ANNUAL REPORT 2023 Company information Contents DIRECTORS Mick Wilkes Bob Katsiouleris Melissa Holzberger Austen Perrin James Marsh Non-executive Chair Managing Director Non-executive Director Non-executive Director Executive Director, Sales & Marketing COMPANY SECRETARY Sarah Clarke General Counsel and Company Secretary ANDROMEDA METALS LIMITED ABN: 75 061 503 375 ASX code: ADN REGISTERED AND PRINCIPAL ADDRESS Level 10, 431 King William Street Adelaide, South Australia 5000 CONTACT DETAILS Telephone: +61 8 7089 0600 ir@andromet.com.au www.andromet.com.au SHARE REGISTRY Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide, South Australia 5000 GPO Box 1903, Adelaide, SA 5000 Enquiries (within Australia): Enquiries (outside Australia): 1300 556 161 +61 3 9415 4000 AUDITORS Deloitte Touche Tohmatsu 11 Waymouth Street Adelaide, South Australia 5000 SOLICITORS Minter Ellison Lawyers 25 Grenfell Street Adelaide, South Australia 5000 BANKERS Westpac Banking Corporation 155 Unley Road Unley, South Australia 5061 Letter from the Chair Managing Director’s report Operations review The Great White Project Commercial Strategy Exploration Great White Deposit Hammerhead Deposit Tiger Deposit Eyre Kaolin Project Mt Hope Kaolin Project Wudinna Gold Project Moonta Copper Gold Project Drummond Epithermal Gold Project Corporate Sustainability Schedule of tenements Reserves and resources Competent person statements Directors’ report Remuneration report Auditor’s independence declaration Financial report Directors’ declaration Independent auditor’s report Shareholder information Glossary 4 6 8 10 11 21 22 23 24 25 26 27 27 28 29 30 41 43 47 49 58 76 77 113 114 119 121 2 ANDROMEDA METALS LIMITE D Highlights Program for Environment Protection and Rehabilitation (PEPR) Land Access and Acquisition Agreements Procurement of Long Lead Items Bankable Feasibility Study (BFS) Debt Funding Data Room Rigorous Commercial Strategy Product Portfolio – Core and Complementary Updated Definitive Feasibility Study (2023 DFS) Lodged Approved Signed Ordered Released Opened Developed Refined Released Andromeda – strongly positioned for growth Tier 1 mining jurisdiction Exploration endowment Mineral resources Ore reserves South Australia Large portfolio of exploration tenements, totalling 8,348km² including earn-ins Kaolin Mineral Resource: >110Mt of Resources Kaolin Ore Reserve (GWKP): 15.1Mt of Reserves Mining lease & PEPR Land acquisition 2023 DFS Experienced team Great White Kaolin Project Mining Lease granted Environmental Management Plan submitted and approved Agreements signed to acquire land covered under Mining Lease Subdivision of land progressed 65% increase in pre-tax NPV to $1.01 Billion Average annual EBITDA increased by 59% to $130 million Experienced and industry focused Board and Executive team Construction ready 3 ANNUAL REPORT 2023 Letter from the Chair Dear Shareholders, Welcome to the Annual Report covering the Financial Year 2023 for Andromeda Metals Limited (Andromeda). Looking over the past year, the Company made some crucial changes that has enabled significant progress to be made in the planned development of The Great White Project (TGWP or Project). We continued moving towards making a final investment decision while progressively de-risking the Project and evaluating funding arrangements that best suit the long-term interests of the Company and its shareholders. These progressive steps are part of the invigorated long-term strategy to bring our product to the broader global market. The staged approach to development was refined to reduce the initial capital investment required, through the construction of an initial Stage 1A Plant. The reduced capacity of Stage 1A was deemed prudent as it more closely matches production to signed offtake volumes in place and being negotiated. In August 2022, the Program for Environment Protection and Rehabilitation (PEPR) was lodged with the South Australian Department for Energy and Mining (DEM) and, subsequently, approved in March 2023. During the year, a number of additional offtake agreements were signed across our portfolio of halloysite-kaolin products to cover a significant proportion of planned Stage 1A production capacity. The growth profile of these agreements, as well as ongoing negotiations with several other potential customers, continue to provide us with the confidence that further offtake agreements will be signed. To support the planned development of TGWP, the Board considered it appropriate to strengthen executive management capacity and capabilities. Accordingly, in October Joe Ranford was appointed Chief Operating Officer, moving from being a part-time consultant to a full-time employee, and subsequently resigned as a Director in November, to solely concentrate on advancing TGWP. In January, Sarah Clarke was appointed as General Counsel & Company Secretary, bringing these functions in-house and reducing the cost of external consultants. Also in January, Bob Katsiouleris was appointed Managing Director and Chief Executive Officer. Bob joined Andromeda in April, with James Marsh transitioning to the role of Executive Director, Sales and Marketing. In April 2023, the Research Agreement related to the carbon capture and conversion project (CC&C Project) with the University of Newcastle was terminated, by mutual agreement. The termination followed ongoing delays in the progress of the CC&C Project, including with the certification process for components of the Carbon Capture Pilot Plant and its set up and installation by GICAN, following its arrival in Newcastle. Andromeda retains control of the CC&C business opportunity and ownership of the CC&C Project intellectual property and the right to continue the CC&C Project and seek to further develop the opportunities identified, with suitable partners. In considering funding arrangements it was necessary to develop a Bankable Feasibility Study (BFS) to underpin the Company’s ability to secure a proportion of the funding required for TGWP’s development through debt. 4 ANDROMEDA METALS LIMITED Letter from the Chair In June, a virtual data room was opened to a number of debt-only financiers, for the purpose of pursuing debt financing discussions. Additionally, following Bob's appointment we have been in discussions regarding a range of other potential funding options. For these discussions to progress in earnest, it was necessary to update the Definitive Feasibility Study (2023 DFS) covering planned production over the full 28 year life-of-mine. Importantly, this updated DFS reflects a comprehensive review of the Company’s corporate positioning and business strategy. This significant piece of work, which Bob explains in detail in his Managing Director’s Report, and announced subsequent to year end, added significant incremental value from the 2022 DFS further confirming the long-term viability of TGWP. In my letter last year, I also wrote how Andromeda acknowledges the importance of committing to safe and sustainable operations and extraction practices. As the Company moves towards production, it continues to aspire to adopt, monitor and report on relevant frameworks and metrics that emerge from the developing consensus and convergence of Environmental, Social and Governance (ESG) frameworks and standards. This year, I am pleased to say that we have progressed our journey through the inclusion of a Sustainability section in this year’s Annual Report, which can be found on page 30. In the Sustainability section, you can read more about how we measure our anticipated Scope 1, 2 & 3 greenhouse gas (GHG) emissions and the plans we have to reduce them over time and as anticipated production expands. The Board continues its commitment to responsible financial and business practices, and the highest standards of corporate governance. Last year, the Board made a number of changes to remuneration practices which continued to be embedded. I invite you to read about these in the Remuneration Report, starting on page 58 of this Report. Thank you to all our stakeholders, in particular, I would like to thank all of our staff, led by Bob, for their ongoing commitment. Finally, I would like to thank you, our shareholders, for your ongoing support. It has been a difficult year for the Company, as it has been for many industrial minerals companies, as we transition to a developer and producer of high quality kaolin, but rest assured the Board and Management remain committed and focused on maximising shareholder value through a considered and methodical approach to advancing TGWP’s development. Yours sincerely, Mick Wilkes Non-executive Chair 5 ANNUAL REPORT 2023 Managing Director's report Andromeda’s commercial strategy continuously defines: “Where we want to play, why we want to play there, who we want to play with, and when.” My fellow Shareholders, This is the first Annual Report in which I write to you, having commenced in my role in April this year. Following my appointment, many shareholders have asked the question of what drove me to move to Adelaide and take on this role. The fact is, I first became aware of the significant size and high quality nature of the resource underpinning TGWP, over 15 years ago, and simply thought and believed that the time to commercialise it is “now”. At the time, both James Marsh and I worked for the same global kaolin company and looked forward to a time when the challenge of developing a resource located so far away from traditional kaolin markets, could be overcome. At Andromeda, we now believe that time has come! Focused approach to advancing TGWP Since commencing in my role, my singular aim has been to narrow the focus of the business, with the aim of accelerating the progress of the development plans and financing options to support a final investment decision (FID) for TGWP being made. This focused approach sought to prioritise activities that support TGWP’s accelerated development, bringing forward the expected generation of revenue and cashflow linked to our world class deposit. Business positioning and commercial strategy To do this, the Company undertook a review of its business positioning and a rigorous, expedited approach to revising its Commercial Strategy. As the proud owner of what are believed to be some of the last great white mineral deposits in the world, Andromeda revised its vision to becoming “The Great White Mineral Company”, with the ambition of leading the world in the sustainable supply of superior quality industrial minerals. 6 Andromeda’s revitalised Commercial Strategy involved identifying key priority markets and segments, that would attract above market value in use opportunities for Andromeda’s kaolin products, which would in turn be accretive to the value of TGWP’s development over the Life-of-Mine (LOM). In doing so, the commercial strategy identified a product portfolio that balances a rigorous segmented market to mine approach with a disciplined and optimised mine to market response. You can read more about Andromeda’s Commercial Strategy on page 11. This led to interesting opportunities that weren’t previously considered, and some difficult decisions being made. In addition to confirming Great White CRM™ and Great White KCM™90 as having an above market value in use in porcelain tableware, an additional application for Great White CRM™ in ceramic tiles and glazes was found to have a potentially high value in use, due to its world-class high alumina/low iron ratio and rheological properties. Whilst Great White HRM™ is subject to ongoing end customer validation, an independent study has demonstrated that Great White HRM™ is a cost- effective additive to decarbonise concrete, through enabling an 8% reduction in cement and water required, leading to an over 7% reduction in Global Warming Potential. Additionally, an emerging shortage of industrial sand, both in Australia and South East Asia, was identified. This led to the opportunity to turn what had been considered as waste previously, both coarse and fine industrial sand, into revenue and margin accretive co-products. ANDROMEDA METALS LIMITED Managing Director's report This now sees Andromeda’s core and complementary product portfolio, defined as: CORE COMPLEMENTARY Great White CRM™ Great White HRM™ Great White KCM™90 Industrial sand This enhanced product portfolio targeting high value markets was incorporated into the 2023 DFS, along with an updated mine development plan (based on the Mine to Market response) that supported an accelerated sales profile and reduced costs across the LOM. This led to the 2023 DFS, whose outcomes were announced following the end of the financial year, that delivered significantly improved economics and an increase of 65% in pre-tax net present value (NPV) to over $1.1 billion, over the 2022 DFS2. Unfortunately, the difficult decisions that needed to be made included pausing some of our research and development activities, including into producing high purity alumina (HPA) and carbon capture. These activities will require further research and investment which the Company will consider once its generating cashflow or should a suitable partner be identified. Reflecting over the past year, the Company has achieved numerous and significant milestones in progressing TGWP to the point of an anticipated final investment decision being made in the coming months. Ongoing negotiations for additional binding offtake agreements continue, which provide support for the planned development of Stage 1A and subsequent expansion. The Project is construction ready, with the required permits in place and a committed Project Team poised for delivery. We continue to assess potential funding arrangements that are appropriate for the Project. With the 2023 DFS recently completed, we can now progress our funding strategy to support an anticipated FID being made. Supporting us in this endeavour, are our legacy metal assets, where we continue to seek opportunities to realise maximum shareholder value through divesting our gold and copper projects, while minimising the cost and management time incurred. Progressing the Project represents a significant, long- term opportunity for Andromeda, you our shareholders, the local Eyre Peninsula community and the South Australian economy. Andromeda is well-positioned to continue the advancement of TGWP through to anticipated development and, together with the numerous growth opportunities in front of us, this provides me with confidence of achieving success in executing on our strategy and in delivering long-term value for you, our shareholders. Procurement activities for long lead items commenced, with all items now on order. Yours sincerely, Bob Katsiouleris Managing Director & CEO 2 Refer ADN ASX dated 24 August 2023 titled 2023 Definitive Feasibility Study Results. 7 ANNUAL REPORT 2023 Operations review Andromeda is an Australian company with the vision to be “The Great White Mineral Company”, with the ambition of leading the world in the sustainable supply of superior quality industrial minerals. Andromeda’s aim is to develop its globally significant, high-quality resources into world-class mining operations that produce superior quality halloysite-kaolin products with high value in use, for supply to key target segments across growing global markets. Andromeda is the proud owner of what are believed to be some of the last great white mineral deposits in the world: a unique blend of bright kaolinite and halloysite clays, producing a refined product with a high average alumina content of greater than 36%. Through developing The Great White Project (The Project or TGWP), Andromeda is focused on leveraging the potential of this unique, world-class resource for the long-term benefit of our shareholders, the local Eyre Peninsula community and the South Australian economy. Together with our portfolio of halloysite-kaolin projects, Andromeda is also exploring several copper and gold prospects across Australia in conjunction with joint venture partners. Our strategy is to leverage our joint venture relationships to maximise shareholder value through divesting these assets, while also minimising the cost and management time incurred developing them. Our purpose Through the use of our industrial minerals and nanotechnologies we strive to enrich the lives of people by improving the environment, creating prosperity for our shareholders and delivering value for our stakeholders. G ROW M ETALS G ROW I N D U STRIAL M I N E A L S R HARV E S T Our vision To become “The Great White Mineral Company” and lead the world in the safe, sustainable supply of superior quality industrial minerals and technologies. Our values N A N OTECHN O L O G IE S Our mission Develop TGWP and leverage its high quality halloysite-kaolin resources to develop a new industry supplying high value in use products to supply growing key targets segments and markets. Innovation Teamwork Integrity Quality Andromeda’s team is passionate about developing, commercialising, and monetising TGWP and, our other high-grade kaolin deposits. The safety and wellbeing of our employees and our communities is our first priority. 8 ANDROMEDA METALS LIMITED Operations review Overview of Andromeda’s current projects and resources Halloysite-Kaolin CAMEL LAKE Kaolin GREAT WHITE Kaolin MOUNT HOPE Kaolin EYRE Copper Gold MOONTA Gold WUDINNA THE GREAT WHITE PROJECT (TGWP) Flagship project with 15.1Mt Ore Reserve and Resource ~100Mt3. 2023 DFS underpins 28-year operation with pre-tax NPV of $1.01 billion4. EYRE KAOLIN PROJECT / MOUNT HOPE KAOLIN PROJECT / CAMEL LAKE PROJECT Projects focused on expanding halloysite-kaolin resources, across six tenements covering 3,481 km2. MOONTA COPPER GOLD PROJECT Joint venture for potential extraction of copper via in-situ recovery (ISR) with Environmental Metal Recovery Pty Ltd. WUDINNA GOLD PROJECT Joint venture exploration for potential development of gold and rare earth elements (REE) deposits and prospects with Cobra Resources PLC over six tenements covering 1,832 km2. 3 Refer ADN ASX announcement dated 6 April 2022 titled Great White Kaolin Project - Definitive Feasibility study and Updated Ore Reserve. 4 Refer ADN ASX dated 24 August 2023 titled 2023 Definitive Feasibility Study Results. 9 ANNUAL REPORT 2023 Operations review The Great White Project SOUTH AUSTRALIA 100% Andromeda The Great White Project (TGWP) is a wholly owned project that includes several high-quality deposits of halloysite-kaolin, containing naturally occurring kaolinite plates and halloysite tubes. Subject to making a final investment decision with respect to TGWP, Andromeda aims to become a globally significant supplier of high-quality kaolin products to growing segments in global markets. TGWP comprises three tenements centred within the District Council of Streaky Bay, approximately 15 km southwest of the township of Poochera. Poochera is located on the Eyre Highway about 635 km northwest by road from Adelaide and 65 km east of Streaky Bay, on the Eyre Peninsula in South Australia (Figure 1). Andromeda has continued to progress and de-risk The Project’s development. During FY23, this included the submission of the PEPR to, and subsequent approval by, South Australia’s Department for Energy and Mining. Additionally, land purchase agreements were signed and the process of subdivision for the eventual transfer of ownership to Andromeda, were progressed. The Project has highly valued kaolinite and halloysite mineral deposits with a world-class iron to alumina ratio , outstanding mechanical strength, exceptional fired brightness, and distinctive rheological properties. 134° Tarcoola 136° Roxby Downs 138° Woomera S OUTH AUSTRALIA 32° Ceduna ML 6532 – Great White Deposit Port Augusta Streaky Bay Poochera Great White Project 34° GREAT AUSTRALIAN BIGHT Whyalla Kimba Port Pirie Lucky Bay Kadina Port Lincoln Adelaide Main road Railway Town Lake Exploration Licence 36° AND SA11 0 100 200 Kilometres Figure 1 The Great White Project regional location map. 10 ANDROMEDA METALS LIMITED Operations review The Great White Project COMMERCIAL STRATEGY The Andromeda team is passionate about developing, commercialising, and monetising TGWP and, in time, Andromeda’s other unique high-grade kaolin deposits. TGWP, fueled by the team’s passion, will be Andromeda’s economic engine for its strategic intent to become the “Best” white mineral company in the world. To be the “Best” white mineral company in the world, Andromeda will support selected customers in targeted high value market segments of non-commodity markets. These markets include high quality ceramic tiles, ceramic porcelain tableware and low-carbon concrete production. Andromeda’s commercial strategy identified a product portfolio that balances a rigorous segmented market to mine approach with a disciplined and optimised mine to market response. Andromeda’s commercial strategy map is presented in Figure 2. Through the rigour of applying the methodology behind the Commercial Strategy Map, Andromeda understands the key drivers in both the macroenvironment and microenvironment in which it operates. From this understanding, strategic white mineral market opportunities are identified. Through Andromeda’s market to mine approach, white mineral options are proposed for those strategic market opportunities with the greatest business potential. E N I M O T T E K R A M T E K R A M O T E N I M I N O T U C E X E Macro environment The Great White Mineral Company Micro environment Strategic market opportunities Strategic Lens Megatrend response solution The “Best” aligned Return on invested capital/CCC Market and technical validation Strategic White Mineral product options Core business products Great White CRM Great White CRM Great White KCM Complementary business products Great White HRM Industrial sand Adjacent business opportunities High-purity alumina Carbon capture Mine responce LOM value accretive LOM plan and mine schedule LOM product wet metric tonnes Great White CRM 3,485,586wml Great White CRM 3,518,962wml Great White KRM 305,881wml Great White HRM 750,734wml Sales plan Marketing and sales strategy Sales and operational planning Figure 2 Andromeda’s commercial strategy map. Figure 3 Images show (from left) raw kaolin clay from Andromeda’s TGWP, which is then refined and processed, before being graded and packaged into various products that meet our clients’ exacting specifications. 11 ANNUAL REPORT 2023 Operations review The Great White Project Products within Andromeda’s product portfolio may interchange from core to complementary to adjacent business lines. They may also be replaced by other newly originated white mineral products, dependent on measurable performance success in respective market segments. Andromeda’s commercial strategy uses both top down, market to mine, and bottom up, mine to market, approaches to carefully determine the most suitable markets to engage and strategically supply. The marketing and sales strategy is essential to ensure the success of the product in the market. Andromeda’s commercial strategy map and methodology continuously defines: “Where we want to play, why we want to play there, who we want to play with, and when.” The commercial strategy map and methodology assist in providing direction towards the markets best suited for TGWP products, the underlying drivers for why they are the best suited, and the key customers, stakeholders, partners and competitors anticipated response. By determining the “where”, Andromeda can identify and efficiently capture the value in use potential for both preferred customers and for Andromeda alike. By understanding and actively revisiting the “why”, Andromeda is able to respond and adjust to prevailing market conditions. The “who” will evolve over time as customers, stakeholders, partners and competitors will be driven by different strategic imperatives. By keeping a disciplined approach across the commercial strategy map and methodology, Andromeda will have the commercial tools in place to understand these changing imperatives in order to prepare and capitalise or mitigate sustainably. More importantly the methodology allows a “first mover” response to leading macro and micro indicators. MARKET TO MINE Macroenvironment The macroenvironment has a significant influence on the success of Andromeda’s marketing efforts. The key macroenvironment elements considered by Andromeda on an ongoing basis, are: • Geopolitical risk • Decarbonisation • Urbanisation and social trends • Macroeconomics • Shipping and ports • Kaolin markets • Water and energy • Regional economies Consideration of the global kaolin macroenvironment has determined that the low-margin and/or high entry cost markets of polymer, paper, pharmaceuticals and paint commodity markets will not be the focus for Andromeda. Analysis of these factors identified the following key target markets for Andromeda to be: • High quality ceramic tiles • High quality ceramic porcelain tableware • • Low carbon concrete production Industrial sand. Microenvironment The microenvironment has a significant influence on the success of Andromeda’s marketing ventures. The key microenvironment elements considered by Andromeda on an ongoing basis, for each key target market are: • Global supply and demand • Addressable market opportunities • Contestable markets • Product end use validation • Competitor product, profiles and competitive positioning. 12 ANDROMEDA METALS LIMITED Operations review The Great White Project Strategic lens Andromeda’s strategic lens is an essential decision-making tool in the market to mine stage of the strategic map methodology. This tool is used to successfully identify strategic white mineral product options by determining how best to take advantage of macroenvironment and microenvironment trends and ultimately drive value creation. How we identify strategic market opportunities and evaluate them against our three key strategic criteria: 1. Megatrend response solution This criterion is based on the need for the white mineral product options to respond to one or more of the following key megatrends: » Urbanisation » Decarbonisation » Technology 2. Aligned with the “Best” White mineral products are assessed against the best-in-class value in use, where this could result in premium pricing in selected target market segments. 3. Return on capital investment; Cash conversion cycle This is a core competency for Andromeda, this determines who to sell to, on what terms and how quickly cash flow into the business could occur. Opportunities are assessed according to the above criteria, then allocated to the corresponding numbered circles in Andromeda’s Strategic Lens, as depicted in Figure 4. Evaluating all opportunities against these strategic criteria is required to appropriately assess and pursue those that maximise the value creation potential for Andromeda. E n a b l e rs of optionality e Tim Reso u r c e s Megatrend response solution Aligned with the “Best” Return on capital Cash conversion cycle (CCC) P a rtners s n gio R e Figure 4 Andromeda’s strategic lens. Andromeda defines the outer ring as ‘enablers of optionality’. Each enabler is addressed with some key questions: • Partnerships » Does Andromeda currently have a strategic partnership in place for this opportunity? » Are there strategic partnerships available for this opportunity? » Does this opportunity require a strategic partnership? » Would this opportunity benefit from a strategic partnership? • Resources » Does Andromeda have access to the geological, financial, physical and human capital resources for this strategic opportunity? » Does this opportunity require additional resources? » Is there market demand for the geological resource? • Regions » Does Andromeda have access to the region where there is demand for this opportunity? » Does this opportunity target regions of interest? » Does this opportunity address demand/supply shortfalls of certain regions? » What is the effect of the opportunity given the location of TGWP? • Time » Is there an immediate need in the market currently that this opportunity responds to? » Can Andromeda respond in a timely way with this opportunity? » What is the time requirement of this opportunity? 13 ANNUAL REPORT 2023 Operations review The Great White Project CRMTMP CRMTMT KCMTM HRMTM • Megatrend response • Megatrend response solution • Aligned with the “Best” • Return on investment solution • Aligned with the “Best” • Return on investment • Megatrend response • Megatrend response solution • Aligned with the “Best” • Return on investment solution • Return on investment Industrial sand HPA Carbon capture • Megatrend response • Megatrend response • Megatrend response solution • Return on investment solution solution The complementary product portfolio has been defined as Great White HRM™ and industrial sand co-product. In addition to the identified use of Great White HRM™ as a rheology modifier, the global market for low-carbon concrete production has been identified as a further opportunity. Industrial sand co- product will be sold to meet the regional shortfall in the construction market. Andromeda’s adjacent businesses (including high purity alumina (HPA) and carbon capture) are considered still at scoping or pre-scoping stage. Accordingly, research activities related to their development were put on hold, in order for the Company to prioritise the development of TGWP. Subject to additional funding, the commercial strategy review identified an opportunity for HPA to become part of Andromeda’s complementary product portfolio following technical and market validation. This is proposed to restart post commissioning of TGWP. Figure 5 Andromeda’s product portfolio. The bidirectional arrows around the outer ring represent the flexibility between the enablers and how these navigate optionality. Therefore, the focus between lenses is in response to changing circumstances or strategic priorities. Opportunities are first considered against the enablers and then against the strategic criteria. It must be understood that this is a dynamic strategic lens, and although an opportunity may initially be placed in one area this is not fixed and should be reassessed proactively. This ensures opportunities capitalise on favourable conditions. The lens encourages well-informed choices that contribute to long-term success and competitiveness through understanding the strategic criteria and their interplay. Ultimately outputting prioritised potential white mineral product options for market and technical validation. Prioritised white mineral options with strategic fit were then evaluated to assess their market and technical viability for value in use within the target market segments. Validated strategic white mineral product options were allocated into either core, complementary or adjacent business products based on the met criteria (Table 2). The comprehensive commercial strategy review conducted during the second half of the 2023 financial year, identified a product value in use that was above the existing market value for The Great White Project’s kaolin core product portfolio, Great White CRM™ and Great White KCM™90, in established and growing markets for high quality ceramic tiles and ceramic porcelain tableware. 14 ANDROMEDA METALS LIMITED Operations review The Great White Project Table 1 Andromeda’s products and end-uses. PRODUCT DESCRIPTION END-USE Great White CRMTM Great White CRMTM P T Fully refined and dried kaolin product. High brightness and ultra-fine. High quality porcelain tableware Fully refined and dried kaolin product. High brightness, ultra-fine and high alumina. High quality ceramic tiles Great White KCMTM90 Refined, bright white kaolin product. Great White HRMTM Highly reactive halloysite-kaolin rheology modifier Ceramics and it can also be used for further refinement by other parties to give a premium grade product for other industry applications. It can be directly added into lower grade resources to increase the total value of the resultant combined product. High solids slurries including concrete and a large range of associated applications where its suspension properties are very effective. Industrial sand There two potential Andromeda sand grades, coarse and fine sand. Construction market High purity alumina (HPA) Carbon capture and conversion Sapphire glass, LED lights and lithium-ion battery manufacturing Heavy industry carbon producers, who need carbon capture materials Table 2 Andromeda product lifecycle comparison table. MARKET AND TECHNICAL VALIDATION ELEMENT GREAT WHITE CRM™ GREAT WHITE KCM™90 GREAT WHITE HRM™ INDUSTRIAL SAND HPA Determine key market segments Conduct initial process testwork Conduct initial product testwork Identify addressable market Value in use assessment In progress In progress In progress n/a Planned Planned Planned Planned Planned Identify contestable market share Conduct commercial scale pilot trials In progress In progress Planned Planned Planned 15 ANNUAL REPORT 2023 Operations review The Great White Project MINE TO MARKET RESPONSE Andromeda’s commercial strategy map methodology led to the selection of its Core, Complementary and Adjacent business products. These business products are presented in Figure 6 aligned with the global megatrends they primarily respond to. The Great White Deposit’s 15.1 Mt JORC reserve delineated by Core and Complementary products aligned to market demand, is presented in Figure 7. Stage 1A - Design and construction. A staged, scalable approach to developing TGWP, is achieved through the initial development of the Stage 1A Processing Plant that more closely matches production to total commitments for signed offtake agreements. This approach has the additional benefits of reducing initial up-front capital requirements, while also enabling the scaling up of production volumes in line with subsequent signed offtake agreements. Stage 1A represents the beginning of a staged approach to developing TGWP that continues to aim to deliver on the production and financial outcomes of the 2023 DFS. The staged approach de-risks the development of the Project whilst building the Great White brand, reputation, and value in the market. After revising and rescheduling the mine plan, the Stage A Plant was able to reduce the initial capital required while meeting the sales forecasts and design plans detailed in the 2023 DFS. When fully operational, the Stage A Plant is planned to process a nominal rate of 100,000 tpa of ore and have a nameplate capacity of 50,000 tpa of refined product to fulfil customer demand. The plant is designed to produce Great White CRM™, Great White KCM™90 and Great White HRM™, with built-in optionality to provide the feedstock to meet the need for other products customers may demand. The location of the Stage 1A Pit enables the ability to access Andromeda’s core kaolin products and enable for the ramp-up of production in accordance with market demand. 16 Figure 6 Andromeda business, products and global megatrend responses (Andromeda business products and megatrend response - product positioning). Stage 1A starter pit Figure 7 The Great White Project 2023 DFS starter pit position, products, and grades. The staged nature of current offtake agreements and signing of additional offtake agreements is expected to see production increase to the processing capacity of 300,000 tpa outlined in Stage 1A of the 2023 DFS, and subsequent Stages 1B, 2 and 3. Ordering of long lead items In August 2022, preparations for the procurement process of long lead items for Stage 1A commenced. The procurement process has progressed in line with all items scheduled to arrive according to the construction schedule. In December 2022, the Fluidised Bed Dryer was ordered, followed by the Drum Washer in June 2023. Subsequent to the end of the financial year, the Thickener, Filter Press and Filter Cake Feeder have also been ordered. This completes the ordering of long lead items, with ordering since progressing to other capital equipment required for Stage 1A. Subject to making a final investment decision, all planned and current activities underway will be run in parallel to complete construction as efficiently as possible. ANDROMEDA METALS LIMITED Operations review The Great White Project Figure 8 Stage 1A - 3D design model of processing plant. Streaky Bay Pilot Plant During FY23, the Streaky Bay Pilot Plant continued to be operated. This enabled Andromeda to confirm the product quality of samples collected from the area that will be mined in the early years of TGWP. During the period, the pilot plant continued successfully producing new samples for customer and partner evaluation and to undertake further test work, in addition to informing the engineering design of the TGWP processing plant, project execution and financial modelling of the Project. In June 2023, ahead of an expected increase in requests for samples, a comprehensive review was undertaken. The focus of the review was to enable a scaling up of operations to support additional customer testing and further product validation, while ensuring safe, sustainable operations. Following the review, a re-set of operations was undertaken with the Streaky Bay Pilot Plant recommencing in late-July, with the expanded ability to produce large scale samples. REGULATORY APPROVALS AND LAND ACCESS AGREEMENTS During August 2022, further progress was achieved, and risk reduced, in advancing TGWP, with the PEPR for Stage 1A and 1B submitted for assessment and approval to the South Australian Department for Energy and Mining. Additionally in August 2022, agreements to acquire all the required freehold land from relevant landowners for the Project were signed. These agreements include the land access waivers that are required as part of the PEPR approval. Both these activities followed months of extensive stakeholder consultations with landholders, regulators and the broader Eyre Peninsula community. In March 2023, approval of the PEPR was received from DEM. Additionally, EPA Works approval was granted by the Environment Protection Authority (EPA) of South Australia. These approvals now result in TGWP being construction ready with the required permits in place. Progression to the construction phase is dependent on the lodgment of the Environmental Bond and payment into the Native Vegetation Fund. 17 ANNUAL REPORT 2023 Operations review The Great White Project EXECUTION Branding and market positioning Andromeda’s vision is to be “The Great White Mineral Company” with ambition to lead the world in the sustainable supply of superior quality industrial minerals. Andromeda’s core products are targeted at the high quality ceramic tile and porcelain tableware segments, and this requires the best and most consistent kaolin available. The Andromeda core products will be positioned for this target audience using specific industry advertising and alignment with independent experts, institutions and associations. Price positioning will reflect the value in use of the Great White suite of products. “The Great White Mineral Company” will be used as a positioning statement and branding tool. Offtake strategy Andromeda’s offtake strategy is based on a hub and spoke model. Andromeda establishes its hub for each core and complementary business in a selected geographical region that is world-leading in the respective targeted market segment. The selection of each hub is for the required technical validation of Andromeda’s matching core and complementary products. Technical validation requires credible independent institutions and/or Andromeda partners with the requisite industry expertise, capability, and equipment to test and validate Andromeda’s products. Where needed, these organisations can also guide product development for Andromeda to gain traction and grow in target markets. Once technical validation is successfully achieved in Andromeda hubs, testing certification and technical information is leveraged for market penetration in targeted regions. Initially this is within hub regions and then into other prioritised regions that are influenced by hub regions. Andromeda services targeted markets through its working relationships and The Project product delivery spokes. Working relationships are established either directly by Andromeda with end use customers and/or with distribution partners, who in turn engage with end- use customers. Andromeda likewise delivers its products either directly to end use customers and/or to distribution partners, who in turn deliver to end-use customers. 18 S O URCE The Great White Project PRODUCT Vietnam Bangladesh India SEED/DEVELOPMENT PRODUCT Thailand Indonesia Malaysia Teir 1 manufacturers SPAIN ITALY Formulation H UB SPAIN/ITALY FORMULATION Ibero Clays ITC Spain North America Formulation TURKEY MIDDLE EAST JAPAN CHINA Teir 2 manufacturers Figure 9 Andromeda’s offtake strategy for the global high quality ceramic tiles market. S O URCE The Great White Project PRODUCT Korea Bangladesh India Teir 1 distributors CHINA Influence H UB CHINA SEED/DEVELOPMENT PRODUCT FORMULATION Thailand Indonesia Sri Lanka Foshan Ceramic Research Institute Influence JAPAN Teir 1 distributors Figure 10 Andromeda’s offtake strategy for the global high quality ceramic porcelain tableware market. S O URCE The Great White Project PRODUCT Cement and concrete companies Australia and NZ Subsidiaries of global companies Influence H UB AUSTRALIA Europe SEED/DEVELOPMENT PRODUCT FORMULATION Certification and product testing South East Asia Influence Australia and NZ Locally owned Cement and concrete companies Figure 11 Andromeda’s offtake strategy for the global cement and concrete market. ANDROMEDA METALS LIMITED Operations review The Great White Project SALES AGREEMENTS Securing good quality binding offtake agreements for kaolin products is a lengthy and complicated process. Andromeda’s strategic approach to marketing has led to the following sales agreements. Great White KCMTM90 Plantan Yamada Co Ltd has signed a long form offtake agreement for the supply of 25,000 tonnes of Great White KCM™90 over the first three years of production for sales into the ceramics sector of Japan subject to conditions precedent5 Great White CRMTM & Great White KCMTM90 Foshan Gaoming Xing-Yuan Machinery Co. has signed a terms sheet with to purchase 115,000 tonnes of Great White CRM™ over a five year period and 5,000 tonnes of Great White KCM™90 in the first year, subject to conditions precedent6 Great White HRMTM IMCD has signed a terms sheet for exclusive sales into Australia and New Zealand with an indicative total of 22,500 tonnes of Great White HRM™ over an initial term of three years, with a maximum of 30,000 tonnes and a minimum of 15,000 tonnes subject to conditions precedent7 Additionally, Andromeda has received a signed Letter of Intent from IberoClays8 for exclusive distribution to the Mediterranean region of the full portfolio of Andromeda’s ceramics kaolin products. IberoClays is a key supplier of kaolin into global markets and the leading formulator of ceramic tile minerals in Europe. Key terms under the Letter of Intent are: • Exclusive distribution across Spain, France, Italy, Portugal, Morocco, Egypt and Turkey. • Target volumes of between 15,000-20,000 tonnes per annum (tpa) during the first 3 years of production. • Pre-payment for orders confirmed before 30 September 2025, payable quarterly at the beginning of the quarter for product to be shipped during that quarter. • Agreement duration of an initial 3 years, with an evergreen provision thereafter, and to finalise the binding agreement by the end of October 2023. Ongoing negotiations for further offtake agreements continue with several other interested parties across multiple markets and segments. 5 Refer to ADN ASX dated 8 August 2022 titled Andromeda signs another Binding Offtake Agreement for KCM™90 from the Great White Project. 6 Refer to ADN ASX dated 7 June 2023 titled Term Sheet signed for significant quantities of kaolin products for Chinese market. 7 Refer to ADN ASX dated 24 November 2022 titled Andromeda Signs Binding Offtake Agreement for Great White Concrete Additives. 8 Refer to ADN ASX dated 10 July 2023 titled Letter of Intent received from IberoClays for exclusive distribution to the Mediterranean region 19 ANNUAL REPORT 2023 Operations review The Great White Project 2023 DEFINITIVE FEASIBILITY STUDY (2023 DFS) Following the updated Commercial Strategy, Andromeda updated the previous 2022 DFS by developing the 2023 DFS. The 2023 DFS confirmed the staged approach (Figure 12) to the development of The Great White Project, which results in low initial capital requirements and a 12-month construction and commissioning program required for each stage. The 2023 DFS is based on a staged expansion (Stage 1A, 1B, 2 and 3), and currently has a 28-year mine life. The processing method has been updated to provide an improved mine to market response. The 2023 DFS covers the four-stage development of The Project to ramp up to full anticipated production of 300 ktpa over the 4 stages. The production summary across the LOM can be seen in Table 3. Following the development of vigorous revision Commercial Strategy, Andromeda revised the planned development of TGWP by developing the 2023 DFS. The 2023 DFS confirmed the staged approach to the development of The Great White Project, would deliver strong financial returns in low initial capital requirements and a 12-month construction and commissioning program required for each stage. The 2023 DFS confirmed TGWP could deliver strong long term cashflows from a range of high-grade kaolin products and industrial sand co-products, with sufficient Reserves to sustain a 28-year mining operation based on assumptions at that time. Using conventional mining and processing techniques, the 2023 DFS found TGWP could generate high quality products, leading to high margin cashflows with a pre- tax NPV of $1,010 million and average EBITDA of $130 million per annum. The 2023 DFS is based on a staged expansion (Stage 1A, 1B, 2 and 3) ramping-up to the 600,000 tpa feed rate envisaged in the previous 2022 DFS. The processing method has been updated to provide an improved mine to market response. The 2023 DFS covers the four-stage development of The Project to ramp up to full anticipated production of 300 ktpa over the 4 stages. The summary of the 4 stages across the LOM can be seen in Table 3. The four-stage approach to development outlined in the 2023 DFS, was expected to deliver average annual EBITDA of $130 million, an increase of 59% from the 2022 DFS, and require an initial capital cost of $62.4 million, which is a 33% reduction from that envisaged under the 2022 DFS. The payback period of 5.1 years under the 2023 DFS is an improvement on the 5.9 years in the 2022 DFS, and includes capital costs to develop Stages 1A, 1B and 2. Capital costs for Stage 3 are intended to be funded by the cash flows generated by The Project. Please refer to the ASX announcement released by the Company on 24 August 2023 titled 2023 Definitive Feasibility Study Results for further details on the 2023 DFS, including the assumptions and qualifications on which the outcomes are based. Table 3 Production summary (wet metric product tonne) across the LOM. PRODUCTION SUMMARY Product Great White CRMTMP Great White CRMTMT Great White KCMTM90 Great White HRMTM Coarse sand Fine sand Total with sand Wet metric product tonne 3,485,588 3,518,962 305,881 750,374 4,459,008 1,486,336 14,006,149 Stage First shipment Kaolin production Nominal capacity Capital cost Stage 1A October 2024 50,000 tpa 100,000 tpa $62.4 million Stage 1B December 2025 150,000 tpa 300,000 tpa $57.6 million Stage 2 December 2027 250,000 tpa 500,000 tpa $57.2 million Stage 3 December 2029 300,000 tpa 600,000 tpa $10.9 million Figure 12 2023 DFS planned development stages. 20 ANDROMEDA METALS LIMITED Operations review Exploration During the period Andromeda’s focus was on developing The Great White Project with regional exploration activities minimised to levels where core exploration tenements were maintained in good standing, Eyre Kaolin Joint Venture requirements were met, and divestment of non-core assets advanced. 21 ANNUAL REPORT 2023 Operations review Exploration Great White Deposit SOUTH AUSTRALIA Andromeda 100% The initial focus of TGWP is centered around The Great White Deposit which underpins the planned 28-year mining operation detailed in the 2023 DFS (see page 20). The Ore Reserve Estimate for The Great White Deposit is 15.1 Mt of bright white kaolinised granite, comprising 34% Proved Reserve and 66% Probable Reserve9, producing a refined product with a high average alumina content of greater than 36%, with properties suited to the high end porcelain and tiles markets. In December 2021, a Mining Lease (ML 6532) underpinning the TGWP, was granted by South Australia’s Department for Energy and Mining (DEM), along with supporting Miscellaneous Purposes Licences (MPL 163 & 164). In August 2022, following an extensive and ongoing program of landholder and community engagement, Andromeda announced that it had signed land purchase agreements and had lodged its PEPR related to the Great White Deposit10. The DEM subsequently approved the PEPR in March 202311. Puntabie 450,000m E 500,000m E Nunjikompita SOUTH AUSTRALIA Location of tenure Carawa Cartwheel Corner Pimbaacla Nargultie Wirrulla Haslam 6,400,000m N Streaky Bay Yantanabie Halfpipe EL 6665 Cungena Highway Main road Road Town Resource Prospect EL – Great White Project EL – Eyre Kaolin Project Mining Lease 6532 MPL 163 (water pipeline) MPL 164 (access road) Hammerhead Deposit Piednippie EL 6666 Parraba Streaky Bay Chandada Inkster Capietha EL 6666 Poochera EL 6426 Whichelby Bronze Whaler EL 6426 EL 6588 EL 6588 EL 6426 Witera Venus Bay Venus Bay 6,350,000m N Sceale Bay Sceale Bay Searcy Bay EL 6202 Bairds Bay 0 10 20 Kilometres Karcultaby Mogul Great White Deposit Manta Tiger Deposit Poldinna Yaninee EL 6663 EL 6664 Mount Damper Chairlift Talia Station Poochera 49 Figure 13 Great White Deposit Mining Lease and Miscellaneous Purposes Licences. RESERVE CATEGORY MT YIELD (%) HALLOYSITE (%) BRIGHTNESS (%) Fe2O3 (%) Proved Probable Total 5.2 10.0 15.1 45 46 46 14 10 11 84 83 84 0.5 0.5 0.5 9 Refer ADN ASX announcement dated 6 April 2022 titled “Great White Kaolin Project - Definitive Feasibility study and Updated Ore Reserve”. 10 Refer ADN ASX announcement dated 18 August 2022 titled “Andromeda progresses Great White Kaolin Project with signing of Land Acquisition Agreements and lodgement of PEPR”. 11 Refer ADN ASX announcement dated 2 March 2023 titled “Andromeda locks-in regulatory approval for its Great White Project”. 22 ANDROMEDA METALS LIMITED Operations review Exploration Hammerhead Deposit SOUTH AUSTRALIA Andromeda 100% Andromeda’s Hammerhead Deposit is approximately 5 km northeast of the Great White Deposit (See Figure 13). An Inferred Mineral Resource for the Hammerhead Deposit of 51.5Mt of kaolinised granite reported at an ISO Brightness (ISO B R457) cut-off of 75 in the minus 45µm size fraction has been estimated (refer Table 4). Table 4 Hammerhead Kaolin Mineral Resource DOMAIN Main Halloysite Total MT 43.1 8.4 51.5 PSD <45 µM KAOLINITE % HALLOYSITE % 52.7 52.1 52.6 43.2 40.5 42.7 5.4 12.0 6.5 Note that all figures are rounded to reflect appropriate levels of confidence. The Resource yields 27.1Mt of High Bright kaolin product (ISO B >80) in the minus 45µm recovered fraction, with the remaining approximate 47.4% of material being largely residual quartz derived from the weathered granite. The Halloysite sub domain contains 4.7Mt of minus 45µm material comprised of 21.6% halloysite with an ISO B of 82.9. Significantly, some areas within the Hammerhead Deposit show high levels of halloysite (>20%) that is similar to the existing resource reported at the Great White Deposit. Table 5 Hammerhead Kaolin Mineral Resource <45µm. DOMAIN Main Halloysite Total MT ISO B KAOLINITE % HALLOYSITE % 22.4 4.7 27.1 82.0 82.9 82.2 82.7 72.9 81.0 10.4 21.6 12.3 Al2O3 % 36.90 37.47 36.99 Fe2O3 % 0.63 0.64 0.63 TiO2 % 0.73 0.62 0.71 Note that all figures are rounded to reflect appropriate levels of confidence. 23 ANNUAL REPORT 2023 Operations review Exploration Tiger Deposit SOUTH AUSTRALIA Andromeda 100% Andromeda’s Tiger Kaolin Deposit is approximately 10km south of the Great White Deposit. A Mineral Resource Estimate for the Tiger deposit of 12.1Mt containing 7.2Mt of kaolinite (in the <45 µm size fraction) has been estimated.12 The Tiger Kaolin Deposit further demonstrates GWKP’s potential to become a world class producer of kaolin. Table 6 Tiger Kaolin Mineral Resource. CLASSIFICATION Inferred Mt 12.1 PSD <45µm KAOLINITE + HALLOYSITE % 59.9 56.7 Note that all figures are rounded to reflect appropriate levels of confidence Table 7 Tiger Kaolin Mineral Resource <45µm CLASSIFICATION Inferred Mt 7.2 ISO B KAOLINITE + HALLOYSITE % 83.1 94.7 Al2O3 % 37.2 Fe2O3 % 0.81 TiO2 % 0.61 Note that all figures are rounded to reflect appropriate levels of confidence 12 Refer ADN ASX announcement dated 23 March 2022 titled “Maiden Tiger Kaolin Resource and Regional Rare Earth Element Potential”. 24 ANDROMEDA METALS LIMITED Operations review Exploration Eyre Kaolin Project SOUTH AUSTRALIA Andromeda 0% (earning up to an 80% interest in the tenements through sole funding expenditure of $2.75 million over six years from commencement of the joint venture)13 Andromeda entered into a binding Heads of Agreement with private entity Peninsula Exploration Pty Ltd (Peninsula) to form the Eyre Kaolin Joint Venture (EKJV) comprising four tenements near GWKP on the western Eyre Peninsula of South Australia. The four exploration licences cover 2,799 km2 and are explored for kaolin with properties that are complementary to those of the Great White Deposit’s kaolin. During the financial year the Company announced an Exploration Target Estimate of 80-120Mt of High Bright White kaolin (ISO B in the range of 80 to 84) on the Chairlift Prospect14, located on tenement EL 6664. The potential quantity and grade of the Chairlift Exploration Target is conceptual in nature as there has been insufficient drilling results to estimate a Mineral Resource, and it is uncertain if further exploration drilling will result in the estimation of a Mineral Resource. Following the announcement of the Chairlift Exploration Target an additional 23 holes were completed for 842 metres, and at the Halfpipe Prospect located on EL 6665 a further 15 drillholes were completed for 633 metres. From this drilling, the Company continues to await the full results of the samples that were submitted for processing and analysis. 13 Refer ADN ASX announcement dated 12 August 2021 titled “Andromeda enters new kaolin Joint Venture. 14 Refer ADN ASX announcement dated 29 November 2022 titled “Exploration Target Defined for Chairlift” 25 ANNUAL REPORT 2023 Operations review Exploration Mount Hope Kaolin Project SOUTH AUSTRALIA Andromeda 100% Andromeda holds a 100% interest in the Mount Hope Kaolin Project, approximately 160km southeast of GWKP. Work undertaken by Andromeda defined significant areas of ultra-high bright white kaolin with exceptionally low iron contaminant levels. An Inferred Mineral Resource for Mount Hope of 18.0Mt of bright white kaolinised granite was subsequently estimated using an ISO B cut-off of 75, yielding 7.5Mt of minus 45µm quality kaolin product. DOMAIN Main Halloysite Ultra-bright Total Mt PSD <45µm KAOLINITE % HALLOYSITE % 12.8 1.6 3.7 18.0 40.95 39.13 44.37 41.49 33.6 25.6 38.0 33.8 0.9 6.7 0.7 1.4 Note that all figures are rounded to reflect appropriate levels of confidence The ultra-bright sub domain contains 1.6Mt of minus 45-micron material with an ISO B of 84.1 and the halloysite sub domain contains 0.6Mt of minus 45-µm material comprised of 17.2% halloysite. Table 9 Mount Hope Kaolin Mineral Resource (in the <45µm). Table 8 Mount Hope Kaolin Mineral Resource (whole rock). 6,220,000m N Mount Hope Kaolin Deposit 520,000m E 530,000m E 540,000m E 550,000m E EL 6286 S O U T H A U S T R A L I A Roxby Downs Tarcoola Woomera Ceduna Streaky Bay Mt Hope Kaolin Project GREAT AUSTRALIAN BIGHT Port Augusta Whyalla Port Pirie Port Lincoln Adelaide 6,230,000m N Hall Bay Inset Mount Hope Kaolin Project Mount Hope Brimpton Lake 200 100 0 Kilometres Inset F L I N D E R S H I G H W A Y Kapinnie Highway Main road Road Railway Town Exploration licence Kaolin resource 6,210,000m N 0 5 10 Kilometres Mt Hope 05 Figure 14 Mount Hope licence area. SOUTH AUSTRALIA MOUNT HOPE KAOLIN PROJECT DOMAIN Main Halloysite Ultra-bright Total Mt 5.2 0.6 1.6 7.5 ISO B KAOLINITE % HALLOYSITE % Al2O3 % Fe2O3 % 81.8 81.2 84.1 82.2 82.1 65.4 85.7 81.4 2.2 17.2 1.5 3.3 35.1 34.8 36.0 35.3 0.56 0.60 0.32 0.51 TiO2 % 0.62 0.63 0.63 0.62 Note that all figures are rounded to reflect appropriate levels of confidence. The ultra-bright domain is of extremely high purity, bright white kaolin with low halloysite levels. This makes it ideally suited to high-value markets in specialist coatings and polymers. 26 ANDROMEDA METALS LIMITED Operations review Exploration Wudinna Gold Project SOUTH AUSTRALIA Andromeda 25%, royalty payment 1.5% of the Net Smelter Return to Alcrest Royalties Australia Pty Ltd The Wudinna Gold Project (WGP) comprises five tenements that total 1,832km2 in the Central Gawler Ranges. In October 2017, a Heads of Agreement was entered into with Lady Alice Mines (LAM) for expenditure of up to $5.0 million by LAM on the tenements in order to earn a 75% interest. LAM was subsequently acquired in early 2019 by Cobra Resources PLC (Cobra), a listed London Stock Exchange entity. During the financial year, Cobra completed 20 Reverse Circulation (RC) drillholes for 2,466m and a 6,000m Aircore (AC) drilling program, both jointly aimed at expanding the existing gold resources, and testing for Rare Earth Elements (REE) over the existing gold prospects and new exploration targets Barns East, Boland and Thompson. This work, subsequent to the period, led to an updated combined WGP Mineral Resource Estimate of 5.81Mt at 1.5 g/t gold for 279,000 Oz and a REE Mineral Resource Estimate of 41.6 Mt at 699 ppm Total Rare Earth Oxides (TREO)15 in the overburden above and adjacent to the Clarke and Baggy Green deposits. Note, the maximum recovery of the REEs was 35% at pH 1. During the period Newcrest Mining Limited sold their royalty of 1.5% of the Net Smelter Return to Alcrest Royalties Australia Pty Ltd, and Cobra met the Stage 3 expenditure commitments of solely funding $5 million on expenditure within a 6-year period, and therefore earned a 75% equity interest in the tenements. Moonta Copper Gold Project SOUTH AUSTRALIA Andromeda 100% (except Moonta Porphyry Joint Venture: Andromeda 90%, Demetallica Limited 10%) The Moonta Copper-Gold Project falls near the southern end of the Olympic Copper- Gold Province in South Australia. The Olympic Copper-Gold Province is highly prospective for world class Iron Oxide Copper Gold (IOCG) deposits as exampled by Olympic Dam, Prominent Hill and Carrapateena Mines. In December 2018, the Company executed a binding Earn-in and Joint Venture Agreement with Environmental Metals Recovery Pty Ltd (EMR) to form the Moonta ISR Joint Venture covering the northern part of the Moonta tenement (EL 5984). The Joint Venture Agreement allowed EMR to earn an initial 51% interest of the Moonta ISR JV area by sole funding $2.0 million within 4 years of the execution Joint Venture Agreement. Although the 51% earn-in requirements were not satisfied within the 4-year timeframe, negoiations between the parties in relation to the tenement are continuing. In August 2022, South Australia’s DEM approved EMR’s Program for Environmental Protection and Rehabilitation to undertake drilling and pump trials using tracers. During the financial year EMR continued to undertake work with two Ambient Noise Tomography (ANT) surveys completed over a portion of the Alford West project area using ExoSphere by Fleet Space. The surveys delineated a “trough” like structure that correlates well with the deep weathering associated with the defined oxide copper-gold mineralisation. EMR intends to integrate the subsurface ANT results with information with existing drillhole data to prioritise exploration drill targets with potential for oxide copper- gold mineralisation. Additionally, a trial electro-seismic survey was undertaken at the Alford West Project site that successfully mapped out the highly saline ground water and deep weathering (typically 100 to 300m below surface) associated with the copper mineralisation. In parallel, the Company continued its review of the Moonta Project, utilising existing drilling results, to assess the in-situ recovery (ISR) potential of 100% Andromeda held copper prospects16. 15 Cobra Resources PLC LSE announcement dated 7 September 2023, “Rare Earth and Gold Resource Upgrades”, 16 Refer ADN ASX announcement dated 30 June 2022 titled "Investor presentation update". 27 ANNUAL REPORT 2023 Operations review Exploration Drummond Epithermal Gold Project QUEENSLAND Andromeda 100% Shares in Trigg will be issued at the price equal to the 5-day volume-weighted average price (VWAP) of Trigg shares for the five trading days up to completion of the sale. Andromeda will also receive a non-refundable upfront payment of $27,000 in cash and will receive a cash refund of $7,500 in respect of the environmental bonds for the project at completion of the sale. The Drummond Epithermal Gold Project comprises five tenements securing a total area of 539km2 in the Drummond Basin in North Queensland. The Drummond Basin is considered prospective for high grade epithermal gold deposits. During the period, the Company determined that maximum shareholder value is achieved through accepting an offer for the Drummond Epithermal Gold Project from Rush Resources Limited (Rush) for approximately $250,000 worth of fully paid ordinary shares in Rush. A binding Term Sheet Agreement was signed, which was subject to Rush listing on ASX. Subsequent to the period, Andromeda was informed that rather than listing on the ASX directly, Rush will become a subsidiary of ASX-listed Trigg Minerals Limited (Trigg; ASX: TMG)17. As a result, rather than receiving shares in Rush as consideration for the sale of Drummond, Andromeda will instead receive shares in Trigg to the value of the following: • $250,000 as consideration for the sale of Drummond to Rush, and • Reimbursement of all expenditure incurred by Andromeda in respect of the Drummond tenements from 1 August 2022 until 30 June 2023, up to an amount of $45,000 (excluding GST). 17 Refer ADN ASX announcement dated 15 September titled "Update on Sale of Drummond Epithermal Gold Project". 28 ANDROMEDA METALS LIMITED Operations review Corporate SALE OF DRUMMOND Following the October 2022 announcement announcing that Andromeda had entered into an agreement with Rush for the sale of Drummond (via the disposal of shares in subsidiary Adelaide Exploration Pty Ltd), the Company was informed that Rush will become a subsidiary of ASX-listed Trigg Minerals Limited (Trigg) (ASX: TMG), via a share sale agreement between the shareholders of Rush and Trigg18. Completion of both the binding agreement between Rush and Trigg, and for the sale of Drummond to Rush will occur simultaneously, subject to satisfaction of a number of conditions precedent by 31 October 2023. During the 2023 financial year, the Company undertook a corporate restructure in preparation for anticipated funding of TGWP and facilitate potential sell-down or divestment of projects or assets. BOARD AND MANAGEMENT CHANGES On 1 July 2022, Mr Austen Perrin was appointed as an Independent Non-executive Director of the Company. Mr Perrin is an experienced corporate executive and company director with more than 35 years of experience in corporate and financial roles. He has considerable knowledge of transport, logistics, infrastructure and the mining industries. He also has in-depth experience across commercial, accounting and the finance spectrums. On 24 August 2022, Mr Andrew Shearer resigned as an Independent Non-executive Director due to the increasing demands of his executive and other board roles. On 20 October 2022, Joseph (Joe) Ranford was appointed Chief Operating Officer (COO). In doing so, Mr Ranford transitioned from a part-time consultant to a full-time employee and, given the COO role’s importance and additional focus on progressing the TGWP, resigned as a director on 22 November 2022. In January 2023, Ms Sarah Clarke commenced her role as General Counsel & Company Secretary at the Company. In March 2023, Michael Zannes resigned as Chief Financial Officer. On 1 April 2023, Bob Katsiouleris commenced as CEO, with James Marsh transitioning to Executive Director, Sales and Marketing. Mr Katsiouleris’ directorship as Managing Director took effect on 27 April 2023. TAX RULINGS During the financial year, a private ruling with respect to the ability for Andromeda to claim an upfront instant asset write-off deduction related to the acquisition of Minotaur Exploration Ltd was received from the Australian Taxation Office. The private ruling enables Andromeda to claim an upfront deduction of approximately $117 million in its 2022 tax return for the acquisition of Minotaur Exploration Ltd. Additionally, a favourable Private Ruling from the ATO was received, relating to the historical tax losses of Minotaur Exploration Limited (Minotaur), following its acquisition by Andromeda. The Private Ruling confirms that $21.8 million of historic carried forward tax losses of Minotaur, can be transferred, and utilised by Andromeda subject to the normal tax rules related to carry forward losses. This brings the total of Andromeda’s carried forward tax losses to $191 million as at 30 June 2023, further reducing tax payable by Andromeda on future profits, subject to the normal tax rules related to carry forward losses. 18 Refer ADN ASX announcement dated 15 September titled “Update on Sale of Drummond Epithermal Gold Project”. 29 ANNUAL REPORT 2023 Operations review Sustainability Our vision and strategic intent To be The Great White Mineral Company We are passionate about developing, commercialising and monetising The Great White Project We can be the “Best” white mineral company in the world The Great White Project is our economic engine FY23 ESG HIGHLIGHTS • All major approvals and permits required in place, including approval of PEPR • No environmental incidents • Full compliance with laws and regulations and permit conditions • Zero Lost Time Injuries • 35% of workforce female, 33% of Board and Senior management females • Regular engagement with key stakeholders Sustainability is an essential element of Andromeda’s activities. It is an investment in society as well as in our own future. We firmly believe that anchoring sustainable practices as part of our business strategy will lead to environmental, social and economic progress. Sustainability is therefore central to how we manage our business in terms of our planning for future operations and international trade of our products, but also our contribution to regional, national and international challenges, including climate change. We are committed to the highest standards of corporate governance, ethics and integrity. Sound governance is a cornerstone of our ability to create shared value. 30 Andromeda is a mining company which is dedicated to responsible resource development and mining practices. Our focus is on the sustainable development of our operational and governance structures and systems and we strive to work collaboratively with all our stakeholders to be a supplier, partner and employer of choice. As we mature as a company, we aim to move towards the anticipated construction and eventual production, in a safe, ethical and sustainable way. We recognise the critical importance of sustainable practices in our operations and are committed to minimising the impact of our operations, reducing greenhouse gas emissions, supporting local communities, and ensuring ethical business conduct. We aim to do this through communicating and engaging with our stakeholders transparently and in a timely manner, regarding our efforts to create long- term value for all stakeholders while minimising any adverse effects on the environment and society. As the Company progresses the development of TGWP, we have also been enhancing our governance and operational structures and systems. The solid governance foundations put in place during 2022 have supported growth in the Company’s size and capabilities, leading to an evolution during 2023 in the Company’s corporate positioning and business strategy. ANDROMEDA METALS LIMITED Operations review Sustainability In FY23 Andromeda pleasingly had no lost time injuries, no environmental incidents, full compliance with laws and regulations; and made impressive progress in the gender diversity of our valued team. We are committed to continuous improvement and look forward to further strengthening our focus and expanding our commitments in ESG areas and creating sustainable value for all our stakeholders. When anticipated production commences, Andromeda is committed to implementing leading ESG reporting frameworks, including development of an implementation plan for reporting climate disclosures using the Task Force on Climate-Related Financial Disclosures (TCFD), the Taskforce on Nature-related Financial Disclosures (TNFD) framework; and the adoption of the International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards. GOVERNANCE FRAMEWORK Sound governance is a cornerstone of our ability to create shared value. We are devoted to the highest standards of corporate governance, ethics and integrity. Andromeda acknowledges the importance of committing to and establishing an integrated and consistent approach to reporting on Environmental, Social and Governance (ESG) factors and the impact our business has on the prosperity of people and the planet. This commitment has been adopted at the highest level within Andromeda. In 2022, our Board created a separate, dedicated Sustainability and Governance Committee to lead on all aspects of our governance, environmental and social sustainability. The Company is committed to responsible financial and business practices, and the highest standards of corporate governance, including the corporate governance guidelines and recommendations set out by the ASX Corporate Governance Principles and Recommendations (ASX Guidelines). Andromeda’s Corporate Governance Statement dated 30 June 2023 and approved by the Board on 15 September 2023 can be found under Who We Are on Andromeda’s website, together with the ASX Appendix 4G, addressing the ASX Principles and Recommendations to disclosures in this statement and the current Annual Financial Report. ECONOMIC Responsible and equitable development, providing local and First Nations business and employment opportunities GOVERNANCE Maintaining the highest standards in corporate governance and business ethics, aligned to leading standards and frameworks ENVIRONMENTAL Minimising impacts on the environment and assisting in the develoment of decarbonisation products and technologies SOCIAL Actively supporting our stakeholders and employees, and contributing to the local communities in which we operate Andromeda’s Sustainability and Governance Committee Charter, which is available under Our Charters on Andromeda’s website, formalises our governance structure and commitment. The Sustainability and Governance Committee Charter formalises Andromeda’s commitment to conducting business ethically and sustainably, taking into account the needs of current and future stakeholders and integrating sustainability considerations into all aspects of its decision making. We maintain a robust corporate governance structure, incorporating sustainability principles into our decision- making processes. Our Board of Directors oversees sustainability matters through regular updates, policy reviews, and audits. COMPANY POLICIES AND STANDARDS Andromeda will operate in accordance with a framework of internal company policies developed to ensure consistent and coordinated management of issues relating to the environment, Indigenous peoples and work health and safety. These will be continually reviewed and monitored in line with South Australian and Commonwealth law and the progression of the Project. The consistent application of policies and procedures will help prevent or resolve issues, such as claims of unfair dismissal, workplace health and safety prosecution, environmental or right of entry breaches, and discrimination claims. 31 ANNUAL REPORT 2023 Operations review Sustainability OUR MATERIAL TOPICS The United Nations Sustainable Development Goals (SDGs) are a principles-based approach and form part of the ‘Transforming our world: the 2030 Agenda’ for Sustainable Development’ adopted on 25 September 2015, by the 193 United Nations Member States. The 17 SDGs aim to address some of the world’s pressing economic, social and environmental challenges and represent the world’s comprehensive plan of action for social inclusion, environmental sustainability and economic development. Through aligning our approach to sustainability with the UN SDGs, Andromeda has identified 11 of the 17 goals as specific targets. Within each goal we have selected specific indicators and have prioritized these in order to measure our impact in accordance with ‘Agenda 2030’. 32 We have selected three pillars that we feel are most relevant to operating our business responsibly and where we can have the biggest impact. The material topics which have been identified as priority ESG areas are: Emissions ENVIRONMENT Water Rehabilitation Community engagement Economic development of local and regional communities Health, safety, and wellbeing Mental health and wellbeing Diversity of board and workforce COMMUNITIES OUR PEOPLE Our immediate priorities will be to focus on: #3 #9 Good health and well-being Industry, innovation, and infrastructure #13 Climate change As we progress towards production we will begin to track and disclose positive and negative impacts of our operations against each indicator and goal, and identify the short-term, medium-term or long- term nature of indicator. ANDROMEDA METALS LIMITED Operations review Sustainability ENVIRONMENT Climate change and our commitment to reduce GHG emissions Andromeda accepts the science of climate change. The result of human activity has seen a continued rise in concentration of greenhouse gas (GHG) emissions – which in turn has been a rise in average global temperatures. From this we continue to see an increase in catastrophic weather events resulting in natural disasters and we see a continual negative impact on the wellbeing of people and the planet. Andromeda accepts that the activities associated with minerals extraction, innovation of products through research and development and testing, can contribute to rising temperatures through GHG emissions. Andromeda believes there is a positive role to play in addressing climate change. As the Company evolves, it plans to continually adapt its operations and adopt contemporary, innovative mine design solutions to accommodate the reality of global warming and to transition towards a low-emissions future. Consequently, the Company is committed to reducing GHG emissions with the aspiration of achieving net zero emissions over time and will seek to develop an implementation plan for reporting climate disclosures using the Task Force on Climate-Related Financial Disclosures (TCFD) framework into the Company’s future Annual Reports. When anticipated production commences, Andromeda is committed to implementing leading ESG reporting frameworks, including development of an implementation plan for reporting climate disclosures using the Task Force on Climate-Related Financial Disclosures (TCFD). Greenhouse gas (GHG) emissions The National Greenhouse and Energy Reporting Act (NGER) and its associated regulations and guidelines govern the reporting of GHG emissions in Australia, providing mandatory reporting requirements, and uniform methods for measurement of emissions. The NGER requires yearly reporting of GHG emissions if individual facilities, and or total corporate emissions exceed the threshold values in Table 10. Table 10 NGER emissions reporting thresholds. CATEGORY FACILITY THRESHOLD Scope 1 & 2 GHG emissions 25,000 t CO2-e/year Energy consumption 100,000 GJ/year Energy production 100,000 GJ/year CORPORATE THRESHOLD 50,000 t CO2-e/year 200,000 GJ/year 200,000 GJ/year TGWP’s potential annual GHG emissions during the first full year of operations are set out in Table 11. Table 11 Potential estimated TGWP annual scope 1 & 2 GHG emissions (tonnes)19. SOURCE Stationary combustion – gas Stationary combustion – diesel SCOPE Scope 1 Scope 1 Transport combustion – diesel heavy vehicles Scope 1 Transport combustion – diesel light vehicles Scope 1 Blasting Total Scope 1 CO2 5,514 2,948 71 58 5 8,669 CH4 19 5 1 1 1 27 N2O 19 9 1 1 1 31 t CO2-e 5,552 2,962 73 60 7 8,727 Although annual reporting under the NGER is not required, given GHG emissions are below NGER’s Emissions Reporting Thresholds, Andromeda commits to reporting both Corporate and TGWP actual Scope 1 & 2 GHG emissions as part of its annual reporting requirementss following the commencement of planned construction. 19 Based on analysis of Stage 1A by engineering consultants ammjohn PE Pty Ltd. 33 ANNUAL REPORT 2023 Operations review Sustainability Table 12 Potential estimated TGWP annual scope 1 & 2 carbon equivalent emissions. SOURCE ONE-OFF EMISSIONS t CO2-e ANNUAL EMISSIONSt CO2-e SPECIFIC EMISSION t CO2-e / t PRODUCT Stationary combustion – gas Stationary combustion – diesel Transport combustion – diesel Vegetation clearing 3,240 Blasting Total 5,514 2,926 133 108 7 8,724 0.061 0.033 0.001 0.000 0.000 0.097 As the Company matures, it aims to also track and report on Scope 3 emissions in the future. As shown in Table 12, the largest contributor to carbon emissions is due to gas being used to generate electricity to power processing operations and heat to dry processed kaolin product. Table 13 Potential estimated TGWP annual scope 3 carbon emissions20. SOURCE Freight product to port Sea freight to Europe Gas freight to site Diesel freight to site Regular general freight to site Regular waste freight from site Employee regular commute to site bus Employee regular commute to site car Employee regular commute to bus Employee regular air travel Landfill emissions Total SCOPE Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 Scope 3 CO2 5079 3569 108 10 27 20 117 131 103 50 9255 CH4 389 389 CO2-e 5079 3569 108 10 27 20 117 131 103 50 389 9644 20 Based on analysis of Stage 1A by engineering consultants ammjohn PE Pty Ltd. 34 ANDROMEDA METALS LIMITED Operations review Sustainability In determining how to generate power and heat for TGWP, an analysis conducted by engineering consultants, ammjohn PE Pty Ltd (ammjohn). The analysis evaluated several options which are summarised as follows: • Grid power and gas heating – considered the base case, power is supplied from the national grid via a 66 kVA distribution line. Gas heating is used to satisfy all heating requirements. • Turbine power and gas re-heating – electricity is generated on site using microturbines. Turbine exhaust gases are re-heated via a gas fired burner for use in drying products. • • Internal combustion engine gas power and gas re-heating – electricity is generated on site using gas fired internal combustion engines. Internal combustion engines exhaust gases are re-heated (if required) via a gas fired burner for use in drying products. Internal combustion engine diesel power and gas heating – electricity is generated on site using diesel fired internal combustion engines. Gas heating is used to satisfy all heating requirements. Financial modelling of the options above showed that the generation of electricity with gas fired turbines and the reheating of exhaust with gas fired burners for the purpose of drying processed product, delivered the lowest net present cost option. Benchmarking of GHG emissions t c u d o r p t / e - ₂ O C g k 300 250 200 150 100 50 0 Andromeda kaolin (Planned) Australian kaolin producer Iron ore (Fortescue) Lithium (Pilbara Minerals) Gold - World average Mining approach and rehabilitation Andromeda is committed to operating in a safe and sustainable manner. Mining at TGWP is planned to be undertaken utilising conventional open cut methods using open pit mining equipment for load and haul. No tailings storage facilities will be required as environmental rehabilitation will be undertaken progressively, as mining operations are completed in the various pit stages. Topsoil and other overburden material is planned to be placed into an out of pit adjacent landform will be contoured and revegetated. When sufficient capacity is available in the mined-out sections of the pit, overburden will be placed directly into the pit void. A detailed progressive rehabilitation plan was included in the Program for Environment Protection and Rehabilitation (PEPR), which was approved by South Australia’s Department for Energy and Mining in March 2023. Water management Andromeda aims to have a high level of water stewardship to care for this vital resource. With the dry conditions of the local Eyre Peninsula region, water is a key concern for the area surrounding TGWP and the local community. Water is initially planned to be sourced directly from the Todd water main at Poochera, with modelling indicating no impact to local users. Additionally, over 90% of water is planned to be recycled through the installation of a reverse osmosis system to recycle processing water on site. The Company is working with SA Water to install and operate a pipeline to site, while also planning for an economical, scalable and long term water supply solution that minimises any impacts to local users. Figure 15 Industry benchmarking of TGWP’s potential scope 1 & 2 GHG emissions21. 21 Based on analysis of Stage 1A by engineering consultants ammjohn PE Pty Ltd. 35 ANNUAL REPORT 2023 Operations review Sustainability SOCIAL To fulfil our corporate aspiration to be considered as a supplier, partner and employer of choice, Andromeda is committed to effective, ongoing, and transparent consultation with all stakeholders, whether directly or indirectly. This includes the full range of stakeholder groups, including: Customers Shareholders First Nations Government Employees Strategic partners Investors Landowners Regulators Contractors Suppliers Debt providers Local businesses Local councils Credit providers Community Industry bodies Stakeholder engagement Andromeda is committed to building enduring relationships across all of its stakeholder groups, through mutual respect, active partnership, and a long-term commitment. Our approach to engaging with stakeholders is outlined as follows: INFORM: Provide balanced and objective information to assist understanding of issues, alternatives, opportunities, and solutions to those stakeholders who prefer information only. CONSULT: Obtain stakeholder feedback on issues, alternatives, opportunities, and solutions, with those stakeholders who want their opinions heard. INVOLVE: Engagement with stakeholders who may have a higher level of expertise or insight on an issue and want to provide feedback, alternatives, opportunities, and solutions. COLLABORATE: A higher level of engagement, which establishes partnerships with stakeholders to develop alternatives and the identification of preferred solutions. EMPOWER: The highest level of community decision making, where decisions of the public are implemented. Figure 16, sourced from DEM Guideline MG31, encapsulates the International Association of Public Participation’s (IAP2) spectrum of public participation. Additionally, the Company has also committed to ensuring its engagement with stakeholders adheres to the six principles of engagement, as set out by the South Australian government’s “Better Together” framework (SA Government 2020), as follows: 1. We know why we are engaging, and we communicate this clearly. 2. We know who to engage. 3. We know the background and history. 4. We begin early. 5. We are genuine. 6. We are creative, relevant and engaging. Communication approaches A suite of communication approaches, tools and activities have been implemented to effectively engage with stakeholders. The primary goals for these communication tools are to: • Identify community attitudes and expectations. • Provide various mechanisms for dissemination of information to the community. • Gather feedback from the community. • Register and document community feedback, concerns, or expectations from members of the community. • Analyse and promptly respond to community feedback or concerns. Inform Consult Involve Collaborate Empower Inform Low level of public engagement Involve Mid level of public engagement Empower High level of public engagement Figure 16 Spectrum of engagement (Source: DEM Guideline MG31). 36 ANDROMEDA METALS LIMITED Operations review Sustainability • Engagement with stakeholders during all the Table 14 Communication approaches, tools and activities. various phases of The Project is critical. These phases have been identified as: APPROACH PURPOSE AND APPLICATION • Early development (exploration) phase • Feasibility including mining proposal • PEPR development and approval • Construction and commissioning • Operations • Decommissioning Stakeholder identification and engagement Stakeholders are noted as all those persons (individuals or groups) who have an interest in Andromeda, can have an influence on, or can be influenced by, it or its businesses. Stakeholder identification and analysis was originally undertaken during the development of the Community Engagement Plan (CEP) and completed to provide the basis for consultation on The Project. The stakeholder mapping process for that phase of The Project lifecycle identified 14 stakeholder groups as having an interest in or influence on The Project. Stakeholder identification and groupings have been reviewed periodically. No additional stakeholder groups have become apparent during the development of the PEPR or from community drop-in days and focused stakeholder meetings. These meetings included meetings with First Nations and other Indigenous groups. Meetings involved discussions on business and employment opportunities during the planning and development stages of The Project and cultural heritage. A draft Cultural Heritage Management Plan was also provided to Wirangu No 2 Native Title Claimant Group in May 2022 and again in 2023. Frequently asked questions (FAQ) Face-to-face meetings Telephone Community meetings Briefings Community drop-in days Fact sheet Posters Summary of responses available online and at community meetings in response to questions raised. The responses prepared by members of Andromeda’s team and its sub-contractors provide a clear reference and ensure consistency of information and message. Provides an opportunity for all stakeholders to engage and discuss specific issues. Face to face meetings are an opportunity to build relationships based on trust, honest and open communication. Primary form of contact with stakeholders to respond to general enquiries and provide Project information. An opportunity to present publicly precise and consistent Project information to interested stakeholders. Typically, there is a set agenda which can address specific areas of interest. Also used when significant information needs to be communicated to a wide section of the community and feedback, views or opinions are sought. An opportunity for members of the community and interested persons to engage with a wide range of information of The Project and engage with team members to ask questions. Provide landowners and interested stakeholders with information about specific stages of The Project, areas of interest, Project plans and status. Designed to ensure the messages being distributed to the community and stakeholders are consistent and based on fact. Information sheet Provide progress updates on The Project to the wider community and advertise upcoming events or milestones. Advertisement Used to advertise forthcoming community meetings or events. Website To communicate progress updates on The Project, achievements and Project milestones using the Andromeda website (www.andromet.com.au). Email Text messages Letters The Project team will communicate with stakeholders directly, responding to specific queries or matters which are uniquely relevant to specific stakeholders. 37 ANNUAL REPORT 2023 • develop, implement and continually improve work practices that enable Andromeda to identify, assess and manage environmental risks and opportunities • communicate, engage and build trust with communities, regulators and other stakeholders on Andromeda’s environmental performance • publicly report environmental performance on a regular basis • ensure that all employees, contractors and suppliers of goods and services that enter Company-managed sites are aware of the Environmental Policy and their obligations under it • provide adequate resources to implement and regularly review the Environmental Policy whilst taking into consideration evolving community expectations, technology, management practices, scientific knowledge and business structure. Andromeda commits to actively evaluating and reviewing its performance against these commitments to ensure both compliance and success. Compliance Andromeda is committed to ensuring compliance with environmental laws and minimising the environmental impacts of its exploration and operation of the TGWP. No breaches have occurred or have been notified to any Government agencies during the year ending 30 June 2023. Operations review Sustainability Environmental Policy The aim of Andromeda’s Environmental Policy is to protect and conserve the existing environment within the Project and its surrounds, by minimising adverse environmental impacts resulting directly from the mine and enhancing the environment wherever possible. Andromeda works in conjunction with its employees, contractors and service providers to promote an environmentally aware culture that: • understands and is committed to the Environmental Policy • • is committed to a high level of environmental standards in all areas of the mine is inducted in, aware of, and committed to the individual environmental management plans that apply to the mine • considers the environmental impact of all business decisions before conducting potentially impactful activities. For its part, management will: • meet or exceed all relevant environmental laws, regulations and approval conditions • • • identify, monitor and manage environmental aspects of Andromeda’s business to maximise benefits and minimise adverse impacts, including pollution prevention strive for excellence in environmental performance through setting goals in consultation with stakeholders improve performance by undertaking appropriate environmental research and development, preferably utilising a partnership approach • ensure Andromeda’s environmental systems and procedures are appropriate to the nature and scale of Project activities and are fully integrated into the business • train and support employees and contractors to ensure Andromeda has the necessary skills and technology to meet or exceed our environmental performance expectations 38 ANDROMEDA METALS LIMITED Operations review Sustainability Our purpose and values Ecological and economic sustainability is the central driving force behind Andromeda’s purpose – sitting across all three business pillars. These are to grow industrial minerals, harvest critical metals sustainably and advance innovation through nanotechnologies. This purpose is to enrich the lives of people by improving the environment, creating prosperity for the planet, our stakeholders, the communities we work within. Andromeda is focused on value creation for our shareholders through the advancement and use of our decarbonising nanotechnologies and the supply of critical industrial minerals. Our vision is to lead the world in the sustainable extraction and supply of superior quality industrial minerals and advancement of nanotechnologies. Our purpose INNOVATION / QUALITY – INTEGRITY / TEAMWORK INNOVATION We strive to instil every decision QUALITY with honesty and respect for all stakeholders, including colleagues, customers, and the communities we live and work in. Quality is the strength of our business which will drive long- term success. We take pride in providing our customers and stakeholders with outstanding and consistent quality and service. Through the use of our industrial minerals and nanotechnologies we strive to enrich the lives of people by improving the environment, creating prosperity for our shareholders and delivering value for our stakeholders. TEAMWORK We are committed to our team Our mission is to mine and process industrial minerals for supply, together with advancing nanotechnologies to our global customer base by leveraging our unique natural resources and intellectual property. G ROW We will deliver on our vision and mission by designing our operations with the tenet of circular economy in mind – these are to eliminate waste production, circulate materials, and regenerate natural systems. These tenets along with the careful selection of voluntary and mandatory reporting frameworks, Andromeda will now, moving forward, report accurately on all material and non-material risks and A L S opportunities arising from our business practices to demonstrate our commitment to ESG and sustainability. STRIAL M I N E Our vision To become “The Great White Mineral Company” and lead the world in the safe, sustainable supply of superior quality industrial minerals and technologies. Our core values All staff at Andromeda are responsible for upholding and living out our values. It is through this alignment and commitment that will enable our Company to provide value to our shareholders and broader stakeholders. U I D N R environment where we embrace courage, perseverance, diversity, and inclusion. M ETALS G ROW Every employee’s contribution is valued. With the strength of our people, we can achieve more in a team, than alone. INTEGRITY Through innovation we encourage our people to use their initiative to generate new ideas, seek continuous improvement, and constantly strive to exceed expectations. OTECHN O L O G IE S N A N HARV E S T Our mission Develop TGWP and leverage its high quality halloysite-kaolin resources to develop a new industry supplying high value in use products to supply growing key targets segments and markets. Our values Innovation Teamwork Integrity Quality The safety and wellbeing of our employess and our communities is our first priority. Andromeda’s team is passionate about developing, commercialising, and monetising TGWP and, our other high-grade kaolin deposits. The safety and wellbeing of our employees and our communities is our first priority. 39 ANNUAL REPORT 2023 Operations review Sustainability PEOPLE & CULTURE Gender and diversity Andromeda is committed to broadening workplace diversity to support enhanced decision making and better business outcomes. In FY23 we achieved our measurable objective of 20% female representation at Board, Senior Management and all other employees across the workforce. For FY24 the Board has adopted a target of 33% female employees participation across all levels of the Company. The measurable objectives for the Company in FY23, including targets and achievement status and FY24 targets are represented in the following table. Table 15 FY23 MEASURABLE OBJECTIVES ON DIVERSITY TARGETS FY23 ACHIEVEMENT AS AT 30 JUNE 2022 Board At least 20% female members Senior management1 At least 20% female employees in senior executive roles All other employees across workforce2 At least 20% employees female across entire workforce 33% 33% 35% 1 Excludes Executive Directors 2 Excludes Directors and senior management Indigenous Peoples’ Policy Andromeda recognises that its exploration and operations are conducted on land which was or is traditionally under the custodianship of Aboriginal and Torres Strait Islander peoples. Andromeda acknowledges the customs, traditions and language of Australia’s Indigenous Peoples and is committed to working with them to identify, protect and conserve evidence of the ancient and continuing occupation of Aboriginal and Torres Strait Islanders in Australia. The Indigenous Peoples Policy outlines Andromeda’s approach to fostering trusting, respectful and cooperative relationships with Aboriginal and Torres Strait Islander peoples, and promotes listening, communicating and negotiating with Indigenous peoples with respect, having regard for diverse views and perspectives. The policy also outlines minimum requirements in regard to providing cultural awareness training, Indigenous procurement and for the Board to consider opportunities for mutual benefit. Health and Safety Policy The Health and Safety Policy defines Andromeda’s commitment to providing a healthy and safe workplace whilst striving to achieve an injury free work environment for all personnel. The policy applies to all employees and contractors and requires all to act in accordance with Andromeda’s policies and procedures. The Health and Safety Policy outlines responsibilities and minimum requirements in regard to work activities, the HSEC Management System, safe working environments and outlines Andromeda’s Duty of Care in regard to the workplace. Community Engagement Policy Andromeda is committed to engaging effectively with the community and stakeholders to strengthen relationships and facilitate transparent decision making. Additionally, Andromeda is committed to employing local, engaging with local businesses and purchases local products and services wherever possible. These commitments aim to ensure that all projects explore and deliver effective community engagement activities which are consistent, respectful, planned, coordinated, accessible and inclusive. Andromeda will aim to identify community and stakeholder interests, issues and concerns early, and to address these matters during exploration, project development, approvals process and operation. 40 ANDROMEDA METALS LIMITED Operations review Schedule of tenements as at 30 June 2023 PROJECT TENEMENT TENEMENT NAME AREA (km2) REGISTERED HOLDER OR APPLICANT NATURE OF COMPANY’S INTEREST (%) SOUTH AUSTRALIA Great White Kaolin Project ML 6532 Great White 319 ha Andromeda Industrial Minerals Pty Ltd1 and Great Southern Kaolin Pty Ltd2 AIM 75% GSK 25% MPL 163 MPL 164 Water Pipeline MPL 78 ha Andromeda Industrial Minerals Pty Ltd and Great Southern Kaolin Pty Ltd AIM 75% GSK 25% Access Road MPL 13 ha Andromeda Industrial Minerals Pty Ltd and Great Southern Kaolin Pty Ltd AIM 75% GSK 25% EL 6588 Tootla EL 6202 Mt Hall 372 147 EL 6426 Mt Cooper 648 Andromeda Industrial Minerals Pty Ltd and Great Southern Kaolin Pty Ltd AIM 75% GSK 25% Andromeda Industrial Minerals Pty Ltd and Great Southern Kaolin Pty Ltd AIM 75% GSK 25% Andromeda Industrial Minerals Pty Ltd and Great Southern Kaolin Pty Ltd AIM 75% GSK 25% Wudinna Gold Joint Venture EL 6317 Pinkawillinie 156 Peninsula Resources Pty Ltd3 EL 6131 Corrobinnie 1303 Peninsula Resources Pty Ltd EL 6489 Wudinna Hill 42 Peninsula Resources Pty Ltd EL 5953 Minnipa 184 Peninsula Resources Pty Ltd Moonta Copper Gold Project4 Camel Lake Halloysite Project Eyre Kaolin Project Mt Hope Kaolin Project EL 6001 EL 5984 EL 5984 Waddikee Rocks Moonta- Wallaroo Moonta Porphyry JV 147 Peninsula Resources Pty Ltd 713 Peninsula Resources Pty Ltd 100% 106 Peninsula Resources Pty Ltd 90% – option to acquire 100% from AIC Mines Ltd EL 6128 Camel Lake 455 Andromeda Industrial Minerals Pty Ltd and Great Southern Kaolin Pty Ltd AIM 75% GSK 25% ELA 2019/73 Dromedary 481 AIC Mines Ltd5 AIM 75% GSK 25% EL 6663 Aspen EL 6664 Whistler EL 6665 Hotham EL 6666 Thredbo EL 6286 Mt Hope 976 452 875 496 227 Peninsula Exploration Pty Ltd6 Peninsula 100% Peninsula Exploration Pty Ltd Peninsula 100% Peninsula Exploration Pty Ltd Peninsula 100% Peninsula Exploration Pty Ltd Peninsula 100% Andromeda Industrial Minerals Pty Ltd9 100% 41 PRL 35% LAM 65% PRL 35% LAM 65% PRL 35% LAM 65% PRL 35% LAM 65% PRL 35% LAM 65% ANNUAL REPORT 2023 Operations review Schedule of tenements PROJECT TENEMENT TENEMENT NAME AREA (km2) REGISTERED HOLDER OR APPLICANT NATURE OF COMPANY’S INTEREST (%) QUEENSLAND Drummond Gold Project EPM 18090 Glenroy EPM 25660 Gunthorpe EPM 26154 Sandalwood Creek 196 74 109 Adelaide Exploration Pty Ltd7 Adelaide Exploration Pty Ltd Adelaide Exploration Pty Ltd EPM 26155 Mount Wyatt 144 Adelaide Exploration Pty Ltd EPM 27501 Packhorse Creek 16 Adelaide Exploration Pty Ltd WESTERN AUSTRALIA Dundas Project E 63/2089 Circle Valley 29 Mylo Gold Pty Ltd8 100% 100% 100% 100% 100% 100% 1 Andromeda Industrial Minerals Pty Ltd (AIM), (incorporated 9 August 2018) is a wholly owned subsidiary of Andromeda Metals Ltd. 2 Great Southern Kaolin Pty Ltd (GSK) is a wholly owned subsidiary of Andromeda Metals Ltd. 3 Peninsula Resources Ltd (PRL), (incorporated 18 May 2007) is a wholly owned subsidiary of Andromeda Metals Ltd. PRL has a farm-out agreement with Lady Alice Mines Pty Ltd (LAM), a wholly owned subsidiary of Cobra Resources PLC. 4 Andromeda Metals Ltd has partnered with Environmental Metals Recovery Pty Ltd (EMR) to form the Moonta ISR Joint Venture. 5 Demetallica Operations Pty Ltd is a wholly owned subsidiary of AIC Mines Ltd. Registered interest is to be transferred to AIM (75%) and GSK (25%) upon grant. 6 Andromeda Industrial Minerals Pty Ltd has a farm in agreement with Peninsula Exploration Pty Ltd (Peninsula) over the Eyre Kaolin Project. 7 Adelaide Exploration Pty Ltd (incorporated 13 July 2001) is a wholly owned subsidiary of Andromeda Metals Ltd, but is the subject of a sale agreement – refer ADN ASX announcement dated 15 September titled “Update on Sale of Drummond Epithermal Gold Project”. 8 Mylo Gold Pty Ltd (acquired 21 December 2017) is a wholly owned subsidiary of Andromeda Metals Ltd. 9 In July 2023 this tenement was transferred to Andromeda Industrial Minerals NZ Pty Ltd, which is a wholly owned subsidiary of Andromeda Metals Ltd. 42 ANDROMEDA METALS LIMITED Operations review Resources and Reserves as at 30 June 2023 Andromeda’s Mineral Resource and Ore Reserve estimates as at 30 June 2022 and 30 June 2023 are listed below. The Mineral Resource estimates are reported inclusive of Ore Reserve estimates. The totals and average of some reports may appear inconsistent with the parts, but this is due to rounding of values to levels of reporting precision commensurate with the confidence in the respective estimates. The statements for the 30 June 2023 estimates by the Competent Person, as defined under the 2012 Edition of the ‘Australasian Code for reporting Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code), are included on page 47 of this Annual Report. Andromeda’s public reporting governance for Mineral Resources and Ore Reserves estimates includes a chain of assurance measures. Firstly, Andromeda ensures that the Competent Persons responsible for public reporting: • are current members of a professional organisation that is recognised in the JORC Code framework; • have sufficient mining industry experience that is relevant to the style of mineralisation and reporting activity, to be considered a Competent Person as defined in the JORC Code; • have provided Andromeda with a written sign-off on the results and estimates that are reported, stating that the report agrees with supporting documentation regarding the results or estimates prepared by each Competent Person; and • have prepared supporting documentation for results and estimates to a level consistent with normal industry practices – which for JORC Code 2012 resources includes Table 1 Checklists for any results and/or estimates reported. The following tables set out the current Resource and Reserve position for the Company. Table of Resources – Clay, whole rock CLAY, WHOLE ROCK 2022 Great White1,2,3 Hammerhead1,3,4 Tiger6 Mount Hope1,3,5 Total (100%)1 Total 2022 (Andromeda share)1 MEASURED RESOURCE INDICATED RESOURCE INFERRED RESOURCE TOTAL RESOURCES ANDROMEDA INTEREST (%) TONNES (Mt) RECOVERY <45µm FRACTION (%) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) RECOVERY <45µm FRACTION KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) RECOVERY <45µm FRACTION (%) KAOLINITE (%) HALLOYSITE (%) RECOVERY <45µm FRACTION (%) 100 100 100 100 5.7 50.2 39.5 6.9 - - - 5.7 4.3 - - - - - - 50.2 39.5 50.2 39.5 - - - 6.9 6.9 14.2 - 12.1 - 26.3 26.3 51.1 - 42 - 59.9 56.7 - 55.1 55.1 - 48.8 48.8 5.0 - - - 2.7 2.7 14.7 51.5 - 18 84.2 49.3 52.6 - 41.5 49.7 40.3 42.7 - 33.8 40.4 67.7 49.1 39.9 4.9 6.5 - 1.4 5.1 4.9 34.6 51.5 12.1 18 116.2 50.2 52.6 59.9 41.5 50.9 40.9 42.7 56.7 33.8 42.2 116.2 50.9 42.2 5.3 6.5 - 1.4 4.7 4.7 2023 ANDROMEDA INTEREST (%) TONNES (Mt) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) RECOVERY <45µm FRACTION (%) RECOVERY <45µm FRACTION (%) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) RECOVERY <45µm FRACTION (%) KAOLINITE (%) HALLOYSITE (%) RECOVERY <45µm FRACTION (%) Great White1,2,3 Hammerhead1,3,4 Tiger6 Mount Hope1,3,5 Total (100%)1 100 100 100 100 Total 2023 (Andromeda share)1 5.7 50.2 39.5 6.9 - - - 5.7 4.3 - - - - - - 50.2 39.5 50.2 39.5 - - - 6.9 6.9 14.2 - 12.1 - 26.3 26.3 51.1 - 42 - 59.9 56.7 - 55.1 55.1 - 48.8 48.8 5.0 - - - 2.7 2.7 14.7 51.5 - 18 84.2 49.3 52.6 - 41.5 49.7 40.3 42.7 - 33.8 40.4 67.7 49.1 39.9 4.9 6.5 - 1.4 5.1 4.9 34.6 51.5 12.1 18 116.2 50.2 52.6 59.9 41.5 50.9 40.9 42.7 56.7 33.8 42.2 116.2 50.9 42.2 5.3 6.5 - 1.4 4.7 4.7 43 ANNUAL REPORT 2023 Operations review Resources and Reserves Table of Resources – Clay <45µm CLAY <45µm 2022 MEASURED RESOURCE INDICATED RESOURCE INFERRED RESOURCE TOTAL RESOURCES ANDROMEDA INTEREST (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) Great White1,2,3 Hammerhead1,3,4 100 100 100 Tiger6 Mount Hope1,3,5 Total (100%)1 Total 2022 (Andromeda share)1 100 2.9 83.9 78.8 13.8 - - - 2.9 2.9 - - - 83.9 83.9 - - - 78.8 78.8 - - - 13.8 13.8 7.3 - 7.2 - 14.5 14.5 82.8 - 83.1 - 82.9 82.9 82.3 - 94.7 - 88.5 88.5 9.9 - - - 5.0 5.0 7.2 27.1 - 7.5 41.8 41.8 83.3 82.2 - 82.2 82.4 82.4 81.7 81.0 - 81.4 81.2 81.3 9.9 12.3 - 3.3 10.3 9.9 17.4 27.1 7.2 7.5 59.2 59.2 82.3 82.2 83.1 82.2 82.3 82.3 81.5 81.0 94.7 81.4 82.9 82.9 10.5 12.3 - 3.3 9.1 9.1 2023 ANDROMEDA INTEREST (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) TONNES (Mt) BRIGHTNESS (R47) KAOLINITE (%) HALLOYSITE (%) 100 100 Great White1,2,3 Hammerhead1,3,4 Tiger6 Mount Hope1,3,5 Total (100%)1 Total 2023 (Andromeda share)1 100 100 2.9 83.9 78.8 13.8 - - - 2.9 2.9 - - - 83.9 83.9 - - - 78.8 78.8 - - - 13.8 13.8 7.3 - 7.2 - 14.5 14.5 82.8 - 83.1 - 82.9 82.9 82.3 - 94.7 - 88.5 88.5 9.9 - - - 5.0 5.0 7.2 27.1 - 7.5 41.8 41.8 83.3 82.2 - 82.2 82.4 82.4 81.7 81.0 - 81.4 81.2 81.3 9.9 12.3 - 3.3 10.3 9.9 17.4 27.1 7.2 7.5 59.2 59.2 82.3 82.2 83.1 82.2 82.3 82.3 81.5 81.0 94.7 81.4 82.9 82.9 Table of Resources – Clay <45µm continued CLAY < 45µm (CONT.) MEASURED RESOURCE INDICATED RESOURCE INFERRED RESOURCE TOTAL RESOURCES 2022 ANDROMEDA INTEREST (%) TONNES (MT) Al2O3 (%) Fe2O3 (%) Great White1,2,3 Hammerhead1,3,4 100 100 100 Tiger6 Mount Hope1,3,5 Total (100%)1 Total 2022 (Andromeda share)1 100 2.9 36.7 0.52 - - - 2.9 2.9 - - - - - - 36.7 36.7 0.52 0.52 2023 ANDROMEDA INTEREST (%) TONNES (MT) Al2O3 (%) Fe2O3 (%) 100 100 Great White1,2,3 Hammerhead1,3,4 Tiger6 Mount Hope1,3,5 Total (100%)1 Total 2023 (Andromeda share)1 100 100 2.9 36.7 0.52 - - - 2.9 2.9 - - - - - - 36.7 36.7 0.52 0.52 Table of Resources – Gold TiO2 (%) 0.32 - - - 0.32 0.32 TiO2 (%) 0.32 - - - 0.32 0.32 TONNES (MT) 7.3 - 7.2 - 14.5 14.5 Al2O3 (%) 36.6 - 37.2 - 36.9 36.9 Fe2O3 (%) 0.51 - 0.81 - 0.70 0.70 TONNES (MT) Al2O3 (%) Fe2O3 (%) 7.3 - 7.2 - 14.5 14.5 36.6 - 37.2 - 36.9 36.9 0.51 - 0.81 - 0.70 0.70 TiO2 (%) 0.50 - 0.61 - 0.60 0.60 TiO2 (%) 0.5 - 0.61 - 0.6 0.6 TONNES (MT) Al2O3 (%) Fe2O3 (%) 7.2 27.1 - 7.5 41.8 41.8 36.4 37.0 - 35.3 36.6 36.5 0.51 0.63 - 0.51 0.60 0.60 TONNES (MT) Al2O3 (%) Fe2O3 (%) 7.2 27.1 - 7.5 41.8 41.8 36.4 37.0 - 35.3 36.6 36.5 0.51 0.63 - 0.51 0.60 0.60 TiO2 (%) 0.45 0.71 - 0.62 0.7 0.7 TiO2 (%) 0.45 0.71 - 0.62 0.7 0.7 TONNES (MT) Al2O3 (%) Fe2O3 (%) 17.4 27.1 7.2 7.5 59.2 59.2 36.5 37 37.2 35.3 36.7 36.7 0.51 0.63 0.81 0.51 0.60 0.60 TONNES (MT) Al2O3 (%) Fe2O3 (%) 17.4 27.1 7.2 7.5 59.2 59.2 36.5 37.0 37.2 35.3 36.7 36.7 0.51 0.63 0.81 0.51 0.60 0.60 10.5 12.3 - 3.3 9.1 9.1 TiO2 (%) 0.45 0.71 0.61 0.62 0.60 0.60 TiO2 (%) 0.45 0.71 0.61 0.62 0.60 0.60 GOLD 2022 ANDROMEDA INTEREST (%) 35 35 Barns1,7,9 Baggy Green1,7,9 White Tank1,7,9 Total (100%)1 Total 2022 (Andromeda share)1 35 2023 ANDROMEDA INTEREST (%) 25 25 Barns1,8,9 Baggy Green1,8,9 Clarke1,8,9 White Tank1,8,9 Total (100%)1 Total 2023 (Andromeda share)1 25 25 INDICATED RESOURCE INFERRED RESOURCE TOTAL RESOURCES TONNES (Mt) 0.41 0.41 0.14 TONNES (Mt) 0.44 0.44 0.11 Au (g/t) 1.4 1.4 1.4 Au (g/t) 1.3 1.3 1.3 Au (oz) 18,000 18,000 6,000 Au (oz) 18,000 18,000 4,000 TONNES (Mt) 1.71 2.03 0.28 4.02 1.4 TONNES (Mt) 2.19 2.12 0.73 0.28 5.37 1.34 Au (g/t) 1.5 1.4 1.4 1.4 1.5 Au (g/t) 1.6 1.4 1.4 1.5 1.5 1.5 Au (oz) 86,000 94,000 13,000 193,000 67,000 Au (oz) 116,000 96,000 33,000 16,000 261,000 65,000 TONNES (mt) 2.21 2.03 0.28 4.43 1.55 TONNES (mt) 2.63 2.12 0.73 0.28 5.81 1.45 Au (g/t) 1.5 1.4 1.4 1.5 1.5 Au (g/t) 1.5 1.4 1.4 1.5 1.5 1.5 Au (oz) 104,000 94,000 13,000 211,000 73,000 Au (oz) 134,000 96,000 33,000 16,000 279,000 69,000 44 ANDROMEDA METALS LIMITED Operations review Resources and Reserves Table of Resources – Rare Earth Oxides RARE EARTH OXIDES 2022 Baggy Green Clarke Total (100%) Total 2022 (Andromeda share) 35 35 35 - - - - 2023 ANDROMEDA INTEREST (%) TONNES (Mt) Baggy Green1,8,10 Clarke1,8,10 Total (100%) 25 25 25 Total 2023 (Andromeda share)1 15.1 26.5 41.6 10.4 REE – Rare earth elements REO – Rare earth oxides ANDROMEDA INTEREST (%) TONNES (Mt) TREO (ppm) MREO (ppm) LREO (ppm) HREO (ppm) TONNES (Mt) TREO (ppm) MREO (ppm) LREO (ppm) HREO (ppm) INFERRED RESOURCE TOTAL RESOURCES - - - - TREO (ppm) 652 725 699 699 - - - - MREO (ppm) 142 175 163 163 - - - - LREO (ppm) 512 571 549 549 - - - - HREO (ppm) 140 154 149 149 - - - - TONNES (Mt) 15.1 26.5 41.6 10.4 - - - - TREO (ppm) 652 725 699 699 - - - - MREO (ppm) 142 175 163 163 - - - - LREO (ppm) 511 571 549 549 - - - - HREO (ppm) 141 154 149 149 MREO – Magnet rare earth oxides (dysprosium + terbium + praseodymium, neodymium) TREO – Total rare earth oxides plus yttrium TREO-Ce – Total rare earth oxides plus yttrium and minus cerium Table of Resources – Rare Earth Oxides (continued) RARE EARTH OXIDES 2022 Baggy Green Clarke Total (100%) Total 2022 (Andromeda share)1 ANDROMEDA INTEREST (%) TONNES (Mt) Pr6O11 (ppm) Nd2O3 (ppm) Dy2O3 (ppm) Tb4O7 (ppm) TONNES (Mt) Pr6O11 (ppm) Nd2O3 (ppm) Dy2O3 (ppm) Tb4O7 (ppm) INFERRED RESOURCE TOTAL RESOURCES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2023 ANDROMEDA INTEREST (%) TONNES (Mt) Pr6O11 (ppm) Nd2O3 (ppm) Dy2O3 (ppm) Tb4O7 (ppm) TONNES (Mt) Pr6O11 (ppm) Nd2O3 (ppm) Dy2O3 (ppm) Tb4O7 (ppm) 35 35 35 100 100 100 100 100 100 Baggy Green1,8,10 Clarke1,8,10 Total (100%)1 25 25 25 Total 2023 (Andromeda share)1 15.1 26.5 41.6 10.4 29 35 33 33 97 122 113 113 Table of Resources – Copper (in situ recovery) COPPER (IN SITU RECOVERY) INFERRED RESOURCE ANDROMEDA INTEREST (%) TONNES (Mt) 2022 Wombat1,11,12,13 Bruce1,11,12,13 Larwood1,11,12,13 Total (100%)1 2023 Wombat1,11,12,13 Bruce1,11,12,13 Larwood1,11,12,13 Total (100%)1 Total 2023 (Andromeda share)1 Total 2022 (Andromeda share)1 ANDROMEDA INTEREST (%) TONNES (Mt) Cu (%) 0.17 0.19 0.15 0.17 0.17 Cu (%) 0.17 0.19 0.15 0.17 0.17 Cu (Kt) 80 22 12 114 114 Cu (Kt) 80 22 12 114 114 46.5 11.8 7.8 66.1 66.1 46.5 11.8 7.8 66.1 66.1 14 16 15 15 Au (g/t) - - 0.04 - - Au (g/t) - - 0.04 - - 2 3 3 3 15.1 26.5 41.6 10.4 Au (Koz) TONNES (Mt) - - 10 10 10 46.5 11.8 7.8 66.1 66.1 Au (Koz) TONNES (Mt) - - 10 10 10 46.5 11.8 7.8 66.1 66.1 29 35 33 33 Cu (%) 0.17 0.19 0.15 0.17 0.17 Cu (%) 0.17 0.19 0.15 0.17 0.17 97 122 113 113 TOTAL RESOURCES Cu (Kt) 80 22 12 114 114 Cu (Kt) 80 22 12 114 114 14 16 15 15 Au (g/t) - - 0.04 - - Au (g/t) - - 0.04 - - 2 3 3 3 Au (Koz) - - 10 10 10 Au (Koz) - - 10 10 10 45 ANNUAL REPORT 2023 Operations review Resources and Reserves Table of Reserves – Great White Deposit 2022 ANDROMEDA INTEREST (%) TONNES (Mt) PRM YIELD (%) CRM YIELD (%) 100 Great White PRM1,14,15 Great White CRM1,14,15 Total (100%)1,14,15 Total 2022 (Andromeda share)1 100 0.4 4.8 5.2 5.2 27 - - - 18 45 - - PROVED RESERVE TOTAL YIELD (%) 45 45 45 45 HALLOYSITE (%) BRIGHTNESS (R457) 3 15 14 14 87 84 84 84 2023 ANDROMEDA INTEREST (%) TONNES (Mt) PRM YIELD (%) CRM YIELD (%) TOTAL YIELD (%) HALLOYSITE (%) BRIGHTNESS (R457) 100 Great White PRM1,14,15 Great White CRM1,14,15 Total (100%)1,14,15 Total 2023 (Andromeda share)1 100 0.4 4.8 5.2 5.2 27 - - - 18 45 - - 45 45 45 45 3 15 14 14 87 84 84 84 2022 ANDROMEDA INTEREST (%) TONNES (Mt) PRM YIELD (%) CRM YIELD (%) TOTAL YIELD (%) HALLOYSITE (%) BRIGHTNESS (R457) PROBABLE RESERVE 100 Great White PRM1,14,15 Great White CRM1,14,15 Total (100%)1,14,15 Total 2022 (Andromeda share)1 100 1.1 8.9 10.0 10.0 24 - - - 16 - - - 40 46 45 45 1 11 10 10 87 83 83 83 2023 ANDROMEDA INTEREST (%) TONNES (Mt) PRM YIELD (%) CRM YIELD (%) TOTAL YIELD (%) HALLOYSITE (%) BRIGHTNESS (R457) 100 Great White PRM1,14,15 Great White CRM1,14,15 Total (100%)1,14,15 Total 2023 (Andromeda share)1 100 1.1 8.9 10.0 10.0 24 - - - 16 46 - - 2022 ANDROMEDA INTEREST (%) TONNES (Mt) PRM YIELD (%) CRM YIELD (%) 100 Great White PRM1,14,15 Great White CRM1,14,15 Total (100%)1,14,15 Total 2022 (Andromeda share)1 100 1.5 13.7 15.1 15.1 25 - - - 17 46 - - 40 46 45 45 TOTAL RESERVE TOTAL YIELD (%) 41 46 46 46 1 11 10 10 87 83 83 83 HALLOYSITE (%) BRIGHTNESS (R457) 2 12 11 11 87 83 84 84 2023 ANDROMEDA INTEREST (%) TONNES (Mt) PRM YIELD (%) CRM YIELD (%) TOTAL YIELD (%) HALLOYSITE (%) BRIGHTNESS (R457) 100 Great White PRM1,14,15 Great White CRM1,14,15 Total (100%)1,14,15 Total 2023 (Andromeda share)1 100 1.5 13.7 15.1 15.1 25 - - - 17 46 - - 41 46 46 46 2 12 11 11 87 83 84 84 Fe2O3 (%) 0.3 0.5 0.5 0.5 Fe2O3 (%) 0.3 0.5 0.5 0.5 Fe2O3 (%) 0.3 0.5 0.5 0.5 Fe2O3 (%) 0.3 0.5 0.5 0.5 Fe2O3 (%) 0.3 0.5 0.5 0.5 Fe2O3 (%) 0.3 0.5 0.5 0.5 ISO brightness (R457) cut-off of at 75 in the <45µm size fraction. 1 Figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding. 2 ASX 26 November 2020, Updated mineral resource for the Great White Kaolin JV Deposit. 3 4 ASX 29 September 2020, New mineral resource estimate for Hammerhead Halloysite-Kaolin Deposit. 5 ASX 11 August 2020, New mineral resource for the Mount Hope Kaolin Project. 6 ASX 23 March 2022, Maiden Tiger Kaolin Resource and Regional Rare Earth Element Potential. 7 ASX announcement released 8 May 2019 “Increased ounces in updated Wudinna Gold Project Mineral Resource”. 8 Cobra Resources PLC LSE announcement released 7 September 2023, “Rare Earth and Gold Resource Upgrades”. 9 The Wudinna Gold Project Mineral Resources estimates have been reported above a 0.5 g/t gold cut to reflect extraction by open pit mining. 10 REE Mineral Resource reported above a cut-off grade of 320 ppm TREO-CeO2 to reflect extraction by open pit mining. 11 ASX release dated 15 August 2019 “Substantial initial copper resource – Moonta Project, inferred ISR copper resource of 114,000 tonnes contained copper”. 12 Figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding. 13 Environmental Copper Recovery Pty Ltd earn in and joint venture agreement (earn in not satisfied). 14 2022 Ore Reserve used in Definitive Feasibility Study released in April 2022 (refer ADN ASX announcement dated 16 April 2022 titled “Definitive Feasibility Study and Updated Ore Reserve”). 15 Ore Reserves have been reported from Measured and Indicated Resources only. 46 ANDROMEDA METALS LIMITED Operations review Competent person statements WUDINNA GOLD PROJECT RESOURCES The information that relates to the estimation and reporting of the gold Mineral Resource estimates for the Barns, Baggy Green and White Tank Deposits and the Clarke and Baggy Green REE Mineral Resource estimates has been compiled by Mrs Christine Standing BSc Hons (Geology), MSc (Min Econs), MAusIMM, MAIG. Mrs Standing is a Member of the Australian Institute of Geoscientists and the Australian Institute of Mining and Metallurgy and is a full-time employee of Snowden Optiro (Optiro Pty Ltd) and has acted as an independent consultant. The information that relates to the estimation and reporting of the gold Mineral Resource estimate for Clarke has been compiled by Ms Justine Tracey BSc Hons (Geology), MSc (Geostatistics), MAusIMM. Ms Tracey is a Member of the Australian Institute of Geoscientists and is a full-time employee of Snowden Optiro (Optiro Pty Ltd) and has acted as an independent consultant. Mrs Christine Standing and Ms Justine Tracey have sufficient experience with the style of mineralisation, deposit type under consideration and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code). Mrs Standing and Ms Tracey consent to the inclusion in this announcement of the contained technical information relating the Mineral Resource estimations in the form and context in which it appears. GREAT WHITE AND MT HOPE PROJECTS RESOURCES Information in that relates to The Great White Project and Mt Hope Project has been reviewed by Mr James Marsh a member of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Marsh is an employee of Andromeda Metals Limited who holds shares, options and performance rights in the company and is entitled to participate in Andromeda’s employee incentive plan (details of which are included in Andromeda’s Annual Remuneration Report) and has sufficient experience, which is relevant to the style of mineralisation, type of deposits and their ore recovery under consideration and to the activity being undertaking to qualify as Competent Person under the 2012 Edition of the ‘Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code). This includes Mr Marsh attaining over 30 years of experience in kaolin processing and applications. Mr Marsh consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The data that relates to Mineral Resource Estimates for the Great White Kaolin Project (Great White, Hammerhead and Tiger Deposits) and Mount Hope Kaolin Project are based on information evaluated by Mr Eric Whittaker who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM). Mr Whittaker is the Chief Geologist of Andromeda Metals Limited and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). Mr Whittaker has 30 years of experience in the mining industry. Mr Whittaker consents to the information in the form and context in which it appears. Mr Whittaker holds Performance Rights in the Company and is entitled to participate in Andromeda’s employee incentive plan. 47 ANNUAL REPORT 2023 Operations review Competent person statements MOONTA COPPER ISR RESOURCES The information in this release that relates to the Estimation and Reporting of Mineral Resources has been compiled by Mr David Coventry BSc (Hons). Mr Coventry was at the time of the estimation a full- time employee of Mining Plus Pty Ltd and acted as an independent consultant on the Moonta Deposit Mineral Resource estimations. Mr Coventry is a Member of the Australasian Institute of Geoscientists and has sufficient experience with the style of mineralisation, deposit type under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code). Mr Coventry consents to the inclusion in this report of the contained technical information relating the Mineral Resource Estimation in the form and context in which it appears. GREAT WHITE ORE RESERVES The data in this report that relates to Mineral Reserve Estimates for the Great White Deposit is based on information evaluated by Mr John Millbank who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM). Mr Millbank is the Director of Proactive Mining Solutions Pty Ltd, an independent mining consultancy, and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). Mr Millbank consents to the information contained in this report being used in the form and context in which it appears. Neither Mr Millbank, or any of the entities he directly controls, have any financial interests in Andromeda Metals Ltd or any of its subsidiaries. 48 ANDROMEDA METALS LIMITED Directors' report The Directors present this Directors’ Report and the attached annual financial report of Andromeda Metals Limited for the financial year ended 30 June 2023. DIRECTORS AND EXECUTIVES The names and details of the Directors and Executives of the Company during or since the end of the financial year are: Michael Wilkes BEng(Hons), MBA, MAusIMM, MAICD Robert Katsiouleris (Appointed 6 April 2022) (Appointed 1 April 2023) Chair and Independent Non-executive Director Managing Director & CEO Mick Wilkes is an experienced mining executive and company director with more than 35 years of broad international mining experience coupled with a successful track record of leading the development and operation of greenfield mines. Most recently in his executive career, Mick was the President and CEO of dual listed (ASX and TSX) OceanaGold Corporation (ASX:OCG) from 2011 to 2020 where he led the transformation from a single asset junior company to a multinational mid-tier producer with four operations across three countries. In previous roles he was the Executive General Manager of Operations at OZ Minerals responsible for the development of the Prominent Hill copper/gold project in South Australia and General Manager of the Sepon gold/copper project for Oxiana based in Laos. Mick is currently a Non-executive Chair of Kingston Resources Limited (ASX: KSN), been appointed as Non-executive Director of Genesis Minerals Ltd effective 1 October; and a member of the Sustainable Minerals Institute’s Advisory Board at the University of Queensland. He was previously the Chair of the Governance Committee and a member of the Administration Committee of the World Gold Council. Bob has over twenty five years of combined operational, engineering, and commercial experience in industrial minerals, and base metals, with an emphasis on improving profitability from mine to market. Bob’s experience spans plant design and start-ups, new process and product development, and sales and marketing experience in mature and emerging markets for a wide range of minerals including zircon, rutile, borates, diatomite, silica, perlite, and more recently in zinc, lead, and associated by-products. Bob has had success across bulk minerals and non-ferrous metals by always maintaining a focus on adding value via developing and implementing an industrial marketing model that creates uplift in a business by understanding the balance between mine to market, and market to mine. Specialties: Industrial minerals, growth platforms, product development, and sales and marketing of non-commodity minerals, and commodity metals. Sales and marketing strategies, with a focus on the customer, product, and regional segmentation that improved profitability and created sustainable competitive advantage 49 ANNUAL REPORT 2023 Directors’ report James E Marsh BSc (Hons), MAusIMM (Appointed Managing Director 30 May 2018, transitioned to Executive Director 1 April 2023) Melissa K Holzberger LLM Resources Law (Distinction (Scotland), Dip. International Nuclear Law (Hons) (France), LLB (Adel), BA (Adel), Grad Dip Legal Practice, GAICD, FGIA (Appointed 23 September 2021) Executive Director, Sales and Marketing Independent Non-executive Director James Marsh is a highly qualified kaolin specialist with more than 30 years’ industrial minerals experience, including notable, senior technical and marketing roles with two global market leaders. With experience at all levels of the industry from laboratory development through to market listing, James has been instrumental in developing new applications and markets for kaolin around the world. James spent fifteen years working as Technical Manager for Imerys Minerals, the world leader in industrial minerals with a focus on kaolin, where he successfully assisted in developing and commercialising several new grades from projects around the world. He then worked for nine years with Minerals Corporation in Australia as Marketing and Technical Director commercialising kaolin products from Australia and China, and setting up a global network for sales and distribution. James spent seven years as Business Development Manager for Active Minerals International, a worldwide leader in the production and marketing of kaolin and attapulgite minerals. Uniquely qualified in all aspects of the kaolin industry, James is passionate about leveraging his experience to deliver a world-class industrial minerals business. 50 Sustainability and Governance Committee Chair Ms Holzberger is an experienced Independent Non-executive Director and mining lawyer with over 20 years’ experience in the international energy and resources sector. Ms Holzberger is currently a Non-executive Director of Paladin Energy Ltd (ASX: PDN) and a member of the Australian Radiation Protection and Nuclear Safety Agency’s Radiation Health and Safety Advisory Council. She brings a deep understanding of mining projects and operations, having previously worked with BHP and Rio Tinto. Her substantial experience extends to highly regulated industries, international commodity trade, corporate ethics, risk and compliance oversight, together with a focus on sustainability, environment, social and governance (ESG) matters. Ms Holzberger holds a Master of Laws in Resources Law (Distinction) as a Chevening scholar from the Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee; a Diploma in International Nuclear Law (Hons) as an OECD Nuclear Energy Agency scholar from the University of Montpellier; a Bachelor of Laws and Bachelor of Arts from the University of Adelaide; and a Graduate Diploma in Legal Practice. She is a graduate of the University of Oxford’s Leading Sustainable Corporations; a graduate member of the Australian Institute of Company Directors; and a Fellow of the Governance Institute of Australia. In 2006 Ms Holzberger was awarded the Telstra South Australian Young Business Woman of the Year which recognised her commitment and leadership in the energy, resources and business community. ANDROMEDA METALS LIMITED Directors’ report Austen Perrin B. Econ. (Acc.), CA, GAICD (Appointed 1 July 2022) Independent Non-executive Director Audit and Risk Committee Chair Austen Perrin has had significant experience in developing capital management strategies and financing solutions to support corporate objectives including development of key infrastructure and transport projects and underground coal mines. He has a breadth of experience gained in a variety of industries including transport and logistics, ports, road and rail infrastructure, coal, copper and gold mining, unconventional shale gas, mining services, oil, gas and water pipeline construction, general building construction and insurance. Austen Perrin is currently a non- executive director with AJ Lucas Group Limited and up until recently a non-executive director for Round Oak Minerals Pty Limited. Austen currently chairs the Audit and Risk Committee for AJ Lucas and previously for Round Oak Minerals Pty Limited. He has been a Charted Accountant for over 33 years and is a graduate of the Australian Institute of Company Directors. Sarah Clarke LLB (Hons), BSc, Grad Cert (Applied Finance and Investment) Joseph F Ranford BEng (Mining), MBA, FAusIMM, GAICD, Grad Dip (Business Management) (Appointed 9 January 2023) General Counsel and Company Secretary Sarah Clarke brings over 17 years of experience as a lawyer working with ASX-listed energy and resources companies, with extensive knowledge of the industry and regulatory environment. She was most recently a Partner at Piper Alderman. Sarah was an elected Councillor of the South Australian Chamber of Mines and Energy (SACOME) from 2018 to 2022, is well-connected in the industry and deeply understands the issues facing South Australian mining companies. Sarah was previously named a “Leading” South Australian energy and resources lawyer in Doyle’s guide. She was recommended for Natural resources (transactions & regulatory) in the Legal 500 Asia Pacific: Australia and recognised for Corporate Law by Best Lawyers Australia. Operations Director Joe Ranford is a mining engineer with 25 years’ senior management experience across both domestic and international mining companies. Joe has significant experience bringing mining operations into production within sensitive communities and considerable knowledge of the South Australian mining approval process and stakeholder landscape. Most recently, he held the role as Chief Operating Officer for Nordic Gold Inc, a Canadian based company which was the previous owner of the Laiva Gold Mine in Finland, where he re-established mining operations and brought the project back into production from care and maintenance. Prior to his role at Nordic Gold Inc, Joe was Operations Manager for Terramin Australia Limited where he managed all operational and technical aspects of the Angas Zinc mine and championed the evaluation and approval processes for the Bird in Hand Gold Project. Joe is focused on bringing the deposits of the Great White Kaolin Project on South Australia’s Eyre Peninsula project into production. Growing up in the region, Joe has a genuine understanding and respect for the local community and wants to continue building partnerships based on creating shared value. 51 ANNUAL REPORT 2023 Directors’ report Tim Anderson BEng (Honours), Grad Cert (AICD) (Appointed 1 December 2021) Chief Commercial Officer Tim Anderson is an experienced executive with more than 30 years of experience including commercialisation, business development and operations management roles in resources, energy, water, technology and engineering. Tim was a Senior Leadership Team member and Program Manager – Energy & Resources for Nova Systems, an Australian-owned internationally operating engineering and technology solutions company. He served as CEO of Optimatics, a global leader in water utility systems planning and operations optimization through the application of computational intelligence technologies. Tim held business development and operations management roles at The University of Adelaide for the commercialisation of research and the provision of academic consulting and testing services. Tim has led and grown businesses from the ground up and established and transformed new business entities within mature state companies. He holds an Honours Degree in Civil Engineering from The University of Adelaide in Australia and a Graduate Diploma from the Australian Institute of Company Directors. 52 DIRECTORS WHO RESIGNED DURING THE FINANCIAL YEAR Andrew N Shearer BSc (Geology), Hons (Geophysics), MBA (Resigned 24 August 2022) Independent Non-executive Director Andrew Shearer has been involved in the mining and finance industries for 20 years. Joseph F Ranford BEng (Mining), MBA, FAusIMM, GAICD, Grad Dip (Business Management) (Resigned 21 November 2022) Executive Director Joe Ranford was appointed COO, in doing so, he transitioned from a part-time consultant to a full-time employee and, given the COO role’s importance and additional focus on progressing the GWP, resigned as a director. DIRECTORSHIPS OF OTHER LISTED COMPANIES Directorships of other listed companies held by directors in the three years immediately before the end of the financial year are as follows: NAME COMPANY PERIOD OF DIRECTORSHIP M Wilkes Kingston Resources Limited From May 2018 to present Matador Mining Limited From July 2020 to May 2022 Dacian Gold Limited Genesis Minerals Ltd From September 2021 to September 2022 From October 2022 to present M K Holzberger Paladin Energy Limited From May 2021 to present Silex Systems Limited A Perrin AJ Lucas Group Limited From January 2019 to October 2021 From December 2014 to present ANDROMEDA METALS LIMITED Directors’ report ATTENDANCE AT BOARD AND COMMITTEE MEETINGS The number of Board meetings held during the reporting period and the number of meetings attended by each Director are as follows: DIRECTOR M Wilkes B Katsiouleris J Marsh M K Holzberger A Perrin A Shearer J Ranford BOARD MEETINGS ENTITLED TO ATTEND ATTENDED 14 3 14 14 14 2 4 14 3 13 14 14 2 4 The number of Board committee meetings held during the reporting period and the number of committee meetings attended by committee members is as follows: DIRECTOR M Wilkes M K Holzberger A Perrin A Shearer AUDIT AND RISK COMMITTEE REMUNERATION AND NOMINATION COMMITTEE SUSTAINABILITY AND GOVERNANCE COMMITTEE ENTITLED TO ATTEND ATTENDED ENTITLED TO ATTEND ATTENDED ENTITLED TO ATTEND ATTENDED 5 5 5 1 5 5 5 1 5 5 5 2 5 5 5 2 3 3 3 - 3 3 3 - PRINCIPAL ACTIVITIES The principal activity of the Company is the advancement of TGWP through the development of production facilities for halloysite-kaolin products and industrial sand co-products to meet increasing market demand. 53 ANNUAL REPORT 2023 Directors’ report OPERATING AND FINANCIAL REVIEW (All $ are AUD unless otherwise stated) Strategy To achieve the goal of growing shareholder wealth, Andromeda’s Directors have formulated a Company strategy comprising the following key elements: The Company’s primary focus is on advancing the TGWP through to a final investment decision for eventual development and production. The Directors continue to see a strong growing market for high quality halloysite-kaolin products, underpinned by declines in global supply. The Company will continue to seek opportunities to maximise shareholder value for our legacy gold and copper assets, through our joint-venture partners, while minimising the cost and management time incurred on these assets. The Company will adhere to principles of good corporate governance, caring for its employees, conducting its operations in an environmentally sensitive manner, and maintaining respect for other stakeholders and for the communities in which it operates. The Company acknowledges the importance of committing to and establishing an integrated approach to Sustainability and consistent reporting on Environmental, Social and Governance (ESG) frameworks and factors. As the Company moves into production, its aspiration is to adopt, monitor and report on relevant frameworks and metrics that emerge from the developing consensus and convergence of ESG standards. Financial results Income for FY23 increased to $2,002,153, representing a 342% increase from the $452,516 recorded during FY22. The net result of operations for the year was a loss after income tax of $9,461,246, which is a 8.3% increase from the loss of $8,733,119 for the prior year. This was driven by the increased expenses incurred as the Company continued to move TGWP towards a final investment decision, and prepare for operational readiness ahead of production. The earnings per share for FY23 was a loss of 0.30 cents per share, compared to a loss of 0.33 the prior year. At 30 June 2023, the Company held cash and cash equivalents totalling $15,376,000, down from the $32,853,203 held the year prior. 54 The Great White Project (TGWP) During FY23, the Company continued moving towards making a final investment decision while progressively de-risking the Project and evaluating funding arrangements that best suit the long-term interests of the Company and its shareholders. The staged approach to development was refined to reduce the initial capital investment required, through the construction of an initial Stage 1A. The reduced capacity of Stage 1A was deemed prudent as it more closely matches production to signed offtake volumes currently in place and under negotiation. During the year, additional offtake agreements were signed across our portfolio of halloysite-kaolin products to cover a significant proportion of planned Stage 1A production capacity. The growth profile of these agreements, as well as ongoing negotiations with other potential customers, continue to provide confidence that further offtake agreements will be signed. The Program for Environment Protection and Rehabilitation (PEPR) was lodged with the South Australian Department for Energy and Mining (DEM) in August 2022, and subsequently approved in March 2023. Land purchase agreements to acquire all the required freehold land from relevant landowners for the Project were signed. These agreements include the land access waivers while the subdivision progresses ahead of eventual ownership being transferred to Andromeda. To support securing of the required funding arrangements, the Board deemed it sensible to develop a Bankable Feasibility Study (BFS) and an updated Definitive Feasibility Study (2023 DFS). The BFS is expected to underpin the Company’s ability to secure a proportion of the funding required for TGWP’s development through debt. To support additional funding considerations and discussions, the 2023 DFS was developed to update the production and financial outcomes expected through developing TGWP. To do this, the Company undertook a review of its business positioning and a rigorous, expedited approach to revising its Commercial Strategy. Andromeda’s revitalised Commercial Strategy identified key priority markets and segments, that would attract above market value in use opportunities for Andromeda’s kaolin products, which would in turn be accretive to the value of TGWP’s development over the life-of-mine (LOM). ANDROMEDA METALS LIMITED Directors’ report The commercial strategy review confirmed TGWP’s core kaolin product portfolio as Great White CRM™ and Great White KCM™ 90, and identified a value in use that is above market in established and growing segments for high quality ceramic tiles and porcelain tableware. Andromeda’s complementary product portfolio was defined as Great White HRM™ and industrial sand co-products. In addition to the current established use of Great White HRM™ as a rheology modifier, the global market for low-carbon concrete production has been identified as a further opportunity to be commercialised. Industrial sand co-products (not commercialised in the 2022 DFS) are planned to be sold to meet shortfalls in regional construction and infrastructure markets. Using conventional mining and processing techniques, the 2023 DFS found TGWP can generate high quality halloysite-kaolin products, with a pre-tax NPV of $1,010 million based on the 15.1Mt Ore Reserve that would sustain a 28-year mining operation. The four-stage approach to development outlined in the 2023 DFS, is expected to deliver average annual EBITDA of $130 million and require an initial capital cost of $62.4 million during Stage 1A. The strong cashflows detailed in the 2023 DFS, led to an internal rate of return of 45% and a payback period of 5.1 years, a significant improvement over the 2022 DFS results of 36% and 5.9 years respectively, based on the assumptions in the 2023 DFS. Sales agreements underpinning TGWP’s development, include: • Plantan Yamada Co Ltd has signed a long form offtake agreement for the supply of 25,000 tonnes of Great White KCM™90 over the first three years of production for sales into the ceramics sector of Japan; • Foshan Gaoming Xing-Yuan Machinery Co. has signed a terms sheet with to purchase 115,000 tonnes of Great White CRM™ over a five year period and 5,000 tonnes of Great White KCM™90 in the first year, subject to conditions precedent; and • IMCD has signed a terms sheet for exclusive sales into Australia and New Zealand with an indicative total of 22,500 tonnes of Great White HRM™ over an initial term of three years, with a maximum of 30,000 tonnes and a minimum of 15,000 tonnes. Additionally, Andromeda has received a signed Letter of Intent from IberoClays for exclusive distribution to the Mediterranean region of the full portfolio of Andromeda’s ceramics kaolin product. Ongoing negotiations for further offtake agreements continue with several other interested parties across multiple markets in Asia, Europe and the Middle East, with the aim of securing the balance of production output detailed in the 2023 DFS. Further details on the operation of the Company can be found in the Operation Report section on page 8. Further details on the financial position of the Company can be found in the Financial Report on page 77. Exploration and evaluation activities During FY23, Andromeda’s main focus has been to further progress TGWP through: • completion of the BFS and the 2023 DFS, • obtaining the necessary mining approvals, and • preparations and planning ahead of the expected commencement of construction activities. Exploration and evaluation expenditure for the year was $7,521,335, which was an 65% de(in)crease on the $4,035,983 incurred the year prior. Funds were predominantly directed towards advancing TGWP. DIVIDENDS OR DISTRIBUTIONS No dividends or distributions were paid, declared or recommended for payment to shareholders during the reporting period. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The Company continues to pursue its flagship development, the Great White Project, including procurement of certain long lead items, development of a skeleton start up project team and preliminary construction activities in advance of a final investment decision for the Great White Project. Post the end of the reporting period, the Company released the results of the updated 2023 DFS, which showed a significant increase in the net present value of the Great White Project, based on the assumptions and qualifications in the 2023 DFS. This is underpinning discussions in relation to appropriate funding for project development. No significant changes in the state of affairs of the Company are anticipated until funding for project development is secured and a final investment decision is made. 55 ANNUAL REPORT 2023 Directors’ report LIKELY DEVELOPMENTS The Company continues to consider the appropriate funding for the development of TGWP and advance discussions with potential debt providers. Offtake revenue streams also continue to be developed. Should a final investment decision be made, the Company will pay the required environmental and rehabilitation bond and commence construction activities at the TGWP. Until a final investment decision is made, the Company will continue to prudently manage its available funds and will consider interim funding options if required. SECURITIES ON ISSUE The following securities were issued or cancelled during the reporting period: DATE ISSUE AMOUNT DETAIL 22 July 2022 Performance rights Ordinary shares (2,000,000) 2,000,000 Performance rights conversion to ordinary shares 11 November 2022 Performance rights (1,001,250) Cancellation 28 November 2022 Unlisted options (43,320,000) Options expired 13 December 2022 Performance rights 3 February 2023 Performance rights Ordinary shares (487,500) Lapse of performance rights (262,500) 262,500 Performance rights conversion, with ordinary shares subject to voluntary escrow period 10 February 2023 Performance rights (65,000) Cancellation 3 March 2023 Unlisted options (1,400,000) Lapse of unlisted option 3 March 2023 Performance rights (1,920,364) Cancellation Note: For more detailed information refer to Note 15 in the notes to the Financial Statements (page 101). The Company has the following securities on issue (as at 29 September 2023): SECURITY NUMBER TYPE Fully paid ordinary shares 3,110,270,932 3,110,008,432 unescrowed shares NUMBER OF HOLDERS 13,617 Options 24,760,000 20 million exercisable at $0.075 each for a fully 262,500 escrowed shares (until 3/2/2024) paid ordinary share and expiring 28/11/23 4,760,000exercisable at $0.2375 each for a fully paid ordinary share and expiring 31/12/25 Performance rights 18,566,082 9,557,600 expiring 23/12/23 (with vesting conditions relating to commencement of mining) 3,600,133 expiring 23/12/23 (with vesting conditions relating to commencement of mining) 1,148,349 expiring 23/12/23 (with vesting conditions based on first shipment of product) 4,260,000 expiring 30/06/24 (with vesting conditions based on shipment of products) 1 4 3 5 11 2 3 The options and performance rights do not carry any right to vote or participate in a share issue of the Company. During the reporting period there were no ordinary shares issued as a result of the exercise of an option and 2,262,500 shares were issued as a result of exercise of performance rights. 56 ANDROMEDA METALS LIMITED NON-AUDIT SERVICES Deloitte has not provided any non-audit services to the Company during the reporting period. A copy of the Auditor’s Independence Declaration can be found on page 76. CORPORATE GOVERNANCE STATEMENT The Company’s 2023 Corporate Governance Statement is available at: www.andromet.com.au/who- we-are/corporate-governance/ EVENTS ARISING SINCE THE END OF THE REPORTING PERIOD No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Company in future financial years, the results of those operations in future financial years or the state of affairs of the Company in future financial years. Directors’ report ENVIRONMENTAL LEGISLATION As set out in the Sustainability Report, there have been no environmental incidents or breaches of environmental laws or permits during the reporting period. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave under s237 of the Corporations Act 2001(statutory derivative action) to bring proceedings on behalf of the Company, or intervene in the any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. INDEMNITIES GIVEN TO AND INSURANCE PREMIUMS PAID FOR OFFICERS AND AUDITOR All Directors are entitled to have premiums on indemnity insurance paid by the Company. During the reporting period, the Company paid premiums to insure the Directors and other officers of the consolidated entity for liabilities that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity, to the extent permitted by law. Under the terms and conditions of the insurance contract, the nature of liabilities insured against and the premium paid cannot be disclosed. The Company has not otherwise during or after the reporting period, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor against a liability incurred as an officer or auditor. The Company has agreed to indemnify its auditors, Deloitte, as part of the terms of its audit engagement against claims by third parties arising from the audit, subject to standard exclusions. The Directors of the Company have not provided Deloitte with any indemnities. No payment has been made to indemnify Deloitte during or since the financial year. 57 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) LETTER FROM THE REMUNERATION AND NOMINATION COMMITTEE CHAIR REMUNERATION REPORT - Table of contents Dear Shareholders, Section Content 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 Key management personnel covered in this remuneration report Remuneration governance Andromeda remuneration - strategy and principles Engagement of remuneration consultants 2022 AGM voting outcome Andromeda remuneration framework Remuneration components Key management personnel service agreements Performance and outcomes for 2023 Remuneration of directors and key management personnel Options and performance rights Key management personnel shareholdings Other transactions with key management personnel and/or their related parties On behalf of the Board, I present the Remuneration Report for Financial Year 2023. The Company’s Remuneration Report is designed to demonstrate the link between strategy, performance and remuneration outcomes for Key Management Personnel (KMP) and report on the remuneration arrangements for Non-Executive Directors (NEDs). The Board continues to embed the changes identified as part of the recent comprehensive review of the Company’s remuneration framework. This includes regular assessments of the remuneration framework, practices and outcomes, to ensure they are fit-for- purpose and support Andromeda’s strategic goals. The Company’s remuneration framework is made up of three key principles that are directly linked to our business strategy. Firstly, remuneration is weighted between short and long-term rewards, because we want our employees to be appropriately aligned with the interest of our shareholders and have an ownership mindset. Secondly, recruiting exceptional talent relies on market benchmarking, paying fairly for skills, ability and responsibility. The third principle is performance accountability which includes delivering annual business results within the culture expectations and risk appetite set by the Board. The Board applies these principles to attract and retain the talent necessary to deliver on our strategic goals and create long term value for our shareholders. We continue to prioritise engagement with you, our shareholders, particularly as we manage the transition towards becoming a mining production company. Yours sincerely, Mick Wilkes Independent Chair, Remuneration and Nomination Committee 58 Page 59 59 60 61 61 62 63 66 68 69 70 75 75 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.1 KEY MANAGEMENT PERSONNEL COVERED IN THIS REMUNERATION REPORT The following Key Management Personnel (KMP) of the Company comprises the Non-executive Directors (NEDs) of the Company and the Executives listed below, who have significant influence over the Company’s operating performance: NAME POSITION TERM AS KMP Non-executive Directors Michael Wilkes Independent Non-Executive Chair Melissa Holzberger Independent Non-Executive Director Independent Non-Executive Director Austen Perrin Andrew Shearer Executive KMP Bob Katsiouleris James Marsh * Independent Non-Executive Director Resigned 24 August 2022 Managing Director & CEO Appointed 1 April 2023 Executive Director Sales & Marketing Full year Full Year Full Year Full year Full year Joseph Ranford ** Chief Operating Officer (COO) Michael Zannes Tim Anderson Chief Financial Officer (CFO) Resigned 3 March 2023 Chief Commercial Officer (CCO) Full year * James Marsh held the position of Managing Director from 1 July 2022 to 31 March 2023. He was then appointed to Executive Director, Sales and Marketing from 1 April 2023. ** Joe Ranford resigned from the Board on 22 November 2022 as Executive Director. He commenced with Andromeda as employee (from consultant) on 20 October 2022. 1.2 REMUNERATION GOVERNANCE The Remuneration and Nomination Committee is responsible for determining the remuneration arrangements for KMP and making recommendations to the Board. The Committee comprises three independent Non-Executive Directors, inclusive of an independent Chair. The Committee reviews remuneration levels and other terms of employment on a periodic basis having regard to relevant employment market conditions, the strategy of the Company, and the qualifications, skills and experience of the KMP. The Committee also advises on the appropriateness of remuneration packages of the Company given trends in comparative peer companies, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality board and executive team. The overall remuneration framework is approved by the Board upon receiving recommendations by the Committee. The Committee’s recommendations are based on adaptations to reflect competitive market and business conditions. Within this framework, the Committee considers remuneration policies and practices generally, and determines specific remuneration packages and other terms of employment for the Managing Director and senior Executives. Executive remuneration and other terms of employment are reviewed annually having regard to performance, relevant comparative information and expert advice. 59 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) Board The Board is responsible for approving and reviewing the remuneration arrangements for the Directors and Key Management Personnel, based on recommendations of the Remuneration and Nomination Committee. The Board also reviews the performance of all KMPs on an annual basis. Remuneration and Nomination Committee The Remuneration and Nomination Committee reviews and makes recommendations to the Board regarding the Directors and KMP remuneration arrangements. These reviews take place at least annually, taking into account relevant factors including market conditions. Management The CEO, in consultation with other KMP sets and reviews the remuneration arrangements of all other employees. Remuneration Consultants External Advisors may be engaged directly by the Board or through the Remuneration and Nomination Committee to provide advice or information related to remuneration that is free from the influence of management. 1.3 ANDROMEDA REMUNERATION – STRATEGY AND PRINCIPLES ELEMENT DETAIL Philosophy The performance of the Company depends on the quality of its Directors and other KMP. Therefore, to achieve success in executing its corporate strategy, the Company must attract, motivate and retain appropriately qualified personnel. To achieve these aims, the Company embodies the following in its remuneration framework: – provide competitive rewards to attract and retain high calibre directors and other KMP; – link Executive rewards to shareholder value; – link reward with the strategic goals and performance of the Company; and – ensure total remuneration is competitive by market standards. The above framework is reliant on the business having the financial capacity to deliver on the above. Purpose The Company’s remuneration framework is designed to align Executives’ remuneration with shareholders’ interests and to retain appropriately qualified executive talent for the benefit of the Company. The Framework aims to balance multiple factors such as Company operational performance, investor expectations, financial and sustainability performance, fairness to individuals and maintaining market competitiveness. Principles Andromeda operates a remuneration strategy comprising fixed pay and variable pay. – Fixed pay (Total Fixed Remuneration) includes base salary and statutory superannuation; and – Variable pay includes STI and LTI but may be structured in other ways. Remuneration is benchmarked to Australian Mining Companies similar in size, scale and operational scope to Andromeda utilising independent external data sources, with benchmarking set around the 50th percentile (+/-10%). 60 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.4 ENGAGEMENT OF REMUNERATION CONSULTANTS From time to time, the Committee will seek advice from independent remuneration consultants on Executive KMP trends, remuneration benchmarking, and prevailing market practices. During the financial year, data was sought from REMSMART to benchmark Executive KMP remuneration, including fixed remuneration and incentive structures, against relevant ASX-listed organisations. REMSMART data is used to benchmark the Company against peer companies in the mining and metals sector with a similar market capitalisation. The report was presented to the Remuneration and Nomination Committee, providing a summary of base salaries, statutory superannuation plans, STI and LTI levels and assessing the positioning of the Company compared to the market. The Board received data from REMSMART that was free from undue influence from the Executive KMP to whom the remuneration information applies. The Board reviewed the data and utilised the Committee to consider the data, along with other business conditions when recommending remuneration packages. 1.5 2022 AGM VOTING OUTCOME AND COMMENTS During FY2022, the Board reviewed the approach to remuneration and made changes to ensure reward outcomes appropriately reflect the Company’s performance. This revised approach was endorsed by Shareholders at the FY2022 AGM, with the Company receiving a vote of 92.7% in favour of the adoption of its Remuneration Report for the 2022 Financial Year. 61 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) 1.6 ANDROMEDA REMUNERATION FRAMEWORK The Company’s Remuneration Framework consists of the following key components. COMPONENT DETAIL Total Fixed Remuneration (TFR) Variable Remuneration – Short-Term Incentive (STI) TFR includes base salary plus statutory superannuation. TFR is reviewed annually by the Committee, following consideration of individual performance, industry benchmarking, relevant economic indicators and internal capacity at Andromeda. The Company may invite Executives and employees to participate in its STI Program. The STI Program will include specific KPIs that are required to be achieved in order for an award to be made. Further details regarding the STI Program is detailed below in section 1.7 Remuneration Components. NEDs will not participate in STI or LTI Programs. Variable Remuneration - Long-Term Incentive (LTI) The Company may invite Executives to participate in the LTI Program. The LTI Program will be based on the key metric of the Company’s Total Shareholder Return (TSR) relative to a selected group of ASX-listed peer companies. LTI awards will be granted as performance rights. Further details regarding the LTI Program is detailed below in section 1.7.2 Remuneration Components. No LTIs have been issued under this framework. Previously issued performance rights and options were not linked to the current LTI incentive program and TSR metric. Malus Clause The Board has discretion in exceptional circumstances to forfeit or reduce any yet to be awarded or unvested STI and/or LTI opportunities, where previously awarded incentive outcomes have, in the opinion of the Board, resulted in the award of an inappropriate benefit. Any unvested securities or securities yet to be converted into fully paid ordinary shares will be subject to recovery (clawback). Change of Control On the occurrence of a change of control event, the Board will determine, in its sole and absolute discretion, the manner in which all STI awards and LTI awards (unvested and vested Performance Rights) will be dealt with. Termination of Employment If a participant in the STI or LTI program ceases employment with the Company prior to the end of the performance period, they will forego any STI or LTI award. A pro-rata payment of the STI/ LTI award will be considered in exceptional circumstances. If the employee is a Good Leaver, as defined in the Company’s Employee Incentive Plan, all unvested Performance Rights will remain and will be assessed at the end of the performance period. Non-Executive Director Share ownership NEDs will not participate in any STI or LTI Programs. NEDs are required to hold a minimum shareholding in Andromeda Metals Limited as follows: 50% of pre-tax Director annual base fee within 3 years of appointment; and 100% of pre-tax Director annual base fee within 5 years of appointment. 62 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.7 REMUNERATION COMPONENTS 1.7.1 Non-executive director remuneration In accordance with current corporate governance practices, the structure for the remuneration of NEDs and Senior Executives is separate and distinct. Shareholders approve the maximum aggregate remuneration payable to NEDs, with the current aggregate Directors’ Fees pool limit being $500,000 per annum. The Committee recommend the actual payments to Directors to the Board for decision. The Company adopted a remuneration structure where NEDs are wholly remunerated by fixed Director’s Fees (wholly cash-based), with no Share Based Payment component (no issue of shares, options, performance rights or other securities). The NED remuneration structure is now also similar to other developer and producer listed public companies. NED remuneration is structured as follows: i) The Non-Executive Chair receives fees of $200,000 per annum inclusive of any superannuation. ii) NEDs receive $116,000 per annum inclusive of superannuation. iii) Directors holding an additional position of Committee Chair are not paid any additional fees. iv) Board Committee members are not paid any additional fee. v) NEDs are entitled to statutory superannuation benefits. vi) NEDs are not remunerated through the issue of shares, options, performance rights or any other securities. vii) NEDs are required to own shares in the Company, with the aim of owning: a) 50% of pre-tax Director annual base fee within 3 years of appointment and b) 100% of pre-tax Director annual base fee within 5 years of appointment. viii) Any consultancy arrangements for NEDs who provide services outside of, and in addition to, their duties as NEDs are first considered by the Board and can only be permitted and approved by the Board. NEDs are not entitled to participate in performance- based remuneration schemes, for example any STI or LTI programs. All Directors are entitled to have premiums on indemnity insurance paid by the Company. During the financial year, the Company paid premiums to insure the Directors and other officers of the consolidated entity. The liabilities insured are for costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity. 1.7.2 Executive remuneration During the reporting period, the Company reviewed the structure of executive remuneration (inclusive of Executive Director remuneration) Executive Remuneration is now structured in accordance with the Andromeda Executive Remuneration Framework (Section 1.6 on page 62). Executive Remuneration is designed to promote superior performance and long-term commitment to the Company, whilst building sustainable shareholder value. Remuneration packages are set at levels that are intended to attract and retain executives capable of contributing to the Company’s operations and strategic plans. All executives receive a base remuneration which is market reviewed, together with performance- based remuneration linked to the achievement of pre-determined milestones and targets (Key Performance Indicators). The structure of Executive Remuneration comprises: i) Fixed remuneration. ii) STI with KPIs linked to annual planning and strategic objectives; and iii) LTI with KPIs as part of performance-based equity plans, with prior approval of shareholders to the extent required. The proportion of fixed and variable remuneration has been established by the Committee for FY23. The Committee linked the proportion of each segment to relevant market practices and to the degree to which the Board intends participants to focus on short and long-term outcomes. 63 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) Participation rates for STI and LTI plans as follows: Managing Director Executives STI (% OF TFR) 75% 50%-60% LTI (% OF TFR) 120% 75% FIXED REMUNERATION SHORT-TERM INCENTIVES LONG-TERM INCENTIVES – Comprises Director’s Fees, – Cash “at risk” component of – Equity “at risk” remuneration to consulting fees, salaries, and superannuation contributions remuneration for KMP – Linked to achievement of the Company’s strategic objectives and outcomes – Based on performance against financial and non-financial KPIs – KPI targets are set at the beginning of each financial year and are intended to be challenging but achievable promote alignment between KMP and shareholder value – Performance Rights granted based on KPI of TSR performance against TSR of ASX-listed peer group – Vesting over a three-year period Fixed remuneration Fixed remuneration comprises Director’s Fees, consulting fees, salaries, and superannuation contributions. Short-term incentives linked to annual planning and strategic objectives The objective of STIs is to link achievement of the Company’s strategic objectives and outcomes, or which clearly build shareholder value, with the remuneration received by Executives charged with meeting those targets. The STI is an “at risk” component of remuneration for key management personnel and is payable based on performance against KPIs set at the beginning of each financial year. Targets are intended to be challenging but achievable. The STI is offered annually, set as a percentage of annual salary, payment of which is conditional upon the achievement of agreed KPIs for each Executive, which comprise a combination of agreed milestones and financial measures. These milestones are selected from group, functional/unit and individual level objectives, each weighted to reflect their relative importance and each with targets linked to the Board’s expectations and with threshold, target and stretch levels set where possible (some KPIs are binary and are either achieved or not achieved). The KPIs comprise financial and non-financial objectives and include out-performance against financial metrics, health and safety targets and specific operations-related milestones including project development milestones for the Great White Kaolin Project. Measures chosen directly align the individual’s reward to the KPIs of the group and to its strategy and performance. 64 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) The participation rate for all employees in the STI program is as follows: POSITION CEO/Managing Director Executives including Executive Directors TARGET STI % OF TFR 75% 50%-60% The award rate scale for the KPIs within the STI program for all participants is as follows: PERFORMANCE Below the threshold Threshold performance Target performance Stretch performance AWARD Nil 50% of KPI 100% of KPI 150% of KPI Awards will be made on a pro-rata basis (using the straight-line method) when between “Threshold” and “Target” and between “Target” to “Stretch” Performance. Long-term incentives through participation in performance-based equity plans The objective of LTIs is to promote alignment between Executives and shareholders through the holding of equity. As such, LTIs are only granted to Executives who can directly influence the generation of shareholder wealth, or who are in a position to contribute to shareholder wealth creation. The participation rate for Executives in the LTI Program is as follows: POSITION CEO/Managing Director Executives including Executive Directors TARGET LTI % OF TFR 120% 75% The LTI Program is a program whereby Performance Rights are granted with a measurement period of three years and with the vesting condition KPI comprising TSR, on a graduated scale. The measurement of TSR will be based on a combined return for the Company measured by the change in its share price plus dividends over a three-year period. The Company’s TSR will be ranked against the TSR of a selected group of ASX-listed peer companies as determined by the Board of Directors. The award rate scale for the KPIs within the LTI Program for all participants is as follows: PERFORMANCE Below the 50th percentile 50th percentile 75th percentile or above AWARD Nil 50% of KPI 100% of KPI Awards will be made on a pro-rata basis (using straight-line method) between the 50th and 75th percentile. Any Performance Rights issued under the LTI Program will be issued pursuant to the Company’s Employee Incentive Plan, with shareholder approval sought for any Executive Directors, as required. 65 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) 1.8 KEY MANAGEMENT PERSONNEL SERVICE AGREEMENTS 1.8.1 Non-executive Director agreements The structure of NED Remuneration has been provided in section 1.7.1 above. All NEDs are appointed pursuant to an Appointment Letter, which details the terms and conditions of the appointment. NEDs are not appointed for a fixed term. In addition to Directors’ Fees that are detailed in section 1.7.1 above, NEDs are entitled to be paid reasonable travelling, accommodation and other expenses incurred as a consequence of their attendance at meetings of Directors and otherwise in the execution of their duties as Directors. 1.8.2 Executive Directors BOB KATSIOULERIS – MANAGING DIRECTOR & CEO Agreement commenced Term of agreement Fixed remuneration 1 April 2023 No fixed term $550,000 per annum (inclusive of superannuation) (effective from 1 April 2023) Equity compensation Mr Katsiouleris is entitled to participate in the STI and LTI programs. Full details of the equity issued is provided in section 1.11 below. Termination/notice by the company/individual Six months’ notice. Other key terms STI participation rate LTI participation rate 4 weeks annual leave 75% (refer section 1.7.2 for full details) 120% (refer section 1.7.2 for full details) JAMES MARSH, EXECUTIVE DIRECTOR SALES AND MARKETING Agreement commenced Term of agreement Fixed remuneration 1 April 2023 No fixed term $420,000 per annum (inclusive of superannuation) (effective from 1 April 2023) Equity compensation Mr Marsh is entitled to participate in the STI and LTI programs. Full details of the equity issued is provided in section 1.11 below. Termination/notice by the company/individual Three months’ notice. Other key terms STI participation rate LTI participation rate 4 weeks annual leave 60% (refer section 1.7.2 for full details) 120% (refer section 1.7.2 for full details) JAMES MARSH, CEO/MANAGING DIRECTOR (DURING PERIOD 1 JULY 2022 TO 31 MARCH 2023) Terms during this period were as above, other than the following: Agreement commenced 30 May 2018 Fixed remuneration Other key terms 66 $553,000 per annum (effective from 1 July 2022) 5 weeks annual leave ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.8.3 Executives JOSEPH RANFORD, CHIEF OPERATING OFFICER Agreement commenced Term of agreement Details Fixed remuneration 20 October 2022 No fixed Term On 20 October 2022 the Company entered into an Executive Employment Agreement with Mr Ranford and terminated the consulting service agreement $468,000 per annum (inclusive of superannuation) (effective from 20 October 2022) Equity compensation Mr Ranford is entitled to participate in the STI and LTI programs. During the reporting period Mr Ranford was issued with the following equity: – 1,650,000 unlisted options – 1,350,000 performance rights Full details of the equity issued is provided in section 1.11 below. Termination/notice by the company/individual Three months’ notice. Other key terms STI participation rate LTI participation rate 4 weeks annual leave 50% (refer section 1.7.2 for full details) 75% (refer section 1.7.2 for full details) JOSEPH RANFORD, OPERATIONS DIRECTOR (DURING PERIOD 1 JULY 2022 TO 19 OCTOBER 2022) Terms during this period were as above, other than the following: Agreement Commenced 8 April 2020 Fixed Remuneration $30,000 per month (3 days per work) (effective from 1 September 2021) Other key terms Nil TIMOTHY ANDERSON, CHIEF COMMERCIAL OFFICER Agreement commenced Term of agreement Fixed remuneration 1 December 2021 No fixed Term $337,000 per annum (inclusive of superannuation), effective from 1 July 2022 Equity compensation Mr Anderson is entitled to participate in the STI and LTI programs. Full details of the equity issued is provided in section 1.11 below. Termination/notice by the company/individual Three months’ notice. Other key terms STI participation rate LTI participation rate 4 weeks annual leave 50% (refer section 1.7.2 for full details) 75% (refer section 1.7.2 for full details) 67 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) 1.9 PERFORMANCE AND OUTCOMES FOR 2023 The tables below set out summary information about the Group’s earnings and movements in shareholder wealth for the five years to June 2023: 30 JUNE 2023 30 JUNE 2022 30 JUNE 2021 30 JUNE 2020 30 JUNE 2019 Other Income 2,002,153 452,516 61,461 767,419 18,960 Net profit / (loss) before tax (9,461,246) (8,733,119) (6,435,782) (3,365,301) (1,041,044) Net profit / (loss) after tax (9,461,246) (8,733,119) (6,443,299) (3,447,274) (1,113,181) 30 JUNE 2023 30 JUNE 2022 30 JUNE 2021 30 JUNE 2020 30 JUNE 2019 Share price at beginning of the year Share price at end of year $0.07 $0.04 $0.150 $0.07 $0.051 $0.150 $0.015 $0.051 $0.007 $0.015 Basic earnings per share $(0.0030) $(0.0033) $(0.0033) $(0.0024) $(0.0010) Diluted earnings per share $(0.0030) $(0.0033) $(0.0033) $(0.0024) $(0.0010) No dividends have been declared during the five years ended 30 June 2023 and the Directors do not recommend the payment of a dividend in respect of the year ended 30 June 2023. 1.10 REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL KMP Year Employee benefits, salary, and fees Other non- cash benefits Non-Executive Directors $ $ 2023 200,000 Short term remuneration Long term remuneration Super- annuation Incentives paid Incentives accrued13 Sub total Share based payments for securities issued in the current period1,4 Share based payments for securities issued in prior periods1,3 Share based payments for securities cancelled1,2 Long service leave entitle- ment12 $ - - 1,600 10,328 11,023 5,942 11,023 - - 8,012 6,323 - $ - - - - - - - - - - $ - - - - - - - - - - $ 200,000 47,222 16,839 111,750 116,000 65,365 116,000 - - 167,628 - 128,906 266,406 - - - - - - - - - - - - 47,222 15,239 101,422 104,977 59,423 104,977 - - 159,616 131,177 - $ - - - - - 43,733 - - - - - - - $ - - $ - - 53,978 (438,181)5 273,096 - - - - - (65,888) - - - - 87,4672 - - - - - - $ - - - - - - - - - - - - 213,859 (461,428)8 34,538 519,231 36,799 25,292 - 47,775 629,097 362,500 71,232 36,250 - 86,940 - - - - - - 469,982 - 86,940 43,662 394,473 - - - (134,768) - - - - - - Total $ 200,000 47,222 (367,364) 384,846 116,000 196,5652 116,000 - - 101,740 266,406- 416,066 908,117 - (47,828) Michael Wilkes Andrew Shearer5 Melissa Holzberger Austen Perrin6 Rhoderick Grivas 2022 2023 2022 2023 2022 2023 2022 2023 2022 Executive Directors Bob Katsiouleris7 James Marsh Nicholas Harding 2023 2022 2023 2022 2023 2022 68 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) KMP Year Employee benefits, salary, and fees Other non- cash benefits $ Executives Joseph Ranford9 Michael Zannes10 Timothy Anderson 2023 449,940 2022 350,000 2023 2022 2023 2022 247,343 273,973 311,708 160,437 $ - - - - - - Short term remuneration Long term remuneration Super- annuation Incentives paid Incentives accrued13 Sub total Share based payments for securities issued in the current period1,4 Share based payments for securities issued in prior periods1,3 Share based payments for securities cancelled1,2 Long service leave entitle- ment12 Total $ $ $ $ 18,969 - - 72,540 541,449 350,000 42,130 965,688 18,928 90,000 - 356,271 - 74,327 (151,022) 27,397 25,292 16,044 - - 301,370 136,691 - - 35,385 372,385 - 79,636 (32,116)11 390 420,295 - 176,481 90,021 - - - 266,502 $ - $ 211,284 $ - - $ $ 11,621 764,354 - - - 1,357,818 279,576 438,061 Total 2023 2,084,592 36,799 118,450 90,000 284,606 2,614,447 - 633,084 (1,082,747) 46,549 2,211,333 2022 1,601,533 71,232 103,973 - - 1,776,738 356,237 1,432,601 87,467 - 3,653,043 Footnotes to the above table in section 1.10 1 Share-based payments do not represent cash payments and the related shares may or may not ultimately vest. In accordance with the requirements of accounting standard AASB 2 Share Based Payments, valuations of share-based payments were undertaken based on market conditions at the date of grant and are expensed over the relevant vesting period. The amount included as remuneration is not related to nor indicative of the benefit (if any) that may ultimately be realised should the securities vest. 2 With the restructure of NED remuneration, all unvested options (546,667 options) held by Ms Holzberger were cancelled on 30 June 2022. In accordance with AASB 2 Share Based Payments (AASB2), the value of the options, as determined at grant date, is required to be recognised in full during the 2022 financial reporting period. It is to be noted that the amount of $87,467 does not represent any actual benefit (cash or otherwise) to Ms Holzberger as a result of the cancellation, it is an accounting entry only as required by AASB 2. 3 As stated above, share based payments are required to be expensed over the relevant vesting period as per AASB 2 Share Based Payments. Accordingly, an expense is required to be recognised in the current reporting period for grants of securities in prior years. 4 Details of the securities issued to KMP during the current reporting period are disclosed in detail in section 1.11. 5 Mr Shearer ceased to be a KMP on 24 August 2022, with 1,001,250 performance rights (valued at $174,508) forfeited due to not meeting service condition and 8,000,000 options (valued at $263,673) having expired during the financial year. 6 Mr Perrin was appointed to the Board on 1 July 2022. 7 Mr Katsiouleris was appointed as Chief Executive Officer on 1 April 2023 and as Managing Director on 27 April 2023. 8 During FY23, 14,000,000 options (valued at $461,428) allocated to Mr Marsh expired. 9 The consulting service agreement with Mr Ranford was Terminated on 20 October 2022 and the company entered into an Executive Employment Agreement to appoint him appointed him as Chief Operation Officer (COO). He resigned from the board of directors on 21 November 2022 and continued in his COO role on full-time basis. 10 Mr Zannes ceased to be a KMP on 3 March 2023, with 1,400,000 options (valued at $65,475) and 795,364 performance rights (valued at $85,547) having been forfeited due to not meeting the service condition. A discretionary cash bonus of $90,000 was paid on 30 November 2022, prior to his resignation, in recognition of Mr Zannes meeting major objectives over financial year 2022, in the absence of any STI and LTI programs. 11 487,500 performance rights (valued at $32,116) allocated to Mr Anderson expired during FY23, due to conditions not being met. 12 13 In FY23 a probably weighted calculation of the Company’s long service leave obligations was recognised, as accumulated from the commencement of employment. Incentives accrued relate to STI’s awarded for performance in the 2023 financial year against KPIs as detailed in section 1.7.2. 69 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) 1.11 OPTIONS AND PERFORMANCE RIGHTS 1.11.1 Options granted as compensation to key management personnel There were no options granted during the period ended 30 June 2023. 1.11.1a Issuing of options in report period ended 30 June 2022 2022 Michael Wilkes Andrew Shearer Melissa Holzberger3 Rhoderick Grivas1 James Marsh Joseph Ranford Nicholas Harding2 Michael Zannes Timothy Anderson Total NUMBER OF OPTIONS GRANTED DURING THE PERIOD NUMBER OF OPTIONS GRANTED DURING THE PERIOD THAT WERE CANCELLED OR LAPSED DURING THE PERIOD VALUE ALLOCATED IN 2022 FINANCIAL YEAR TO OPTIONS GRANTED $ - - 820,000 - 1,710,000 1,650,000 - 1,400,000 1,400,000 6,980,000 - - (546,667) - - - - - - (546,667) - - 131,200 - 43,662 42,130 - 34,909 34,909 286,810 Footnotes to the above table in section 1.11.1a 1 Mr Grivas resigned at 20 January 2022. 2 Mr Harding resigned at 11 August 2021. 3 With the restructure of NED remuneration, all unvested options (546,667 options) held by Ms Holzberger were cancelled on 30 June 2022. In accordance with AASB 2 Share Based Payments (AASB2), the value of the options, as determined at grant date, were required to be recognised/expensed in full during the 2022 financial reporting period. It is to be noted that of the $131,200 value allocated to the issue of the options to Ms Holzberger, the amount of $87,467 does not represent any actual benefit (cash or otherwise) to Ms Holzberger as a result of the cancellation of 546,667 options, it is an accounting entry only, as required by AASB 2. 1.11.2 Performance rights granted as compensation to key management personnel There were no performance rights granted during the period ended 30 June 2023. 70 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.11.2a Issuing of performance rights in report period ended 30 June 2022 2022 Michael Wilkes Andrew Shearer Melissa Holzberger Rhoderick Grivas1 James Marsh Joseph Ranford Nicholas Harding2 Michael Zannes Timothy Anderson Total NUMBER OF PERFORMANCE RIGHTS GRANTED DURING THE PERIOD NUMBER OF PERFORMANCE RIGHTS GRANTED DURING THE PERIOD THAT WERE CANCELLED OR LAPSED DURING THE PERIOD VALUE ALLOCATED IN FY22 TO PERFORMANCE RIGHTS GRANTED $ TOTAL VALUE ALLOCATED IN FY22 TO PERFORMANCE RIGHTS GRANTED $ - - - - 1,410,000 1,350,000 - 2,325,000 2,250,000 7,335,000 - - - - - - - - - - - - - - -3 -3 - - - - - -3 -3 - 101,7824 55,1124 156,894 101,7824 55,1124 156,894 Footnotes to the above table in section 1.11.2a 1 Mr Grivas resigned at 20 January 2022. 2 Mr Harding resigned at 10 August 2021. 3 Expected production and sales schedules at the time of issue are different from current expectations and as such these performance rights are now not expected to vest prior to their expiry date, and consequently no value has been recognised in relation to these performance rights in 2022. As required under AASB 2, the probability of these performance rights vesting will be reassessed at each reporting date. 4 Values have been recognised for performance rights issued to Mr Zannes, relating to the commencement of mining and the first shipment of kaolin, and to Mr Anderson, in relation to several Business Development KPI’s, as required under AASB 2. As per footnote 3, performance rights granted in relation to production and sales schedules have had no value recognised in 2022. Issuing of options and performance rights in reporting period ended 30 June 2022 Melissa Holzberger On 3 December 2021, Ms Holzberger was issued 820,000 zero priced options expiring 31/12/2025, pursuant to shareholder approval received at the 2021 AGM. At grant date, the options had a fair value per option of $0.16 per option. On 30 June 2022, 273,333 options vested and were converted into Fully Paid ordinary shares. With the restructure of NED remuneration, all unvested options (546,667 options) were cancelled on 30 June 2022. James Marsh On 3 December 2021, Mr Marsh was issued with 1,710,000 options exercisable at $0.2375, expiring 31/12/2025 and vesting 31/12/2023, pursuant to shareholder approval received at the AGM in November. On 3 December Mr Marsh was also issued with 1,410,000 Performance Rights, expiring 30/06/2024, pursuant to shareholder approval at the 2021 AGM, which will vest and be convertible into fully paid ordinary shares in the Company upon commercial shipment of a refined kaolin product, with the following graduated hurdles: i) 50,000 tonnes shipped will result in 20% of Performance Rights to vest; ii) 115,000 tonnes shipped will result in 50% of Performance Rights to vest; iii) 165,000 tonnes or more shipped will result in 100% of Performance Rights to vest. At grant date, the options had a fair value of $0.0901 per option and the Performance Rights had a fair value of $0.16 per Right. As detailed in footnote 3 to the above table, no value / expense has been recognised during the year ended 30 June 2022 in relation to the Performance Rights granted on 3 December 2021. 71 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) Joe Ranford On 3 December 2021, Mr Ranford was issued with 1,650,000 options exercisable at $0.2375, expiring 31/12/2025 and vesting 31/12/2023, pursuant to shareholder approval received at the AGM in November. Mr Ranford was issued with 1,350,000 Performance Rights, expiring 30/06/2024, pursuant to shareholder approval at the 2021 AGM, which will vest and be convertible into fully paid ordinary shares in the Company upon commercial shipment of a refined kaolin product, with the following graduated hurdles: i) 50,000 tonnes shipped will result in 20% of Performance Rights to vest; ii) 115,000 tonnes shipped will result in 50% of Performance Rights to vest; iii) 165,000 tonnes or more shipped will result in 100% of Performance Rights to vest. At grant date, the options had a fair value of $0.0901 At grant date, the Performance Rights had a fair value of $0.16 per Right. As detailed in footnote 3 to the above table, no value / expense has been recognised during the year ended 30 June 2022 in relation to the Performance Rights granted on 3 December 2021. Michael Zannes On 26 August 2021, Mr Zannes was issued with 1,200,000 Performance Rights, expiring 23/12/2023, with 50% of the Performance Rights to vest upon the commencement of mining and 50% of the Performance Rights to vest upon the first shipment of Kaolin product. On 3 December 2021, Mr Zannes was issued with 1,400,000 options exercisable at $0.2375, expiring 31/12/2025 and vesting on 31/12/2023. On 3 December 2021, Mr Zannes was also issued with 1,125,000 Performance Rights, expiring 30/06/2024, which will vest and become convertible into fully paid ordinary shares in the Company upon commercial shipment of a refined kaolin product, with the following graduated hurdles: i) 50,000 tonnes shipped will result in 20% of Performance Rights to vest; ii) 115,000 tonnes shipped will result in 50% of Performance Rights to vest. iii) 165,000 tonnes or more shipped will result in 100% of Performance Rights to vest. At grant date, the options had a fair value of $0.0901 per option and the Performance Rights had a fair value of $0.16 per Right. As detailed in footnote 3 to the above table, no value / expense has been recognised during the year ended 30 June 2022 in relation to the Performance Rights granted on 3 December 2021. Timothy Anderson On 3 December 2021, Mr Anderson was issued with 1,400,000 options exercisable at $0.2375, expiring 31/12/2025 and vesting on 31/12/2023. On 3 December 2021, Mr Anderson was also issued with 750,000 Performance Rights, expiring 31/12/2023, with 55% of the Performance Rights to vest upon the achievement of several Business Development hurdles and 45% to vest upon the commencement of mining. On 3 December 2021, Mr Anderson was also issued with 1,500,000 Performance Rights, expiring 30/06/2024, which will vest and become convertible into fully paid ordinary shares in the Company upon commercial shipment of a refined kaolin product, with the following graduated hurdles: i) 50,000 tonnes shipped will result in 20% of Performance Rights to vest; ii) 115,000 tonnes shipped will result in 50% of Performance Rights to vest; iii) 165,000 tonnes or more shipped will result in 100% of Performance Rights to vest. At grant date, the options had a fair value of $0.0901 per option and the Performance Rights had a fair value of $0.16 per Right. As detailed in footnote 3 to the above table, no value / expense has been recognised during the year ended 30 June 2022 in relation to the Performance Rights granted on 3 December 2021. 72 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.11.3 Key management personnel option holdings 2023 Non-executive Directors Michael Wilkes Andrew Shearer Melissa Holzberger Austen Perrin3 Executive Directors James Marsh Bob Katsiouleris4 Executives Joseph Ranford7 Michael Zannes5 Timothy Anderson Total BALANCE AT PREVIOUS YEAR REPORTING DATE GRANTED DURING THE PERIOD CONVERTED DURING THE PERIOD OTHER BALANCE AT REPORTING DATE1 - 11,500,000 - - 23,210,000 - 1,650,000 1,400,000 1,400,000 39,160,000 - - - - - - - - - - - - - - - - - - - - - - (8,000,000)2 3,500,000 - - - - (14,000,000)6 9,210,000 - - - 1,650,000 (1,400,000)5 - - 1,400,000 23,400,000 15,760,000 Footnotes to the above table in section 1.11.3 1 As at 30 June 2023, there were no options held by KMP that had vested and were exercisable. 2 8,000,000 unlisted options issued to Mr Shearer on 24 December 2019 with an exercise price of 6.4 cents expired on 28 November 2022. Mr Shearer resigned and ceased to be a KMP on 24 August 2022. . 3 Mr Perrin was appointed to the Board on 1 July 2022. 4 Mr Katsiouleris was appointed as Chief Executive Officer on 1 April 2023. 5 Mr Zannes resigned and ceased to be a KMP on 3 March 2023, with 1,400,000 options were subsequently forfeited when he ceased employment. 6 14,000,000 unlisted options issued to Mr Marsh on 24 December 2019 with an exercise price of 6.4 cents expired on 28 November 2022. 7 The consulting service agreement with Mr Ranford was Terminated on 20 October 2022 and the company entered into an Executive Employment Agreement appointed him as Chief Operation Officer (COO). He resigned from the board of directors on 21 November 2022 and continued in his COO role on full-time basis. 73 ANNUAL REPORT 2023 Directors’ report Remuneration report (audited) 1.11.4 Key management personnel performance rights holdings 2023 Non-executive Directors Michael Wilkes Andrew Shearer2 Melissa Holzberger Austen Perrin3 Executive Directors James Marsh Bob Katsiouleris5 Executives Joseph Ranford4 Michael Zannes6 Timothy Anderson7 Total BALANCE AT PREVIOUS YEAR REPORTING DATE GRANTED DURING THE PERIOD CONVERTED DURING THE PERIOD OTHER BALANCE AT REPORTING DATE1 - 2,250,000 - - 4,660,000 - 6,600,000 2,325,000 2,250,000 18,085,000 - - - - - - - - - - - - - - - - (2,000,000)4 - - (1,001,250)2 1,248,750 - - - - - - - 4,660,000 4,600,000 - (1,920,364)6 404,636 (262,500)7 (487,500)7 1,500,000 (2,262,500) (3,409,114) 12,413,386 Footnotes to the above table in section 1.11.4 1 As at 30 June 2023, there were no performance rights held by KMP that had vested and were exercisable. 2 Mr Shearer resigned and ceased to be a KMP on 24 August 2022, with 1,001,250 Performance Rights being forfeited when he ceased as a Director.. 3 Mr Perrin was appointed to the Board on 1 July 2022. 4 The consulting service agreement with Mr Ranford was Terminated on 20 October 2022 and the company entered into an Executive Employment Agreement appointed him as Chief Operation Officer (COO). He resigned from the board of directors on 21 November 2022 and continued in his COO role on full-time basis. 4 2,000,000 of the Performance Rights issued on 24 December 2020 had been converted by Joseph Ranford during the year on approval of the Mining Lease Application for the Great White Kaolin Project. 5 Mr Katsiouleris was appointed as Chief Executive Officer on 1 April 2023. 6 Mr Zannes resigned and ceased to be a KMP on 3 March 2023, with 1,920,364Performance Rights being forfeited when he ceased employment.. 7 During the year, 262,500 of the performance rights were exercised by Mr Anderson and converted to unquoted fully paid ordinary shares (subject to escrow) while 487,500 lapsed during the year and included in Other. 74 ANDROMEDA METALS LIMITED Directors’ report Remuneration report (audited) 1.12 KEY MANAGEMENT PERSONNEL SHAREHOLDING The numbers of shares in the Company held during the financial year by key management personnel, including personally related entities are set out below: BALANCE AT 1 JULY 2022 RECEIVED THROUGH EXERCISE OF OPTIONS/RIGHTS PURCHASE OR DISPOSAL DURING THE YEAR OTHER (SHARES HELD WHEN CEASING TO BE KMP) BALANCE AT 30 JUNE 2023 2023 Non-executive Directors Michael Wilkes Andrew Shearer1 Melissa Holzberger Austen Perrin2 Executive Directors James Marsh Bob Katsiouleris3 Executives Joseph Ranford4 Michael Zannes5 Timothy Anderson 1,060,000 - 3,533,195 - (11,137,204)1 2,473,195 11,137,204 273,333 - 12,293,000 - - - - - - - 384,615 939,598 1,902,153 11,950,000 6,360,000 2,000,000 - - - 262,500 - - - - 657,948 939,598 14,195,153 11,950,000 (8,360,000) - 262,500 - - - - - - - Total 32,536,732 2,262,500 16,236,366 (11,137,204) 39,898,394 Footnotes to the above table in section 1.12 1 Mr Shearer ceased to be a KMP on 24 August 2022, with the removal of shareholding in “other” upon ceasing to be a KMP. 2 Mr Perrin was appointed to the Board on 1 July 2022. 3 Mr Katsiouleris was appointed as Chief Executive Officer on 1 April 2023. 4 The consulting service agreement with Mr Ranford was Terminated on 20 October 2022 and the company entered into an Executive Employment Agreement appointed him as Chief Operation Officer (COO). He resigned from the board of directors on 21 November 2022 and continued in his COO role on full-time basis. 5 Mr Zannes ceased to be a KMP on 3 March 2023. 1.13 OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL AND/OR THEIR RELATED PARTIES Mr Wilkes invoices through his private company for Director’s Fees only. It is not a separate entity that provides consulting services to the Company. The NEDs Melissa Holzberger and Austen Perrin are paid Director’s Fees through the Company’s payroll. Mr Wilkes, Mr Perrin and Ms Holzberger satisfy the definition and maintain their status as Independent NEDs, thus retain objectivity and their ability to meet their oversight role. End of remuneration report (audited) 75 ANNUAL REPORT 2023 Auditors independence declaration Deloitte Touche Tohmatsu ABN 74 490 121 060 11 Waymouth Street Adelaide SA 5000 Australia Tel: +61 8 8407 7000 www.deloitte.com.au 29 September 2023 The Board of Directors Andromeda Metals Limited Level 10/431 King William Street Adelaide SA 5000 Dear Board Members AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo AAnnddrroommeeddaa MMeettaallss LLiimmiitteedd In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Andromeda Metals Limited. As lead audit partner for the audit of the financial report of Andromeda Metals Limited for the year ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) (ii) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and Any applicable code of professional conduct in relation to the audit. Yours faithfully DELOITTE TOUCHE TOHMATSU DDaarrrreenn HHaallll Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. 76 ANDROMEDA METALS LIMITED Financial report (audited) Consolidated statement of profit or loss and other comprehensive income for the Year ended 30 June 2023 Other income Impairment of exploration and evaluation assets Exploration and evaluation expenditure expensed Administration expenses Corporate consulting expenses Company promotion Salaries and wages Directors’ fees Occupancy expenses Research and development Share based payments Share of loss of joint venture Loss before income tax Tax expense Loss for the year NOTE 4 9 9 5 5 YEAR ENDED 30/06/23 $ 2,002,153 (672,213) (72,374) (2,158,334) (1,959,036) (85,160) (2,799,835) (425,194) (25,477) YEAR ENDED 30/06/22 $ 452,516 (422,114) (18,230) (2,197,525) (2,002,361) (90,675) (719,162) (291,267) (78,171) (2,838,533) (846,464) (427,243) (2,280,129) - (9,461,246) - (239,537) (8,733,119) - (9,461,246) (8,733,119) Other comprehensive income, net of income tax - - Total comprehensive loss for the year (9,461,246) (8,733,119) Earnings per share Basic (cents per share) – (loss) Diluted (cents per share) – (loss) 25 25 (0.30) (0.30) (0.33) (0.33) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 77 ANNUAL REPORT 2023 Financial report (audited) Consolidated statement of financial position as at 30 June 2023 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Assets classified as held for sale TOTAL CURRENT ASSETS NON-CURRENT ASSETS Exploration and evaluation assets Property, plant and equipment Other financial assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Lease liabilities - current Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Lease liabilities - non-current TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY NOTE 30/06/23 $ 30/06/22 $ 6 7 9a 9 10 8 11 13 12 14 13 15 16 15,300,890 32,853,203 2,841,021 1,750,000 19,891,911 1,247,211 250,000 34,350,414 142,124,436 137,367,031 2,714,037 300,107 145,138,580 165,030,491 2,134,319 372,224 139,873,574 174,223,988 1,730,341 200,576 309,711 2,240,628 106,480 526,540 633,020 1,966,169 165,974 185,337 2,317,480 35,498 680,163 715,661 2,873,648 3,033,141 162,156,843 171,190,847 219,882,120 219,250,120 5,213,883 6,865,285 (62,939,160) (54,924,558) 162,156,843 171,190,847 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 78 ANDROMEDA METALS LIMITED Financial report (audited) Consolidated statement of changes in equity for the Year ended 30 June 2023 ISSUED CAPITAL $ SHARE OPTION RESERVE $ NCI ACQUISITION RESERVE $ ACCUMULATED LOSSES $ TOTAL $ Balance at 1 July 2021 56,929,522 5,838,594 Loss attributable to the year Total comprehensive loss for the year - - Issue of share capital through placement 44,999,913 Costs associated with the issue of shares (2,303,816) - - - - Shares issued on the exercise of unlisted options 1,578,550 (1,016,551) Equity settled share based payments - 2,280,129 Transfer of previously forfeited share- based payments (87,467) Conversion of performance rights 1,032,500 (1,032,500) Conversion of options 43,733 (43,733) - - - - - - - - - - Share capital issued – acquisition of Minotaur Exploration (refer note 29) 116,969,718 - 926,813 (46,278,906) 16,489,210 (8,733,119) (8,733,119) (8,733,119) (8,733,119) - - - 44,999,913 (2,303,816) 561,999 2,280,129 87,467 - - - - - - 117,896,531 Balance at 30 June 2022 219,250,120 5,938,472 926,813 (54,924,558) 171,190,847 Loss attributable to the year Total comprehensive loss for the year - - - - Conversion of Performance Rights 632,000 (632,000) Fair value of options issued to directors Fair value of performance rights issued to directors Fair value of options issued to employees Fair value of performance rights issued to employees Performance rights forfeited Options expired - - - - - - 144,178 413,130 91,197 136,383 (357,646) (1,446,644) - - - - - - - - - (9,461,246) (9,461,246) (9,461,246) (9,461,246) - - - - - - - 144,178 413,130 91,197 136,383 (357,646) 1,446,644 - Balance at 30 June 2023 219,882,120 4,287,070 926,813 (62,939,160) 162,156,843 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 79 ANNUAL REPORT 2023 Financial report (audited) Consolidated statement of cash flows for the Year ended 30 June 2023 Cash flows relating to operating activities Receipts from government grants Payments to suppliers and employees Net cash used in operating activities Cash flows relating to investing activities Interest received Receipts from government grants Payment of environmental bonds Payment for investment in joint venture Payments for exploration and evaluation expenditure Payments for acquisition related costs – Minotaur (Note 29) Payment received from joint venture partner Payments for property, plant and equipment Loans advanced to Minotaur pre-acquisition Cash received via Minotaur acquisition (Note 29) Cash transferred from/(to) secured term deposit YEAR ENDED 30/06/23 $ 353,602 (9,488,392) (9,134,790) 382,353 - (10,000) - (7,521,335) - - (1,076,685) - - 32,524 INFLOWS/(OUTFLOWS) YEAR ENDED 30/06/22 $ - (5,140,961) (5,140,961) 29,380 1,326,001 (15,000) (241,699) (4,035,983) (2,348,383) 448,298 (1,070,991) (4,973,348) 1,178,858 (125,784) Net cash used in investing activities (8,193,143) (9,828,651) Cash flows relating to financing activities Proceeds from share placement Proceeds from exercise of share options Lease payments Interest paid Payments for share issue costs Net cash (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents Cash at beginning of financial year - - (197,006) (27,374) - (224,380) (17,552,313) 32,853,203 44,999,913 332,000 (99,795) (10,206) (2,303,816) 42,918,096 27,948,484 4,904,719 Cash and cash equivalents at end of financial year 15,300,890 32,853,203 80 ANDROMEDA METALS LIMITED Financial report (audited) Consolidated statement of cash flows Reconciliation of loss for the period to net cash flow from operating activities: Loss for the period Interest income Share based remuneration Depreciation Interest expense Exploration written off or impaired Research and development incentive received (Increase) in receivables Share of loss of JV Increase in payables Increase in provisions Fair value movement of financial instruments (9,461,246) (459,521) 427,243 424,722 27,374 744,587 353,602 (8,733,118) (39,297) 2,280,129 191,021 10,206 440,344 - (1,510,517) (668,144) - 89,310 195,356 34,300 239,537 865,186 148,224 124,950 Net operating cash flows (9,134,790) (5,140,961) The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes 81 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements for the financial year ended 30 June 2023 1 GENERAL INFORMATION Andromeda Metals Limited (the Company) is a listed public company, incorporated in Australia and operating in Australia. Andromeda Metals Limited’s registered office and its principal place of business are as follows: REGISTERED OFFICE PRINCIPAL PLACE OF BUSINESS Level 10, 431 King William Street Level 10, 431 King William Street Adelaide South Australia 5000 Adelaide South Australia 5000 Principal activities The principal activity of the Company is the advancement of The Great White Project (TGWP) through the development of production facilities for halloysite-kaolin products and industrial sand co-products to meet increasing market demand. Presentation currency and rounding These financial statements are presented in Australian Dollars ($). The company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts the financial report are rounded off to the nearest dollar, unless otherwise indicated. 2 ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2022. There has been no material impact to the financial statements of the Group from adopting the updated Standards. Standards and Interpretations on issue but not yet effective STANDARD/INTERPRETATION AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128, AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections. AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current, AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date and AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants. The amendments to AASB 101 Presentation of Financial Statements affect only the presentation of liabilities as current or non-current in the statement of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items. APPLICATION DATE OF STANDARD APPLICATION DATE FOR GROUP 1 January 2025 1 July 2025 1 January 2024 1 July 2024 82 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements STANDARD/INTERPRETATION AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates Amends Australian Accounting Standards to improve accounting policy disclosures so that they provide more useful information to investors users of the financial statements and clarify the distinction between accounting policies and accounting estimates. APPLICATION DATE OF STANDARD APPLICATION DATE FOR GROUP 1 January 2023 1 July 2023 AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction 1 January 2023 1 July 2023 Amends AASB 112 Income Taxes to specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations. Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2023. Those which may be relevant to the Group are set out in the table below. The Directors of the Company do not anticipate that the application of the amendments will have a material impact on the Group’s consolidated financial statements. 3 SIGNIFICANT ACCOUNTING POLICIES Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. The financial statements comprise the consolidated statements of the Group. For the purpose of preparing the consolidated financial statements, the Company is a profit entity. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’). The financial statements were authorised for issue by the directors on 29th September 2023. Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non- current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. In the application of the Group’s accounting policies, which are described below, management is required to make 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 various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates. Significant management judgement The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in financial statements. Estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. 83 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements Exploration and evaluation expenditure The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether it is likely that future economic benefits are likely either from future exploration or sale or whether activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. Ore reserve and resource estimates The Group estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Resources (the JORC Code). Reserves determined in this way are taken into account in considering the recoverability of capitalised exploration and evaluation expenditure. Going concern The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will continue normal business activities, realise its assets and discharge its liabilities in the ordinary course of business for a period of at least 12 months from the date these financial statements are approved. For the year ended 30 June 2023 the Group incurred a net loss of $9,461,246 (30 June 2022: $8,733,119), and experienced net cash outflows from operating and investing activities of $17,327,933 (30 June 2022: $14,969,612). At 30 June 2023, the Group has cash reserves of $15,300,890 (30 June 2022: $32,853,203). The Directors, in their consideration of the appropriateness of using the going concern basis for the preparation of the financial statements, have had regard to the following matters: y The Group continues to pursue its flagship development, the Great White project. Certain activities will continue to be undertaken on the Project such as the procurement of certain long lead items, development of a skeleton start up project team and preliminary construction activities in advance of a final investment decision for the Great White project. 84 y y It is noted that substantial expenditure to develop the Project will only take place once a final investment decision has been made following the securing of the required debt and equity funding. The Group has been in recent dialogue with a select number of debt capital market participants in relation to the Great White project. Progress is being made towards finding an appropriate debt funding package to partially support the Project's funding needs, however this remains subject to certain deliverables, including minimum offtake revenue streams which continue to be developed. y Should funding for the Great White project not be secured by February 2024, the procurement of long lead items will cease until funding is secured. Under this scenario, management have prepared a cash flow forecast for the period ending 30 September 2024 which indicates minimum funding of $4.0 million will be required progressively over the period commencing from June 2024 by way of debt, equity or other forms of funding to continue to progress the Group’s projects through to 30 September 2024. y y The Group is pursuing other funding options in addition to debt for the Great White project and for general corporate purposes, in order to provide coverage for the Group's non-Project expenditure and coverage for the Project’s development up to initial commercial production should an investment decision be made for the Project. The Group has, subsequent to balance date, updated its Definitive Feasibility Study (DFS) for the Great White project which indicates a revised Net Present Value increase of 65% from the 2022 DFS to $1.01 billion. In considering the above and the factors available to the Directors to manage the Group's risks, the Directors are satisfied it remains appropriate to prepare the financial statements on the going concern basis. Should the Group be unable to achieve the additional funding referred to above, there is a material uncertainty that may cast significant doubt as to whether the Group will be able to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business. No adjustments have been made to the financial statements relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements Accounting policies c) Exploration and evaluation expenditure a) Cash and cash equivalents In the statement of financial position, cash and bank balances comprise cash (i.e. cash on hand and demand deposits) and cash equivalents. Cash equivalents are short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather for investment or other purposes. Bank balances for which use by the Group is subject to third party contractual restrictions are included as part of cash unless the restrictions result in a bank balance no longer meeting the definition of cash. Contractual restrictions affecting use of bank balances are disclosed in note 22(e). If the contractual restrictions to use the cash extend beyond 12 months after the end of the reporting period, the related amounts are classified as non- current 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. b) Employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of short- term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. Liabilities recognised in respect of other long- term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. Contributions to accumulated benefit superannuation plans are expensed when incurred. Exploration and evaluation expenditures in relation to each separate area of interest, are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: i) the rights to tenure of the area of interest are current; and ii) at least one of the following conditions is also met: – the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale: or – exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploration drilling, trenching and sampling and associated activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they relate directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances (as defined in AASB 6 “Exploration for and Evaluation of Mineral Resources”) suggest that the carrying amount of exploration and evaluation assets may exceed its recoverable amount. The recoverable amount of the exploration and evaluation assets (or the cash-generating unit(s) to which it has been allocated, being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment, reclassified to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced. 85 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements Farm-outs – exploration and evaluation phase The consolidated entity accounts for the treatment of farm-out arrangements under AASB 6 Evaluation of Mineral Resources under these arrangements: ¬ the farmor will not capitalise any expenditure settled by the farmee; ¬ any proceeds received that are not attributable to future expenditure are initially credited against the carrying amount of any existing exploration and evaluation asset; and ¬ to the extent that the proceeds received from the farmee exceed the carrying amount of any exploration an evaluation asset that has already been capitalised by the farmor, this excess is recognised as a gain in profit or loss. d) Financial assets Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. Classification of financial assets Debt instruments that meet the following conditions are measured subsequently at amortised cost: ¬ ¬ the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI): ¬ the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and 86 ¬ the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL). Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset: ¬ ¬ the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met; and the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch. Amortised cost and effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. Amortised cost and effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. For financial assets other than purchased or originated creditimpaired financial assets (i.e. assets that are creditimpaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract assets, as well as on financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognises lifetime ECL for trade receivables, contract assets and lease receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements e) Goods and service tax f) Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense or: ii) for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. Impairment of assets (other than exploration and evaluation) At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount 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 pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash- generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior periods. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase. g) Income tax Current tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice. Deferred tax Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacting by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. 87 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the company/consolidated entity intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax is recognised as an expense or income in the Statement of Comprehensive Income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess. Tax consolidation The Company and all its wholly-owned Australian resident entity are part of a tax-consolidated group under Australian taxation law. Andromeda Metals Limited is the head entity in the tax- consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group). Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in Note 5 to the financial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants. h) Financial liabilities and equity Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. 88 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Financial liabilities All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts issued by the Group, are measured in accordance with the specific accounting policies set out below. Other financial liabilities All financial liabilities are initially measured at fair value, net of transaction costs. All financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. i) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on plant and equipment. Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period. ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of- use asset is depreciated over the useful life of the underlying asset. Freehold land is not depreciated. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. The following estimated useful lives are used in the calculation of depreciation: Buildings 20 years Plant and equipment 3-10 years Motor vehicles Furniture and fittings 4 years 3-5 years Office and IT equipment 3-5 years Leasehold improvements 5 years Right of use assets 3-5 years j) Principles of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company: ¬ ¬ ¬ has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including: ¬ the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; ¬ potential voting rights held by the Company, other vote holders or other parties; ¬ rights arising from other contractual arrangements; and ¬ any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non- controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 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 the aggregate of the fair value of the consideration received and the fair value of any retained interest and the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to 89 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements another category of equity as specified/permitted by applicable AASBs). 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 IFRS 9, when applicable or the cost on initial recognition of an investment in an associate or a joint venture. k) Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is that rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. l) Share-based payments Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 15. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve. m) Leases The Group as lessee The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight- line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. 90 The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. The incremental borrowing rate depends on the term, currency and start date of the lease and is determined based on a series of inputs including: the risk-free rate based on government bond rates; a country-specific risk adjustment; a credit risk adjustment based on bond yields; and an entity- specific adjustment when the risk profile of the entity that enters into the lease is different to that of the Group and the lease does not benefit from a guarantee from the Group. Lease payments included in the measurement of the lease liability comprise: ¬ Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; ¬ Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; ¬ ¬ ¬ The amount expected to be payable by the lessee under residual value guarantees; The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever: ¬ The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements ¬ The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used). ¬ A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. The Group did not make any such adjustments during the periods presented. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the consolidated statement of financial position. The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy. n) Government grants Government grants are assistance by government in the form of transfers of resources to the Group in return for past or future compliance with certain conditions relating to the operating activities of the entity. Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attached to them and the grant will be received. Government grants whose primary condition is to assist with exploration activities are netted against the exploration asset to which they relate in the statement of financial position. Other government grants are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate on a systematic basis. Government grants receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the consolidated entity with no future related costs are recognised as income in the period in which it becomes receivable. Other grants related to cost reimbursements are recognised as other income in profit or loss in the period when the costs were incurred or when the incentive meets the recognition requirements (if later). o) Business combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of their fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant Standards. Changes in the fair value of contingent consideration classified as equity are not recognised. Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interest in the acquiree prior to the acquisition date 91 ANNUAL REPORT 2023 q) Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable, and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale. When the Group is committed to a sale plan involving disposal of an investment in an associate or, a portion of an investment in an associate, the investment, or the portion of the investment in the associate, that will be disposed of is classified as held for sale when the criteria described above are met. The Group then ceases to apply the equity method in relation to the portion that is classified as held for sale. Any retained portion of an investment in an associate that has not been classified as held for sale continues to be accounted for using the equity method. r) Research and development Expenditure on research and development activities are recognised in the period in which it is incurred. Research activities are captured in both the Consolidated Statement of Profit or Loss, as expenses, and on the Consolidated Statement of Financial Position as part of the exploration and evaluation assets where appropriate. Research and development government grants both received and accrued, are recognised in other income, for expenditure recognised as an expense, and offsetting the associated capitalised expenditure when the expenditure is recognised in exploration and evaluation. Financial report (audited) Notes to the financial statements 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. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 Business Combinations are recognised at their fair value at the acquisition date, except that: ¬ deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with AASB 112 “Income Taxes” and AASB 119 “Employee Benefits” respectively; ¬ liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in accordance with AASB 2 “Share-based Payment”; and ¬ assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 “Non- current Assets Held for Sale and Discontinued Operations” are measured in accordance with that Standard. 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. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are 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. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year. p) Asset acquisitions The acquisition of assets that do not represent a business combination in accordance with AASB 3 Business Combinations are accounted for as an asset acquisition. Accordingly, when an asset acquisition does not constitute a business combination, the cost of acquisition is allocated to the identifiable assets and liabilities based on their relative fair values at the date of purchase. Transactions costs of the acquisition are included in the capitalised cost of the asset. No goodwill arises on the acquisition and no deferred tax will arise due to the initial recognition exemption for deferred tax under AASB 112 Income Taxes. 92 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 4 LOSS FROM OPERATIONS Other income Interest income on bank deposits Gain/(Loss) on disposal of assets (i) Government Grants (ii) Fair value movement in equity investment held at fair value through profit & loss Other YEAR ENDED 30/06/23 $ 459,521 - 1,575,422 (34,300) 1,510 2,002,153 YEAR ENDED 30/06/22 $ 39,297 (2,224) 538,693 (124,950) 1,700 452,516 (i) Disposal of office equipment. (ii) Research & Development tax incentive recognised of $1,547,422 (2022: $516,693) and $28,000 grant received for the Export Market Development Grant (2022: $22,000 from Entrepreneurs program). Other expenses Employee benefit expense: Post-employment benefits: Accumulated benefit superannuation plans 410,549 267,827 Share based payments: Equity settled share-based payments (i) Other employee benefits 427,243 6,010,358 6,848,150 2,280,129 3,574,562 6,122,518 Less amounts capitalised in exploration and evaluation expenditure (2,973,779) (2,030,688) Depreciation of property, plant and equipment Short-term rental expenses 3,874,371 4,091,830 424,722 65,746 191,021 37,138 (i) Share based payments relate to the amortisation of shares, options or performance rights granted to employees. Share based payments do not represent cash payments and may or may not be exercised by the employee. 93 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 5 INCOME TAX a) Income tax recognised in profit or loss The prima facie income tax expense on the loss before income tax reconciles to the tax expense in the financial statements as follows: Loss from continuing operations Income tax income calculated at 30% Share based payments Non deductable expenses Non-assessable income Other YEAR ENDED 30/06/23 $ YEAR ENDED 30/06/22 $ (9,461,246) (2,838,374) 128,173 823,590 (464,227) - (8,733,119) (2,619,936) 684,039 173,412 (155,008) - Deferred tax assets not brought to account 2,350,838 1,917,493 Tax expense - - 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, being the tax rate that is expected to apply to the period when the net deferred tax asset is expected to be realised. There has been no change in the corporate tax rate when compared with the previous reporting period. b) Recognised tax assets and liabilities Deferred tax assets/ and (liabilities) are attributable to the following: 30/06/23 $ (106,908) (40,634,183) (525,000) (82,790) 37,176 1,061,717 213,712 108,357 - (39,927,919) 39,927,919 - 30/06/22 $ (83,488) (4,131,169) (75,000) (72,644) 26,769 1,384,148 42,999 66,251 - (2,842,134) 2,842,134 - Trade and other receivables Exploration and evaluation expenditure Assets available for sale Property plant and equipment Investments Capital raising costs Trade and other payables Employee benefits Other liabilities Tax value of losses carried forward Net deferred tax assets / (liabilities) 94 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements c) Unrecognised deferred tax assets: A deferred tax asset has not been recognised in respect of the following items: Tax losses-revenue (Group) Tax losses-revenue (transferred) 30/06/23 $ 30/06/22 $ 14,076,994 13,602,695 7,768,807 1,217,701 Exploration and evaluation expenditure - 33,865,690 A deferred tax asset has not been recognised in respect of the above tax losses because it is not probable that future taxable profit will be available against which the consolidated entity can utilise the benefit. d) Movement in recognised temporary differences and tax losses Opening balance Recognised in equity Recognised in income Closing balance Tax consolidation 30/06/23 $ 30/06/22 $ - - - - - - - - Relevance of tax consolidation to the consolidated entity The Company and its wholly owned Australian resident entities are in a tax-consolidated group and are therefore taxed as a single entity. The head entity within the tax consolidated group is Andromeda Metals Limited. Nature of tax funding arrangement Entities within the tax-consolidated group have entered into a tax funding arrangement with the head entity. Under the terms of the tax funding arrangement, Andromeda Metals Limited and its wholly owned Australian resident entities have agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the-consolidated group. 6 CASH AND CASH EQUIVALENTS Cash at bank Cash on deposit (i) 30/06/23 $ 30/06/22 $ 5,300,890 8,851,537 10,000,000 24,001,666 15,300,890 32,853,203 (i) Term deposits with maturity of 3 months or less at varying interest rates in excess of cash at bank rates. 95 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 7 CURRENT TRADE AND OTHER RECEIVABLES Interest receivable Government grant receivable Prepaid expenses GST receivable Other receivables and prepayments 8 OTHER NON-CURRENT FINANCIAL ASSETS Deposits (Note 22 (e)) Equity Investments at fair value through profit & loss (i) Environmental bonds 30/06/23 $ 86,998 2,401,143 269,362 42,413 41,105 2,841,021 30/06/23 $ 225,857 12,250 62,000 300,107 30/06/22 $ 9,917 865,108 268,376 89,145 14,665 1,247,211 30/06/22 $ 258,284 46,940 67,000 372,224 (i) Shares owned in listed companies with fair value based on the quoted share price on the ASX with fair value recognised in Note 4. 9 EXPLORATION AND EVALUATION ASSETS Costs brought forward Expenditure incurred during the year 30/06/23 $ 137,367,031 7,372,212 30/06/22 $ 11,316,819 3,714,818 Acquisition additions of Minotaur Exploration (refer note 29) - 124,066,962 Government grants received / receivable (370,220) (1,041,224) Impairment of exploration and evaluation expenditure assets Expenditure impaired (i) Expenditure written off (ii) Transfer to assets held for sale- refer note 9(a) 144,369,023 138,057,375 (672,213) (72,374) (1,500,000) (2,244,587) (422,114) (18,230) (250,000) (690,344) 142,124,436 137,367,031 96 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements (i) Impairment Impairment of specific exploration and evaluation assets during the year have occurred where Directors have concluded that capitalised expenditure is unlikely to be recovered by sale or future exploitation. At each reporting date the group undertakes an assessment of the carrying amount of its exploration and evaluation assets. During the year indicators of impairment were identified on certain exploration and evaluation assets in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources. The identified impairment relates to the tenements that are going through a sale process and the carrying value has been written down to the expected sale proceeds. As a result of this review, an impairment loss of $672,213 (2022: $422,114) has been recognised in relation to areas of interest where the Directors have concluded that the capitalised expenditure is written down to its estimated recoverable or sale value. (ii) Expenditure written off relates to exploration and evaluation expenditure associated with tenements or parts of tenements that have been surrendered, or exploration to identify new exploration targets where no tenure is currently held by the Company. The recoverability of the carrying value of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. 9a ASSETS HELD FOR SALE Exploration and evaluation assets 30/06/23 $ 1,750,000 30/06/22 $ 250,000 Selected exploration and evaluation assets have been actively marketed with sales discussions well advanced as at 30 June 2023. The associated exploration asset has been written down to the expected value of the sales proceeds. The excess carrying value of the exploration asset has been impaired prior to the asset being reclassified into assets held for sale. 97 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 10 PROPERTY, PLANT AND EQUIPMENT LAND & BUILDINGS PLANT AND EQUIPMENT WORK IN PROGRESS MOTOR VEHICLES FURNITURE & FITTINGS OFFICE & IT EQUIPMENT LEASEHOLD IMPROVEMENT RIGHT OF USE ASSETS TOTAL 2022/23 Gross carrying amount Opening balance 736,180 445,824 92,172 4,792 18,263 165,560 - - 141,862 702,374 (105,432) (71,717) - - - 30,439 93,045 - 84,104 - - - - 894,807 2,357,598 129,765 1,004,440 736,180 482,254 722,829 4,792 111,308 195,999 84,104 1,024,572 3,362,038 Additions Transfers Balance 30 June 2023 Accumulated depreciation Opening balance (15,026) (48,826) Depreciation (16,904) (88,746) (31,930) (137,572) Balance 30 June 2023 Net book value 30 June 2023 - - - (4,209) (5,798) (80,735) - (68,685) (223,279) (264) (26,914) (45,419) (20,886) (225,589) (424,722) (4,473) (32,712) (126,154) (20,886) (294,274) (648,001) 704,250 344,682 722,829 319 78,596 69,845 63,218 730,298 2,714,037 - - - - - - - - - - 185,268 542,077 851,978 2,114,604 - - (142,439) (299,083) 894,807 2,357,598 (103,274) (329,117) (107,850) (191,021) 142,439 296,859 (68,685) (223,279) 826,122 2,134,319 2021/22 Gross carrying amount Opening balance - 45,998 38,288 4,792 62,488 205,243 Additions Transfers Disposals and write-offs Balance 30 June 2022 736,180 404,974 60,856 6,972 (6,972) (12,120) - - - - 2,307 58,309 - - (46,532) (97,992) 736,180 445,824 92,172 4,792 18,263 165,560 Accumulated depreciation Opening balance - (24,428) Depreciation (15,026) (36,518) - 12,120 (15,026) (48,826) - - - - (3,945) (46,568) (150,902) (264) (3,600) (27,763) - 44,370 97,930 (4,209) (5,798) (80,735) 721,154 396,998 92,172 583 12,465 84,825 Disposals and write-offs Balance 30 June 2022 Net book value 30 June 2022 98 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 10 PROPERTY, PLANT AND EQUIPMENT continued The Group has three leases, one for office premises, one for property, and the other for equipment. The average lease term is 2.75 years (2022: 4.5 years). Amount recognised in profit or loss Depreciation expense on right-to-use assets Interest expense on lease liabilities Expense relating to short term leases The total cash outflow for leases amounts to $224,381 (2022: $102,271). 11 CURRENT LIABILITIES – TRADE AND OTHER PAYABLES Trade payables and accruals (i) 30/06/23 $ 225,589 27,374 65,746 30/06/23 $ 1,730,341 1,730,341 30/06/22 $ 107,850 10,206 37,138 30/06/22 $ 1,966,169 1,966,169 (i) Trade payables and accruals principally comprise amounts outstanding for trade purchases in relation to exploration activities and ongoing costs. The average credit period taken for trade purchases is 30 days. No interest is charged on the trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within the agreed credit terms. 12 CURRENT LIABILITIES – PROVISIONS Employee benefits – annual leave Movement in employee benefits Balance at the beginning of the year Leave accrued Leave taken Closing value 30/06/23 $ 309,710 309,710 185,337 347,107 (222,733) 309,711 30/06/22 $ 185,337 185,337 41,933 202,234 (58,830) 185,337 99 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 13 LEASE LIABILITIES Maturity analysis: Year 1 Year 2 Year 3 Year 4 Year 5 Less unearned interest Closing value Analysed as: Current Non-current 30/06/23 $ 30/06/22 $ 221,161 218,679 196,764 134,372 - 770,976 (43,860) 727,116 200,576 526,540 727,116 190,865 196,585 200,015 193,733 131,924 913,122 (66,985) 846,137 165,974 680,163 846,137 The Group does not face a significant liquidity risk with regards to its lease liabilities. Lease liabilities are monitored within the Group’s treasury function. 14 NON-CURRENT LIABILITIES - PROVISIONS Employee benefits – long service leave Make good provision 30/06/23 $ 51,480 55,000 106,480 30/06/22 $ 35,498 - 35,498 100 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 15 ISSUED CAPITAL 3,110,270,932 fully paid ordinary shares (2022: 3,108,008,432) 219,934,341 219,302,341 30/06/23 $ 30/06/22 $ 2,107,500 treasury stock (2022: 2,107,500) Movement in issued shares for the year: (52,221) (52,221) 219,882,120 219,250,120 NUMBER YEAR ENDED 30/06/23 $ NUMBER YEAR ENDED 30/06/22 $ Fully paid ordinary shares Balance at beginning of financial year 3,108,008,432 219,302,341 2,160,727,827 56,981,743 Placement at 15 cents Costs associated with the issue of shares Exercise of listed options Exercise of unlisted options - - - - - - - - 299,999,219 44,999,913 - - (2,303,816) - 23,273,333 1,622,283 Conversion of Performance Rights 2,262,500 632,000 3,500,000 1,032,500 Transfer from Options Reserve Shares issued as part of acquisition of Minotaur Exploration (i) Related income tax - - - - - - - - 620,508,053 116,969,718 - - Balance at end of financial year 3,110,270,932 219,934,341 3,108,008,432 219,302,341 Treasury stock Balance at beginning of financial year (2,107,500) (52,221) (2,107,500) (52,221) Shares issued from treasury stock - - - - Balance at end of financial year (2,107,500) (52,221) (2,107,500) (52,221) Total issued capital 3,108,163,432 219,882,120 3,105,900,932 219,250,120 Fully paid shares carry one vote per share and carry the right to dividends. (i) Represents the value of shares at the date of issue. Details of the acquisition are disclosed in Note 29 below. Financial year ended 30 June 2022 On 27 July 2021 the Company issued 299,999,219 ordinary shares under a placement to professional and sophisticated investors and existing shareholders at an issue price of 15 cents per share raising $44,999,913 before costs. Financial year ended 30 June 2023 There were no shares issued as part of a capital raising during the year. 101 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements Share options on issue OPENING AS AT 30/6/22 ISSUED EXERCISED FORFEITED LAPSED CLOSING AS AT 30/6/23 Unlisted Options (i) 43,320,000 Unlisted Options (ii) 20,000,000 Unlisted Options (ii) 6,160,000 Total 69,480,000 - - - - - - - - - (43,320,000) - - - 20,000,000 (1,400,000) - 4,760,000 (1,400,000) (43,320,000) 24,760,000 (i) Issued on 24/12/19 with an exercise price of 6.4 cents and an expiry date of 28/11/22. (ii) Issued on 24/12/19 with an exercise price of 7.5 cents and an expiry date of 28/11/23. (iii) Issued on 3/12/21 and vest 31/12/23 with an exercise price of 23.75 cents and an expiry date of 31/12/25. Performance rights OPENING AS AT 30/6/22 ISSUED EXERCISED FORFEITED LAPSED Performance Rights (i) 10,558,850 Performance Rights (ii) 2,000,000 Performance Rights (iii) 5,639,475 Performance Rights (iv) 2,760,000 Performance Rights (v) 2,625,000 Performance Rights (vi) 750,000 Total 24,333,325 - - - - - - - - (1,001,250) (2,000,000) - - - - (860,364) - (1,125,000) - - - - - CLOSING AS AT 30/6/23 9,557,600 - 4,779,111 2,760,000 1,500,000 (262,500) - (487,500) - (2,262,500) (2,986,614) (487,500) 18,596,711 (i) (ii) Issued on the 26/11/20 expiring on the 26/11/23. The vesting condition is the Commencement of mining at the Great White Deposit (or equivalent deposit). Issued on the 24/12/20 expiring on the 24/12/22. The vesting condition was the Approval of the Mining Lease application for the Great White Project. (iii) Issued on the 26/08/21, with an expiry date of 23/12/23. 67.7% of the Performance Rights to vest upon the commencement of mining and 32.3% of the Performance Rights to vest upon the first shipment of Kaolin product. (iv) Issued 25/11/21, with an expiry date of 30/6/24. The performance rights will vest and be convertible into fully paid ordinary shares in the Company upon commercial shipment of a refined kaolin product, with the following graduated hurdles: i. 50,000 tonnes shipped will result in 20% of Performance Rights to vest; ii. 115,000 tonnes shipped will result in 50% of Performance Rights to vest; iii. 165,000 tonnes or more shipped will result in 100% of Performance Rights to vest. (v) Issued on 2/12/21, with an expiry date of 30/6/23. The performance rights will vest and be convertible into fully paid ordinary shares in the Company upon commercial shipment of a refined kaolin product, with the following graduated hurdles: i. 50,000 tonnes shipped will result in 20% of Performance Rights to vest; ii. 115,000 tonnes shipped will result in 50% of Performance Rights to vest; iii. 165,000 tonnes or more shipped will result in 100% of Performance Rights to vest. (vi) Issued 2/12/21, with an expiry date of 31/12/23. 55% of the Performance Rights to vest upon the achievement of several Business Development hurdles and 45% to vest upon the commencement of mining. 102 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 16 RESERVES Share option reserve (i) NCI acquisition reserve (ii) 30/06/23 $ 4,287,070 926,813 5,213,883 30/06/22 $ 5,938,472 926,813 6,865,285 (i) The share option reserve arises from the issuance of share options and performance rights to directors, employees and consultants. (ii) The NCI acquisition reserve represents the incremental increase (or decrease) in the Andromeda share price on the acquisition of non-controlling interests post the date control was obtained. This reserve relates to the acquisition of Minotaur Exploration Limited. 17 LOAN FUNDED EMPLOYEE SHARE PLAN The Loan Funded Employee Share Plan (LFESP) is an ownership-based compensation plan for executives, employees and consultants established in November 2015. At 30 June 2023 the number of shares granted to executives and employees was nil and the amount held by the trustee of the LFESP was 2,107,500 that are available to be issued to executives and employees. During the year no shares were transferred to executives and employees through the settlement of their respective interest-free loans. No shares have been issued under the plan since May 2018 and the Group does not intend to issue anything further under this plan. 18 KEY MANAGEMENT PERSONNEL COMPENSATION The key management personnel of Andromeda Metals Limited during the year were: y M Wilkes (Non-executive Chairman) y A N Shearer (Non-executive Director) – Resigned 24 August 2022 y M Holzberger (Non-executive Director) y A Perrin (Non-executive Director) – Commenced 1 July 2022 y R Katsiouleris (CEO & Managing Director) – Commenced 1 April 2023 y J E Marsh (Executive Director - Sales & Marketing) – Managing Director 1 July 2022 to 31 March 2023 y J F Ranford (Chief Operating Officer) – Resigned as Director 21 November 2022 y M Zannes (Chief Financial Officer) – Resigned 3 March 2023 y T Anderson (Chief Commercial Officer) The aggregate compensation of key management personnel of the Group is set out below: Short-term employee benefits Other non-cash benefits Superannuation Incentives Post-employment benefits Share-based payments (i) YEAR ENDED 30/06/23 $ 2,084,592 36,799 118,450 374,606 46,549 (449,663) 2,211,331 YEAR ENDED 30/06/22 $ 1,686,133 71,232 103,973 - - 1,876,305 3,737,643 (i) Share based payments do not represent cash payments to key management personnel and the related shares may or may not ultimately vest. 103 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 19 REMUNERATION OF AUDITORS Deloitte and related network firms* Audit or review of financial reports – Andromeda Group Grant Thornton and related network firms Audit or review of financial reports – Minotaur Exploration Limited 30/06/23 $ 30/06/22 $ 154,721 100,670 15,000 169,721 - 100,670 * The auditor of Andromeda Metals Limited is Deloitte Touche Tohmatsu. 20 RELATED PARTY DISCLOSURES a) Equity interests in related parties Equity interests in subsidiaries Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 26 to the financial statements. Interests in joint arrangements Details of interests in joint arrangements are disclosed in Note 21 to the financial statements. b) Key management personnel compensation Details of key management personnel compensation are disclosed in Note 18. c) Transactions with key management personnel Other than as disclosed in Note 18 and Note 20(b), there were no transactions with key management personnel or their personally related entities during the year ended 30 June 2023 (2022: Nil). 21 THIRD PARTY INTERESTS The Group had interests in unincorporated joint arrangements at 30 June 2023 as follows: Great White Kaolin Joint Venture (note i) – Halloysite-Kaolin Evaluation and Development Halloysite Nanotechnology Joint Venture (note ii) - halloysite research Eyre Kaolin Joint Venture (note iii) Wudinna Gold Joint Venture (note iv) – Gold Exploration Moonta Copper ISR Joint Venture (note v) – Copper in-situ recovery Moonta Porphyry Joint Venture (note vi) – Copper/Gold Exploration PERCENTAGE INTEREST 2023 PERCENTAGE INTEREST 2022 100% 100% - 25% 100% 90% 100% 100% - 35% 100% 90% (i) Under the terms of the Great White Kaolin Joint Venture Agreement with Minotaur Exploration Limited (Minotaur) announced 26 April 2018, the Company reached Stage 2 during the December 2020 Quarter, earning a 75% interest in the Project. On 10 November 2021 the Company announced that it had entered into a Bid Implementation Agreement, pursuant to which Andromeda will offer to acquire all issued ordinary shares of Minotaur by way of an off-market takeover offer. On 7 February 2022 the Company announced that it had acquired Minotaur (Note 29) and subsequently consolidated the Great White Kaolin Project. 104 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements (ii) The Halloysite Technology Joint Venture was a collaborative partnership with Minotaur Exploration Limited established on 16 May 2019 to undertake research and development to develop intellectual property and investigate commercial applications for halloysite-kaolin nanotubes sourced from the Great White Kaolin Project. On 10 November 2021 the Company announced that it had entered into a Bid Implementation Agreement, pursuant to which Andromeda will offer to acquire all the issued ordinary shares of Minotaur by way of an off- market takeover offer. On 7 February 2022 the Company announced that it had completed the acquisition on Minotaur Exploration Limited (Note 29) and subsequently consolidated the Great White Kaolin Project. (iii) The Heads of Agreement (HOA) with private entity Peninsula Exploration Pty Ltd (Peninsula) to form the Eyre Kaolin Project Joint Venture (EKJV) was announced 12 August 2021. Under the terms of the agreement the Company is to sole fund $140,000 (exclusive of tenement rents) on the Project tenements within 12 months of commencement of the EKJV which was 13 September 2021. Stage 1 expenditure obligation by Andromeda of $750,000 (exclusive of tenement rents and which is inclusive of the minimum expenditure requirement) within 3 years of commencement to earn a 51% interest in the EKJV (Stage 1 commitment). Andromeda can elect to sole fund an additional $2 million over a further 3 years on meeting Stage 1 to earn an additional 29% interest, taking its overall interest in the EKJV to 80% (Stage 2 commitment). During the year an Exploration Target at the Chairlift Prospect was identified 23 holes were drilled. From this drilling, the Company continues to await the full results of the samples that were submitted for processing and analysis. (iv) Under the terms of the Wudinna Farm-in and Joint Venture Agreement, Lady Alice Mines Pty Ltd (LAM) was required to spend $2,100,000 by 30 October 2020 on exploration activities across tenements comprising the Company’s Eyre Peninsula Gold Project to earn a 50% equity interest in the Project. The Company granted an extension to 31 December 2020 for the completion of the Stage 1 expenditure following a request from LAM due to logistical issues associated with COVID-19, which was met. On 8 February 2022 the Company announced that LAM had given notice that it had met Stage 2 of the earn in having spent an additional $1,650,000, increasing its equity to 65%. On 1st December 2022, LAM advised that they had achieved their Stage 3 expenditure commitment to earn 75% of the project. Thereafter each party may contribute to ongoing expenditure in respect to their joint venture holding or else elect to dilute. Should a party’s equity fall below 5%, its equity will be compulsory acquired by the other party at a price to be negotiated in good faith or as determined by an independent valuer. LAM was acquired by London Stock Exchange listed entity Cobra Resources PLC in calendar year 2019 and acts as the operator of the joint venture. (v) The Moonta Copper ISR Mining Farm-in and Joint Venture Agreement was entered into on 19 December 2018 with Environmental Metals Recovery Pty Ltd (EMR) to progress the potential to recover copper via in-situ leach recover technique across the northern part of the Company’s Moonta tenement in South Australia. Under the terms of the agreement joint venture EMR had the right to sole fund $2.0million over 4 years to earn a 51% equity interest in the project area. The 51% earn-in requirements were not satisfied within the 4-year timeframe, but the Company has not yet given a breach notice under the agreement pending the outcome of ongoing discussions between the parties as to the best way to proceed. (vi) The Moonta Porphyry Joint Venture was established under a Heads of Agreement dated 12 February 1996 and the Group currently holds a 90% joint venture interest. The Group has an option to purchase the remaining 10% at any time for a consideration of $200,000 cash or the equivalent of $200,000 in Andromeda Metals Limited shares The amount included in mining tenements, exploration, and evaluation (Note 9) includes $1,435,434 (2022: $3,255,130) relating to the above joint arrangements. 105 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 22 COMMITMENTS FOR EXPENDITURE AND CONTINGENT LIABILITIES a) Exploration expenditure commitments The Group has certain obligations to perform exploration work and expend minimum amounts of money on such works on mineral exploration tenements. These obligations will vary from time to time, subject to statutory approval. The terms of current and future joint ventures, the grant or relinquishment of licences and changes to licence areas at renewal or expiry, will alter the expenditure commitments of the Company. Total expenditure commitments at balance date in respect of minimum expenditure requirements not provided for in the financial statements are approximately: Not later than one year Later than one year but not later than two years: Later than two years but not later than five years: b) Natural Nanotech 2023 $ 650,417 400,833 1,116,250 2022 $ 663,333 439,583 1,190,833 The Group has commitments to fund research partnerships that have been entered into by Natural Nanotech Pty Ltd. Natural Nanotech Pty Ltd is a fully owned subsidiary of the Group. Total expenditure commitments at balance date in respect of the research funding not provided for in the financial statements are approximately: Not later than one year Later than one year but not later than two years: Later than two years but not later than five years: 2023 $ 605,000 380,000 142,500 2022 $ 1,750,000 1,605,000 1,920,000 The Research Agreement related to the Carbon Capture and Conversion project with the University of Newcastle was terminated by mutual agreement on the 28th April 2023. Andromeda retains control and ownership of the CC&C business opportunity and associated intellectual property. c) Capital expenditure The Group has committed to purchase a number of long lead time capital items in order to build the processing plant at the Great White Project. Total expenditure commitments at balance date in respect of the capital expenditure not provided for in the financial statements are approximately: Not later than one year Later than one year but not later than two years: Later than two years but not later than five years: 2023 $ 2,607,070 - - 2022 $ - - - d) Service agreements Details of the current services and consultancy agreements are set out below: 2023 KEY MANAGEMENT PERSONNEL TERMS J F Ranford Monthly rate of $30,000 for 3 days week Mr Ranford entered into an employment agreement on 20 October 2022 and the above service agreement is no longer in effect. 106 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 2022 KEY MANAGEMENT PERSONNEL TERMS J F Ranford R G J Grivas (i) N J Harding (ii) Monthly rate of $30,000 for 3 days week Daily rate of $1,000 per day as required Daily rate of $920 (i) Mr Grivas resigned as a Director of the Company on 20 January 2022 and the agreement is no longer in effect (ii) Mr Harding resigned as a Director of the Company on 11 August 2021 and the agreement is no longer in effect On 1 June 2020 the Group entered into a service agreement with an entity associated with J F Ranford with no fixed term. The Group or the entity associated with J F Ranford may terminate the agreement by giving three months’ notice respectively. e) Bank guarantees The Group has provided restricted cash deposits of $225,857 as security for the following unconditional irrevocable bank guarantees: ¬ Environment bonds of $10,107 (2022: $10,008) to the Minister for Mineral Resources Department, South Australia, ¬ A cash deposit of $90,225 (2022: $90,225) to secure a credit card facility, ¬ A rent guarantee of $125,525 (2022: $125,525) to the landlord of the Company’s leased office premises. 23 FINANCIAL INSTRUMENTS Capital risk management The Group aims to manage its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. Due to the nature of the Group’s activities (exploration) the directors believe that the most advantageous way to fund activities is through equity and strategic joint venture arrangements. The Group’s exploration activities are monitored to ensure that adequate funds are available. Categories of financial instruments Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities Trade and other payables Lease liabilities 2023 $ 2022 $ 15,300,890 32,853,203 2,841,021 300,107 1,247,211 372,224 1,730,341 727,116 1,966,169 846,137 Interest rate risk management The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. 107 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements Interest rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the Group’s net profit would increase by $116,779 and decrease by $105,446 (2022: increase by $200,224 and decrease by $44,295). This is mainly attributable to interest rates on bank deposits. Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from activities. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board of Directors, who has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves. Liquidity and interest risk tables The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. WEIGHTED AVERAGE EFFECTIVE INTEREST RATE % LESS THAN ONE YEAR $ ONE TO TWO YEARS $ TWO TO THREE YEARS $ THREE TO FOUR YEARS $ FOUR TO FIVE YEARS $ 2023 Non-interest bearing - 1,730,341 - - - Interest bearing 3.23% 200,576 204,712 189,079 132,749 2022 Non-interest bearing - 1,966,169 - - - - - - Interest bearing 3.23% 187,566 187,088 184,337 172,683 114,462 Fair value of financial instruments The fair values of financial assets and financial liabilities are determined as follows: y y the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices. the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions. y the book value approximates the fair value. 108 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 24 SEGMENT INFORMATION The Group’s focus is on developing its Kaolin Halloysite assets, including the Great White Project and associated technologies. The decision to allocate resources to other projects in which the Group has an interest is predominantly based on available cash reserves, technical data and the expectations of future commodity prices. This is the basis on which internal reports are provided to the directors for assessing performance and determining the allocation of resources within the Group. Overall, the Group has a number of exploration licenses in Australia which are managed on a portfolio basis. Accordingly, the Group effectively operates as one segment, being exploration in Australia. 25 EARNINGS PER SHARE Basic earnings per share – Profit / (loss) Diluted earnings per share – Profit / (loss) Basic earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: – Earnings YEAR ENDED 30/06/23 CENTS PER SHARE YEAR ENDED 30/06/22 CENTS PER SHARE (0.30) (0.30) (0.33) (0.33) $ $ (9,461,246) (8,733,119) NUMBER NUMBER – Weighted average number of ordinary shares 3,109,993,603 2,661,699,070 Diluted earnings per share The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows: – Earnings $ $ (9,461,246) (8,733,119) NUMBER NUMBER – Weighted average number of ordinary shares 3,109,993,603 2,661,699,070 The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted profit / (loss) per share: – Listed share options – Unlisted share options – Treasury shares YEAR ENDED 30/06/23 NUMBER YEAR ENDED 30/06/22 NUMBER - - 24,760,000 69,480,000 2,107,500 2,107,500 26,867,500 71,587,500 109 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 26 CONTROLLED ENTITIES NAME OF ENTITY Parent Entity Andromeda Metals Limited Subsidiaries Adelaide Exploration Pty Ltd Peninsula Resources Pty Ltd ADN LFESP Pty Ltd Mylo Gold Pty Ltd Frontier Exploration Pty Ltd Andromeda Industrial Minerals Pty Ltd Andromeda Green Technologies Andromeda IP Pty Ltd Andromeda Base Metals Holdings Pty Ltd Andromeda Industrial Minerals Holdings Pty Ltd Andromeda Technologies Holdings Pty Ltd Andromeda Industrial Minerals NZ Pty Ltd Camel Lake Halloysite Pty Ltd Eyre Kaolin Pty Ltd Great White Industrial Minerals Holdings Pty Ltd Minotaur Exploration Pty Ltd Minotaur Industrial Minerals Pty Ltd Great Southern Kaolin Pty Ltd Natural Nanotech Pty Ltd (i) Head entity in tax consolidated group (ii) Members of tax consolidated group COUNTRY OF INCORPORATION OWNERSHIP INTEREST 2023 % 2022 % Australia 100% 100% Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - - - - - - - 100% 100% 100% 100% (i) (ii) (ii) (ii) (iii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (ii) (iii) The Company acts as the trustee to the Loan Funded Employee Share Plan. 110 ANDROMEDA METALS LIMITED Financial report (audited) Notes to the financial statements 27 PARENT ENTITY DISCLOSURES FINANCIAL POSITION Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Reserves Accumulated profits/(losses) Total equity FINANCIAL PERFORMANCE Profit / (loss) for the year Other comprehensive income 30/06/23 $ 30/06/22 $ 18,138,405 32,669,615 146,892,086 141,510,640 165,030,491 174,180,255 2,240,628 633,020 2,873,648 2,206,356 715,661 2,922,017 219,882,119 219,250,119 4,292,071 5,938,472 (62,017,347) (53,930,353) 162,156,843 171,258,238 YEAR ENDED 30/06/23 $ YEAR ENDED 30/06/22 (9,228,922) (7,582,717) - - Total comprehensive income / (loss) (9,228,922) (7,582,717) Commitment for expenditure and contingent liabilities of the parent entity Note 22 to the financial statements disclose the Group’s commitments for expenditure and contingent liabilities. Of the items disclosed in that note the following relate to the parent entity: y service agreements y bank guarantees 28 SUBSEQUENT EVENTS On the 24 August 2023 the Company released the results of the updated Definitive Feasibility Study (2023 DFS) following a comprehensive strategy review and approach to developing The Great White Project. The Great White Project Net Present Value increased by 65% to A$1,010 million and average annual earnings before interest, tax, depreciation and amortisation (EBITDA) increased 59% to A$130 million. With the 2023 DFS completed the Company can progress our funding strategy to support an anticipated Final Investment Decision being made. On the 15th September 2023, the Company confirmed the sale of the Drummond Epithermal Gold Project (via the disposal of subsidiary Adelaide Exploration Pty Ltd) with consideration received in the form of shares in Trigg Minerals Limited of $250,000 and reimbursement of tenement expenditure up to an amount of $45,000 for expenditure incurred by Andromeda from 1 August 2022 until 30 June 2023. Andromeda will also receive a non-refundable upfront payment of $27,000 in cash and a refund of $7,500 in respect of the environmental bonds for the project at completion of the sale. There were no other matters or circumstances occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. 111 ANNUAL REPORT 2023 Financial report (audited) Notes to the financial statements 29 ASSET ACQUISITION (PRIOR YEAR) Minotaur Exploration Limited On the 10th of November 2021 Andromeda announced the unanimously recommended off-market takeover offer of Minotaur Exploration Limited. The deal was designed to consolidate the Great White and Natural Nanotech joint ventures as 100% owned under Andromeda. The offer of 1.15 new Andromeda shares for every Minotaur share was seen as an accretive transaction for Andromeda. The bid was subject to a number of conditions precedent. On the 7th February 2022, Andromeda announced the offer made under its off-market takeover bid for all the securities in Minotaur Exploration Limited was free from all Conditions set out in section 14.7 of the associated Bidder’s Statement. As at 9.00am on the 7th of February Andromeda’s relevant interest in MEP was 79.16% with the ADN share price being $0.19 cents per share. At the closing of the offer period on the 25th of February 2022 Andromeda’s relevant interest had increased to 92.12% with the ADN share price being $0.17 cents per share. On this date Andromeda also announced the intention to commence the compulsory acquisition of the remaining shares in Minotaur to bring Andromeda’s interest to 100%. The compulsory acquisition was completed on the 29th of March 2022 with the ADN share price at $0.18 cents per share. The Group has determined that the acquisition of Minotaur Exploration Ltd does not represent a business combination in accordance with AASB 3 Business Combinations. As such the acquisition has been accounted for as an asset acquisition and accordingly the cost of acquisition has been allocated to the identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Additionally, no deferred tax will arise due to the initial recognition exemption for deferred tax under AASB 112 Income Taxes. Consideration related to the acquisition is detailed below: PURCHASE CONSIDERATION Ordinary shares issued (620,508,053) Acquisition related costs NCI Reserve Carrying value of previously held interest in Natural Nanotech Pty Ltd Total purchase consideration $ 116,969,718 2,348,383 926,813 276,822 120,521,736 The fair value of Andromeda shares issued to Minotaur shareholders is based on the share price on the 7th of February 2022 (acquisition date) of $0.19 cents and issued capital was recorded at this value for the 79.16% or relevant interest on this date. Shares issued after the acquisition date relating to the close of the offer period on the 25th February 2022 (12.96% at $0.1835) and the compulsory acquisition on the 29th March 2022 (7.88% at $0.18) were recorded in share capital at the relevant share price. The difference between the share price at the date of acquisition and the subsequent share issues has been recorded in the NCI reserve. NET ASSETS ACQUIRED Cash and cash equivalents Other current assets Net trade receivables / payables Exploration and evaluation assets ADN loan/cash calls payables (i) Net identifiable assets acquired $ 1,178,858 171,890 77,374 124,066,962 (4,973,348) 120,521,736 (i) Payables to Andromeda become intercompany entries upon consolidation and have been eliminated accordingly. All amounts outstanding between Minotaur and Andromeda were pre-existing arrangements at the date of acquisition. 112 ANDROMEDA METALS LIMITED Directors’ Declaration The Directors declare that: a) In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; b) In the Directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as stated in Note 3 to the financial statements; c) In the Directors’ opinion, the financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the Group; and d) The Directors have been given the declaration required by Section 295A of the Corporation Act 2001. Signed in accordance with a resolution of the Directors made pursuant to Section 295(5) of the Corporations Act 2001. On behalf of the Directors Bob Katsiouleris Managing Director & CEO Mick Wilkes Non-executive Chair Adelaide, South Australia 29 September 2023 113 ANNUAL REPORT 2023 Independent auditors report to the members of Andromeda Metals Ltd Deloitte Touche Tohmatsu ABN 74 490 121 060 11 Waymouth Street Adelaide SA 5000 Australia Tel: +61 8 8407 7000 www.deloitte.com.au Independent Auditor’s Report to the members of Andromeda Metals Limited RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt Opinion We have audited the financial report of Andromeda Metals Limited (the Company) and its subsidiaries (the Group) which comprises the consolidated statement of financial position as at 30 June 2023, 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, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: • • giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 3 in the financial report which indicates that the Group incurred net losses of $9,461,246, experienced net cash outflows from operating activities of $9,134,790 and net cash outflows from investing activities of $8,193,143 for the year ended 30 June 2023. As stated in Note 3, these events or conditions, along with other matters as set forth in Note 3, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation. 114 ANDROMEDA METALS LIMITED Independent auditors report to the members of Andromeda Metals Ltd Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. KKeeyy AAuuddiitt MMaatttteerr AAccccoouunnttiinngg ffoorr EExxpplloorraattiioonn aanndd EEvvaalluuaattiioonn AAsssseettss As at 30 June 2023, the carrying value of exploration and evaluation assets amounts to $142,124,436 including additions of $7,372,212 as disclosed in Note 9. Significant judgement is applied in determining the treatment of exploration and evaluation expenditure including: treatment of exploration and evaluation expenditure during the year; o whether the conditions for capitalisation are satisfied; o which elements of exploration and evaluation expenditure qualify for capitalisation; and o whether the costs associated with exploration and evaluation expenditure is complete. whether the carrying value of exploration and evaluation assets is recoverable; o the Group’s intention and ability to proceed with a future work program; the likelihood of license renewal or extension; and the expected or actual success of resource evaluation and analysis. the classification of assets as Exploration & Evaluation Assets or Development Assets. o o • • • 115 HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr Our procedures associated with exploration and evaluation expenditure incurred during the year included, but were not limited to: • • • obtaining an understanding of the Group’s key controls over the capitalisation or expensing of exploration and evaluation expenditure; and testing, on a sample basis, exploration and evaluation expenditure to confirm the nature of the costs incurred, and the appropriateness of the classification between asset and expense; and assessing the completeness of costs capitalised. Our procedures associated with the carrying value of exploration and evaluation assets included, but were not limited to: • • obtaining an understanding of the Group’s key controls relating to the identification of indicators of impairment; evaluating management’s impairment indicator assessment, including consideration as to whether any events exist at the reporting date which may indicate that exploration and evaluation assets may not be recoverable: o obtaining a schedule of the area of interest held by the Group and confirming whether the rights to tenure of that area of interest remained current at balance date. This included confirming that an active renewal application had been lodged where a licence had expired; and o holding discussions with management as to the status of ongoing exploration programs in the respective area of interest; and o assessing whether any facts or circumstances existed to suggest impairment testing was required. Our procedures associated with the classification of Exploration & Evaluation Assets included, but were not limited to: 115 ANNUAL REPORT 2023 Independent auditors report to the members of Andromeda Metals Ltd • • • holding discussions with management in relation to any commitments; and review of board minutes and contracts to assess whether these would indicate that a final investment decision has been made; and performing subsequent events procedures to identify if any final investment decision has been made after the reporting date. We also assessed the adequacy of the disclosures in Note 3 and 9 to the financial statements. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors 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 the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. 116 116 ANDROMEDA METALS LIMITED Independent auditors report to the members of Andromeda Metals Ltd As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit 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 Group’s internal control. • • • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 117 117 ANNUAL REPORT 2023 Independent auditors report to the members of Andromeda Metals Ltd RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt Opinion on the Remuneration Report We have audited the Remuneration Report included on pages 58 to 75 of the Directors’ Report for the year ended 30 June 2023.. In our opinion, the Remuneration Report of Andromeda Metals Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. DELOITTE TOUCHE TOHMATSU DDaarrrreenn HHaallll Partner Chartered Accountants Adelaide, 29 September 2023 118 118 ANDROMEDA METALS LIMITED Shareholder information as at 13 September 2023 DISTRIBUTION AND NUMBER OF SHAREHOLDERS RANGE OF UNITS 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total TOTAL HOLDERS 483 1,915 1,796 6,061 3,369 UNITS 93,188 5,934,669 14,162,766 237,449,503 2,852,630,806 % UNITS 0.00 0.19 0.46 7.63 91.72 13,624 3,110,270,932 100.00 6,275 shareholders hold less than a marketable parcel of shares TOP 20 SHAREHOLDERS RANK NAME BURATU PTY LTDHSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMINEES PTY LTD CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 LJ & K THOMSON PTY LTD YARRAANDOO PTY LTD MR ADONIS KIRITSOPOULOS + MS JENNIFER ANNE FORD DEBUSCEY PTY LTD HAINASON HOLDINGS PTY LTD SURPION PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED G & C ASHMORE NOMINEES PTY LTD MR ROBERT JOHN CONNOLLY SUPERHERO SECURITIES LIMITED MINOTAUR EXPLORATION LTD MR CRAIG ALEX BARRETT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 MR GREGORY JOHN HOOK 20 MR JAMES EDWARD MARSH Total of top 20 holders of fully paid ordinary shares Other holdings UNITS % UNITS 138,355,448 4.45 52,640,592 37,973,232 35,188,409 33,045,061 31,953,815 30,407,804 30,000,896 30,000,000 25,857,234 22,600,000 20,983,440 20,851,300 17,928,264 15,006,121 14,984,835 14,707,880 13,405,000 12,293,000 612,182,331 2,498,088,601 1.69 1.22 1.13 1.06 1.03 0.98 0.96 0.96 0.83 0.73 0.67 0.67 0.58 0.48 0.48 0.47 0.45 0.43 0.40 19.68 80.32 MR WILLIAM MARK PALMER + MRS PATRICIA DAWN GREGORY 14,000,000 Total fully paid ordinary shares on issue 3,110,270,932 100.00 119 ANNUAL REPORT 2023 Shareholder information as at 13 September 2023 SUBSTANTIAL SHAREHOLDERS as disclosed in substantial shareholders notices given to the Company Buratu Pty Ltd (Connolly Super Fund A/C) / Robert Connolly) NUMBER 161,943,712 Holders of shares are entitled to vote at meetings of shareholders (with each shareholder to have one vote on a show of hands and one vote per fully paid ordinary share held on a poll), in accordance with the Company’s Constitution. UNLISTED OPTIONS Unlisted options with an exercise price of $0.075 and expiring 28/11/2023 Unlisted options with an exercise price of $0.2375 and expiring 31/12/2025 Holders of unlisted options have no voting rights. UNLISTED PERFORMANCE RIGHTS Performance rights with performance hurdles to be achieved by 23/12/2023 Performance rights with performance hurdles to be achieved by 30/6/2024 Holders of unlisted performance rights have no voting rights. 20,000,000 4,760,000 14,306,082 4,260,000 120 ANDROMEDA METALS LIMITED Glossary CONTENT $ / AUD $m EXPANSION All prices are in Australian dollars, unless otherwise stated Millions of dollars Andromeda Andromeda Metals Limited (ABN 75 061 504 375) Cobra DCSB DFS EKJV ECL EMR FY23 FYXX Group HPA IRR ISO B ISR JORC Cobra Resources PLC District Council of Streaky Bay Definitive feasibility study Eyre Kaolin Joint Venture EnviroCopper Limited Environmental Metals Recovery Pty Ltd (a subsidiary of EnviroCopper Ltd) Financial Year 2023, for the financial year ending 30 June, 2023 Financial Year 20XX (with XX denoting the last two digits of the year ending 30 June, 20XX) Andromeda Metals Limited and its consolidated subsidiaries High purity alumina Internal rate of return ISO brightness, a European standard for measuring brightness in-situ recovery Joint Ore Reserves Committee JORC Code The Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves JVP kt LTI Joint venture partners (including Cobra Resources PLC) Thousand tonnes Long-term incentive Minotaur Minotaur Exploration Limited Mt NPV PCT REE Rush SGA STI tpa TFR TGWP TSR WGP Million tonnes Net present value Patent Co-operative Treaty Rare earth element Rush Resources Limited Smelter grade alumina Short-term incentive Tonnes per annum Total fixed remuneration The Great White Project (wholly owned by Andromeda) Total shareholder returns Wundinna Gold Project 121 ANNUAL REPORT 2023 Notes 122 ANDROMEDA METALS LIMITED Registered and Principal Office Level 10, 431 King William Street, Adelaide, South Australia 5000 T: +61 8 7089 0600 E: ir@andromet.com.au WWW: andromet.com.au