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Annual Report 2021

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ANNUAL REPORT 2021 Competent Persons This Mineral Resources and Ore Reserves Statement as a whole has been approved by Mr D Ian Chalmers, FAusIMM, FAIG, (Executive Director of the Company,) who has sufficient experience which is 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’. Mr Chalmers has provided his prior written consent to the inclusion in this report of the Mineral Resources and Ore Reserves Statement in the form and context in which it appears. The information in this report that relates to the TGO Mineral Resource estimates is based on, and fairly represents, information which has been compiled by Mr Craig Pridmore, Geology Manager Tomingley Gold Operations, who is a Member of the Australasian Institute of Mining and Metallurgy and an employee of Alkane Resources Ltd. Mr Pridmore has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being 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 information in this report that relates to the TGO Open Pit Ore Reserve estimate is based on, and fairly represents, information which has been compiled by Mr John Millbank (Proactive Mining Solutions), an independent consultant, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Millbank has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being 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 information in this report that relates to the TGO Underground Ore Reserve estimate is based on, and fairly represents, information which has been compiled by Mr Christopher Hiller (Hiller Enterprises Pty Ltd), an independent consultant, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Hiller has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being 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 information in this report that relates to Roswell and San Antonio Mineral Resource estimate is based on, and fairly represents, information compiled by Mr David Meates MAIG, (Alkane Exploration Manager NSW), who has sufficient experience which is 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 information in this report that relates to the Roswell and San Antonio Open Pit Ore Reserve estimate is based on, and fairly represents, information that has been compiled by Mr John Millbank (Proactive Mining Solutions), an independent consultant, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Millbank has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being 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’. Mr Millbank consents to the inclusion in this report of the matters based on his information in the form and context in which they appear. The information in this report that relates to the PHGP Mineral Resource estimate is based on, and fairly represents, information which has been compiled by Mr Craig Pridmore, Geology Manager Tomingley Gold Operations, who is a Member of the Australasian Institute of Mining and Metallurgy and an employee of Alkane Resources Ltd. Mr Pridmore has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being 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’. Previously reported information All information in this report that relates to Mineral Resource or Ore Reserve estimates has been extracted from the Company’s ASX announcement dated 7 September 2021. Exploration results (Northern Molong Porphyry Project) are extracted from the Company’s ASX announcements noted in the text of the report. The relevant ASX announcements are available to view on the Company’s website. The Company confirms that, other than mining depletion, it is not aware of any new information or data that materially affects the information included in the relevant market announcement(s); in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed; and that the form and context in which the Competent Person’s findings are presented have not been materially altered. Disclaimer This report contains certain forward-looking statements and forecasts, including possible or assumed reserves and resources, production levels and rates, costs, prices, future performance or potential growth of Alkane Resources Ltd, industry growth or other trend projections. Such statements are not a guarantee of future performance and involve unknown risks and uncertainties, as well as other factors which are beyond the control of Alkane Resources Ltd. Actual results and developments may differ materially from those expressed or implied by these forward-looking statements depending on a variety of factors. Nothing in this report should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. This document has been prepared in accordance with the requirements of Australian securities laws, which may differ from the requirements of United States and other country securities laws. Unless otherwise indicated, all Ore Reserve and Mineral Resource estimates included or incorporated by reference in this document have been, and will be, prepared in accordance with the JORC classification system of the Australasian Institute of Mining, and Metallurgy and Australian Institute of Geosciences. Contents Business Review Chairman’s Message Group Overview Tomingley Gold Operations Projects & Exploration ESG Financial Report Directors’ Report Auditor’s Independence Declaration Financial Statements Consolidated Financial Statements Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report 4 5 6 8 16 24 30 31 51 52 54 58 94 95 Shareholder Information 100 Corporate Governance Statement 101 Schedule of Mining Tenements 102 Company Information ACN 000 689 216 ABN 35 000 689 216 Directors I J Gandel N P Earner D I Chalmers A D Lethlean G M Smith (Non-Executive Chairman) (Managing Director) (Technical Director) (Non-Executive Director) (Non-Executive Director) Joint Company Secretaries D Wilkins J Carter Registered office and principal place of business Level 4 66 Kings Park Road West Perth WA 6005 Telephone: 61 8 9227 5677 Share register Advanced Share Registry Limited 110 Stirling Highway Nedlands WA 6009 Auditor PricewaterhouseCoopers Brookfield Place 125 St Georges Terrace Perth WA 6000 Securities exchange listings Ordinary fully paid shares Australian Securities Exchange (Perth) ASX code: ALK Contact http://www.alkane.com.au mail@alkane.com.au BUSINESS REVIEW 4 | Alkane Resources Annual Report 2021BUSINESS REVIEW | CHAIRMAN'S MESSAGE Chairman's Message On behalf of your Board of Directors, I present the Alkane Resources Annual Report for 2021. In the past year, we have made excellent progress in our quest to become Australia’s next multi-mine gold producer, advancing projects at both Tomingley and Boda. We have come to the end of another strong year for Alkane, a year in which we successfully demerged Australian Strategic Materials Ltd (ASM) and the Dubbo Project, allowing us to consolidate our focus on gold. ASM has gone from strength to strength since the demerger and on behalf of the Board and Alkane shareholders I wish them every success in the future. A key focus of Alkane for the year was progressing the approval process for development of the San Antonio and Roswell deposits that will prolong the life of the Tomingley gold mine. Updated Mineral Resources were announced and incorporated into the Tomingley life of mine plan, which now extends until at least 2031. As required for a NSW State Significant Development, we are currently finalising the all-important Environmental Impact Statement, which is the culmination of a lot of hard work by a great number of people. On behalf of the Board, I thank our employees and the many consultants who have undertaken extensive environmental studies and community consultations, not to mention careful design of the project informed by these studies. I also thank the community and stakeholders for their positive and willing engagement. We are hoping for approval around the middle of 2022, and look forward to embarking on this next chapter at Tomingley. I also extend thanks to our gold mining and production teams at Tomingley, who have continued to perform reliably and productively in another year of uncertainty due to the pandemic. Our production of 56,958 ounces of gold poured for the year exceeded guidance, which is testament to their diligence. Following our major discovery of extensive gold mineralisation at Boda in 2019, our exploration team focused this past year on a large drilling program to test the dimensions of the system. There is still a long way to go, but the encouraging results continue to fuel our optimism that there is potential for a large tier-one gold-copper project. We were also delighted for Alkane to be named the NSW Minerals Council’s 2021 Explorer of the Year in May, on the back of the Boda discovery. I congratulate our Technical Director, Ian Chalmers, and our NSW exploration team on this achievement. As we continue to focus on our two major gold projects in the coming year, I once again thank our Managing Director, Nic Earner, and the entire Alkane team, along with our strategic partners and consultants. I also extend thanks to our many shareholders and stakeholders for their ongoing support of Alkane. Ian Gandel Chairman Alkane Resources Ltd 5 Alkane Resources Annual Report 2021 | Group Overview Alkane has maintained a strong focus on gold exploration, production and investment, making significant advances towards its vision of becoming a multi- mine gold producer and successfully demerging Australian Strategic Materials. About Alkane Alkane Resources Ltd is the parent entity of the Alkane Group, and is poised to become Australia’s next multi-mine gold producer. The Group’s projects and operations are primarily located in central western New South Wales in eastern Australia. The Company is also progressing a drill program in the Northern Molong Volcanic belt, east of Dubbo, following the discovery of extensive gold-copper porphyry mineralisation at Boda in 2019. Alkane believes Boda has the potential to be a large, tier-one gold-copper project. Current gold production is from Alkane’s wholly owned subsidiary, Tomingley Gold Operations, which has been operating since 2014. The Company is currently expediting the approval pathway to develop two gold deposits immediately south of Tomingley to extend the mine’s life to at least 2031. Alkane has an enviable exploration track record and controls several highly prospective gold and copper tenements. A major focus is the tenement area between Tomingley and Peak Hill, where a number of large resources have been defined that have the potential to provide additional ore for Tomingley’s operations. Alkane’s gold interests extend throughout Australia, including holdings of ~19.8% of Genesis Minerals (ASX: GMD) and ~9.7% of Calidus Resources (ASX: CAI), both gold exploration and development companies in Western Australia. The Company continues to evaluate strategic investments in other gold exploration and aspiring mining companies, where it can contribute additional capital, expertise and operating capability, for mutual benefit. Alkane is listed on the Australian securities exchange (ASX:ALK). 6 | Alkane Resources Annual Report 2021 BUSINESS REVIEW | GROUP OVERVIEW ASM demerged Alkane demerged its former subsidiary, Australian Strategic Materials (ASM), to realise a very large increase in combined market value in the following year. ASM was Alkane’s holding company for the polymetallic Dubbo Project (rare earths, zirconium, niobium and hafnium). The Alkane Board judged it time for ASM to move forward independently, identifying: • rising but diverging investor interest in gold and critical metals (particularly rare earths), and • the need for independent strategic focus for each company, which have different markets and growth opportunities. Highlights of the year Tomingley mine life extended Alkane has incorporated the San Antonio and Roswell resources into the Tomingley life of mine plan, which has been extended to at least 2031. The plan shows the production of approximately 745,000 ounces of gold and relies upon development approval being achieved. Large-scale Boda system revealed Alkane’s extensive drill program at Boda and surrounds continues to reveal the very large scale of the Boda system and indicates potential repeat systems of significant scale within the structural corridor. Strategic investment With the approval of Genesis shareholders, Alkane invested $2.2 million to maintain its holding of approximately 19.8 per cent of Genesis Minerals Ltd (ASX:GMD). The Company also invested another $7.5 million during the year for rights issues and placement, for a total investment of $9.7 million. The demerger was announced 20 May 2020 and passed at an Extraordinary General Meeting on 16 July 2020. ASM was first listed on the ASX on 30 July 2020. The demerger has been a resounding success, with Alkane’s market capitalisation largely unchanged over the financial year, and ASM’s market capitalisation close to $1 billion as at 30 June 2021. 745,000oz Tomingley extended to 2031 Drilled 36 holes totalling 36,638m at Boda/Kaiser Alkane holds 19.8% Genesis Minerals Alkane Resources Annual Report 2021 | 7 BUSINESS REVIEW | GROUP OVERVIEW BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS Tomingley Gold Operations While mining and production continued, the Company progressed consultations, finalised project design and updated Mineral Resource estimates for the Tomingley Gold Extension Project. These were incorporated into an updated life of mine plan that extends to at least 2031. Mining and Production Tomingley Gold Operations is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately 50 kilometres southwest of Dubbo in central western New South Wales. The gold processing plant was commissioned in January 2014 and has been operating at the design capacity of 1Mtpa since late May 2014. Mining is currently based on the Caloma and Wyoming deposits. Open cut mining occurred in the Wyoming One, Wyoming Three, Caloma One and Caloma Two pits from late 2013 until early 2019. Upon improved gold prices, development of a previously approved cutback in the northeast of the Caloma One open cut commenced in September 2020. Reconciliations of ore mined compared to resource estimates show the grade is higher than forecast, resulting in higher gold production. Development of the underground mine at the Wyoming One deposit continued during the year. An additional portal was established at the base of the Caloma One pit, and that drive has connected with the underground drive from Wyoming One and Caloma Two. The operation processed a mix of underground stope material and ore extracted from the Caloma cutback, with low-grade stockpiles processed when capacity permitted. The processing plant continues to perform very well, with recovery performing as expected. Production of 56,958 ounces for the financial year exceeded the guidance of 50,000-55,000 ounces (ASX Announcement 8 July 2021). 8 Total gold poured in FY2021: 56,958 ounces at an All in Sustaining Cost (AISC)* of A$1,320 per ounce Total gold sold in FY2021: 55,929 ounces at an average of A$2,286 per ounce *All in Sustaining Cost (AISC) comprises all site operating costs, royalties, mine exploration, sustaining capex and mine development and an allocation of corporate costs, presented on the basis of ounces sold. | Alkane Resources Annual Report 2021 Tomingley Gold Extension Project Alkane plans to extend gold mining operations at Tomingley to include the recently defined San Antonio and Roswell deposits immediately south of the existing mine. The Company commenced the application process for this NSW State Significant Development at the beginning of the reporting period. The primary focus of the year was consultation with regulators, landholders and other stakeholders, along with detailed on-ground assessments, environmental studies and project design. The Scoping Report was submitted to the NSW Department of Planning, Industry and Environment on 22 June 2021. Alkane plans to submit the Environmental Impact Statement by September 2021, with public exhibition expected to follow in Q4 2021. The expected timing for project approval is mid-2022. Project overview Feedback from the consultation and approval process has directly informed the design of the project, which will encompass both open cut and underground mining. The open cut will comprise three pits combining the adjacent San Antonio and Roswell deposits (the SAR open cut). Underground mining will initially utilise the exploration drive originating at the Wyoming One underground operation and advancing to the north end of Roswell. A waste rock emplacement will be established in the vicinity of the SAR open cut. The two Caloma open cuts will be backfilled, as will a portion of the SAR open cut, in time. Progressive rehabilitation will ensure all landforms are stable, productive and reside sympathetically within the environment. Since the San Antonio and Roswell deposits are underneath the current Newell Highway, Alkane will construct a new 8.4km section of highway to bypass the development. The smaller, local Kyalite Road also needs to be realigned since it currently runs through the proposed open cut. BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS The Tomingley processing plant will undergo some modifications to achieve the already approved 1.5Mtpa rate, with production to be increased to 1.75Mtpa for short periods. A second residue storage facility will be constructed adjacent to the first. Permission for the first stages of the new residue storage facility was granted in May 2021 as the fifth modification to approval. During the year, Alkane purchased seven properties (approximately 2700ha) for this project. Some of this land holds the San Antonio and Roswell deposits or is earmarked for waste rock emplacements and other supporting mine infrastructure. A number of properties are required for construction of the new section of Newell Highway, as well as biodiversity offsets. The remainder will be operated as a commercial farm. The capital cost of approximately $87 million, to be expended predominantly in FY2023, is expected to be funded from operating cashflow and debt. The Company has commenced discussions with potential debt providers. Alkane Resources Annual Report 2021 | 9 BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS Indicative site layout for the Tomingley Gold Extension Project 10 | Alkane Resources Annual Report 2021BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS San Antonio and Roswell (SAR) resource updates Continued resource drilling at the San Antonio and Roswell deposits led to updated resource estimates for both deposits. A Mineral Resource estimation was calculated on the Roswell deposit with a nominal 20 metre drill hole spacing to depths ranging from 0mLR to -200mRL, and averaging about 350 metres below ground surface (ASX Announcement 4 November 2020). The mineralisation remains open at depth. A Mineral Resource estimation was calculated on the San Antonio deposit with a nominal 20 metre drill hole spacing to depths ranging from 30mLR to -200mRL, and averaging about 250 metres below ground surface (ASX Announcement 16 February 2021). Refer to p13 for the Mineral Resource tables. 3D model of the Roswell mineralisation 3D model of the San Antonio mineralisation 11 Alkane Resources Annual Report 2021 | BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS Revised Life of Mine Plan Alkane has incorporated the San Antonio and Roswell resources into the Tomingley life of mine plan, which has been extended to at least 2031 (ASX announcement 3 June 2021). The revised life of mine plan relies upon approval for the Tomingley Gold Extension Project being achieved. The existing underground development at the Wyoming and Caloma deposits remains open at depth and strike in several areas, with the mining schedule currently extending into 2024. Underground mining of the Roswell deposit is expected to commence in the 2023 financial year via an exploration drive starting at the existing operation. Approval for development of this exploration drive was granted in May 2020. Open cut mining will transition from the Caloma cutback to development of the southern part of the San Antonio deposit in FY2024 (pending the Newell Highway realignment). Mining of the San Antonio deposit will occur from south to north to meet the needs of the pit backfill and progressive rehabilitation schedule. Open cut mining of Roswell is scheduled to commence in the second half of 2024. The plan shows the production of approximately 745,000 ounces of gold for the period, with processing ramping to a 1.5Mtpa feed rate. There is substantial upside potential to extend the Roswell underground and maintain production at a rate of at least 100,000 ounces per annum. Indicative production volume by ore source and year for Tomingley’s updated life of mine plan 120000 100000 80000 60000 40000 20000 0 12 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 Tomingley open cut Roswell underground Potential Roswell underground extension Tomingley underground SAR open cut | Alkane Resources Annual Report 2021 BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS Mineral Resources and Ore Reserves Alkane reports Ore Reserves and Mineral Resources as at 30 June 2021 in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012). These estimates take into account ore depleted by mining during the 2021 financial year and were reported to the ASX on 7 September 2021. Any differences to those tables are corrections to typographical errors; the assumptions and parameters detailed in that report are unchanged. Mineral Resources are wholly inclusive of Ore Reserves. Mineral Resources Tomingley Gold Operations Mineral Resources (as at 30 June 2021) MEASURED INDICATED INFERRED TOTAL DEPOSIT Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) TOTAL GOLD (koz) Open Pittable Resources (cut-off 0.50g/t Au) Wyoming One Wyoming Three Caloma One Caloma Two Sub Total 573 86 801 57 1,517 1.8 2.0 1.6 2.3 1.7 Underground Resources (cut-off 1.3g/t Au) Wyoming One Wyoming Three Caloma One Caloma Two Sub Total TOTAL 1102 46 157 2 1,307 2,824 3.0 2.2 2.6 3.6 2.9 2.3 412 16 1,070 875 2,373 1,050 24 234 699 2,007 4,380 Apparent arithmetic inconsistencies are due to rounding. SAR Mineral Resources (as at 30 June 2021) 1.2 1.3 1.2 1.9 1.4 2.7 2.0 2.1 2.5 2.6 135 33 579 30 777 86 20 374 153 633 0.7 1.4 1.2 1.8 1.1 2.0 1.9 2.1 2.3 2.1 1.7 1,410 1.8 1,120 135 2,450 962 4,667 2,238 90 765 854 3,947 8,614 1.4 1.7 1.3 1.9 1.5 2.8 2.1 2.2 2.5 2.6 2.0 52 8 105 58 222 201 6 54 67 328 550 MEASURED INDICATED INFERRED TOTAL DEPOSIT Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) TOTAL GOLD (koz) Total Resources (cut-off 0.50g/t Au) Roswell San Antonio TOTAL 7,871 5,930 13,801 2.07 1.82 1.96 2,188 1,389 3,577 1.93 1.32 10,059 7,319 1.69 17,378 2.04 1.73 1.91 660 406 1,066 Apparent arithmetic inconsistencies are due to rounding. 13 Alkane Resources Annual Report 2021 | BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS Ore Reserves Tomingley Gold Operations Ore Reserves (as at 30 June 2021) DEPOSIT Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) PROVED PROBABLE TOTAL TOTAL GOLD (koz) 0 0 398 0 72 470 Open Pittable Reserves (cut-off 0.40g/t Au) Wyoming One Wyoming Three Caloma One Caloma Two Stockpiles Sub Total Underground Reserves (cut-off 1.3g/t Au) Wyoming One Caloma One Caloma Two Sub Total TOTAL 783 1,253 780 3 0.0 0.0 1.7 0.0 1.2 1.6 2.1 1.5 2.1 1.8 0 0 78 0 0 78 410 113 519 1,042 1,120 0.0 0.0 1.2 0.0 0 1.2 2.1 1.5 1.8 1.9 1.9 0 0 476 0 72 548 1,190 116 519 1,825 2,373 0.0 0.0 1.6 0.0 1.2 1.6 2.1 1.5 1.8 2.0 1.9 0 0 25 0 3 28 81 5 31 117 144 Apparent arithmetic inconsistencies are due to rounding. SAR Ore Reserves (as at 30 June 2021) DEPOSIT Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) Tonnage (kt) Grade (g/t Au) PROVED PROBABLE TOTAL TOTAL GOLD (koz) 0 0 0 Open Pittable Reserves (cut-off 0.40g/t Au) Roswell San Antonio Sub Total Underground Reserves (cut-off 1.3g/t Au) Roswell San Antonio* Sub Total TOTAL 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 3,679 4,188 7,867 1,575 0 1,575 9,442 1.7 1.6 1.7 2.8 0.0 2.8 1.9 3,679 4,188 7,867 1,575 0 1,575 9,442 1.7 1.6 1.7 2.8 0.0 2.8 1.9 202 218 420 142 142 563 Apparent arithmetic inconsistencies are due to rounding. * San Antonio Reserves not determined at this time. Mineral Resource and Ore Reserve Governance and Internal Controls The Alkane Group has put governance arrangements and internal controls with respect to its estimates of Mineral Resources and Ore Reserves, including: • oversight and approval of each annual statement by the Technical Director; • establishment of internal procedures and controls to meet JORC Code 2012 compliance in all external reporting; • independent review of new and materially changed estimates; • annual reconciliation with internal planning to validate reserve estimates for operating mines; and • Board approval of new and materially changed estimates. 14 | Alkane Resources Annual Report 2021 BUSINESS REVIEW | TOMINGLEY GOLD OPERATIONS Comparative Resources and Reserves The tables below compare the total Mineral Resources and Ore Reserves as at 30 June 2021 year on year with 30 June 2020. Tomingley Gold Operations Comparative Mineral Resources (30 June 2020 to 30 June 2021) DEPOSIT Open Pit Wyoming One Wyoming Three Caloma One Caloma Two Sub Total Underground Wyoming One Wyoming Three Caloma One Caloma Two Sub Total TOTAL Tonnage (kt) 2020 Grade (g/t Au) Gold (koz) Tonnage (kt) 2021 Grade (g/t Au) Gold (koz) 1,159 135 2,719 902 4,915 2481 90 752 1211 4534 9,449 1.5 1.7 1.3 2.0 1.5 2.9 2.1 2 2.3 2.6 2.0 57 8 115 58 238 228 6 50 88 372 610 1,120 135 2,450 962 4,667 2238 90 765 854 3947 8,614 1.4 1.7 1.3 1.9 1.5 2.8 2.1 2.2 2.4 2.6 2.0 Apparent arithmetic inconsistencies are due to rounding. Tomingley Gold Operations Comparative Ore Reserves (30 June 2020 to 30 June 2021) DEPOSIT Open Pit Wyoming One Wyoming Three Caloma One Caloma Two Stockpiles Sub Total Underground Proven Probable Sub Total TOTAL Tonnage (kt) 2020 Grade (g/t Au) Gold (koz) Tonnage (kt) 2021 Grade (g/t Au) Gold (koz) 0 0 569 0 207 776 573 1,618 2,191 2,967 0.0 0.0 1.6 0.0 0.8 1.4 1.9 2.0 2.0 1.8 0 0 30 0 6 36 34 106 140 176 476 72 548 783 1,042 1,825 2,373 1.6 1.2 1.6 2.1 1.9 2.0 1.9 Apparent arithmetic inconsistencies are due to rounding. The primary differences from 2020 to 2021 are: • Caloma One cut-back placed into the reserves • Underground reserves depleted through mining at Wyoming One; and • Addition of Caloma One and Caloma Two reserves. 52 8 105 58 222 201 6 54 67 328 550 24 3 27 54 63 117 144 15 Alkane Resources Annual Report 2021 | BUSINESS REVIEW | PROJECTS & EXPLORATION Projects & Exploration Following the discovery at Boda in 2019-2020, Alkane embarked on a 30,000-metre drilling program at the Northern Molong Porphyry Project to progress understanding of the extensive mineralised system. The other main exploration focus was completing resource definition drilling at the San Antonio and Roswell deposits within the Tomingley Gold Project. Northern Molong Porphyry Project (gold-copper) Alkane Resources Ltd 100% Encompassing four exploration licences (Bodangora, Boda South, Kaiser and Finns Crossing), the Northern Molong Porphyry Project (NMPP) covers an area of 115 square kilometres, centred about 20 kilometres north of Wellington and about 35 kilometres east of Dubbo. The project covers a section of the northern Molong Volcanic Belt, which is highly prospective for large-scale porphyry gold-copper deposits similar to the Cadia Valley deposits near Orange. Alkane’s exploration activity over the past several years has established a geological and geochemical framework for the project area and demonstrated the existence of stratigraphic and intrusive rock sequences very similar to that at Cadia. The work also shows that gold-copper mineralisation is hosted by very similar rock types at similar stratigraphic positions – notably the margins of major magnetic/intrusive complexes. Alkane has a number of exploration prospects located adjacent to five identified magnetic/intrusive complexes (Kaiser, Boda, Comobella, Driell Creek and Finns Crossing) within a 15-kilometre northwest trending corridor. During the 2020 financial year, Alkane discovered a significant porphyry gold-copper system at the Boda prospect, positioned at the western margin of the Boda Intrusive Complex. The Company believes Boda has the potential to be a large, tier-one gold-copper project. 16 Kaiser-Boda prospective corridor During 2020-2021, Alkane’s NMPP exploration activities sought to progress understanding of the large-scale Boda mineralised system. A major RC and diamond core drilling program of approximately 30,000 metres commenced in July 2020. The program is testing the dimensions and extensions to the large low-grade mineralised envelope as well as any internal high-grade zones at Boda. To understand the broader extent of the mineralised system, the drilling program has been extended beyond Boda. Of particular interest is the highly prospective four- kilometre corridor between the Kaiser and Duke systems (1.5 kilometres northwest of Boda) and Boda Three, which lies two kilometres to the south. Other known gold-copper mineralisation occurrences and coincident IP anomalies within the northwest-trending structural corridor between Boda and Finns Crossing (including a strong magnetic anomaly at Murga) are also being explored. In addition to revealing the very large scale of Boda, Alkane’s drill program indicates the existence of potential repeat systems of significant scale within the structural corridor. Results of the exploration program were reported in a series of ASX Announcements on 11 November 2020, 18 December 2020, 8 March 2021, 3 May 2021 and 22 July 2021. | Alkane Resources Annual Report 2021 BUSINESS REVIEW | PROJECTS & EXPLORATION Map of the Northern Molong Porphyry Project Regional Geology Boda and Boda Two Drilling at Boda indicates the high-grade zone (sulphide cemented breccia) extends at least 100 metres deeper than indicated by previous drilling. The results also show extensions to the mineralised system to the south at Boda Two, approximately one kilometre from the main Boda target zone. Boda Two drill results have identified a similar broad zone of low-grade gold-copper porphyry mineralisation with a gold-enriched pyrite zone on the eastern margin. Current results for Boda suggest a large alkalic porphyry system of 400 metres wide, over 1000 metres north-south strike length and more than 1100 metres vertically. The high-grade breccia has now been intersected by drill holes KSDD007, KSDD011, KSDD012, KSDD028, KSDD031 and KSRC033D, indicating at this early stage that the breccia is approximately 50 metres in true width, thickening up plunge. Further drilling is planned at Boda, Boda Two and Boda Three to test extensions and continue defining dimensions of the system. 17 Alkane Resources Annual Report 2021 |BUSINESS REVIEW | PROJECTS & EXPLORATION Kaiser and Duke A single diamond core drilled at the Kaiser and Duke systems (KSDD027) intersected two zones of gold-copper porphyry mineralisation with grades and alteration similar to Boda. Based on earlier drilling by Alkane in 2015-2019, the Duke zone is currently interpreted to be approximately 250 metres wide, striking over 800 metres and open along strike and at depth. It is understood to run parallel to the Kaiser zone, which was the site of historic, extensive shallow drilling. Murga As part of the ongoing exploration program of the NMPP, Alkane conducted reconnaissance shallow air-core drilling at the Murga prospect (Finns Crossing) approximately 12 kilometres northwest of Boda. Murga is positioned within the same northwest structural corridor that hosts both the Kaiser and Boda porphyry discoveries. Targeting a large, lin- ear magnetic anomaly at the prospect, the drilling program comprised 75 air-core drill holes totalling 1,354 metres along a strike length of two kilometres. Results confirmed the prospectivity of the target, with further exploration planned (ASX Announcement 22 July 2021). Cross section of mineralised core from diamond hole KSDD007 drilled at Boda, showing 2cm-thick bornite-chalcopyrite-quartz vein at 385m downhole. 18 | Alkane Resources Annual Report 2021 Explorer of the year award Alkane won the NSW Minerals Council’s 2021 Explorer of the Year award for the Boda discovery. Pictured (L-R) are Exploration Manager NSW David Meates, Technical Director Ian Chalmers, Non-Executive Director Tony Lethlean and Chairman Ian Gandel. BUSINESS REVIEW | PROJECTS & EXPLORATION Alkane’s drilling program in the Kaiser-Boda corridor to-date, overlaying regional magnetics 19 Alkane Resources Annual Report 2021 |BUSINESS REVIEW | PROJECTS & EXPLORATION Tomingley Gold Project (gold) Alkane Resources Ltd 100% Alkane’s Tomingley Gold Project covers an area of approximately 440 square kilometres, stretching 60 kilometres north-south along the Newell Highway in central western New South Wales. The prospective belt extends from near the village of Tomingley in the north (about 50 kilometres southwest of Dubbo), through Peak Hill and almost to Parkes in the south. The project incorporates the Company’s currently active Tomingley Gold Operations, the Tomingley Gold Extension Project, and the inactive Peak Hill Gold Mine. Exploration for the year focused on updating the resources for the San Antonio and Roswell deposits (ASX Announcements 16 February 2021 and 4 November 2020 respectively), which have been incorporated into the life of mine plan for Tomingley – refer to the preceding section of this report. Alkane also undertook regional exploration at the Macleans prospect north of Roswell, and the El Paso prospect south of San Antonio. Other key prospects include Glen Isla, Myalls United, Smiths, Black Snake, Trewilga and McGregors. Peak Hill Gold Mine Located 15 kilometres south of Tomingley, Alkane’s Peak Hill Gold Mine operated from 1996 to 2005 as an open cut heap leach. While the site is substantially rehabilitated, it remains an active Mining Lease. Based upon a revised gold price, an updated Mineral Resource estimate (JORC 2012), completed in October 2018, identified an initial Inferred Resource of 108,000 ounces of gold. The following Mineral Resource estimate is unchanged since 30 June 2020. Peak Hill Mineral Resource (as at 30 June 2021) Technological advances and the gold price increases in the last two decades led Alkane to re-evaluate the economics of further development. During the reporting period, the Company completed a metallurgical test program that explored different recovery methods for the ore, which is moderately refractory in nature, unlike the Tomingley deposits. Results showed that recoveries in excess of 95 per cent are possible with bio-oxidation. Further metallurgical testing and a conceptual mining plan is in progress. Alkane retains its Mining Lease and Environment Protection Licence for Peak Hill Gold Mine, but any further mine development would require further environmental assessment and government approval. Resource category Cut-off Tonnes (Mt) Gold grade g/t Gold metal (koz) Copper Metal (%) Inferred 2g/t Au Inferred 2g/t Au 1.02 1.02 3.29 3.29 108 108 0.15 0.15 Deposit Proprietary Underground TOTAL 20 | Alkane Resources Annual Report 2021 BUSINESS REVIEW | PROJECTS & EXPLORATION Map of the gold corridor between Tomingley and Peak Hill 21 Alkane Resources Annual Report 2021 |BUSINESS REVIEW | PROJECTS & EXPLORATION Other Projects Due to the extensive effort on the Tomingley Gold and Northern Molong Porphyry Projects, exploration activity on other projects was largely limited to data review for target definition. Alkane’s other exploration projects in central western New South Wales are: Glen Isla – Gundong (gold); Armstrongs (gold); Elsienora (gold); Cudal (gold-zinc); Rockley (gold); Trangie (nickel-copper+); Mt Conqueror (gold). (All Alkane Resources Ltd 100%) Alkane’s 100% interest in the Wellington – Galwadgere project (copper-gold) was purchased by Sky Metals Limited (ASX:SKY) in early 2021, as per the Option to Purchase Agreement with Alkane (ASX SKY 24 August 2020). The rights and liabilities for Alkane’s 19.4% diluting interest in the Leinster Region Joint Venture (nickel-gold) have been assigned to Australian Nickel Investments Pty Ltd (ANI) under an executed deed. The Dubbo Project is owned by Australian Strategic Materials Ltd (ASM), which demerged from Alkane in July 2020. For information about ASM and the Dubbo Project, refer to the ASM Annual Report. 22 | Alkane Resources Annual Report 2021 BUSINESS REVIEW | PROJECTS & EXPLORATION Alkane’s projects and operations are primarily located in the vicinity of Dubbo in central western New South Wales. 23 Alkane Resources Annual Report 2021 |BUSINESS REVIEW | ESG ESG Alkane strives to uphold high environmental, social and governance (ESG) standards across all its activities. The Company aims to deliver low-impact operations with openness and integrity, while providing a safe and rewarding working environment for employees and a positive legacy for local communities. Environmental stewardship Alkane’s exploration, mining, processing and rehabilitation activities are carefully designed with the smallest practical environmental footprint in mind. Environmental responsibility is embedded into the Company’s normal business practice. Tomingley environmental performance At Alkane’s existing gold mining operation at Tomingley, the Company’s approach to environmental management is documented in a comprehensive Environmental Management Strategy (EMS), which is underpinned by a series of site-specific Environmental Management Plans. These are implemented by a dedicated Environmental Management team to ensure site compliance with all project approvals, licenses and permits, and to minimise potential environmental impacts. Annual reporting undertaken includes: • Annual Environmental Review (NSW DPIE) • Annual Return (NSW EPA) • National Pollution Inventory Reporting (NPI) • National Emissions and Energy Report (NGER) During the 2021 financial year, the site was subject to its three-yearly independent environmental audit for the period March 2018 to May 2021. The audit report will be submitted to the NSW Department of Planning, Industry and Environment in September 2021. Alkane undertakes water monitoring as part of its Environmental Management Strategy. 24 | Alkane Resources Annual Report 2021 BUSINESS REVIEW | ESG A team of specialist consultants undertook extensive studies spanning ecology, heritage, soils and land capability, noise and vibration, air quality, surface and groundwater, rehabilitation and final landform design, as well as potential social and economic impacts. Rehabilitation and landform design The Company practices progressive landform rehabilitation to ensure sites are returned to stable and productive ecosystems once mining is finished. When designing the Tomingley Gold Extension Project, Alkane has focused on minimising ecological and agricultural impacts. Soil experts were engaged to assess soil ‘erodibility’ and model waste rock emplacement (WRE) designs based on the volume of waste rock to be moved, the quality of available topsoil, and local climate. The new WRE will look more natural in the landscape, compared with the rehabilitated WREs near the Caloma and Wyoming deposits. Instead of stepped batters, where possible it will feature gentler contours to reside more sympathetically within the environment. It will also be rehabilitated progressively. Renewable energy Alkane is currently investigating renewable energy solutions to provide a large proportion of the power requirements for the Tomingley processing plant and other site infrastructure. Feasibility of a 5MW solar installation on Alkane’s land around Tomingley is under consideration. No noise, dust or vibration exceedances were recorded at Tomingley during the reporting period, and no complaints were received. One reportable incident occurred on site during the period. On 19 May 2021, a bulk diesel tanker operated by a transport company spilt diesel on site due to a malfunctioning hose joiner. The spill was fully contained within Tomingley’s internal water management system and did not impact any staff or wildlife. The incident was reported to the NSW EPA hotline and officers from the EPA attended site to investigate the incident and Tomingley’s initial response. The EPA officers were pleased with the actions taken to contain and minimise potential impacts. The EPA also approved the Remediation Action Plan prepared by a third party contractor, who coordinated removal of the contaminated soil and remediation of the contaminated area on behalf of, and at the cost of, the transport company. A completion report was submitted to the EPA and the matter is still with the EPA. Details of Tomingley’s environmental performance can be found on the Company’s website. Documents available include: • Annual Environmental Review • Monthly Environmental Monitoring Reports • Monthly Noise Monitoring Reports • Annual Noise Compliance Report • Environmental Management Plans Environmental impact assessments A major focus of the 2021 financial year was progressing environmental impact assessments for the Tomingley Gold Extension Project, which is undergoing the NSW State Significant Development approval process. The Environmental Impact Statement (EIS), which is a key part of the approval process, is currently being finalised. Alkane Resources Annual Report 2021 | 25 BUSINESS REVIEW | ESG Biodiversity Alkane focuses on protecting, nurturing and enhancing local biodiversity. Designated biodiversity offset areas around Tomingley are protected by a binding Conservation Property Vegetation Plan, signed in agreement with regional Local Land Services organisations. Activities include re-vegetation, weed control, feral animal control and protection of native species from introduced predators. A biannual fauna monitoring report is prepared by external ecological consultants with data obtained from an extensive field assessment program. This report guides the ongoing management of native fauna around the Tomingley operations. In accordance with Tomingley project approval, an annual rehabilitation and biodiversity monitoring report is completed and submitted to the NSW DPIE. Data for this report is obtained from the field assessment of 17 permanent transects and used to guide ongoing management of rehabilitated areas. One of the positive benefits of Alkane’s conservation activities has been enhancement of habitat for the Grey- crowned Babbler (Pomatostomus temporalis), a species listed as vulnerable in NSW. Destocking biodiversity offset areas has enhanced the habitat value and enabled the birds that live in families of up 15 to thrive. Each family requires around 10 hectares of habitat. Ongoing management of nesting and roosting habitat areas has helped grow populations. An interesting immigrant to the mine site has been the Australian Reed-warbler (Acrocephalus australis). This locally uncommon species has found its preferred habitat of dense vegetation alongside water in the drains within 50 metres of the Tomingley site office. At Peak Hill Gold Mine, the Company’s rehabilitation efforts have resulted in an increasingly species-rich site, with several native and woodland bird and mammal species, not present pre-mining, now thriving. The original tree plantings from 1996 are now around 20 metres tall. They have led to natural regeneration of the woodland species on site. Alkane has already commenced tree planting outside the projected disturbance footprint of the extension project. Members of the Company’s exploration team planted several hundred Fuzzy Box (Eucalyptus conica) seedings grown by Narromine Transplants. Alkane has enhanced habitat for the vulnerable Grey-crowned Babbler. Photo credit: Imogen Warren 26 | Alkane Resources Annual Report 2021 People and communities Alkane practices safe and sustained economic development for the long-term benefit of its shareholders, employees, contractors, suppliers and local communities. The Company is most active in the Narromine Shire, Parkes Shire and Dubbo Regional Council local government areas in central western New South Wales. Workforce Alkane’s personnel are distributed across several office locations and operations across central western New South Wales (Orange, Dubbo, Peak Hill and Tomingley), Sydney and Perth (head office). The largest concentration of employees is at the Tomingley gold mine, southwest of Dubbo. A full-time site supervisor maintains the Peak Hill Gold Mine leases and infrastructure during decommissioning. Alkane also maintains exploration offices in Dubbo and Orange to service the Group’s other tenements. Alkane is committed to employing members of the local community where possible. Since the Company does not support a ‘fly-in/fly-out’ scheme, the majority of employees live in the local area. At financial year end, the Group had 249 personnel on the payroll (including casual employees), 215 of which were at Tomingley. These included 22 women (9%), including three female managers, and 32 employees of Aboriginal and Torres Strait Islander descent (13%). A total of 23 full-time equivalent contractors were on site at Tomingley in June 2021. Achieving a good gender balance in such an historically male-dominated industry is a challenge essential to maintaining a culture of equal opportunity. Tomingley is committed to equal-opportunity recruitment, using gender-neutral or female-positive language to encourage women to apply for all roles. During the reporting period, Tomingley management organised for all employees to have free access to the Altius Life health and wellbeing digital platform via an integrated access point in the Company’s site EAP platform. BUSINESS REVIEW | ESG Work Health & Safety Alkane is committed to providing a safe and rewarding workplace for all employees and contractors. Workforce conditions meet international occupational health and safety standards, with no exploitation or child labour. Mine Safety Management and Operations Management systems are in place at Alkane’s main operation at Tomingley, with both systems subjected to a rigorous auditing and inspection regime to ensure their integrity. The site employs a dedicated Work Health and Safety (WHS) Manager; in the reporting period, the Tomingley safety team expanded to include a fulltime Safety and Training Coordinator, a six-month contracted Safety and Training Coordinator, and an additional operational training role. The site uses thorough employee safety induction program to on-board all employees and contractors. 27 Alkane Resources Annual Report 2021 | BUSINESS REVIEW | ESG During the reporting period, there were 14 recordable injuries at the Tomingley site. These consisted of three Lost Time Injuries, seven Restricted Work Injuries and four Medical Treated Injuries. For the 2021 financial year, Tomingley had a total recordable injury frequency rate (TRIFR) of 5.21 per 1,000,000 hours worked. During the year, Tomingley Gold Operations developed a safety action plan based on evidence collected from the MI-profile Risk Leadership and Cultural Survey Engagement tool. This supports the ongoing implementation of the Social Psychology of Risk – Culture and Leadership program. Implementation of the action plan began during the 2020- 2021 financial year and will continue into the next year. It encompasses: • Improving Communications and Inductions • Maturing the Safety Management System • Review of the Safety Management System • Mental Health and Wellbeing – Creating a Psychologically Safe Workplace, and • High Risk Manual Tasks – Participative Ergonomics. The Tomingley WHS team also progressed projects in relation to: • Development of cultural data-gathering tools to support the implementation of the safety action plan top 5 priorities • Development and Implementation of a new safety software system to assist in the collection and management of safety-related information and data, including training information • Document Usability Mapping, and • Development of Critical Safety System review schedule and process to assess the system efficacy. Communities & stakeholders Alkane is an active and engaged member of the communities in which it operates – in particular the Narromine Shire, Parkes Shire and Dubbo Regional Council local government areas in central western New South Wales. The Company aims to support the development of more resilient regional communities through the establishment of permanent infrastructure, sponsorship of local events and organisations, provision of training and career opportunities to local students and residents, and the creation of local economic opportunities for service providers. Alkane maintains strong relationships with local communities through clear and regular communications about its operations and development activities, and actively participates on the Tomingley Gold Project Community Consultative Committee. The Company encourages community engagement and participates regularly at regional events to discuss the Group’s projects. Alkane shares knowledge through papers and participation in selected industry forums. The Company is also an active member on the NSW Minerals Council Environment and Community Committee. Community consultations During the reporting period, consultants working on behalf of Alkane consulted extensively with the community and key stakeholders to gain feedback on the Tomingley Gold Extension Project. Over a period of several months, the team talked to many local residents, government agencies (local, state and federal), non-government organisations, Newell Highway users and local Aboriginal communities. The Company strives for continuous improvement of its standards at the Tomingley gold mine, the Peak Hill gold mine decommissioning and closure, and for ongoing exploration and mine development. Details of WHS performance can be found on Alkane’s website. These consultations helped inform the final design of the project – such as final landforms, realigned roads, water diversions and biodiversity offsets. Of particular note, Alkane selected the more costly option for the realignment of Kyalite Road, based on community feedback. 28 | Alkane Resources Annual Report 2021 BUSINESS REVIEW | ESG Sponsorships and funding Governance In September 2020, Alkane established a major new sponsorship of the Clontarf Foundation’s Narromine Academy for $300,000 over three years. The sponsorship represents Alkane’s long-term investment in capacity building for young Aboriginal and Torres Strait Islander men, and includes an annual program of student interaction, celebrations of achievements, employment pathway support, and visits between the Tomingley gold mine and the Narromine Academy. Alkane also supports the Narromine Rotary club with several forms of sponsorship. This reporting period, the Company donated $2,000 to enable the club to register its mobile food caravan and associated truck. Tomingley management also sponsored staff lunches supplied by the van on a semi-regular basis. Over the last 12 months, this equated to approximately $14,000. The Company also continues to support the Tomingley Gold Project Community Fund, which funds local community projects and events on a submissions basis. During the financial year, approximately $51,000 was awarded to a number of different projects, including the annual sponsorship of the Tomingley Picnic Races (traditionally held near ANZAC Day), new fencing and a shade structure to support the races event, and a new turf and irrigation system surrounding Tomingley Hall. Engaging the next generation During the year, Alkane nurtured its ties with Narromine High School, sponsoring the School Science Spectacular event. Representatives of Tomingley Gold Operations also attended a Rugby League “Super Training Session” hosted by Clontarf Narromine Academy at Narromine High School. The Company also engaged two local teenagers as diesel fitter apprenticeships during the year. Alkane employs comprehensive systems of control and accountability, and administers corporate governance with openness and integrity based on the principles and recommendations of the ASX Corporate Governance Council. Corporate Governance Statement The Company’s Corporate Governance Statement is available on the Alkane website, along with the Board charter and details of Board sub-committees. Also listed are key policies and procedures, including those pertaining to appointment and independence of directors, diversity, code of conduct, risk management, and anti-bribery and corruption. https://www.alkane.com.au/company/governance/ Risk management Alkane is committed to the active management of risks to its operations and has a Risk Management Committee composed of directors and management to assist the Managing Director to identify, assess, monitor and manage the Company’s risks. The Company’s Risk Management Coordinator is tasked with the responsibility of keeping the risk management policy, framework and registers updated, subject to formal approval of policy amendments by the Board. Tomingley continues to monitor and audit critical controls as part of its ongoing risk management process. A specialised software package assists with the management of the complexities for the high-level risks. Tomingley Gold Operations sponsors the Clontarf Narromine Academy, which hosted a Rugby League “Super Training Session” at Narromine High School. Alkane Resources Annual Report 2021 | 29 FINANCIAL REPORT 30 | Alkane Resources Annual Report 2021FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS Directors’ Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity' or the 'Group') consisting of Alkane Resources Ltd (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2021. Directors The following persons were directors of Alkane Resources Ltd (Alkane) during the whole of the financial year and up to the date of this report, unless otherwise stated: I J Gandel N P Earner D I Chalmers A D Lethlean G M Smith The Board continues its efforts to seek to appoint additional independent members who will bring complementary skill sets and diversity to the Group's leadership. Information on Directors and Company Secretaries Ian Jeffrey Gandel – Non-Executive Chairman LLB, BEc, FCPA, FAICD Appointed Director 24 July 2006 and Chairman 1 September 2017. Mr Gandel is a successful Melbourne-based businessman with extensive experience in retail management and retail property. He has been a director of the Gandel Retail Trust and has had an involvement in the construction and leasing of Gandel shopping centres. He has previously been involved in the Priceline retail chain and the CEO chain of serviced offices. Mr Gandel has been an investor in the mining industry since 1994. Mr Gandel is currently a substantial holder in a number of publicly listed Australian companies and, through his private investment vehicles, now holds and explores tenements in his own right in Western Australia. Mr Gandel is currently non-executive chairman of Alliance Resources Ltd (appointed as a director on 15 October 2003 and in June 2016 was appointed non-executive chairman). Mr Gandel is currently non-executive chairman of Australian Strategic Materials Limited (appointed 18 March 2014). (This company was demerged and admitted to the Australian Securities Exchange (ASX) on 29 July 2020.) He is also non-executive chairman of Octagonal Resources Ltd (appointed 10 November 2010). (This company sought delisting from the ASX in February 2016 and converted to Pty Ltd status in April 2016.) Mr Gandel is a member of the Audit Committee and a member of the Remuneration and Nomination Committees. 31 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS Nicolas Paul Earner – Managing Director BEng (hons) Appointed Managing Director 1 September 2017. Mr Earner is a chemical engineer and a graduate of the University of Queensland, with over 25 years' experience in technical and operational optimisation and management, and has held a number of executive roles in mining and processing. Mr Earner joined Alkane Resources Ltd as Chief Operations Officer in August 2013, with responsibility for the safe and efficient management of the Company's operations at Tomingley Gold Operations (TGO) and Dubbo (Dubbo Project). Under his supervision, the successful development of TGO transitioned to profitable and efficient operations. His guidance also drove the engineering and metallurgical aspects of the Dubbo Project, prior to its transition into the separately listed Australian Strategic Materials. Prior to his appointment as the Group's Chief Operations Officer in August 2013, he had roles at Straits Resources Ltd, Rio Tinto Coal Australia's Mount Thorley Warkworth coal mine, and BHP/WMC Olympic Dam copper-uranium-gold operations. Mr Earner is currently a non-executive director of Genesis Minerals Limited (appointed 24 October 2019) and Australian Strategic Materials Limited (appointed 1 September 2017). (This company was demerged and admitted to the ASX on 29 July 2020.) David Ian Chalmers – Technical Director MSc, FAusIMM, FAIG, FIMM, FSEG, MSGA, MGSA, FAICD Appointed Technical Director 1 September 2017. Resigned as Managing Director 31 August 2017. Mr Chalmers, Alkane Resources Ltd's Technical Director, is a geologist and graduate of the Western Australia Institute of Technology (Curtin University) and has a Master of Science degree from the University of Leicester in the United Kingdom. He has worked in the mining and exploration industry for over 50 years, during which time he has had experience in all facets of exploration and mining through feasibility and development to the production phase. Mr Chalmers was Technical Director of Alkane until his appointment as Managing Director in 2006, overseeing the Group's minerals exploration efforts across Australia and the development and operations of the Peak Hill Gold Mine (NSW). During his time as Chief Executive he steered Alkane through the discovery, feasibility, construction and development of the now fully operational Tomingley Gold Operations; the discovery and ultimate sale of the McPhillamys gold deposit; the recent discovery of the gold deposits immediately south of Tomingley; and the porphyry gold-copper discovery at Boda. Mr Chalmers also managed the process development and global marketing effort for the Dubbo Project, advancing it to the threshold of development. Mr Chalmers is currently a non-executive director of Australian Strategic Materials Limited (appointed 18 March 2014). (This company was demerged and admitted to the ASX on 29 July 2020.) Mr Chalmers is a member of the Nomination Committee. Anthony Dean Lethlean – Non-Executive Director BAppSc (Geology) Appointed Director 30 May 2002. Mr Lethlean is a geologist with over 10 years mining experience, including four years underground on the Golden Mile in Kalgoorlie. In later years, he has worked as a resource analyst with various stockbrokers and investment banks including CIBC World Markets. He was a founding director of Helmsec Global Capital Limited, which seeded, listed and funded a number of companies in a range of commodities. He retired from the Helmsec group in 2014. He is also a director of corporate advisory Rawson Lewis and a non-executive director of Alliance Resources Ltd (appointed 15 October 2003). Mr Lethlean is the senior independent Director, Chairman of the Audit Committee and Risk Committee, and a member of the Remuneration and Nomination Committees. 32 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - DIRECTORS Gavin Murray Smith – Non-Executive Director B.Com, MBA, MAICD Appointed Director 29 November 2017. Mr Smith is an accomplished senior executive and non-executive director within multinational business environments. He has more than 35 years' experience in information technology, business development, and general management in a wide range of industries and sectors. Mr Smith has worked for the Bosch group for the past 29 years in Australia and Germany, and is current chair and president of Robert Bosch Australia. In this role Mr Smith has led the restructuring and transformation of the local Bosch subsidiary. Concurrent with this role, he is a non-executive director of the various Bosch subsidiaries, joint ventures, and direct investment companies in Australia and New Zealand. In addition, Mr Smith is the chair of the Internet of Things Alliance Australia (IoTAA), the peak body for organisations with an interest in the IoT. Mr Smith is currently a non-executive director of Australian Strategic Materials Limited (appointed 12 December 2017). (This company was demerged and admitted to the ASX on 29 July 2020.) Mr Smith is a member of the Audit Committee, Risk Committee and Chair of the Remuneration and Nomination Committees. Dennis Wilkins – Joint Company Secretary B.Bus, ACIS, AICD Appointed Company Secretary 29 March 2018. Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural resources industry. Since 1994 he has been a director, and involved in the executive management, of several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd, where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector. Mr Wilkins is currently a director of Key Petroleum Limited. James Carter – Joint Company Secretary Appointed Company Secretary 20 May 2020. Mr Carter is a CPA and Chartered Company Secretary with over 25 years international experience in the resources industry. He has held senior finance positions across listed resources companies since 2001. 33 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - PRINCIPAL ACTIVITIES Principal activities During the financial year, the principal activities of the consolidated entity consisted of: • mining operations at the Tomingley Gold Operation; • exploration and evaluation activities on tenements held by the Group; and • pursuing strategic investments in gold exploration companies. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Result for the year The profit for the consolidated entity, after providing for income tax, amounted to $55,701,000 (30 June 2020: $12,762,000) of which continued operations amounted to $33,567,000 and discontinued operations amounted to $22,134,000. This result included a profit before tax of $57,791,000 (30 June 2020: $30,362,000) in relation to Tomingley Gold Operations. Review of operations Tomingley Gold Operations Tomingley Gold Operations (TGO) is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately 50km southwest of Dubbo in central western New South Wales. The gold processing plant was commissioned in January 2014 and has been operating at the design capacity of 1Mtpa since late May 2014. Mining is based on four gold deposits (Wyoming One, Wyoming Three, Caloma One and Caloma Two). TGO continues to perform well and is processing underground stope material with recovery as expected. The cutback in the northeast of the Caloma pit is mining ore. Reconciliations of mined material show that the grade mined is higher than forecast. Gold recovery of 88.8% for the period was in-line with expectations (2020: 88.1%). Average grade milled increased to 2.14g/t in the current year (2020: 1.45g/t). In the prior year, the average grade milled was lower, as a result of processing both medium and low-grade stockpiles as the operation transitioned from open cut to underground. Production for the period was 56,958 ounces of gold (2020: 33,507 ounces of gold), with all in sustaining costs of $1,320 per ounce (2020: $1,357 per ounce). The average sales price achieved for the year increased to $2,286 per ounce (2020: $2,199 per ounce). Gold sales of 55,929 ounces (2020: 32,995 ounces) resulted in sales revenue of $127,833,000 (2020: $72,549,000). Bullion on hand increased by 1,015 ounces from 30 June 2020 to 3,246 ounces (fair value of $7,633,000 at year end). Alkane’s intention is to develop the Roswell and San Antonio deposits, which are located 3 – 5km south of Tomingley, as soon as possible. Alkane has commenced the approval process for this development. Consultations with regulators, landholders and other stakeholders, as well as on ground assessments needed for the Environmental Impact statement, continue. The Environmental Impact Statement is being prepared for submission in the current September quarter. The expected timing of Project Approval is mid-2022. 34 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - REVIEW OF OPERATIONS The table below summarises the key operational information: TGO Production Unit September Quarter 2020 December Quarter 2020 March Quarter 2021 June Quarter 2021 FY 2021 FY 2020 Open cut Waste mined Ore mined Stripping Ratio Grade mined(2) Underground Ore mined Grade mined Ore Milled Head Grade Gold Recovery Gold poured(3) Revenue summary Gold sold Average price realised Gold revenue Cost summary Surface works Mining Processing Site support C1 cash cost(1) Royalties Sustaining capital Gold in circuit movement Rehabilitation Corporate All in sustaining cost(1) Bullion on hand Stockpiles BCM's Tonnes Ratio g/t - - - - 390,159 2,755 243.5 0.40 429,443 10,953 67.4 1.15 399,177 1,218,779 57,638 71,347 13.7 0.56 32.8 0.64 50,473 5,331 9.5 2.37 Tonnes 181,831 180,642 169,444 174,971 706,889 335,879 g/t 1.85 3.41 2.88 2.37 2.63 2.37 Tonnes 254,423 235,217 237,455 201,437 928,531 838,743 g/t % 1.56 88.4 2.50 88.1 2.40 91.0 2.16 87.1 2.14 88.8 1.45 88.1 Ounces 11,499 15,919 16,040 13,500 56,958 33,507 Ounces A$/Oz A$M A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz A$/Oz Ounces 11,945 2,261 27.0 16,613 2,302 38.2 15,844 2,203 34.9 11,526 2,401 27.7 55,929 2,286 127.8 32,995 2,199 72.5 - 606 446 126 1,178 63 183 66 19 66 1,575 1,781 - 336 290 94 720 71 326 25 19 41 1,201 1,083 96,029 1.43 4,403 - 389 295 119 803 70 172 (103) 19 35 997 1,275 83 545 398 174 1,199 89 540 (243) 22 62 1,669 3,246 17 452 347 125 940 73 296 (58) 20 49 50 272 517 158 997 56 205 - 26 73 1,320 3,246 1,357 2,231 41,487 1.23 1,811 71,938 0.95 2,856 71,938 207,414 0.95 2,856 0.83 5,566 Ore for immediate milling Tonnes 139,025 Stockpile grade(2) Contained gold g/t Ounces 0.74 3,319 (1) All in sustaining cost (AISC) comprises all site operating costs, royalties, mine exploration, sustaining capex, sustaining mine development and an allocation of corporate costs on the basis of ounces sold since 1 July 2020 (AISC was prepared on a production basis using gold poured ounces in the previous period). AISC does not include share-based payments, production incentives or net realisable value provision for product inventory. (2) Based on the resource models. (3) Represents gold sold at site, not adjusted for refining adjustments which results in minor differences between the movements in bullion on hand and the difference between production and sales. 35 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - REVIEW OF OPERATIONS Tomingley Gold Extension Project An extensive exploration program focused on the immediate area to the south of the Tomingley mine has continued as part of the plan to source additional ore feed, either at surface or underground. On the back of strong results from exploration and resource drilling to the immediate south of Tomingley, the Company is expediting the process to move to mine development. Alkane has commenced the approval process for development of the Roswell and San Antonio deposits located to the immediate south of TGO. Consultations with regulators, landholders and other stakeholders, as well as on ground assessments needed for the Environmental Impact Statement, continue. Feasibility plans that include both open cut and underground mines at Roswell and San Antonio have been prepared and released as part of a Tomingley Life of Mine Plan, that shows extension of the mine life beyond 2030 (on approval). Exploration During the year the exploration program continued to focus on increasing the drilling density within the Roswell and San Antonio prospects, as well as testing strike and depth extensions. Roswell infill drilling is complete and an Indicated Resource has been released. Further drilling around the Roswell resource continues. At San Antonio an Indicated Resource has also been released. Regional drilling of the San Antonio to Peak Hill corridor focused on stratigraphy south of the El Paso target where earlier exploration had returned encouraging results. Northern Molong Porphyry Project (gold-copper) Initial drill testing of the Boda prospect was completed during the year and results demonstrated continuity to the south of the broad gold-copper mineralised alteration envelope. A major RC and diamond core drilling program totalling over 30,000 metres has been completed, with received results released. A further program continues around Boda, with reconnaissance work also underway throughout the NMPP. Corporate In accordance with its strategy of investing part of its cash balance in junior gold mining companies and projects that meet its investment criteria, namely potential investments that have high exploration potential and/or require near term development funding, the Company continues to hold its investment in gold exploration and development companies Calidus Resources Ltd (ASX:CAI) and Genesis Minerals Ltd (ASX:GMD). 36 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Significant changes in the state of affairs On 20 July 2020, Australian Strategic Materials Ltd (ASM) was demerged with its cash reserves and no bank debt. All interests in the Dubbo Project and associated assets (including land and water rights), together with ASM’s investment in South Korean metals technology company RMR Tech Corporation, was 100% owned by ASM following the demerger. A net gain of $22,134,000 has been recognised on demerger of the ASM business. On 17 July 2020, Alkane Resources Ltd and Australian Strategic Materials Ltd entered into a restructure deed as part of the demerger to capitalise $113,000,000 and forgive $4,731,000 of loans to Australian Strategic Materials Ltd. In early 2020 with the outbreak of Coronavirus Disease 2019 (“COVID-19” or “the coronavirus”), unprecedented measures put in place by the Australian Government, as well as governments across the globe, to contain the coronavirus have had a significant impact on the economy. Management continues to maintain high vigilance around COVID-19. As at the date these financial statements were authorised, Management was not aware of any material adverse effects on the financial statements as a result of the coronavirus. There were no other significant changes in the state of affairs of the consolidated entity during the financial year. Matters subsequent to the end of the financial year No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect, the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Likely developments and expected results of operations The Group intends to continue efforts at TGO to be focused on continued safe operation of the underground mine and exploration, evaluation and project approval of several of its other tenements to secure additional ore feed. Exploration and evaluation activities will continue on existing tenements, and opportunities to expand the Group's tenement portfolio will be pursued with a view to ensuring there is a pipeline of development opportunities for consideration. Refer to the Review of Operations for further detail on planned developments. Environmental regulation The Group is subject to significant environmental regulation in respect of its exploration and evaluation, development and mining activities. The Group aspires to the highest standards of environmental management and insists its staff and contractors maintain that standard. A significant environmental incident is considered to be one that causes a major impact or impacts to land biodiversity, ecosystem services, water resources or air, with effects lasting greater than one year. There were no significant environmental incidents reported at any of the Group's operations. 37 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - MEETINGS OF DIRECTORS Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') and of each board committee held during the year ended 30 June 2021, and the number of meetings attended by each director, were: Meetings of committees Meetings of directors Audit Committee Risk Committee Remuneration and Nomination Committee* Attended Held Attended Held Attended Held Attended Held I J Gandel A D Lethlean D I Chalmers G Smith N Earner 12 12 12 12 12 12 12 12 12 12 2 2 - 2 - 2 2 - 2 - - 2 - 2 2 - 2 - 2 2 - - - - - - - - - - Held: represents the number of meetings held during the time the director held office or was a member of the committee during the year. *While the Remuneration Committee did not formally meet during the year, informal discussions between committee members were undertaken. The informal discussions resulted in recommendations which were duly implemented. Remuneration report The directors are pleased to present Alkane Resources Ltd's remuneration report which sets out remuneration information for the company's Non-Executive Directors, Executive Directors and other Key Management Personnel ('KMP'). The report contains the following sections: (a) Key Management Personnel (‘KMP’) disclosed in this report (b) Remuneration governance (c) Use of remuneration consultants (d) Executive remuneration policy and framework (e) Statutory performance indicators (f) Non-Executive Director remuneration policy (g) Voting and comments made at the Company's 2020 Annual General Meeting (h) Details of remuneration (i) Service agreements (j) Details of share-based payments and performance against key metrics (k) Shareholdings and share rights held by Key Management Personnel (l) Other transactions with Key Management Personnel 38 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT (a) Key Management Personnel ('KMP') disclosed in this report Non-Executive and Executive Directors I J Gandel N P Earner A D Lethlean D I Chalmers G M Smith Other Key Management Personnel J Carter S Parsons Chief Financial Officer/ Joint Company Secretary Executive General Manager - Operations (commenced this role 19 April 2021) (b) Remuneration governance The Company has established a Remuneration Committee to assist the Board in fulfilling its corporate governance responsibilities with respect to remuneration by reviewing and making appropriate recommendations to the Board on: • the overall remuneration strategy and framework for the Company; • the operation of the incentive plans which apply to the executive team, including the appropriateness of key performance indicators and performance hurdles; and • the assessment of performance and remuneration of the Executive Directors, Non-Executive Directors and other Key Management Personnel. The Remuneration Committee is a committee of the Board and at the date of this report the members were I J Gandel, A D Lethlean and G M Smith, all of whom were non-executive (with Mr Smith and Mr Lethlean being independent). Their objective is to ensure that remuneration policies and structures are fair, competitive and aligned with the long-term interests of the Company and its shareholders. The Company's annual Corporate Governance Statement provides further information on the role of this committee, and the full statement is available at URL: http://www.alkane.com.au/company/governance. (c) Use of remuneration consultants The Remuneration Committee of the Board commissioned Godfrey Remuneration Group to assist in industry benchmarking review to ensure remuneration remains market competitive. 39 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT (d) Executive remuneration policy and framework In determining executive remuneration, the Board (or the Remuneration Committee as its delegate) aims to ensure that remuneration practices: • are competitive and reasonable, enabling the Company to attract and retain key talent while building a diverse, sustainable and high achieving workforce; • are aligned to the Company’s strategic and business objectives and the creation of shareholder value; • promote a high-performance culture recognising that leadership at all levels is a critical element in this regard; • are transparent; and • are acceptable to shareholders. The executive remuneration framework has three components: • Total Fixed Remuneration (TFR); • Short-Term Incentives (STI); and • Long-Term Incentives (LTI). (i) Executive remuneration mix The Company has in place executive incentive programs which provide the mechanism to place a material portion of executive pay "at risk". (ii) Total fixed remuneration A review is conducted of remuneration for all employees and executives on an annual basis, or as required. The Remuneration Committee is responsible for determining Executive TFR. (iii) Incentive arrangements The Company may utilise both short-term and long-term incentive programs to balance the short and long-term aspects of business performance, to reflect market practice, to attract and retain key talent and to ensure a strong alignment between the incentive arrangements of executives and the creation and delivery of shareholder return. Performance rights have been used in the current period to incentivise the Company’s executives and KMP. The performance rights plan was approved by shareholders at the 2016 Annual General Meeting. Short-term incentives The executives have the opportunity to earn an annual Short-Term Incentive (STI) if predefined targets are achieved. The executive STI is provided in the form of rights to ordinary shares in the Company that vest at the end of the 12-month period, provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each. The executives do not receive any dividends and are not entitled to vote in relation to the rights to shares during the vesting period. If an executive ceases to be employed by the Group within the performance period (the service condition), the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis. STI awards for the executive team in the 2021 financial year were based on the scorecard measures and weighting as disclosed below. Targets were approved by the Remuneration Committee through a rigorous process to align to the Company's strategic and business objectives. 40 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT Performance metrics Production performance at TGO Cost performance at TGO Safety Performance, Environment & Social Licence Planning, Approval SAR Resource Growth Weighting 25% 25% 25% 10% 15% The committee has the discretion to adjust short-term incentives downwards in light of unexpected or unintended circumstances. Long-term incentives The LTI is designed to focus executives on delivering long-term shareholder returns. Eligibility for the plan is restricted to executives and nominated senior managers, being the employees who are most able to influence shareholder value. Under the plan, participants have an opportunity to earn up to 100% of their total fixed remuneration (calculated at the time of approval by the Remuneration Committee) comprised of performance rights. In previous periods, performance rights were granted in two tranches each year. Each tranche of performance rights has separate vesting conditions, being share price growth and company milestone events, with the executives' LTI weighted more heavily to the share price growth tranche. The LTI vesting period is three years. In FY2021 LTI's were issued with vesting conditions linked to total shareholder return with a vesting period of three years. The performance rights will be provided in the form of rights to ordinary shares in Alkane Resources Ltd that will vest at the end of the three-year vesting period, provided the predefined targets are met. On vesting, the rights automatically convert into one ordinary share each. Participants do not receive any dividends and are not entitled to vote in relation to the rights to shares prior to the vesting period. If a participant ceases to be employed by the Group within this period, the rights will be forfeited, except in limited circumstances that are approved by the Board on a case-by-case basis. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan. Targets are generally reviewed annually and set for a forward three-year period. Performance-related targets reflect factors such as the expectations of the Group’s business plans, the stage of development of the Group’s projects and the industry business cycle. The most appropriate target benchmark will be reviewed each year prior to the granting of rights. The Remuneration Committee is responsible for determining the LTI to vest based on an assessment of whether the predefined targets are met. To assist in this assessment, the committee receives detailed reports on performance from management. The committee has the discretion to adjust LTI's downwards in light of unexpected or unintended circumstances. (iv) Clawback policy for incentives Under the terms and conditions of the Company’s incentive plan offer and the plan rules, the Board (or the Remuneration Committee as its delegate) has discretion to determine forfeiture of unvested equity awards in certain circumstances (e.g. unlawful, fraudulent or dishonest behaviour or serious breach of obligations to the Company). All incentive offers and final outcomes are subject to the full discretion of the Board (or the Remuneration Committee as its delegate). (v) Share trading policy The trading of shares issued to participants under any of the Company’s employee share plans is subject to, and conditional upon, compliance with the Company’s employee share trading policy. Executives are prohibited from entering into any hedging arrangements over unvested rights under the Company’s employee incentive plans. The Company would consider a breach of this policy as gross misconduct which may lead to disciplinary action and potentially dismissal. 41 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT (e) Statutory performance indicators The Company aims to align executive remuneration to the Company’s strategic and business objectives and the creation of shareholder wealth. The table below shows measures of the Group’s financial performance over the last five years as required by the Corporations Act 2001. However, these are not necessarily consistent with the specific measures in determining the variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration rewarded. Revenue ($'000) Profit/(loss) for the year attributable to owners ($'000) Basic earnings/(loss) per share (cents) Dividend payments ($'000) Share price at period end (cents) Total KMP incentives as a percentage of profit/(loss) for the year (%) (f) Non-Executive Director remuneration policy 30 June 2021 127,833 55,701 5.6 - 1.15 2.1% 30 June 2020 30 June 2019 30 June 2018 30 June 2017 74,397 12,762 95,852 23,293 129,974 117,792 24,471 (28,937) 2.4 - 1.21 8.3% 4.6 - 0.46 3.3% 4.8 - 0.23 3.0% (5.8) - 0.24 0.3% On appointment to the Board, all Non-Executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration, relevant to the office of Director. Non-Executive Directors receive a Board fee and fees for chairing or participating on Board Committees. Non-Executive Directors appointed do not receive retirement allowances. Fees provided are inclusive of superannuation and the Non- Executive Directors do not receive performance-based pay. Fees are reviewed annually by the Remuneration Committee, taking into account comparable roles and market data obtained from independent data providers. The maximum annual aggregate directors’ fee pool limit (inclusive of applicable superannuation) is $700,000 and was approved by shareholders at the Annual General Meeting on 16 May 2013. 42 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT Details of Non-Executive Director fees in the year ended 30 June 2021 are as follows: Base fees Chair* Other Non-Executive Directors* Additional fees* Audit Committee - chair Audit Committee - member Remuneration Committee - chair Remuneration Committee - member $ per annum 191,000 95,000 12,500 7,500 12,500 7,500 For services in addition to ordinary services, Non-Executive Directors may charge per diem consulting fees at the rate specified by the Board from time to time for a maximum of four days per month over a 12-month rolling basis. Any fees in excess of this limit are to be approved by the Board. *Remuneration for directors changed on 1 October 2020. From 1 July 2020 until 30 September 2020 the Chair base fee was $129,400 and other Non-Executive Directors base fee was $77,600. From 1 July 2020 to 30 September 2020 the committee fees were for chair $7,800 and for member $5,200. (g) Voting and comments made at the Company's 2020 Annual General Meeting The Company received more than 99% of “yes” votes on its remuneration report for the financial year ended 30 June 2020. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. (h) Details of remuneration The following table shows details of the remuneration expense recognised for the directors and the KMP of the Group for the current and previous financial year, measured in accordance with the requirements of the accounting standards. 30 June 2021 Executive Directors N P Earner D I Chalmers Other KMP D Woodall(g) A MacDonald(g) J Carter S Parsons(f) Total Executive Directors and other KMP Total NED remuneration(e) Total KMP remuneration expense 576,942 309,105 26,344 28,769 362,300 87,586 1,391,046 376,661 1,767,707 Fixed remuneration Cash Salary(a) Annual and long service leave(b) Post- employment benefits(c) $ $ $ Variable Remuneration Rights to deferred shares(d) $ Total $ 1,335,675 621,915 28,847 60,867 649,450 143,622 28,234 142,783 - - 17,546 11,105 199,668 - 23,058 21,694 2,503 2,660 25,000 5,065 79,980 24,965 707,441 148,333 - 29,438 244,604 39,866 1,169,682 2,840,376 - 401,626 199,668 104,945 1,169,682 3,242,002 43 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT 30 June 2020 Executive Directors N P Earner D I Chalmers Other KMP D Woodall(g) A MacDonald(g) D Wilkins J Carter Total Executive Directors and other KMP Total NED remuneration(e) Total KMP remuneration expense Fixed remuneration Cash Salary(a) Annual and long service leave(b) Post- employment benefits(c) $ $ $ Variable Remuneration Rights to deferred shares(d) $ Total $ 484,142 244,645 121,180 359,136 309,049 345,000 1,863,152 300,419 2,163,571 28,214 29,443 10,720 15,566 - 17,792 101,735 - 101,735 23,058 19,255 11,512 23,023 - 25,000 101,848 20,589 122,437 748,241 90,312 1,283,655 383,655 - 104,770 - 119,548 1,062,871 - 1,062,871 143,412 502,495 309,049 507,340 3,129,606 321,008 3,450,614 (a) Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6. (b) Other long-term benefits as per Corporations Regulation 2M.3.03(1) Item 8. The amounts disclosed in this column represent the movements in the associated provisions. They may be negative where a KMP has taken more leave than accrued during the year. (c) Post-employment benefits are provided through superannuation contributions. (d) Rights to deferred shares granted under the executive STI and LTI schemes are expensed over the performance period, which includes the year to which the incentive relates and the subsequent vesting period of the rights. Rights to deferred shares are equity-settled share-based payments as per the Corporations Regulations 2M.3.03(1) Item11. These include negative amounts for the rights forfeited during the year. Details of each grant of share right are provided in the table in section (j). Shareholder approval was received in advance to the grant of share rights where required. (e) Refer below for details of Non-Executive Directors' (NED) remuneration. (f) Mr Parsons was appointed an Executive General Manager - Operations on 19 April 2021. Before this appointment he was the Group's General Manager Operations. (g) D Woodall and A MacDonald ceased to be KMP after the demerger of ASM from Alkane Resources on the 20th of July 2020. 30 June 2021 Non-Executive Directors I J Gandel A D Lethlean G M Smith Total Non-Executive Directors 30 June 2020 Non-Executive Directors I J Gandel A D Lethlean G M Smith Total Non-Executive Directors Cash salary and fees $ Superannuation $ Total $ 163,333 99,452 113,876 376,661 130,045 82,366 88,008 300,419 15,517 9,448 - 24,965 12,355 8,234 - 20,589 178,850 108,900 113,876 401,626 142,400 90,600 88,008 321,008 Remuneration for the directors was changed on 1 October 2020. Refer to footnote in section (f) for details. 44 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT The relative proportions of remuneration expense recognised during the year that are linked to performance and those that are fixed are as follows: Fixed remuneration At risk - LTI At risk - STI 2021 % 2020 % 2021 % 2020 % 2021 % 2020 % Executive Directors of Alkane Resources Ltd D I Chalmers N P Earner Other Key Management Personnel J Carter S Parsons 76% 47% 62% 72% 76% 42% 76% - 14% 40% 26% 11% 24% 58% 24% - 10% 13% 12% 17% - - - - D Wilkins was a KMP in the prior year. However, he is not involved in decision-making activities regarding overall running of the Group in the current year. He is not an employee of the Company and therefore not eligible to participate in incentive programs. Instead, a fee for services was paid as set out previously. Mr Parsons was appointed an Executive General Manager - Operations on 19 April 2021. (i) Service agreements Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements are as follows: Name and Position Term of agreement TFR(1) Termination payment(2) D I Chalmers - Technical Director Ongoing commencing 1 September 2017 $330,800 6 months N Earner - Managing Director J Carter - Chief Financial Officer Ongoing commencing 1 September 2017 $600,000 see note 2 below Ongoing commencing 1 October 2018 $388,725 S Parsons - Executive General Manager - Operations Ongoing commencing 1 October 2015 $443,475 3 months 1 month (1) Total Fixed Remuneration (TFR) is for the year ended 30 June 2021, and is inclusive of superannuation, but does not include long service leave accruals. TFR is reviewed annually by the Remuneration Committee. (2) Specified termination payments are within the limits set by the Corporations Act 2001. The termination benefit provision for the Managing Director was approved at the Annual General Meeting on 29 November 2017. Mr Earner may resign with 3 months' notice; or Alkane may terminate the Executive Employment agreement with 3 months' notice; or Where Mr Earner resigns as a result of a material diminution in the position, Mr Earner will be entitled to payment in lieu of 12 months' notice and short-term incentives and long term-incentives granted or issued but not yet vested. 45 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT (j) Details of share-based payments and performance against key metrics Details of each grant of share rights affecting remuneration in the current or future reporting period are set out below. Date of grant Number of rights granted Fair value of share rights at the date of grant $ Share rights at fair value $ Performance period end Share-based payment expense current year $ Name I Chalmers FY2019 LTI - Performance Rights - Tranche 1 21/11/2018 305,785 FY2019 LTI - Performance Rights - Tranche 2 21/11/2018 65,525 FY2020 LTI - Performance Rights - Tranche 1 22/11/2019 198,624 FY2020 LTI - Performance Rights - Tranche 2 22/11/2019 42,562 FY2021 LTI - Performance Rights 11/11/2020 174,903 0.050 0.215 0.419 0.623 0.748 15,289 16/07/2020 14,088 16/07/2020 83,223 30/06/2022 26,519 16/07/2020 130,827 31/08/2023 FY2021 STI - Performance Rights 11/11/2020 - - 101,721 11/11/2021 679,724 30/06/2022 226,575 N Earner FY2019 LTI - Performance Rights - Tranche 1 21/11/2018 2,497,245 FY2019 LTI - Performance Rights - Tranche 2 21/11/2018 535,124 FY2020 LTI - Performance Rights - Tranche 1 22/11/2019 1,622,252 FY2020 LTI - Performance Rights - Tranche 2 22/11/2019 FY2021 LTI - Performance Rights FY2021 STI - Performance Rights Other Key Management Personnel J Carter 11/11/2020 11/11/2020 347,625 687,346 - FY2019 LTI - Performance Rights - Tranche 1 18/10/2018 1,841,591 FY2019 LTI - Performance Rights - Tranche 2 18/10/2018 FY2020 LTI - Performance Rights - Tranche 1 02/09/2019 FY2020 LTI - Performance Rights - Tranche 2 02/09/2019 FY2021 LTI - Performance Rights FY2021 STI - Performance Rights 11/11/2020 11/11/2020 S Parsons FY2020 LTI - Performance Rights - Tranche 1 02/09/2019 FY2021 LTI - Performance Rights FY2021 STI - Performance Rights 11/11/2020 11/11/2020 A MacDonald (01/07/18-20/07/2020) FY2019 LTI - Performance Rights - Tranche 1 18/10/2018 FY2019 LTI - Performance Rights - Tranche 2 18/10/2018 394,626 604,146 129,460 205,530 - 306,451 214,214 - 976,601 139,514 0.050 0.215 0.419 0.623 0.748 124,862 16/07/2020 115,052 16/07/2020 216,590 16/07/2020 514,135 31/08/2023 - 276,750 11/11/2021 0.059 0.220 0.236 0.406 0.748 108,654 16/07/2020 86,818 16/07/2020 142,578 30/06/2022 52,596 16/07/2020 153,736 31/08/2023 - 119,533 11/11/2021 0.236 0.748 72,322 30/06/2022 160,232 31/08/2023 - 124,584 11/11/2021 0.059 0.220 57,619 16/07/2020 30,693 16/07/2020 5,096 3,131 27,741 11,786 36,202 64,377 41,621 25,567 96,262 142,267 175,149 36,218 19,293 47,526 23,376 42,541 75,650 4,755 10,536 24,575 19,206 10,231 (a) The value at grant date for share rights granted during the year as part of remuneration is calculated in accordance with AASB 2 Share-Based Payments. Differences will arise between the number of share rights at fair value in the table above and the STI and LTI percentages mentioned in section (d) due to different timing of valuation of rights as approved by the Remuneration Committee and at grant. Refer to note 30 for details of the valuation techniques used for the rights plan. (b) Share rights only vest if performance and service targets are achieved. The determination is usually made at the conclusion of the statutory audit. (c) Shares for the deferred portion of the 2021 STI will be granted on 11 November 2021. The number of shares will depend on the Alkane Resources Ltd share price over the five days prior to the grant date. 46 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT The determination of the number of rights that are to vest or be forfeited during a financial year is made by the Remuneration Committee after the statutory audit has been substantially completed. As such, the actual determination is made after the balance sheet date. Where there are rights that have vested or been forfeited, details will be included in the Remuneration Report as the relevant performance period will conclude at the end of the relevant financial year. Performance against key metrics On 16 July 2020 at the Extraordinary General Meeting in relation to the demerger of the ASM business, Alkane's shareholders also voted on the following changes to long-term incentives. a) all Alkane Performance Rights with a Dubbo Project (DP) performance condition will be cancelled with no consideration payable to the holders of those performance rights; and b) all FY2018 and FY2019 Alkane Performance Rights with a Total Shareholder Return (TSR) performance condition will vest in full, thereby entitling the holder to one Alkane share for each such Alkane Performance Right exercised. The vesting and cancellation of the FY2018 performance rights was reported in the 2020 financial report. The remaining FY2020 LTI Tranche 1 performance targets relate to share price performance growth as per below: TSR compound annual growth rate (CAGR) % Performance rights vesting Less than 10% CAGR Nil Above 10% CAGR up to 15% CAGR Pro rata vesting from 0% - 50% At 15% CAGR 50% Above 15% CAGR up to 30% CAGR Pro rata vesting from 50% - 100% At 30% CAGR 100% The STI performance metrics for the year are detailed in section (d)(iii) of the Remuneration Report. The Company's TSR for FY2021 will be compared to the S&P/ASX All Ordinaries Gold (Sub industry) XGD (Gold Index). TSR and number of performance rights will vest as follows: Shareholder return comparison TSR is less than Gold Index TSR TSR is equal to Gold Index TSR TSR is >5% and <10% to Gold Index TSR TSR is equal to or >10% to Gold Index TSR Proportion of performance rights that vest - 25% 50% 100% 47 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - REMUNERATION REPORT (k) Shareholdings and share rights held by Key Management Personnel Shareholding The number of shares in the Company held during the financial year by each director and other members of Key Management Personnel of the consolidated entity, including their personally related parties, is set out below: Ordinary shares I J Gandel A D Lethlean D I Chalmers N P Earner G Smith D Woodall* A MacDonald* J Carter S Parsons Balance at the start of the year Received as part of remuneration Additions Disposals/ other Balance at the end of the year 136,021,143 720,086 - - 4,671,140 1,016,745 165,000 331,875 35,000 8,462,496 - - 1,460,000 2,013,418 - - 1,841,591 488,300 14,771,363 - - - - - - - - - - - 150,792,506 720,086 5,687,885 (5,000,000) 3,627,496 - 331,875 (35,000) (3,473,418) (1,841,591) - - - (238,300) 250,000 143,404,244 13,822,550 14,771,363 (10,588,309) 161,409,848 *D Woodall and A MacDonald ceased to be KMP after the demerger of ASM from Alkane Resources on 20 July 2020. Performance rights holding The number of performance rights over ordinary shares in the Company held during the financial year by each director and other members of Key Management Personnel of the consolidated entity, including their personally related parties, is set out below: Balance at the start of the year Granted Vested Expired/ forfeited/ other Balance at the end of the year Performance rights over ordinary shares D I Chalmers - Performance rights 612,496 174,903 (305,785) N P Earner - Performance rights J Carter - Performance rights A MacDonald - Performance rights S Parsons - Performance rights 5,002,246 2,969,823 1,185,872 687,346 (2,497,245) 205,530 (1,841,591) - (976,601) (488,300) 965,054 214,214 (108,087) (882,749) (524,086) (209,271) (170,303) 373,527 2,309,598 809,676 - 520,665 10,735,491 1,281,993 (6,109,522) (1,894,496) 4,013,466 On 16 July 2020 at the Extraordinary General Meeting in relation to the demerger of the ASM business, the shareholders also voted for early vesting of the FY2019 Tranche 1, the cancellation of the FY2019 Tranche 2 performance rights, and the cancellation of the FY2020 Tranche 2 performance rights. 48 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - INDEMNITY AND INSURANCE OF OFFICERS (l) Other transactions with Key Management Personnel There were no other transactions with KMP's during the financial year ended 30 June 2021. There were no unissued ordinary shares of Alkane Resources Ltd under performance rights outstanding at the date of this report. This concludes the remuneration report, which has been audited. Indemnity and insurance of officers Alkane Resources Ltd has entered into deeds of indemnity, access and insurance with each of the directors. These deeds remain in effect as at the date of this report. Under the deeds, the Company indemnifies each director to the maximum extent permitted by law against legal proceedings or claims made against or incurred by the directors in connection with being a director of the Company, or breach by the Group of its obligations under the deed. The liability insured is the indemnification of the Group against any legal liability to third parties arising out of any directors’ or officers’ duties in their capacity as a director or officer, other than indemnification not permitted by law. No liability has arisen under this indemnity as at the date of this report. The Group has not otherwise, during or since the financial year, indemnified nor agreed to indemnify an officer of the Group or of any related body corporate, against a liability incurred as such by an officer. During the year the Company has paid premiums in respect of directors' and executive officers' insurance. The contracts contain prohibitions on disclosure of the amount of the premiums and the nature of the liabilities under the policies. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. 49 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - AUDITOR'S INDEPENDENCE DECLARATION Non-audit services The Company may decide to employ the auditor on assignments additional to their statutory audit duties, where the auditor's expertise and experience with the Group is important. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors, in accordance with advice provided by the Audit Committee, are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Auditor's independence declaration A copy of the auditor's independence declaration, as required under section 307C of the Corporations Act 2001, is set out immediately after this directors' report. Rounding of amounts The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the 'rounding-off' of amounts in the directors' report and financial report. Amounts in this report have been rounded off in accordance with that ASIC Legislative Instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar. This report is made in accordance with a resolution of directors. On behalf of the directors N P Earner Managing Director 27 August 2021 Perth 50 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - AUDITOR'S INDEPENDENCE DECLARATION 51 Alkane Resources Annual Report 2021 |FINANCIAL REPORT | DIRECTORS' REPORT - FINANCIAL STATEMENTS Financial Statements Consolidated Financial Statements Consolidated statement of profit or loss and other comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the Consolidated Financial Statements Note 1. Segment information Note 2. Revenue Note 3. Expenses Note 4. Income tax Note 5. Discontinued operations Note 6. Cash and cash equivalents Note 7. Trade and other receivables Note 8. Inventories Note 9. Financial assets at fair value through other comprehensive income Note 10. Other financial assets Note 11. Property, plant and equipment Note 12. Exploration and evaluation Note 13. Investments accounted for using the equity method Note 14. Trade and other payables Note 15. External borrowings Note 16. Provisions Note 17. Issued capital Note 18. Reserves Note 19. Retained profits Note 20. Critical accounting judgements, estimates and assumptions Note 21. Financial risk management Note 22. Capital risk management Note 23. Key management personnel disclosures Note 24. Remuneration of auditors Note 25. Contingent assets Note 26. Contingent liabilities Note 27. Commitments Note 28. Events after the reporting period Note 29. Related party transactions Note 30. Share-based payments Note 31. Earnings per share Note 32. Parent entity information Note 33. Deed of cross guarantee Note 34. Reconciliation of profit after income tax to net cash from operating activities Note 35. Significant accounting policies 52 54 55 56 57 58 59 59 60 64 66 66 67 68 68 69 71 72 72 73 74 75 76 77 77 79 81 82 82 82 82 83 84 84 84 86 87 89 89 90 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - FINANCIAL STATEMENTS These financial statements are consolidated financial statements for the Group consisting of Alkane Resources Ltd and its subsidiaries. The financial statements are presented in the Australian currency. Alkane Resources Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Alkane Resources Ltd Level 4, 66 Kings Park Road West Perth WA 6005 The financial statements were authorised for issue by directors on 27 August 2021. The directors have the power to amend and reissue the financial statements. All press releases, financial reports and other information are available at the Shareholders’ Centre on our website: www.alkane.com.au 53 Alkane Resources Annual Report 2021 |FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2021 Note 2021 $'000 2020 $'000 Continuing operations Revenue Cost of sales Gross profit Other income Interest income Net gain on derecognition of financial assets Total revenue Expenses Other expenses Finance costs Share of loss of associates accounted for using the equity method Net (loss)/gain on disposal of property, plant and equipment Total expenses Profit before income tax expense from continuing operations Income tax expense Profit after income tax expense from continuing operations Profit/(loss) after income tax benefit from discontinued operations Profit after income tax (expense)/benefit for the year attributable to the owners of Alkane Resources Ltd Other comprehensive income/(loss) Items that will not be reclassified subsequently to profit or loss Changes in the fair value of equity investments at fair value through other comprehensive income, net of tax Items that may be reclassified subsequently to profit or loss Cash flow hedges transferred to profit or loss, net of tax Net change in the fair value of cash flow hedges taken to equity, net of tax Other comprehensive income/(loss) for the year, net of tax Total comprehensive income for the year attributable to the owners of Alkane Resources Ltd Total comprehensive income for the year is attributable to: Continuing operations Discontinued operations Earnings per share for profit from continuing operations attributable to the owners of Alkane Resources Ltd Basic earnings per share Diluted earnings per share Earnings per share for profit/(loss) from discontinued operations attributable to the owners of Alkane Resources Ltd Basic earnings per share Diluted earnings per share Earnings per share for profit attributable to the owners of Alkane Resources Ltd Basic earnings per share Diluted earnings per share 2 3 13 3 3 13 4 5 19 21 21 31 31 31 31 31 31 127,833 (66,341) 61,492 667 94 2,698 131,292 (12,219) (2,835) (870) (957) (16,881) 48,070 (14,503) 33,567 22,134 55,701 2,045 1,017 (459) 2,603 58,304 36,170 22,134 58,304 72,549 (41,940) 30,609 141 625 - 73,315 (10,677) (553) (240) 9 (11,461) 19,914 (6,569) 13,345 (583) 12,762 (251) 278 (487) (460) 12,302 12,885 (583) 12,302 Cents Cents 5.64 5.60 3.72 3.69 9.37 9.28 2.44 2.37 (0.11) (0.10) 2.33 2.26 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 54 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheet As at 30 June 2021 Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Assets of disposal group classified as held for distribution to owners Total current assets Non-current assets Property, plant and equipment Exploration and evaluation Investments accounted for using the equity method Financial assets at fair value through other comprehensive income Deferred tax Derivative financial instruments Other financial assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables External borrowings Provisions Other liabilities Liabilities directly associated with assets classified as held for distribution to owners Total current liabilities Non-current liabilities External borrowings Provisions Deferred tax Other liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained profits Total equity Note 2021 $'000 2020 $'000 6 7 8 5 11 12 13 9 4 10 14 15 16 5 15 16 4 17 18 19 18,991 1,894 11,648 521 33,054 - 33,054 99,411 57,794 15,944 18,471 - - 11,541 203,161 236,215 11,082 3,294 3,660 143 18,179 - 18,179 5,922 15,363 4,737 449 26,471 44,650 48,337 2,940 7,647 172 59,096 139,538 198,634 62,322 32,745 14,385 - 10,947 64 8,614 129,077 327,711 9,425 2,090 2,659 64 14,238 26,565 40,803 4,515 14,873 - 134 19,522 60,325 191,565 267,386 218,079 (65,178) 38,664 191,565 258,876 3,413 5,097 267,386 The above consolidated balance sheet should be read in conjunction with the accompanying notes 55 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of changes in equity For the year ended 30 June 2021 Balance at 1 July 2019 Adjustment for reclassification Balance at 1 July 2019 - restated Profit after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 17) Share-based payments (note 30) Deferred tax recognised in equity Balance at 30 June 2020 Share capital $'000 220,111 (922) 219,189 - - - 39,442 - 245 258,876 Share-based payments reserve $'000 Other reserves $'000 Retained profits $'000 Total equity $'000 2,981 - 2,981 - - - - 1,225 - 4,206 (629) - (629) - (460) (460) - - 296 (793) (8,587) 922 (7,665) 12,762 - 12,762 213,876 - 213,876 12,762 (460) 12,302 - - - 5,097 39,442 1,225 541 267,386 Share capital $'000 Share-based payments reserve $'000 Other reserves $'000 Retained profits $'000 Total equity $'000 Balance at 1 July 2020 258,876 4,206 (793) 5,097 267,386 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Share issue transaction costs (note 17) Share-based payments (note 30) Capital distribution and demerger dividend (note 5) Transfer of gain on demerger (note 5) Deferred tax recognised in equity Balance at 30 June 2021 - - - (31) 2,577 (43,237) - (106) 218,079 - - - - (893) - - - 3,313 - 3,676 3,676 - - (92,435) 22,134 (1,073) (68,491) 55,701 - 55,701 - - - (22,134) - 38,664 55,701 3,676 59,377 (31) 1,684 (135,672) - (1,179) 191,565 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 56 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | DIRECTORS' REPORT - CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of cash flows For the year ended 30 June 2021 Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers (inclusive of GST) Interest received Finance costs paid Royalties and selling costs Other receipts Net cash from operating activities Cash flows from investing activities Payments for investments Payments for property, plant and equipment and development expenditure Proceeds from disposal of property, plant and equipment Payments for exploration expenditure Payments for security deposits Purchase of biological assets Proceeds from the sale of biological assets Transaction costs relating to ASM demerger Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Cost of share issue Proceeds from borrowings Repayment of borrowings Principal elements of lease payment Net cash from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Less cash classified as held for distribution to owners at the beginning of the period Cash and cash equivalents at the end of the financial year Note 2021 $'000 2020 $'000 128,035 (51,879) 76,156 99 (1,614) (4,047) 522 71,116 (14,664) (59,477) 1,522 (26,642) (2,927) - - (538) (102,726) - (31) 8,150 (5,783) (72) 2,264 (29,346) 66,881 (18,544) 18,991 34 17 17 6 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 72,347 (44,059) 28,288 986 (127) (1,490) 879 28,536 (8,966) (46,122) 1 (20,132) (217) (457) 118 (1,525) (77,300) 40,665 (1,223) 7,885 (1,264) - 46,063 (2,701) 69,582 - 66,881 57 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 1 Note 1. Segment information The consolidated entity is currently with one operating segment: gold operations. The ASM business has been accounted for as discontinued operations since 30 June 2020 and was previously reported in the critical metals segment. Information about this discontinued segment is provided in note 5. The operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the chief operating decision makers) in assessing performance and in determining the allocation of resources. Costs that do not relate to the gold operating segment have been identified as unallocated costs. Corporate assets and liabilities that do not relate to the gold operating segment have been identified as unallocated. The Group has formed a tax consolidation group and therefore tax balances are disclosed under the unallocated grouping. The Group utilises a central treasury function resulting in cash balances being included in the unallocated segment. Gold Operations $'000 Unallocated $'000 Total $'000 127,833 - 127,833 57,791 (21,028) - 3,226 - (17,802) 122,856 (35,618) 87,238 72,549 - 72,549 30,362 (9,072) - 2,203 (147) - (7,016) 77,834 (30,890) 46,944 - 94 94 12,413 (226) (1,331) - (14,503) (16,060) 113,359 (9,032) 104,327 - 625 625 (10,448) (79) (329) - - (6,569) (6,977) 110,339 (2,870) 107,469 127,833 94 127,927 70,204 (21,254) (1,331) 3,226 (14,503) (33,862) 236,215 (44,650) 191,565 72,549 625 73,174 19,914 (9,151) (329) 2,203 (147) (6,569) (13,993) 188,173 (33,760) 154,413 30 June 2021 Gold sales to external customers Interest income Segment net profit/(loss) before income tax Segment net profit/(loss) includes the following non-cash adjustments: Depreciation and amortisation Exploration expenditure written off or provided for Inventory product movement and provision Income tax expense Total adjustments Total segment assets Total segment liabilities Net segment assets 30 June 2020 Gold sales to external customers Interest income Segment net profit/(loss) before income tax Segment net profit/(loss) includes the following non-cash adjustments: Depreciation and amortisation Exploration expenditure written off or provided for Inventory product movement and provision Restructuring provision Income tax expense Total adjustments Total segment assets Total segment liabilities Net segment assets 58 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 2 Note 2. Revenue Revenue from continuing operations Gold sales (a) Revenue 2021 $'000 2020 $'000 127,833 72,549 Revenue is recognised when control of a good or service transfers to a customer. Control is generally determined to be when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. (b) Gold Sales Revenue from the sale of goods is recognised when the Group satisfies its performance obligations under its contract with the customer by transferring such goods to the customer's control. Control is generally determined to be when the customer has the ability to direct the use and obtain substantially all of the remaining benefits from that good. Note 3. Expenses Cost of sales Cash costs of production Inventory product movement Depreciation and amortisation Royalties and selling costs (a) Cash costs of production 2021 $'000 2020 $'000 44,393 (3,226) 21,028 4,146 66,341 33,137 (2,203) 9,072 1,934 41,940 Cash costs of production include ore and waste mining costs, processing costs and site administration and support costs. Cash costs of production include $20,401,000 of employee remuneration benefits (2020: $13,085,000). (b) Inventory product movement Inventory product movement represents the movement in the balance sheet inventory ore stockpile, gold in circuit and bullion on hand. Refer to note 8 for further details on the Group's accounting policy for inventory. 59 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4 (c) Inventory product provision for net realisable value Inventory must be carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs to complete processing and to make a sale. The net realisable value provision equals the decrement between the net realisable value and the carrying value before provision. Refer to note 8 for further details on the Group's accounting policy for inventory. 2021 $'000 2020 $'000 2,363 3,836 1,684 1,881 - 1,331 751 226 147 12,219 2021 $'000 2020 $'000 408 1,906 521 2,835 3,387 2,361 1,225 2,321 147 329 660 79 168 10,677 177 317 59 553 2021 $'000 2020 $'000 - - 14,503 - 14,503 6,569 (248) 6,321 Other expenses Corporate administration Employee remuneration and benefits expensed Share-based payments Professional fees and consulting services Restructuring provision Exploration expenditure provided for or written off Directors' fees and salaries expensed Depreciation Non-core project expenses (d) Finance costs Finance costs Interest Expense Put Options Other Note 4. Income tax a) Income tax expense Total current tax expense Income tax expense is attributable to: Profit from continuing operations Loss from discontinued operations 60 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4 (b) Reconciliation of income tax expense/(benefit) to prima facie tax payable Profit from continued operations before income tax expense Profit/(loss) from discontinued operations before income tax expense Profit before income tax expense Tax at the Australian tax rate of 30% (2020 - 30%) Tax benefits of deductible equity raising costs Non-deductible share-based payments Non-deductible expenses Non-assessable income Non-assessable gain on disposal of subsidiaries Other deductible expenses Movement in unrecognised temporary differences Over/(under) Provision for Prior Year (c) Deferred tax assets 2021 $'000 2020 $'000 48,070 22,134 70,204 21,061 (116) 505 8 (8) (6,801) (4) (126) (16) 14,503 19,914 (831) 19,083 5,725 (123) 367 112 - - - - 240 6,321 Tax losses $'000 Rehabilitation Provision and assets $'000 Property, plant and equipment $'000 R&D Tax incentive credits $'000 Other $'000 Total $'000 Movements At 1 July 2019 - to profit or loss - direct to equity At 30 June 2020 - 7,065 - 7,065 3,617 (296) - 3,321 16,352 (2,888) - 13,464 1,072 179 - 1,251 1,358 150 541 2,049 22,399 4,210 541 27,150 Recognised deferred tax assets are attributable to: Losses and temporary differences carried forward for continued operations Losses and temporary differences carried forward for discontinued operations 7,065 3,321 12,420 1,251 1,934 25,991 - - 1,044 - 115 1,159 7,065 3,321 13,464 1,251 2,049 27,150 61 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4 Tax losses $'000 Rehabilitation Provision and assets $'000 Property, plant and equipment $'000 R&D Tax incentive credits $'000 Other $'000 Total $'000 Movements At 1 July 2020 - profit or loss - directly to equity - demerger of subsidiaries 7,065 2,343 - - 3,321 331 - - As at 30 June 2021 9,408 3,652 (d) Deferred tax liabilities 13,463 (3,227) - (1,044) 9,192 The balance comprises temporary differences attributable to: Exploration expenditure Property, plant & equipment Other Gross recognised deferred tax liabilities Set-off of deferred tax assets Net recognised deferred tax assets/(liabilities) are attributable to: Losses and temporary differences carried forward for continued operations Losses and temporary differences carried forward for discontinued operations 1,251 180 - - 1,431 2021 $'000 2,050 544 (346) (115) 2,133 27,150 171 (346) (1,159) 25,816 2020 $'000 (36,995) (4,744) (507) (42,246) 27,150 (15,096) 10,947 (26,043) (15,096) (17,314) (11,440) (1,799) (30,553) 25,816 (4,737) (4,737) - (4,737) Exploration Expenditure $'000 Property, plant and equipment $'000 Other $'000 Total $'000 31,168 - 5,827 36,995 9,795 27,200 36,995 36,995 - 7,518 - (27,200) 17,313 - - 4,744 4,744 4,744 - 4,744 4,744 - 6,697 - - 11,441 548 - (41) 507 505 2 507 507 - 459 836 (3) 1,799 31,716 - 10,530 42,246 15,044 27,202 42,246 42,246 - 14,674 836 (27,203) 30,553 Movements At 1 July 2019 Charged/(credited) - to profit or loss At 30 June 2020 Recognised deferred tax liabilities are attributable to: Temporary differences in respect of continued operations Temporary differences in respect of discontinued operations At 1 July 2020 Charged/(credited) - to profit or loss - directly to equity - demerger of subsidiaries At 30 June 2021 62 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 4 (e) Deferred tax recognised directly in equity Relating to equity raising costs Relating to revaluations of investments/financial instruments (f) Unrecognised temporary differences and tax losses Unrecognised tax losses Deductible temporary differences Potential tax benefit at 30% (2020: 30%) 2021 $'000 2020 $'000 106 1,073 1,179 (245) (296) (541) 2021 $'000 2020 $'000 18,378 - 18,378 5,513 18,378 513 18,891 5,667 The potential benefit of carried forward tax losses will only be obtained if taxable income is derived of a nature and amount sufficient to enable the benefit from the deductions to be realised. In accordance with the Group’s policies for deferred taxes, a deferred tax asset is recognised only if it is probable that sufficient future taxable income will be generated to offset against the asset. Determination of future taxable profits requires estimates and assumptions as to future events and circumstances including commodity prices, ore resources, exchange rates, future capital requirements, future operational performance, the timing of estimated cash flows, and the ability to successfully develop and commercially exploit resources. Tax legislation prescribes the rate at which tax losses transferred from entities joining a tax consolidation group can be applied to taxable incomes and this rate is diluted by changes in ownership, including capital raisings. As a result, the reduction in the rate at which the losses can be applied to future taxable incomes, the period of time over which it is forecast that these losses may be utilised has extended beyond that which management considers prudent to support their continued recognition for accounting purposes. Accordingly, no deferred tax asset has been recognised for certain tax losses. Recognition for accounting purposes does not impact the ability of the Group to utilise the losses to reduce future taxable profits. Alkane Resources Ltd and its wholly owned Australian-controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. Deferred tax assets relating to deductible temporary differences can only be recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary difference can be utilised. Recognition for accounting purposes does not impact the ability of the Group to utilise the deductible temporary differences to reduce future taxable profits. 63 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 5 Note 5. Discontinued operations (a) Demerger – ASM ASM Group On 17 June 2020, the Group publicly announced the demerger of Alkane's critical metals and materials business and assets (the ASM Business) from the remainder of Alkane's business. Australian Strategic Materials Ltd (ASM) was admitted to the ASX on 29 July 2020 and will operate the ASM Business; and Alkane will continue to own and operate the remainder of Alkane's business being, principally, its Australian gold business. Following the demerger, Alkane will be an Australian-focused gold company, with existing production from its Tomingley operations and the opportunity to grow its production base through organic exploration and discovery (including the Boda discovery) and through further strategic acquisitions. Corporately, Alkane will continue to have an experienced board and management team, the remainder of its cash position. ASM was demerged with its cash reserves and no bank debt. All interests in the Dubbo Project and associated assets (including land and water rights), together with ASM’s investment in South Korean metals technology company RMR Tech Corporation, has been 100% owned by ASM following the demerger. The Group recognised a net fair gain on demerger as follows: Fair value of ASM demerger(i) Carrying value of net assets of ASM Less transaction costs 30 June 2021 $'000 135,672 (113,000) 22,672 (538) 22,134 (i) Based on the first five trading days after the demerger date volume weighted average price (“VWAP “) of ASM ($1.14) multiplied by the number of ASM shares (119,049,778 ordinary shares). The demerger distribution is accounted for a reduction in equity, split between share capital $43,237,000 and demerger reserve of $92,435,000. The amount treated as a reduction in share capital has been calculated by reference to the market value of Alkanes' shares and the market value of ASMs' shares post demerger. The difference between the fair value of the distribution and the capital reduction amount is the demerger dividend. 64 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 5 (b) Discontinued operation – ASM Financial performance information Discontinued other income Gain on demerger Total other income Share of loss of Joint Venture Professional fees and consulting services General and administration expenses Pastoral company expenses Audit fees Transaction costs Total expenses Profit/(loss) before income tax expense Income tax expense Income tax benefit Gain on disposal after income tax benefit Profit/(loss) after income tax benefit from discontinued operations Carrying amounts of assets and liabilities held for distribution to the owners Cash and cash equivalents Trade and other receivables Consumables Biological assets Investments accounted for using the equity method Property, plant and equipment Exploration and evaluation assets Other non-current assets Total assets Trade and other payables Provisions Deferred tax Total liabilities Net assets 2021 $'000 2020 $'000 - 22,672 22,672 - - - - - (538) (538) 22,134 - - - 22,134 2021 $'000 2020 $'000 - - - - - - - - - - - - - - 1,073 - 1,073 (10) (624) (381) (848) (41) - (1,904) (831) - 248 248 (583) 18,544 233 5 783 1,721 27,567 90,665 20 139,538 344 178 26,043 26,565 112,973 The major classes of assets and liabilities of the ASM Business classified as held for distribution to the owners as at 30 June 2020 were demerged from the consolidated entity on 20 July 2020, thus nil balances on the Alkane balance sheet for the current year. 65 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 6 Cash flows of ASM businesses Operating Investing Financing Cash at the beginning of the period Net cash at the end of the period 2021 $'000 2020 $'000 - - - - - (222) (4,894) (3,308) 26,968 18,544 Accounting policy for discontinued operations A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for distribution to owners and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss. Note 6. Cash and cash equivalents Current assets Cash at bank Reconciliation to cash and cash equivalents at the end of the financial year The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows: Balances as above Cash and cash equivalents - classified as held for distribution by owners Balance as per statement of cash flows 2021 $'000 2020 $'000 18,991 48,337 18,991 - 18,991 48,337 18,544 66,881 Cash at bank at balance date weighted average interest rate was 0.01% (2020: 0.67%). Cash and cash equivalents include cash on hand and deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Note 7. Trade and other receivables Current assets Trade receivables Prepayments GST and fuel tax credit receivable 66 2021 $'000 2020 $'000 43 963 888 1,894 1,057 922 961 2,940 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 8 (i) Classification as receivables Receivables are recognised initially at fair value and then subsequently measured at amortised cost, less provision for credit losses. As at 30 June 2021 the Group has determined that the expected provision for credit losses is not material. In determining the recoverability of a trade or other receivables using the expected credit loss model, the Group performs a risk analysis considering the type and age of outstanding receivables, the creditworthiness of the counterparty, contract provisions, letter of credit and timing of payment. (ii) Fair value of receivables Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value. (iii) Impairment and risk exposure Information about the impairment of receivables, their credit quality and the Group’s exposure to credit risk, foreign currency risk and interest rate risk can be found in note 21. Note 8. Inventories Current assets Ore stockpiles Gold in circuit Bullion on hand Consumable stores 2021 $'000 2020 $'000 1,571 2,398 4,537 3,142 11,648 934 1,940 2,407 2,366 7,647 (i) Assigning costs to inventories Costs are assigned to ore stockpiles, gold in circuit and bullion on hand on the basis of weighted average costs. Inventories must be carried at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. At balance date ore stockpiles, gold in circuit, bullion on hand and consumable stores were carried at cost. No provision was recorded at 30 June 2021 to write down inventories to their recoverable value (2020: $nil). Consumable stores include diesel, explosives and other consumables items. These items are carried at cost. (ii) Amounts recognised in profit or loss Consumable inventories recognised as an expense during the year ended 30 June 2021 amounted to $2,240,000 (2020: $6,920,000). These were included in costs of production. Product inventory movement during the year ended 30 June 2021 amounted to an expense of $3,226,000 (2020: $2,203,000) and is disclosed as part of cost of sales in note 3. 67 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 9 Note 9. Financial assets at fair value through other comprehensive income Non-current assets Listed securities Calidus Resources Ltd (ASX: CAI) Sky Metals Ltd (ASX: SKY) 2021 $'000 2020 $'000 17,811 660 18,471 - - - Calidus Resources Ltd was reclassified from investments accounted for using the equity method during the year. Refer to note 13 for further information. Note 10. Other financial assets Non-current assets Security deposits 2021 $'000 2020 $'000 11,541 8,614 The above deposits are held by financial institutions or regulatory bodies as security for rehabilitation obligations as required under the respective exploration and mining leases or as required under agreement totalling $11,541,000 for the current period (2020: $8,614,000 backed by security deposits). All interest bearing deposits are held in Australian dollars and therefore there is no exposure to foreign currency risk. Please refer to note 21 for the Group’s exposure to interest rate risk. The fair value of other financial assets is equal to its carrying value. 68 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 11 Note 11. Property, plant and equipment Year ended 30 June 2021 Opening cost Additions Transfers between classes Disposals Net movement Closing cost Land and buildings $'000 Plant and equipment $'000 Capital WIP $'000 Mine properties $'000 Total $'000 22,326 - 12,206 (703) 11,503 33,829 90,060 468 11,932 (1,901) 10,499 100,559 1,687 24,662 (24,138) - 524 2,211 205,682 34,963 - - 34,963 240,645 319,755 60,093 - (2,604) 57,489 377,244 Opening accumulated depreciation and impairment - to profit or loss Disposals Net movement Closing accumulated depreciation and impairment Closing net carrying value (12,787) (75,908) (289) - (289) (13,076) 20,753 (6,595) 854 (5,741) (81,649) 18,910 - - - - - (168,738) (257,433) (14,370) - (14,370) (21,254) 854 (20,400) (183,108) (277,833) 2,211 57,537 99,411 Year ended 30 June 2020 Opening cost Additions Transfers between classes Assets classified as held for distribution to owners and other disposals Net movement Closing cost Opening accumulated depreciation and impairment - to profit or loss Assets classified as held for distribution to owners and other disposals Net movement Closing accumulated depreciation and impairment Closing net carrying value Land and buildings $'000 Plant and equipment $'000 Capital WIP $'000 Mine properties $'000 Total $'000 40,379 - 8,403 (26,456) (18,053) 22,326 (12,674) (121) 8 (113) (12,787) 9,539 80,448 - 11,445 (1,833) 9,612 90,060 (73,322) (3,306) 720 (2,586) (75,908) 14,152 3,728 18,873 (20,794) (120) (2,041) 1,687 174,479 30,257 946 - 31,203 205,682 299,034 49,130 - (28,409) 20,721 319,755 - - - - - (162,000) (247,996) (6,738) (10,165) - (6,738) 728 (9,437) (168,738) (257,433) 1,687 36,944 62,322 69 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 11 All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment charges. Historical cost includes: • expenditure that is directly attributable to the acquisition of the items; • direct costs associated with the commissioning of plant and equipment including pre-commissioning costs in testing the processing plant; • where the asset has been constructed by the Group, the cost of all materials used in construction, direct labour on the project and project management costs associated with the asset; and • the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is located. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives as follows: Buildings Plant and equipment Mining properties Office equipment Furniture and fittings Motor vehicles Software units of production units of production units of production 3-5 years 4 years 4-5 years 2-3 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income. Mine properties Mine properties represent the accumulation of all exploration, evaluation and development expenditure incurred by the Group in relation to areas of interest for which the technical feasibility and commercial viability of the extraction of mineral resources are demonstrable. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the mine property only when it is probable that the additional future economic benefits associated with the expenditure will flow to the Group. Otherwise, such expenditure is classified as part of the cost of production. Mine properties are amortised on a units of production basis over the economically recoverable resources of the mine concerned. Commercial production of the underground mine was declared in February 2020. Amortisation of mine properties commenced with commercial production and is being charged using units of production method. 70 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 12 Note 12. Exploration and evaluation Opening balance Expenditure during the year Amounts provided for or written off Exploration and evaluation classified as available for distribution to owners 2021 $'000 2020 $'000 32,745 27,040 (1,991) - 57,794 103,894 17,964 (329) (88,784) 32,745 (a) Amounts recognised in profit or loss Exploration and evaluation costs are carried forward on an area of interest basis. Costs are recognised and carried forward where rights to tenure of the area of interest are current and either: • the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or • 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 exploration and evaluation activities in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are tested for impairment when reclassified to development tangible or intangible assets, or whenever facts or circumstances indicate impairment. An impairment loss is recognised for the amount by which the exploration and evaluation assets carrying amount exceeds their recoverable amount. The recoverable amount is the higher of the exploration and evaluation assets fair value less costs of disposal and their value in use. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine properties under development. No amortisation is charged during the exploration and evaluation phase. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. There may exist, on the Group's exploration properties, areas subject to claim under native title or containing sacred sites or sites of significance to Aboriginal people. As a result, exploration properties or areas within tenements may be subject to exploration or mining restrictions. 71 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 13 Note 13. Investments accounted for using the equity method Non-current assets Investment in associates Reconciliation Reconciliation of the carrying amounts at the beginning and end of the current and previous financial year are set out below: Opening carrying amount Additions OCI Reclassification Closing carrying amount Share of profit/(loss) of equity accounted for investments Share of losses - associates Interests in associates 2021 $'000 2020 $'000 15,944 14,385 14,385 14,663 (109) (12,995) 15,944 7,616 7,110 (341) - 14,385 (870) (240) Interests in associates and joint venture are accounted for using the equity method of accounting. Information relating to the investments that are material to the consolidated entity are set out below: Name Genesis Minerals Ltd (GMD) Calidus Resources Ltd (CAI) Principal place of business / Country of incorporation 2021 % 2020 % Ownership interest Australia Australia 19.84% 9.65% 15.51% 12.99% On 1 April 2021, Alkane’s percentage of holding in Calidus reduced below 10% to a balance of 9.65%, which no longer gives Alkane the right to appoint one nominated director (out of five) to the Board. Calidus was reclassified to financial assets at fair value through other comprehensive income, a $2,698,000 derecognition gain resulted. On 24 October 2019, Nic Earner (Alkane’s Managing Director) was appointed as a non-executive director to the Genesis Board. Alkane’s 20% representation on the Board out of five directors entitles the Company significant influence in policy- making processes including participation in decisions about dividends and other distributions. Note 14. Trade and other payables Current liabilities Trade payables Other payables 72 2021 $'000 2020 $'000 2,760 8,322 11,082 4,588 4,837 9,425 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 15 Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial period which are unpaid. Current trade and other payables are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented in current liabilities unless payment is not due within 12 months from the reporting date. The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature. Note 15. External borrowings Hire purchase liabilities are secured over the assets to which they relate, the carrying value of which exceeds the value of the hire purchase liability. The Group does not hold title to the equipment under the hire purchase pledged as security. Current liabilities External borrowings Non-current liabilities Hire purchase liabilities 2021 $'000 2020 $'000 3,294 5,922 2,090 4,515 Refer to note 21 for further information on financial risk management. Financing arrangements Unrestricted access was available at the reporting date to the following lines of credit: Total facilities Bank overdraft Used at the reporting date Bank overdraft Unused at the reporting date Bank overdraft Accounting policy for borrowings 2021 $'000 2020 $'000 20,000 - 20,000 - - - Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. 73 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 16 Note 16. Provisions Current liabilities Employee benefits Non-current liabilities Employee benefits Rehabilitation (i) Provisions 2021 $'000 2020 $'000 3,660 2,659 232 15,131 15,363 122 14,751 14,873 Provisions are recognised when the Group has a present legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance charges. (ii) Information about individual provisions and significant estimates Employee benefits The provision for employee benefits relates to the Group's liability for long service leave and annual leave. The current portion of this liability includes all of the accrued annual leave. The entire amount of the provision of $2,490,000 (2020: $1,833,000) is presented as current, since the Group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months. Current leave obligations expected to be settled after 12 months 973 595 2021 $'000 2020 $'000 The liability for long service leave not expected to vest within 12 months after the end of the period in which the employees render the related service is recognised in the non-current provision for employee benefits and measured at the present value of expected future payments to be made in respect of services provided up to the end of the reporting period. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on corporate bonds with terms and currencies that match as closely as possible, the estimated future cash outflows. Where the Group does not have an unconditional right to defer settlement for any annual or long service leave owed, it is classified as a current provision regardless of when the group expects to realise the provision. 74 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 17 Rehabilitation and mine closure The Group has obligations to dismantle and remove certain items of property, plant and equipment and to restore and rehabilitate the land on which they sit. A provision is raised for the estimated cost of settling the rehabilitation and restoration obligations existing at balance date, discounted to present value using an appropriate pre-tax discount rate. Where the obligation is related to an item of property, plant and equipment, its cost includes the present value of the estimated costs of dismantling and removing the asset and restoring the site on which it is located. Costs that relate to obligations arising from waste created by the production process are recognised as production costs in the period in which they arise. The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the future cost of performing the work required, the timing of cash flows and the discount rate. An increase in the provision due to the passage of time of was recognised in finance charges in the statement of comprehensive income of $59,000 (2020: $127,000). The provisions are reassessed at least annually. A change in any of the assumptions used to determine the provisions could have a material impact on the carrying value of the provision. Movements in rehabilitation and mine closure provision during the financial year are set out below: Rehabilitation and mine closure Opening balance Additional provision incurred Expenditure during the year Unwinding of discount Change in estimate Note 17. Issued capital 2021 $'000 2020 $'000 14,751 321 - 59 - 15,131 14,456 1,276 (1,881) 127 773 14,751 Ordinary shares - fully paid 595,388,800 580,033,307 218,079 258,876 2021 Shares 2020 Shares 2021 $'000 2020 $'000 75 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 18 Movements in ordinary share capital Details Balance Adjustment for reclassification Share issue Share issue costs Less: Deferred tax credit recognised directly into equity Balance Demerger capital distribution Shares issued on vesting of performance rights Share issue Share issue costs Less: Deferred tax credit recognised directly into equity Balance Ordinary shares Date 1 July 2019 30 June 2020 30 June 2021 Shares $'000 506,096,222 - 73,937,085 - - 580,033,307 - 15,215,584 139,909 - - 595,388,800 220,111 (922) 40,665 (1,223) 245 258,876 (43,237) 2,416 161 (31) (106) 218,079 Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Note 18. Reserves The following table shows a breakdown of the balance sheet line item ‘Reserves’ and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table. Financial assets at fair value through other comprehensive income reserve Hedging reserve - cash flow hedges Share-based payments reserve Demerger reserve 2021 $'000 2020 $'000 1,943 (134) 3,313 (70,300) (65,178) (101) (692) 4,206 - 3,413 Financial assets at fair value through other comprehensive income reserve The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. Amounts are subsequently either transferred to the initial cost of inventory or reclassified to profit or loss as appropriate. 76 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 19 Hedging reserve – cash flow hedges The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge. Share-based payments reserve The reserve is used to recognise the grant date fair value of shares issued to directors and KMP, as well as the grant date fair value of deferred rights granted but not yet vested. Demerger reserve The demerger reserve is used to recognise the gain on ASM demerger and demerger dividend. Refer to note 5 for further details. Note 19. Retained profits Retained profits/(accumulated losses) at the beginning of the financial year Adjustment for reclassification Transfer gain on demerger Accumulated losses at the beginning of the financial year - restated Profit after income tax (expense)/benefit for the year Retained profits at the end of the financial year 2021 $'000 2020 $'000 5,097 - (22,134) (17,037) 55,701 38,664 (8,587) 922 - (7,665) 12,762 5,097 Note 20. Critical accounting judgements, estimates and assumptions The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s accounting policies. Carrying value of non-current assets Non-current assets include capitalised exploration and evaluation expenditures and mine properties. The Group has capitalised significant exploration and evaluation expenditure on the basis either that such expenditure is expected to be recouped through future successful development (or alternatively sale) of the areas of interest concerned or on the basis that it is not yet possible to assess whether it will be recouped and activities are planned to enable that determination. The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration asset through sale. The future recoverability of mine properties is dependent on the generation of sufficient future cash flows from operations (or alternately sale). Factors that could impact the future recoverability of exploration and evaluation and mine properties include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices and exchange rates. 77 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 20 Estimates of recoverable quantities of resources and reserves also include assumptions requiring significant judgment as detailed in the resource and reserve statements. An impairment review is undertaken to determine whether any indicators of impairment are present. The Group has not recorded an impairment charge or reversal against either the gold operations cash generating units in the current financial year. Depreciation of property, plant and equipment Non-current assets include property, plant and equipment. The Group reviews the useful lives of depreciable asset at each reporting date or when there is a change in the pattern in which the asset's future economic benefits are expected to be consumed, based on the expected utilisation of the assets. Depreciation and amortisation are calculated using the units of production method based on ounces of gold produced. Rehabilitation and mine closure provisions These provisions represent the discounted value of the present obligation to restore, dismantle and rehabilitate certain items of property, plant and equipment and to rehabilitate exploration and mining leases. The discounted value reflects a combination of management's assessment of the nature and extent of the work required, the future cost of performing the work required, the timing of cash flows and the discount rate. Changes to one or more of these assumptions is likely to result in a change to the carrying value of the provision and the related asset or a change to profit and loss in accordance with the group's accounting policy stated in note 16. Net realisable value and classification of inventory The Group's assessment of the net realisable value and classification of its inventory requires the use of estimates, including the estimation of the relevant future commodity or product price, future processing costs and the likely timing of sale. Share-based payments The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value for share appreciation rights and performance rights component tranche 1 is determined with the assistance of an external valuer. The number of performance rights issued under the long-term incentive plan tranche 2 component are adjusted to reflect management’s assessment of the probability of meeting the targets and service condition. The related assumptions are set out in note 30. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. Income tax The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made. In addition, the Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority against which the unused tax losses can be utilised. Utilisation of the tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped. Refer to note 4 for the current recognition of tax losses. 78 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 21 Exploration and evaluation costs Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest. Factors that could impact the future commercial production at the mine include the level of reserves and resources, future technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. Where economic recoverable reserves for an area of interest have been identified, and a decision to develop has occurred, capitalised expenditure is classified as mine development. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which the determination is made. Note 21. Financial risk management Financial risk management objectives The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The Group uses derivative financial instruments including gold forward and gold put option contracts to mitigate certain risk exposures. This note presents information about the Group's exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks and mitigating strategies. (a) Market risk (i) Foreign currency risk The Group's sales revenue for gold are largely denominated in US dollars and the majority of operating costs are denominated in Australian dollars, hence the Group's cash flow is significantly exposed to movement in the A$:US$ exchange rate. The Group mitigates this risk through the use of derivative instruments, including but not limited to a combination of Australian dollar denominated gold forward contracts and put options to hedge a portion of future gold sales. The Australian dollar denominated gold forward contracts are entered into and continue to be held for the purpose of physical delivery of gold bullion. As a result, the contracts are not recorded in the financial statements. Refer to notes 27 for further information. (ii) Commodity price risk The Group's sales revenues are generated from the sale of gold. Accordingly, the Group's revenues are exposed to commodity price fluctuations, primarily gold. The Group mitigates this risk through the use of derivative instruments, including but not limited to Australian dollar denominated gold forward contracts. 79 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 21 (iii) Interest rate risk The Group's main interest rate risk arises through its cash and cash equivalents and other financial assets held within financial institutions. The Group minimises this risk by utilising fixed rate instruments where appropriate. Summarised market risk sensitivity analysis: Interest rate risk Impact on profit/(loss) after tax 30 June 2021 30 June 2020 +100BP $000 -100BP $000 Carrying amount $000 +100BP $000 -100BP $000 133 - 79 - 212 (133) - (79) 48,337 2,028 8,614 - (9,425) (212) - 338 - 60 - 399 (338) - (60) - (399) Carrying amount $000 18,991 43 11,541 (19,956) - Financial assets Cash and cash equivalents Receivables* Other financial assets Financial liabilities Trade and other payables Total increase/(decrease) in profit *The receivables balance excludes prepayments and tax balances which do not meet the definition of financial assets and liabilities. There is no exposure to foreign exchange risk or commodity price risk for the above financial assets and liabilities. (b) Credit risk The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the consolidated entity based on recent sales experience, historical collection rates and forward-looking information that is available. In determining the recoverability of a trade or other receivable using the expected credit loss model, the Group performs a risk analysis considering the type and age of the outstanding receivables, the creditworthiness of the counterparty, contract provisions, letter of credit and timing of payment. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposure to customers, including outstanding receivables and committed transactions. (i) Risk management The Group limits its exposure to credit risk in relation to cash and cash equivalents and other financial assets by only utilising banks and financial institutions with acceptable credit ratings. (ii) Credit quality Tax receivables and prepayments do not meet the definition of financial assets. The Group assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. 80 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 22 (c) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as they fall due. The Group's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Board of Directors monitors liquidity levels on an ongoing basis. The Group's financial liabilities generally mature within 3 months, therefore the carrying amount equals the cash flow required to settle the liability. Financing arrangements Unused borrowing facilities at the reporting date: Bank overdraft 2021 $'000 2020 $'000 20,000 - The facility can be drawn for periods up to 3 months prior to the final repayment date, which is 2 January 2022. The final repayment date may be extended for a further 12 months, upon request by the Company. Hedge accounting Movements in hedging reserves during the current and previous financial year are set out below: Balance at 1 July 2019 Change in fair value of hedging instrument recognised in other comprehensive income Reclassified from other comprehensive income to profit or loss Deferred tax Balance at 30 June 2020 Change in fair value of hedging instrument recognised in other comprehensive income Reclassified from other comprehensive income to profit or loss Deferred tax Balance at 30 June 2021 Cashflow hedges $'000 779 487 (278) (296) 692 220 (1,017) 239 134 Note 22. Capital risk management The Group's objectives when managing capital are to safeguard the ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, pay dividends to shareholders, issue new shares or sell assets. 81 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 23 Note 23. Key management personnel disclosures The aggregate compensation made to directors and other members of KMP of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments 2021 $'000 2020 $'000 1,767 105 200 1,170 3,242 Note 24. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers, the auditor of the Company: Audit services - PricewaterhouseCoopers Audit or review of the financial statements Other services - PricewaterhouseCoopers Other advisory services Other assurance services 2021 $'000 2020 $'000 139 153 35 188 327 2,164 122 102 1,063 3,451 115 175 - 175 290 Note 25. Contingent assets The Group has entered into forward gold sales contracts which are not accounted for on the balance sheet. A contingent asset of $537,000 (2020: liability $14,178,000) existed at the balance date in the event that the contracts are not settled by the physical delivery of gold. Refer to the commitment’s disclosure note 27 for more information. Note 26. Contingent liabilities The Group has contingent liabilities estimated up to the value of $3,223,000 (2020: $8,330,000 including amount of $3,670,000 related to land acquisition surrounding the Dubbo Project) for the potential acquisition of several parcels. 82 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 27 Note 27. Commitments (a) Exploration and mining lease commitments In order to maintain current rights of tenure to exploration and mining tenements, the Group will be required to outlay the amounts disclosed in the below table. These amounts are discretionary, however if the expenditure commitments are not met then the associated exploration and mining leases may be relinquished. Within one year (b) Physical gold delivery commitments 2021 $'000 2020 $'000 941 1,505 As part of its risk management policy, the Group enters into derivatives including gold forward contracts and gold put options to manage the gold price of a proportion of anticipated gold sales. Alkane purchased gold forward sales and put options as part of a risk mitigation strategy on any potential downward price pressure while Tomingley was processing the low grade stockpiles during the year. The gold forward sales contracts disclosed below did not meet the criteria of financial instruments for accounting purposes on the basis that they met the normal purchase/sale exemption because physical gold would be delivered into the contract. Accordingly, the contracts were accounted for as sale contracts with revenue recognised in the period in which the gold commitment was met. The balances in the table below relate to the value of the contracts to be delivered into by transfer of physical gold. 30 June 2021 Fixed forward contracts Within one year 30 June 2020 Fixed forward contracts Within one year (c) Capital commitments Gold for physical delivery Ounces Contracted gold sale price per ounce ($) Value of committed sales $'000 24,000 2,307 55,368 17,770 1,836 32,619 Capital commitments committed for the year at the end of the reporting period but not recognised as liabilities amounted to $11,462,000 (2020: $8,787,000, including amount related to the discontinued operation of $3,200,000). 83 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 28 Note 28. Events after the reporting period No matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Note 29. Related party transactions Parent entity Alkane Resources Ltd is the parent entity of the Group. Associates Interests in associates are set out in note 13. Key management personnel Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the directors' report. Transactions with other related parties Nuclear IT, a director-related entity, provides information technology consulting services to the Group which includes the coordination of the purchase of information technology hardware and software. These terms are documented in a service level agreement and represent normal commercial terms. Purchase of computer hardware and software Consulting fees and services Total Note 30. Share-based payments 2021 $'000 2020 $'000 126 304 430 88 310 398 Share-based compensation benefits are provided to employees via the Group's incentive plans. The incentive plans consist of short-term and long-term incentive plans for executive directors and other executives and the employee share scheme for all other employees. Information relating to these plans is set out in the remuneration report and below. The fair value of rights granted under the short term and long term incentive plans is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. 84 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 30 Non-market vesting conditions and the impact of service conditions are included in assumptions about the number of rights that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of rights that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The initial estimate of fair value for market based and non-vesting conditions is not subsequently adjusted for differences between the number of rights granted and number of rights that vest. When the rights are exercised, the appropriate number of shares are transferred to the employee. The proceeds received net of any directly attributable transaction costs are credited directly to equity. Under the employee share scheme, shares issued by the Group to employees for no cash consideration vest immediately on grant date. On this date, the market value of the shares issued is recognised as an employee benefits expense with a corresponding increase in equity. The fair value of deferred shares granted to employees for nil consideration under the employee share scheme is recognised as an expense over the relevant service period, being the year to which the incentive relates and the vesting period of the shares. The fair value is measured at the grant date of the shares and is recognised in equity in the share-based payment reserve. The number of shares expected to vest is estimated based on the non-market vesting conditions. The estimates are revised at the end of each reporting period and adjustments are recognised in profit or loss and the share-based payment reserve. Executive Directors and other executives The Company’s remuneration framework is set out in the remuneration report, including all details of the performance rights and share appreciation rights plans, the associated performance hurdles and vesting criteria. Participation in the plans is at the discretion of the Board of Directors and no individual has a contractual right to participate in the plans or to receive any guaranteed benefits. Participation is currently restricted to senior executives within the Group. The following tables illustrate the number and weighted average fair value of, and movements in, share rights during the year. Performance Rights Outstanding at the beginning of the year Issued during the year Vested during the year Lapsed/Cancelled during the year Outstanding at the end of the year 2021 2020 Number of performance rights Weighted average fair value Number of performance rights Weighted average fair value 12,092,879 1,492,626 (6,785,208) (2,134,033) 4,666,264 $0.18 $0.75 $0.06 $0.32 $0.47 18,476,061 3,853,701 (8,430,376) (1,806,507) 12,092,879 $0.18 $0.37 $0.24 $0.34 $0.18 The number of performance rights to be granted is determined by the Remuneration Committee with reference to the fair value of each performance right which is generally the volume weighted average price for the month preceding the start of the performance period. This will differ from the fair value reported in the table above which is determined at the time of grant. 85 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 31 The following table lists the inputs to the models used. Grant date Performance hurdle Dividend yield % Expected stock volatility % Risk free rate % Expected life years 18/10/2018 Services condition and market condition 21/11/2018 Services condition and market condition 02/09/2019 Services condition and market condition 22/11/2019 Services condition and market condition 11/11/2020 Services condition and market condition - - - - - 66% 65% 67% 65% 72% 2.14% 2.14% 0.69% 0.73% 0.19% 3.0 2.9 2.8 2.6 3.0 Weighted average share price at grant date $ $0.22 $0.22 $0.40 $0.63 $1.08 Expenses arising from share-based payment transactions: Performance rights Employee share scheme Note 31. Earnings per share 2021 $'000 2020 $'000 1,523 161 1,684 1,225 - 1,225 Earnings per share for profit from continuing operations Profit after income tax attributable to the owners of Alkane Resources Ltd 33,567 13,345 2021 $'000 2020 $'000 Basic earnings per share Diluted earnings per share Cents Cents 5.64 5.60 2.44 2.37 2021 $'000 2020 $'000 Earnings per share for profit/(loss) from discontinued operations Profit/(loss) after income tax attributable to the owners of Alkane Resources 22,134 (583) Basic earnings per share Diluted earnings per share 86 Cents Cents 3.72 3.69 (0.11) (0.10) | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 32 Earnings per share for profit Profit after income tax attributable to the owners of Alkane Resources Ltd 55,701 12,762 2021 $'000 2020 $'000 Basic earnings per share Diluted earnings per share Weighted average number of ordinary shares Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Performance rights Weighted average number of ordinary shares used in calculating diluted earnings per share Cents Cents 9.37 9.28 2.33 2.26 Number Number 594,734,110 547,023,712 5,201,943 599,936,053 17,141,368 564,165,080 Note 32. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Profit after income tax Total comprehensive income Parent 2021 $'000 2020 $'000 15,195 15,195 14,091 14,091 87 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 32 Balance sheet Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Financial assets at fair value through other comprehensive income reserve Share-based payments reserve Demerger reserve Accumulated losses Total equity Determining the parent entity financial information Parent 2021 $'000 2020 $'000 50,669 144,462 3,875 9,776 218,077 1,945 3,313 (70,300) (18,349) 134,686 203,910 254,611 2,801 3,040 258,876 (101) 4,206 - (11,410) 251,571 The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Tax consolidation legislation Alkane Resources Ltd and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. Refer to note 4 for further details. (ii) Share-based payments rights The grant by the Company of rights to equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. (iii) Investment in subsidiaries Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Capital commitments – Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 (2020: $nil). 88 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 33 Note 33. Deed of cross-guarantee The following Group entities have entered into a deed of cross-guarantee. Under the deed of cross-guarantee, each body has guaranteed that the debts to each creditor of each other body which is a party to the deed will be paid in full in accordance with the deed: • Alkane Resources Limited (the Holding Entity) • Tomingley Holdings Pty Ltd and Tomingley Gold Operations Pty Ltd (the wholly owned subsidiaries, which are eligible for the benefit of the ASIC Instrument) By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare financial statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission. The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other parties to the deed of cross-guarantee that are controlled by Alkane Resources Ltd, they also represent the 'Extended Closed Group'. The statement of profit or loss and other comprehensive income and balance sheet (excluding ASM business, which is separately disclosed in note 5) are substantially the same as the consolidated entity as stated in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and therefore have not been separately disclosed. Note 34. Reconciliation of profit after income tax to net cash from operating activities Profit after income tax (expense)/benefit for the year Adjustments for: Depreciation and amortisation Net loss/(gain) on disposal of property, plant and equipment Share of loss - associates Share-based payments Investment paid for by tenement transfer Exploration costs provided for or written off Gain from demerger of ASM Group Finance charges Realised loss on expiry put option derivatives Demerger costs reclassified Gain on derecognition of equity investment Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Increase in inventories Increase/(decrease) in trade and other payables Increase in deferred tax liabilities Decrease in other provisions Increase/(decrease) in fair value of biological assets Net cash from operating activities 2021 $'000 2020 $'000 55,701 21,254 957 870 1,684 (660) 1,991 (22,672) 51 938 538 (2,698) 301 (4,002) 1,217 14,503 - 1,143 71,116 12,762 9,231 (9) 250 1,225 - 329 - 126 258 1,525 - (749) (3,134) 143 6,320 (81) 340 28,536 89 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35 Net debt reconciliation This section sets out an analysis of net debt and the movements in net debt for each of the periods presented. Cash and cash equivalents Borrowings - repayable within one year Borrowings - repayable after one year Net cash 2021 $'000 2020 $'000 18,991 (3,778) (5,922) 9,291 48,337 (2,659) (4,515) 41,163 Opening net cash 18,991 (3,778) (5,922) 9,291 Cash $'000 Borrowings repayable within one year $'000 Borrowings repayable after one year $'000 Net cash $'000 Note 35. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention, except for certain financial assets and liabilities which are measured at fair value. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 20. 90 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35 Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 32. Tax consolidated legislation Alkane Resources Ltd and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Alkane Resources Ltd, and the controlled entities in the Tax Consolidated Group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the Tax Consolidated Group continues to be a stand alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Alkane Resources Ltd also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the Tax Consolidated Group. The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate Alkane Resources Ltd for any current tax payable assumed and are compensated by Alkane Resources Ltd for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Alkane Resources Ltd under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities financial statements. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Alkane Resources Ltd ('Company' or 'parent entity') as at 30 June 2021 and the results of all subsidiaries for the year then ended. Alkane Resources Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity' or the 'Group'. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The financial statements are presented in Australian dollars, which is Alkane Resources Ltd's functional and presentation currency. 91 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35 Accounting policy for lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss. 92 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - NOTE 35 Impairment of non-financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing: • the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares; by • the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: • the profit attributable to owners of the Company, excluding any costs of servicing equity, and • the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. Rounding of amounts The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. 93 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | DIRECTORS' DECLARATION In the directors' opinion: • the financial statements and notes set out on pages 54 to 93 are in accordance with the Corporations Act 2001 including: (a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (b) giving a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and • the financial statements and notes also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 35 to the financial statements; • there are reasonable grounds to believe that Alkane Resources Limited will be able to pay its debts as and when they become due and payable. • at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 33 to the financial statements. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors. On behalf of the directors N P Earner Managing Director 27 August 2021 Perth 94 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT 95 Alkane Resources Annual Report 2021 |FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT 96 | Alkane Resources Annual Report 2021FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT 97 Alkane Resources Annual Report 2021 |FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT 98 | Alkane Resources Annual Report 2021FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT 99 Alkane Resources Annual Report 2021 |FINANCIAL REPORT | SHAREHOLDER INFORMATION Shareholder Information Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 13 September 2021. Distribution of Equity Securities Analysis of numbers of equity security holders by size of holding: 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over The number of equity security holders holding less than a marketable parcel of securities are: Twenty Largest Shareholders The names of the 20 largest holders of quoted ordinary shares are: IJ GANDEL HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CHAPELGREEN PTY LTD CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED FYVIE PTY LTD LEEFAB PTY LTD BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD BNP PARIBAS NOMINEES PTY LTD NICHOLAS EARNER GARRETT SMYTHE LTD HOME IDEAS SHOW PTY LTD AUBURNVALLEY PTY LTD LILYCREEK PTY LTD MAGNABAY PTY LTD S MAAS HOLDINGS PTY LIMITED MS JILLANNE HOMEWOOD BERNE NO 132 NOMINEES PTY LTD <152417 A/C> BNP PARIBAS NOMS PTY LTD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 100 Ordinary shares Number of holders Number of shares 1,715 3,001 1,557 2,646 444 9,363 766 1,011,540 8,630,858 12,186,438 84,510,440 489,049,524 595,388,800 189,462 Listed ordinary shares Number of shares 142,692,506 64,482,077 40,700,000 37,999,186 20,920,496 6,650,000 5,238,258 4,779,962 4,549,021 4,211,958 3,627,496 3,385,125 3,050,000 2,900,000 2,900,000 2,900,000 2,776,232 2,210,636 2,207,000 2,057,980 360,237,933 Percentage of ordinary shares 23.95 10.83 6.84 6.38 3.51 1.12 0.88 0.80 0.76 0.71 0.61 0.57 0.51 0.49 0.49 0.49 0.47 0.37 0.37 0.35 60.50 | Alkane Resources Annual Report 2021 FINANCIAL REPORT | CORPORATE GOVERNANCE STATEMENT Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Ian Jeffrey Gandel Chapelgreen Pty Ltd (*includes securities beneficially held by Citicorp Nominees Pty Limited) Number of Shares 147,392,506* 43,526,931 Voting Rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. Unquoted Securities At 13 September 2021, the Company had the following unlisted securities on issue: Class Employee Performance Rights LTI FY2020 Employee Performance Rights LTI FY2021 Number of Securities 3,173,638 1,492,626 Number of Holders Holder Name 6 7 Nicholas Paul Earner Nicholas Paul Earner Number of Securities 1,622,252 687,346 Holders of 20% or more of the class Corporate Governance Statement The Company's annual Corporate Governance Statement has been published and released to the ASX separately. It is available on the Company's website at www.alkane.com.au/company/governance 101 Alkane Resources Annual Report 2021 | FINANCIAL REPORT | SCHEDULE OF MINING TENEMENTS Schedule of mining tenements – as at 30 June 2021 Project/Location Tenement Interest Nature of interest Peak Hill, NSW Tomingley, NSW Cudal, NSW Rockley NSW Northern Molong Porphyry Project, NSW Bodangora Kaiser South Bodangora Finns Crossing GL 5884 (Act 1904) ML 6036 ML 6042 ML 6277 ML 6310 ML 6389 ML 6406 ML 1351 ML 1364 ML 1479 EL 6319 ML 1684 EL 5675 EL 5830 EL 5942 EL 6085 EL 8676 EL 8794 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Equity Equity Equity Equity Equity Equity Equity Equity Equity Equity Equity Equity through subsidiary Equity Equity Equity Equity Equity Equity EL 7020 100% Equity EL 8194 EL 8527 EL 4022 EL 6209 EL 8887 EL 8261 100% 100% 100% 100% 100% 100% Equity Equity Equity Equity (subject to royalty of 2% net smelter return) Equity Equity Elsienora, NSW EL 8550 100% Equity Trangie, NSW EL 8765 100% Equity Armstrongs (near Parkes), NSW EL8784 100% Equity Mt Conqueror, NSW EL8940 100% Equity Nullagine, WA E 46/522-I & 523-I 0% M 46/515, 522 & 523 0% 60% retained interest in diamond potential – FMGN (FMG Nullagine Pty Ltd) 60% retained interest in diamond potential – FMGN (FMG Nullagine Pty Ltd) 102 | Alkane Resources Annual Report 2021104 

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