhosEnergy, under which Uranium Equities provides transitional services to the Company to support its corporate functions for no fee.

Uranium Equities also provided a working capital loan totalling $50,000 upon the demerger which remains outstanding. The loan is repayable within 14 days of the Company raising capital in excess of $0.5 million or on 31 December 2014, whichever is earlier. The effective interest rate on the loan is 8.5% per annum.

(c) Guarantee

The Company has guaranteed its 27% beneficial share of a US$5 million performance guarantee provided by Cameco to Urtek LLC (the entity which owns the PhosEnergy Process) over its operations at a fertilizer production facility in the USA. The Company receives a guarantee fee of 1.025%.

(d) Managing Director

The terms and conditions of the Managing Director’s contract include annual remuneration of $142,500 plus superannuation, no fixed term and a standard notice period of 1 month. This remuneration is recovered through an agreement with Uranium Equities to continue to provide management services to Urtek LLC.

7.4 Litigation

The Company is not, and has not been during the 12 months preceding this Offer Information Statement, engaged in any legal proceedings which would be likely to have a material adverse effect upon its business, financial condition or the results of its operations.

7.5 Consents and disclaimers of responsibility

Each of the parties referred to in this Section:

(a) has given the following consents in accordance with the Corporations Act which have not been withdrawn as at the date of lodgement of this Offer Information Statement with the ASIC;

(b) does not make, or purport to make, any statement in this Offer Information Statement nor is any statement in this Offer Information Statement based on any of those parties other than those referred to in this Section; and

(c) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Offer Information Statement other than a reference to its name and a statement included in this Offer Information Statement with the consent of that party as specified in this Section.

Bellanhouse Legal has given and, as at the date hereof, has not withdrawn its written consent to being named in this Offer Information Statement as solicitors to the Company.

HLB Mann Judd has given and, as at the date hereof, has not withdrawn its written consent to being named in this Offer Information Statement as auditor of the Company.

Boardroom Pty Ltd has given and, as at the date hereof, has not withdrawn its written consent to be named in this Offer Information Statement as the Company's Share Registry.

7.6 Interests of Directors

Other than as set out in this Offer Information Statement:

(a) no Director or other person envisaged in section 711(4) of the Corporations Act has, or has had in the 2 years before the date of this Offer Information Statement, any interest in the Offer, in the formation or promotion of the Company or in any property of or proposed to be acquired by the Company in connection with the formation or promotion of the Company or the Offer;

(b) no amount, whether in cash or Shares or otherwise, has been paid or agreed to be paid, or any benefit given or agreed to be given, to any Director to induce him or her to become, or to qualify him or her as a Director; and

(c) no amount, whether in cash or Shares or otherwise, has been paid or agreed to be paid, or any benefit given or agreed to be given, for services provided by a Director or other person envisaged in section 711(4) of the Corporations Act in connection with the formation or promotion of the Company or the Offer.

7.7 Director shareholdings

Directors are not required under the Constitution of the Company to hold any Shares in the Company.

Directors and their Associates

No. of Shares

Anthony Kiernan 664,566 Bryn Jones 173,636 Tim Goyder 6,596,700 Tom Pool 56,206

Directors may apply for Shares under this Offer Information Statement. The Company notes that Tim Goyder, a Director of the Company, currently holds a 18.8% interest in the issued capital of the Company. Mr Goyder’s interest in the Company will not increase above 19.9% as a result of the Offer. Therefore, the Offer will not have an impact on the control of the Company.

7.8 Remuneration

The aggregate remuneration that may be paid to non-executive Directors has been set at $100,000 per annum but has not yet been approved by Shareholders. Total Directors’ fees of $20,000 per annum are being accrued but not paid. The balance outstanding as at the date of this document is $10,000.

7.9 Related Party Transactions

While there are no transactions to be noted with related parties, the Company notes that Mr Tim Goyder and Mr Bryn Jones, Directors of the Company are also directors of Uranium Equities. Uranium Equities is not considered by the Directors to be a related party of the Company. Uranium Equities holds 3,455,371 Shares in the Company and it is not currently anticipated that Uranium Equities’ interest in the Company will increase as a result of the Offer.

7.10 Disclaimer

No person is authorised to give any information or make any representation in connection with the Offer or Offer described in this Offer Information Statement, which is not contained in this Offer Information Statement. Any information or representation not contained in this Offer Information Statement may not be relied on as having been authorised by the Company in connection with the Offer.

7.11 Fees and Commissions

Apart from fees paid and to be paid to third parties for professional advice in relation to the Offer and the preparation of the Offer Information Statement, there are no fees or commissions payable to any third parties in relation to capital raised under the Offer.

7.12 Director's Signoff

The Directors confirm that:

(a) except as disclosed in this Offer Information Statement, they are not aware of any circumstances that have materially affected or will materially affect the assets and liabilities, the financial position, the profits and losses, or prospects of the Company on completion of the Offer; and

(b) they have reasonable grounds to do and believe that this Offer Information Statement contains no statement that are false or misleading and that there are no material omissions from the Offer Information Statement.

Dated: 16 July 2014

………………………………………………………………………………… Signed for and on behalf of PhosEnergy Limited by Tim Goyder

8. Glossary

Applicant means an applicant who applies for Shares under this Offer Information Statement.

Application means an application for a specified number of Shares by an Applicant under this Offer Information Statement.

Application Form means the application form accompanying this Offer Information Statement.

Application Monies means funds accompanying a completed Application Form.

Associate means an "Associate" as defined in the Corporations Act.

Cameco means Cameco Corporation (TSX:CCO, NYSE:CCJ).

Closing Date means the date on which the Offer closes, intended to be 15 August 2014.

Company or PhosEnergy means PhosEnergy Limited (ACN 164 573 728).

Corporations Act means the Corporations Act 2001 (Cth).

Demonstration Plant has the meaning given in section 3.1.

Director means a director of the Company.

ISR has the meaning given in section 3.3(b).

Management Agreement has the meaning given in section 7.3(b).

Offer means the offer of Shares under this Offer Information Statement.

Offer Information Statement means this Offer Information Statement.

Offer Period means 24 July 2014 to 15 August 2014, or any other date as may be determined by the Company.

Offer Price means the price payable for one Share under this Offer Information Statement or $0.20.

PhosEnergy Process means the technology owned jointly by Cameco Corporation and the Company and described further in section 3.1.

Placement has the meaning given in section 1.3.

Pre-Feasibility Study means a pre-feasibility study of the Company’s technology as set out in section 3.1.

Share means a fully paid ordinary share in the capital of the Company.

Share Certificate means a share certificate with respect to Shares recorded on the Company's Share register maintained by the Share Registry.

Share Registry means Boardroom Pty Ltd.

Shareholder means a holder of a Share Certificate with respect to Shares as recorded on the Share Register for the Company maintained by the Share Registry.

Strategic Agreement has the meaning given in section 7.3(a).

Uranium Equities means Uranium Equities Limited (ACN 009 799 553).

9. Annexure

PhosEnergy Limited ABN 31 164 573 728

Financial Report for the Year Ended 30 June 2014

PhosEnergy Limited

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CONTENTS

Page

Corporate Information 3

Consolidated Statement of Profit or Loss and Other Comprehensive Income 4

Consolidated Statement of Financial Position 5

Consolidated Statement of Changes in Equity 6

Consolidated Statement of Cash Flows 7

Notes to the Financial Statements 8

Directors’ Declaration 33

Independent Auditor’s Report 34

PhosEnergy Limited

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CORPORATE INFORMATION

ABN 31 164 573 728

Directors

Anthony Kiernan Bryn Jones Tim Goyder Tom Pool Company secretary

Rolf Heinrich Registered office

22B Beulah Road Norwood SOUTH AUSTRALIA 5067 +618 8110 0700 Principal place of business

22B Beulah Road Norwood SOUTH AUSTRALIA 5067 Share register

Boardroom Pty Ltd Level 7, 207 Kent Street Sydney NEW SOUTH WALES 2000 +612 9290 9600 Solicitors

Bellanhouse Legal Suite 1, 6 Richardson Street West Perth WESTERN AUSTRALIA 6005 Bankers

Commonwealth Bank of Australia 96 King William Street Adelaide SOUTH AUSTRALIA 5000 Auditors

HLB Mann Judd Level 4, 130 Stirling Street Perth WESTERN AUSTRALIA 6000

PhosEnergy Limited

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2014

2014

Notes $

Continuing operations

Revenue -

Other income 2 42,300

Corporate and administrative expenses 2 (97,037)

Share of equity accounted investee losses 8 (981,707)

Loss before financing costs (1,036,444)

Financial income 13,971

Financial expenses (2,908)

Loss before income tax expense 3 (1,025,381)

Income tax expense 3 -

Loss for the year attributable to owners of the parent (1,025,381)

Other comprehensive income, net of income tax

Items that may be reclassified to profit or loss

Exchange differences on translation of foreign operations 9,982

Other comprehensive income for the year, net of tax 9,982

Total comprehensive loss for the year attributable to owners of the parent (1,015,399)

Basic loss per share (cents per share) 5 (3.77)

Diluted loss per share (cents per share) 5 (3.77)

The accompanying notes form part of these financial statements

PhosEnergy Limited

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

2014

Notes $

Assets

Current assets

Cash and cash equivalents 6 302,034

Trade and other receivables 7 10,968

Total current assets 313,002

Non-current assets

Equity accounted investment 8 115,274

Property, plant and equipment 9 207

Total non-current assets 115,481

Total assets 428,483

Liabilities

Current liabilities

Trade and other payables 10 29,618

Borrowings 11 52,329

Subscription monies received 12 274,699

Total current liabilities 356,646

Total liabilities 356,646

Net assets 71,837

Equity

Issued capital 13 1,087,236

Reserves 9,982

Accumulated losses (1,025,381)

Total equity 71,837


PhosEnergy Limited

-6-

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Issued capital

Foreign currency

translation reserve

Accumulated losses Total equity

Notes $ $ $ $

Balance at 1 July 2013 - - - -

Loss for the year - - (1,025,381) (1,025,381)

Other comprehensive income, net of income tax - 9,982 - 9,982

Total comprehensive loss for the year - 9,982 (1,025,381) (1,015,399)

Shares issued on incorporation 13 1 - - 1

Shares issued to acquire subsidiary 13 1,087,235 - - 1,087,235

Balance as at 30 June 2014 1,087,236 9,982 (1,025,381) 71,837


PhosEnergy Limited

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CONSOLIDATED STATEMENT OF CASH FLOWS


2014

Notes $

Cash flows from operating activities

Receipts from customers 48,740

Payments to suppliers and employees (71,074)

Interest received 247

Finance costs (339)

Income tax paid -

Net cash (outflow) from operating activities 6 (22,426)

Cash flows from investing activities

Payments for property, plant and equipment -

Net cash inflows/(outflow) from investing activities -

Cash flows from financing activities

Proceeds from issue of shares 1

Subscription monies received 12 274,699

Proceeds from borrowings 50,000

Repayments of borrowings -

Net cash inflows from financing activities 324,700

Net increase in cash and cash equivalents 302,274

Cash and cash equivalents at the beginning of the year -

Effect of exchange rate fluctuations on cash held (240)

Cash and cash equivalents at the end of the year 6 302,034


PhosEnergy Limited

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NOTES TO THE FINANCIAL STATEMENTS


NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

These financial statements are general purpose financial statements, which have been prepared in a manner consistent with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The financial statements have been prepared for the purpose of a proposed capital raising to be undertaken by the Company. The financial statements are for the Group consisting of PhosEnergy Limited (Company) and its subsidiaries. The financial statements have been prepared on a historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. The financial statements are presented in Australian dollars. The Company is an unlisted public Company, incorporated in Australia and its subsidiary operates in the United States of America. The entity’s principal activity is investment in the development and commercialisation of the PhosEnergy Process. The Company was incorporated on 1 July 2013. Accordingly no comparative information is presented. (b) Adoption of new and revised standards

Standards and Interpretations in issue not yet adopted The Directors have reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2014. 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 change is necessary to Group accounting policies. (c) Statement of compliance

The financial report was authorised for issue on 16 July 2014. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).

(d) Basis of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of PhosEnergy Limited (‘Company’ or ‘parent entity’) as at 30 June 2014 and the results of all subsidiaries for the year then ended. PhosEnergy Limited and its subsidiaries are referred to in this financial report as the Group. The financial statements of the subsidiary are prepared for the same reporting period as the parent entity, using consistent accounting policies. 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. 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. Control exists where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing when the Group controls another entity. Business combinations have been accounted for using the acquisition method of accounting, refer Note 1(l). Unrealised gains or transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

PhosEnergy Limited

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Basis of consolidation (continued)

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139 ‘Financial Instruments: Recognition and Measurement’ or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. (e) Critical accounting estimates and judgements

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values 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 are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. (f) Going concern

Notwithstanding the matter that the Company had a working capital deficit of $43,644 at 30 June 2014, the directors are of the opinion that the Company is a going concern for the following reasons:

i) As disclosed in note 19, the Company raised $415,630 by way of a share placement subsequent to balance date; and

ii) The Company is in the process of raising additional equity through a general offer of shares. In this regard the Company’s lawyers are preparing documents to raise up to a further $585,000.

Should the above equity raising not be completed, there is a material uncertainty that may cast significant doubt as to whether the Company will be available to realise its assets and extinguish its liabilities in the normal course of business. (g) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of PhosEnergy Limited.

PhosEnergy Limited

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(h) Foreign currency translation

The functional and presentation currency of PhosEnergy Limited is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying 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 balance date. All exchange differences in the consolidated financial report are taken to profit or loss 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 the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. 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 rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The functional currency of the foreign operation, PhosEnergy Inc is United States Dollars (USD). As at the balance date the assets and liabilities of this subsidiary are translated into the presentation currency of PhosEnergy Limited at the rate of exchange ruling at the balance date and income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. In addition, in relation to the partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. (i) Revenue recognition

Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Rendering of services Revenue from the rendering of services is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:

Contract income is recognised by reference to the total actual costs incurred at the end of the reporting period relative to the proportion of the total costs expected to be incurred over the life of the contract;

Servicing fees are recognised by reference to the proportion of the total cost of providing the service for the product sold; and

Revenue from time and material contracts are recognised at the contractual rates as labour hours are delivered and direct expenses are incurred.

PhosEnergy Limited

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(i) Revenue recognition (continued)

Interest income Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets’ net carrying amount on initial recognition.

(j) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except:

when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

PhosEnergy Limited

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(j) Income Tax (continued)

Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (k) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (l) Business combinations

The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or business under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

PhosEnergy Limited

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(l) Business combinations (continued)

Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or loss. (m) Impairment of tangible and intangible assets other than goodwill

The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing 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. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

PhosEnergy Limited

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(n) Cash and cash equivalents

Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (o) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance. The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. (p) Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of the disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of comprehensive income.

PhosEnergy Limited

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(q) Financial assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions, reference to the current market value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models.

PhosEnergy Limited

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(r) Derecognition of financial assets and financial liabilities

Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired;

the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or

the Group has transferred its rights to receive cash flows from the asset and either: - has transferred substantially all the risks and rewards of the asset, or - has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred

control of the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. (s) Impairment of financial assets

The Group assesses at each balance date whether a financial asset or Group of financial assets is impaired. Financial assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account. The amount of the loss is recognised in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a Group of financial assets with similar credit risk characteristics and that Group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

PhosEnergy Limited

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(s) Impairment of financial assets (continued)

Financial assets carried at cost If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset. Such impairment loss shall not be reversed in subsequent periods. Available-for-sale investments If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the statement of comprehensive income. Reversals of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase in an instrument's fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss. (t) Investment in associated entities

The Group’s investment in its associate is accounted for using the equity method of accounting in the consolidated financial statements, after initially being recognised at cost. The associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating decisions of the investee but is not control or joint control over those policies. Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. Goodwill included in the carrying amount of the investment in an associate is not tested separately; rather the entire carrying amount of the investment is tested for impairment as a single asset. If an impairment is recognised, the amount is not allocated to the goodwill of the associate. The consolidated statement of comprehensive income reflects the Group's share of the results of operations of the associate, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivable and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The balance dates of the associate and the Group are identical and the associate's accounting policies conform to those used by the Group for like transactions and events in similar circumstances. Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with AASB 139. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate. When a Group entity transacts with its associate, profits and losses resulting from those transactions with the associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

PhosEnergy Limited

-18-




(u) Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and equipment between 3 and 15 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment

The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. 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. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to approximate fair value. An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of comprehensive income in the cost of sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement. Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (v) Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. (w) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.

PhosEnergy Limited

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(x) Employee leave benefits

Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the balance date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (y) 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 for the acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration. (z) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

costs of servicing equity (other than dividends) and preference share dividends;

the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(aa) Parent entity financial information

The financial information for the parent entity, PhosEnergy Limited, disclosed in note 18 has been prepared on the same basis as the consolidated financial statements, except as set out below. Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

PhosEnergy Limited

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NOTE 2: INCOME AND EXPENSES

a) Other income

2014

$

Advisory fees 42,300

42,300

The Company seconds its Managing Director, Mr Bryn Jones, to Uranium Equities Limited under a services agreement to support the ongoing management of Urtek LLC, the US based company which is developing the PhosEnergy Process. b) Corporate and administrative expenses

2014

Note $

Accounting fees 2,346

Audit fees 5,000

Depreciation and amortisation 29

Insurance 17,797

Marketing 975

Other 5,784

Personnel expenses 2(c) 52,050

Printing and stationery 135

Rent and Outgoings 403

Share registry 12,518

97,037

c) Personnel expenses

2014

$

Wages and salaries 35,625

Directors’ fees 10,000

Superannuation fund contributions 3,295

Increase in liability for annual leave 3,130

52,050

Directors’ fees have been accrued and not paid as at the date of this report as a cash conservation measure.

PhosEnergy Limited

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NOTE 3: INCOME TAX

The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows:

2014

$

Accounting loss before income tax 1,025,381

Income tax benefit calculated at 30% 307,614

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:

- Tax benefit on PhosEnergy Process losses not recognised (294,512)

Current and deferred tax expense/(benefit) not recognised (13,102)

Income tax benefit on loss before tax reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income -

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items:

2014

$

Unrecognised tax losses – Revenue 43,674

Unrecognised tax losses – Capital -

Unrecognised tax losses – Total 43,674

Unrecognised deferred tax asset on unused tax losses 13,102

The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits thereof.

PhosEnergy Limited

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NOTE 4: SEGMENT REPORTING

The Directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the chief operating decision maker (the Board) in allocating resources and have concluded that at this time there are no separately identifiable segments.

NOTE 5: EARNINGS PER SHARE

The calculation of basic and diluted loss per share at 30 June 2014 was based on the loss attributable to ordinary shareholders of the parent entity of $1,025,381 and a weighted average number of ordinary shares outstanding during the year ended 30 June 2014 of 27,213,699.

NOTE 6: CASH AND CASH EQUIVALENTS

2014

$

Cash at bank and on hand 302,034

302,034

The effective interest rate earned on deposits during the year was 1.42%. Reconciliation of loss for the year to net cash used in operating activities

2014

$

Loss for the year (1,025,381)

Depreciation and amortisation 29

Share of equity accounted investee losses 981,707

Foreign exchange (gain)/loss 240

Operating loss before changes in working capital (43,405)

(Increase)/decrease in assets:

Trade and other receivables (10,968)

Increase/(decrease) in liabilities:

Trade and other payables 31,947

Net cash used in operating activities (22,426)

PhosEnergy Limited

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NOTE 7: TRADE AND OTHER RECEIVABLES

2014

$

Prepayments 3,519

Other receivables 7,449

10,968

NOTE 8: EQUITY ACCOUNTED INVESTMENT

Reconciliation of movements in equity accounted investment:

2014

Note $

Acquired from Uranium Equities Limited 15 1,086,999

Share of losses (981,707)

Foreign currency translation difference 9,982

Balance at the end of the year 115,274

Ownership

interest

Name of entity Principal activity Country of

incorporation

30 June 2014

%

Associated entities

UFP Investments LLC Investment in Urtek LLC, owner of the PhosEnergy Process technology

USA 30%

Summarised financial information of UFP Investments LLC:

2014

$

Financial position

Total assets 546,235

Total liabilities (161,988)

Net assets 384,247

Group’s share of associate’s net assets 115,274

Financial performance

Total revenue -

Total loss for the year (3,272,357)

Group’s share of associate’s loss (981,707)

The Company and Cameco Corporation have developed a process for the extraction of uranium from phosphoric acid streams produced in the production of phosphate-based fertilisers, “the PhosEnergy Process”. Urtek LLC, a USA based company is the entity in which the research and development is being undertaken. UFP Investments LLC (UFP) holds the joint investment of 90% in Urtek LLC with Cameco owning the remaining 10% directly. The beneficial ownership in the PhosEnergy Process held by Urtek is Cameco 73%: PhosEnergy Limited 27%. The Group acquired its 30% investment in UFP through the demerger of Uranium Equities’ PhosEnergy assets in September 2013 (see note 15 for further details). The investment was originally recognised at the Group’s share of the book value of UFP’s net assets consisting entirely of cash and cash equivalents.

PhosEnergy Limited

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NOTE 8: EQUITY ACCOUNTED INVESTMENT (continued)

This investment is translated at each balance date into the Group’s functional currency at the prevailing AUD/USD exchange rate. The share of equity accounted investee losses in the year of $981,707 represents the Group’s equity accounted share of the movement in UFP’s net assets. Principally, UFP’s investment in Urtek was written off reflecting research and development expenditure made within Urtek in the year.

NOTE 9: PROPERTY, PLANT AND EQUIPMENT

Note Plant and

equipment

$

Gross carrying amount

Balance at 1 July 2013 -

Additions -

Acquisitions through business combinations 236

Disposals -

Balance at 30 June 2014 236

Accumulated depreciation and impairment

Balance at 1 July 2013 -

Depreciation expense 2 29

Disposals -

Balance at 30 June 2014 29

Carrying value

30 June 2014 207

NOTE 10: TRADE AND OTHER PAYABLES (CURRENT)

2014

$

Trade payables (i)

4,556 Other creditors and accrued expenses 21,932 Employee benefits 3,130

29,618

(i) Trade payables are non-interest bearing and are normally settled on 30-day terms.

PhosEnergy Limited

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NOTE 11: BORROWINGS

2014

$

Unsecured

Loan from Uranium Equities Limited

- Principal 50,000

- Accrued interest 2,329

Total borrowings 52,329

Uranium Equities Limited provided a loan to the Company for working capital purposes upon the demerger of PhosEnergy Process assets in September 2013. The loan is repayable within 14 days of PEL raising capital in excess of $0.5 million or 31 December 2014, whichever is earlier. The effective interest rate on the loan is 8.5% per annum.

NOTE 12: SUBSCRIPTION MONIES RECEIVED

In June 2014 the Company commenced a capital raising of up to $1 million through a placement and general offer of shares at $0.20 per share. At 30 June 2014, $274,699 in subscription monies had been received through the placement offer. 1,374,494 ordinary shares attaching to these subscriptions were issued on 4 July 2014.

NOTE 13: ISSUED CAPITAL AND RESERVES

Movement in ordinary shares on issue

2014

Number $

Balance at beginning of year - -

Incorporation 1 1

Shares issued on acquisition of PhosEnergy Inc and plant and equipment 32,999,999 1,087,235

Balance at end of year 33,000,000 1,087,236

The Company was incorporated on 1 July 2013 with the issue of one $1 share. In September 2013 the Company acquired the shares in PhosEnergy Inc and certain fixed assets from Uranium Equities Limited (UEQ) as part of its demerger of PhosEnergy Process assets – see note 15 for further details. 32,999,999 shares were issued to UEQ as consideration. UEQ subsequently distributed 30,000,000 of the Company’s shares to its shareholders by way of an equal capital reduction. Rights attaching to ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. Nature and purpose of reserves Foreign currency reserve

The foreign currency translation reserve is used to record the exchange differences arising from the translation of the financial statements of foreign subsidiaries.

PhosEnergy Limited

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NOTE 14: FINANCIAL INSTRUMENTS

Risk Management Framework The Board are responsible for overseeing the Company’s risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Company with the Managing Director having ultimate responsibility to the Board for the risk management and control framework. The consolidated entity has exposures to the following risks: a) Capital risk management The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders. The capital structure of the Company and consolidated entity consists of equity attributable to equity holders, comprising issued capital, reserves and accumulated losses, is disclosed in note 13 and the Consolidated Statement of Changes in Equity. The board reviews the capital structure on a regular basis and considers the cost of capital and the risks associated with each class of capital. The Company and the consolidated entity will balance its overall capital structure through new share issues as well as the issue of debt, if the need arises. b) Market risk exposures Market risk is the risk that changes in market prices such as foreign exchange rates, equity prices and interest rates will affect the consolidated entity’s income or value of its holdings of financial instruments. Foreign exchange rate risk The Group undertakes certain transactions and has cash and investments denominated in foreign currencies giving rise to exposure to exchange rate fluctuations. The Group does not hedge this exposure. The Group manages its foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate cash balances in order to meet its commitments. Equity prices Equity investments held for sale are recorded at their fair value. The consolidated entity is not holding any equity investments for sale at the end of the reporting period. Interest rate risk Interest rate risk is the risk that changes in bank deposit rates affect the consolidated entity’s income and future cashflow from interest income. The exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

Consolidated

Weighted average

interest rate

1 year or less

Over 1 to 5 years

Floating interest

Non-

interest bearing

Total

30 June 2014 % $ $ $ $ $

Financial assets

Bank balances 1.42% - - 302,034 - 302,034

Trade and other receivables - - - - 10,968 10,968

Financial liabilities

Borrowings 8.50% 52,329 - - - 52,329

Subscription monies received - - - - 274,699 274,699

Trade payables and accrued expenses - - - - 26,488 26,488

PhosEnergy Limited

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NOTE 14: FINANCIAL INSTRUMENTS (continued)

A change of 100 basis points in interest rates on bank balances over the reporting period would have increased / (decreased) the consolidated entity’s profit and loss by $57. (c) Credit risk exposure Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The consolidated entity’s exposure to credit risk is not significant and currently arises principally from sundry receivables (see note 7) which represent an insignificant proportion of the consolidated entity’s activities and cash and cash equivalents. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provision for doubtful debts, as disclosed in the notes to the financial statements. (d) Liquidity risk exposure

Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The Board actively monitors the consolidated entity’s ability to pay its debts as and when they fall due by regularly reviewing the current and forecast cash position based on the expected future activities. The consolidated entity has non-derivative financial liabilities which include trade and other payables of $26,488 all of which are due within 60 days. Subscription monies received prior to balance date of $274,699 were converted to equity upon the issue of shares on 4 July 2014 (see note 19). (e) Net fair values of financial assets and liabilities AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: • quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) • inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as

prices) or indirectly ( derived from prices) (level 2), and • inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). The carrying amounts of all financial assets and liabilities approximate their net fair values and are disclosed as level 3 fair values.

PhosEnergy Limited

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NOTE 15: BUSINESS COMBINATION

Acquisition of PhosEnergy Inc In September 2013 the Company acquired, by way of a share and asset sale agreement, all the shares in PhosEnergy Inc and certain plant and equipment from Uranium Equities Limited (UEQ) as part of its demerger of PhosEnergy Process assets. 32,999,999 shares were issued to UEQ as consideration. UEQ also provided a loan to the Company for working capital purposes (see note 11) along with management and office services at nil cost until 30 September 2014. PhosEnergy Inc’s only identifiable asset is its 30% share in UFP Investments LLC (see note 8). UEQ also assigned its interest in a Strategic Alliance Agreement with Cameco Corporation relating to the development over the PhosEnergy Process. Immediately prior to the acquisition, PhosEnergy Inc converted an intercompany loan from UEQ to equity and as such PhosEnergy Inc had no liabilities at the acquisition date. Assets acquired and liabilities assumed at the date of acquisition The Group has recognised the fair values of the identifiable assets and liabilities of PhosEnergy Inc - business combination accounting is as follows:

2014

Fair value at acquisition date $

Investment in UFP Investments LLC (UFP) 1,086,999

Acquisition of plant and equipment 236

Total consideration 1,087,235

The Group’s 30% investment in UFP was originally recognised at the Group’s share of the book value of UFP’s net assets consisting entirely of cash and cash equivalents. Impact of acquisition on the results of the Group There would be no impact on the profit or loss of the Group if the combination had taken place at the beginning of the year as PhosEnergy Inc had no income or expenses for the year prior to acquisition.

NOTE 16: COMMITMENTS AND CONTINGENCIES

Guarantees The Company has guaranteed its 27% beneficial share of a US$5 million guarantee provided by Cameco Corporation to Urtek LLC over its operations at a fertilizer production facility in the USA. Urtek LLC pays a guarantee fee of 1.025%. $13,724 was received by the Company during the year.

PhosEnergy Limited

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NOTE 17: RELATED PARTY DISCLOSURE

The consolidated financial statements include the financial statements of PhosEnergy Limited and the subsidiary listed in the following table.

Country of incorporation

% Equity interest

2014

PhosEnergy Inc. USA 100%

PhosEnergy Limited is the ultimate Australian parent entity and ultimate parent of the Group. Transactions with Key Management Personnel Refer to note 21 for details of transactions with key management personnel. Transactions with other related parties The following table provides the total amount of transactions that were entered into with related parties for the year:

Consolidated

Income from

related parties Expenditure

related parties

Amounts owed by related

parties Amounts owed

to related parties

Related party $ $ $ $

Uranium Equities Limited (UEQ) 2014 42,300 - - 52,329

Associate:

UFP Investments LLC (UFP) 2014 - - - -

Uranium Equities Limited is a related party of PhosEnergy Limited during the year as it controlled the Company prior to the demerger of its PhosEnergy Limited assets. UEQ provided management and office services at no cost during the year as part of the demerger process. This arrangement is due to end on 30 September 2014. From 1 April 2014, the Company seconded its Managing Director, Mr Bryn Jones, to UEQ under a services agreement to support the ongoing management of Urtek LLC, the US based company developing the PhosEnergy Process. There was no amount outstanding for this service as at the balance date. UEQ has also provided a working capital loan to the Company – see note 11 for further details. Associate The Group has a 30% interest in UFP Investments LLC – see note 8. The Group did not have any transactions with UFP during the year. Terms and conditions of transactions with related parties Other than where stated, services provided by related parties are made in arm's length transactions both at normal market prices and on normal commercial terms.

PhosEnergy Limited

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NOTE 18: PARENT ENTITY DISCLOSURES

Financial position

2014

$

Assets

Current assets 313,001

Non-current assets 1,089,561

Total assets 1,402,562

Liabilities

Current liabilities 356,645

Non-current liabilities -

Total liabilities 356,645

Equity

Issued capital 1,087,236

Reserves -

Accumulated losses (41,319)

Total equity 1,045,917

Financial performance

2014

$

Loss for the year (41,319)

Other comprehensive income -

Total comprehensive income (41,319)

There were no parent entity contingencies or capital commitments for the purchase of property, plant and equipment as at 30 June 2014.

NOTE 19: EVENTS AFTER THE REPORTING PERIOD

Other than disclosed below, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of operations, or the state of affairs in future financial years. PhosEnergy Process development The Company has elected to contribute its share of additional funding required to progress development of the PhosEnergy Process through to the end of 2014. The Company’s share of the costs of a Pre-Feasibility Study and ongoing Demonstration Plant operations at a fertilizer production facility in the USA is US$611,000. The Company’s subsidiary PhosEnergy Inc received notice of a cash call for US$611,000 on 23 June 2014. This cash call has not been recorded in the financial statements as a liability. On 10 July 2014 the Company made a payment of US$305,500 in respect of this cash call, with the balance of US$305,500 proposed to be paid from the Capital Raising referred to below. Capital Raising To fund the above expenditure and for general working capital the Company continued with a capital raising of up to $1 million through a placement and general offer of shares. In addition to the $274,699 in subscription monies received (see note 12) prior to the balance date, a further $140,931 has been raised via a placement of the Company’s shares to sophisticated investors at 20 cents per share. The placement shares were issued on 4 July 2014. The Company’s lawyers are preparing documents for a general offer of shares at the same issue price.

PhosEnergy Limited

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NOTE 20: AUDITOR’S REMUNERATION

The auditor of HLB Limited is HLB Mann Judd.

2014

$

Auditor of the parent entity

Audit or review of the financial statements 5,000

5,000

NOTE 21: DIRECTORS AND EXECUTIVES DISCLOSURES

Details of Key Management Personnel

Directors Anthony Kiernan Chairman (non-executive) Bryn Jones Managing Director Tim Goyder Non-executive Director Tom Pool Non-executive Director Executives Rolf Heinrich Chief Financial Officer and Company Secretary The key management personnel compensation included in ‘personnel expenses’ (see note 2c) are as follows:

2014

$

Short-term employee benefits 45,202

Post-employment benefits 3,719

48,921

Of the compensation $10,000 relates to non-executive director fees which have been accrued but not paid at the balance date as a cash conservation measure. Other key management personnel transactions with the Company or its controlled entities A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. Some of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of the transactions with key management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows: KMP Transaction Ref 2014

Anthony Kiernan Corporate Advisory Fees (i) 2,500

(i) The Company used the corporate advisory services of Anthony Kiernan during the course of the financial year. The $2,500 in fees was an outstanding trade creditor at the balance date.

PhosEnergy Limited

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NOTE 21: DIRECTORS AND EXECUTIVES DISCLOSURES (continued)

Shareholdings of Key Management Personnel The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Balance at beginning of

year Granted as

remuneration On Demerger

from UEQ Purchased Sold

Balance at end

of year

30 June 2014 Number Number Number Number Number Number

Directors

Anthony Kiernan - - 539,566 - - 539,566

Bryn Jones - - 123,636 - - 123,636

Tim Goyder - - 5,160,856 837,350 - 5,998,206

Tom Pool - - 56,206 - - 56,206

Executives

Rolf Heinrich - - 16,071 - - 16,071

A further 773,494 shares were applied for in June 2014 by Key Management Personnel under the placement offer (see note 12 and 19). No ordinary shares or other securities were issued to Key Management Personnel as remuneration during the year.

PhosEnergy Limited

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DIRECTORS’ DECLARATION

In the opinion of the directors of PhosEnergy Limited (the ‘Company’):

a. the accompanying financial statements and notes:

i. give a true and fair view of the Group’s financial position as at 30 June 2014 and of its performance for the year then ended; and

ii. comply with Australian Accounting Standards.

b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

c. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.

This declaration is signed in accordance with a resolution of the Board of Directors.

Anthony Kiernan

Chairman

______________________________

Dated this 16th

day of July 2014

-34-

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers.

INDEPENDENT AUDITOR’S REPORT To the members of PhosEnergy Limited

Report on the Financial Report

We have audited the accompanying financial report of PhosEnergy Limited (“the Company”), which comprises the consolidated statement of financial position as at 30 June 2014, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for the consolidated entity. The consolidated entity comprises the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

In Note 1(c), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

http://www.hlb.com.au/

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Auditor’s opinion In our opinion:

(a) the financial report of PhosEnergy Limited: (i) gives a true and fair view of the Group’s financial position as at 30 June 2014 and of its

performance for the year ended on that date; and (ii) complies with Australian Accounting Standards; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(c).

Emphasis of matter

Without modifying our opinion, we draw attention to Note 1(f) in the financial report, which indicates that whilst the Group had a working capital deficit of $43,644 as at 30 June 2014, the Company is in the process of raising additional equity through a general offer of shares. Should this equity raising not be completed, there is a material uncertainty that may cast significant doubt as to whether the Group will be able to realise its assets and extinguish its liabilities in the normal course of business.

HLB Mann Judd Chartered Accountants

W M Clark Partner

Perth, Western Australia 16 July 2014

This is an important document. If you do not understand it or are in any doubt as to how to complete this form, you should contact your stockbroker, legal or financial advisor without delay.

PHOSENERGY LTD (ACN 164 573 728) APPLICATION FORM

Share Registrars use only

Please read all instructions on reverse of this form

A Number of Shares applied for

B Application Monies

at A$0.20 each = A$

You may be allocated all of the Shares above or a lesser number.

Share Certificate reference number (if existing shareholder) S

C Full name details title, given name(s) (no initials) and surname or company name D Tax file number(s) Or exemption category

Name of applicant 1

Applicant 1/company

Name of joint applicant 2 or <account name>

Joint applicant 2/ trust

Name of joint applicant 3 or <account name>

Joint applicant 3/exemption

E Full postal address F Contact details

Number/street Contact name

Contact daytime telephone number

( )

Suburb/town State/postcode

Contact email address

G Return of this Application Form and payment of your Application Monies will constitute your offer to subscribe for Shares

in the Company. I/We declare that this Application Form is completed according to the declaration/appropriate statements on the reverse of this form and agree to be bound by the Constitution of the Company

This Application Form does not require execution. H. INSERT DETAILS OF YOUR CHEQUE, OR BANK CHEQUE, MONEY ORDER OR BANK DRAFT MADE PAYABLE TO "PHOSENERGY LIMITED - SHARE SUBSCRIPTION ACCOUNT"– PLEASE COMPLETE IN BLOCK LETTERS

Name of Drawer Cheque No BSB Amount

PLEASE REFER TO THE REVERSE SIDE FOR LODGEMENT INSTRUCTIONS

Guide to PhosEnergy Ltd - Application Form This Application Form relates to the offer of up to 2,925,000 Shares in PhosEnergy Ltd each at $0.20 to raise up to $585,000 in accordance with Offer Information Statement from the Company dated 16 July 2014 (OIS). Terms defined in the OIS and used in this Application Form shall have the same meaning. Please complete all relevant sections of the Application Form using BLOCK LETTERS. These instructions are cross referenced to each section of the Application Form. Further particulars and the correct forms of registrable titles to use on the Application Form are contained below.

A Insert the number of Shares you wish to apply for. The application must be for a minimum of 5,000 Shares and thereafter in multiples of 1,000 Shares. The maximum number of Shares you can apply for is 2,925,000.

B Insert the relevant amount of Application Monies. To calculate your Application Monies, multiply the number of Shares applied for by A$0.20.

C Write the full name you wish to appear on the statement of holdings. This must be either your own name or the name of the company. Up to three joint applicants may register. You should refer to the table below for the correct forms of registrable title. Applicants using the wrong form of title may be rejected.

D Enter your Tax File Number (TFN) or exemption category. Where applicable, please enter the TFN for each joint Applicant. Collection of TFN(s) is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application.

E Enter your postal address for all correspondence. All communications to you from the share registry will be mailed to the person(s) and address as shown. For joint applicants, only one address can be entered.

F Enter your telephone number(s), area code, email address and contact name in case we need to contact you in relation to your Application. G By lodging the Application Form the applicant(s) agrees that this application is for shares in the Company and to take any number of Shares

equal to or less than the number of Shares indicated in Section A that may be allotted to the applicant(s) and declares that all details and statements made are complete and accurate. It is not necessary to execute the Application Form.

H A cheque, bank or money order made out to “PhosEnergy Ltd – Share Subscription Account” and crossed “Not Negotiable” must be mailed or delivered along with this Application Form to the Company’s registered address at 22B Beulah Road, Norwood SA 5067. Alternatively, subscription monies can be paid by Electronic Funds Transfer (EFT) to the following account with the Shareholder name (as it appears on the register) as the transaction narration: Bank: Commonwealth Bank of Australia BSB: 065-000 Account Number: 11937115 Account Name: PhosEnergy Limited – Share Subscription Account Narration: Name of Shareholder (as recorded on the share register).

Correct Form of Registrable Title Only legal entities are allowed to hold Shares. Applications must be in the name(s) of a natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable title may be included by way of an account designation if completed exactly as described in the example of correct forms of registrable title below:

Type of investor Correct form of Registrable Title

Incorrect form of Registrable Title

Individual Use names in full, no initials

Mr John Alfred Smith JA Smith

Minor (a person under the age of 18) Use the name of a responsible adult, do not use the name of a minor.

John Alfred Smith <Peter Smith>

Peter Smith

Company Use company title, not abbreviations

ABC Pty Ltd ABC P/L ABC Co

Trusts Use trustee(s) personal name(s), do not use the name of the trust

Mrs Sue Smith <Sue Smith Family A/C>

Sue Smith Family Trust

Deceased Estates Use executor(s) personal name(s), do not use the name of the deceased

Ms Jane Smith <Est John Smith A/C>

Estate of late John Smith

Partnerships Use partners personal names, do not use the name of the partnership

Mr John Smith and Mr Michael Smith <John Smith and Son A/C>

John Smith and Son

Lodgement of Application Form Return your completed Application Form to the Company along with payment in accordance with section H above. Application Form and cheque or money/bank order or cleared funds must be received no later than 5.00pm ACST on 15 August 2014.

PhosEnergy Limited ACN 164 573 728 OFFER INFORMATION … · 2014. 7. 16. · phosenergy limited acn...

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Transcript of PhosEnergy Limited ACN 164 573 728 OFFER INFORMATION … · 2014. 7. 16. · phosenergy limited acn...