Alderan Resources Limited
Annual Report 2019

Plain-text annual report

Alderan Resources Limited ABN 55 165 079 201 Annual Consolidated Financial Report 30 June 2019 Contents Corporate Information Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Corporate Governance Tenament Schedule Additional Securities Information Alderan Resources Limited Page 3 4 22 23 24 25 26 27 50 51 54 62 89 2 CORPORATE INFORMATION ABN 55 165 079 201 Alderan Resources Limited Directors Mr. Ernest Thomas Eadie Mr. Frank David “Bruno” Hegner Mr. Nicolaus Heinen Mr. Peter Williams Dr. Marat Abzalov Company Secretary Mr. Brett William Tucker Registered Address Ground Floor, 16 Ord Street West Perth WA 6005 Telephone: 08 9482 0560 Fax: 08 9482 0505 Principal Place of Business Ground Floor, 16 Ord Street West Perth WA 6005 Telephone: 08 9482 0500 Fax: 08 9482 0505 Solicitors Allion Partners Pty Limited Level 9, 863 Hay Street Perth WA 6000 Telephone: 08 9216 7100 Bankers National Australia Bank 1232 Hay Street West Perth WA 6005 Auditors RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 Telephone: 08 9261 9100 Share Registry Automic Share Registry Pty Ltd Level 3, 50 Holt Street Surrey Hills NSW 2010 Telephone: 1300 288 664 (within Australia) +61 (0) 2 9698 5414 (outside Australia) +61 (0) 8583 3040 3 DIRECTORS’ REPORT The Directors of Alderan Resources Limited (“the Company”) present their report on Alderan Resources Limited and its subsidiaries (“the Group”) for the year ended 30 June 2019. Alderan Resources Limited Directors and Officers The names of the directors and officers who held office during or since the end of the year and until the date of this report are as follows. The Directors held office for the full year unless specified below. Mr. Nicolaus Heinen Non-executive Director Appointed on 1 March 2015 Position Date appointed / resigned Mr. Christopher Robert Wanless Executive Director Mr. Peter Williams Non-executive Director Appointed on 31 July 2013 Resigned 11 February 2019 Appointed 13 May 2019 Appointed Managing Director 21 August 2019 Dr. Marat Abzalov Non-executive Director Appointed 13 May 2019 Mr. F. D. Hegner Executive Director Appointed on 1 November 2017 Mr. Ernest Thomas Eadie Executive Chairman Appointed on 23 January 2017 Mr. Brett William Tucker Company Secretary Non-executive Director Appointed Company Secretary on 19 October 2016 Appointed Non-executive Director on 11 February 2019 Resigned Non-executive Director on 13 May 2019 Current Directors and Officers Mr. Ernest Thomas Eadie Executive Chairman Qualifications: Bachelor of Science (Hons) in Geology and Geophysics from the University of British Columbia, a Master of Science in Physics (Geophysics) from the University of Toronto and a Graduate Diploma in Applied Finance and Investment from the Security Institute of Australia. He is a Fellow (and past board member) of the AusIMM and a Member of the Financial Services Institute of Australasia (FINSIA). Mr Eadie is a well-credentialed mineral industry leader and explorer with broad experience in both the big end and small end of town. He was the founding Chairman of Syrah Resources, Copper Strike and Discovery Nickel as well as a founding Director of Royalco Resources. At Syrah, he was at the helm during acquisition, discovery and early feasibility work of the huge Balama graphite deposit in Mozambique which started production in early 2018. Copper Strike, where he was also Managing Director for 10 years, made several significant copper/gold and lead/zinc/silver discoveries in North Queensland, while Discovery Nickel (later to be renamed Discovery Metals), found and developed the Boseto copper deposit in Botswana. Prior to this, Mr. Eadie was Executive General Manager of Exploration and Technology at Pasminco Limited, at the time the largest zinc producer in the world. This came after technical and later management responsibilities at Cominco and Aberfoyle in the 1980s. Mr. Peter Williams Non-Executive Director Qualifications: B Sc (Hons first class), M Sc, AUSIMM, AICD Mr Williams was formerly Chief Geophysicist and Manager of Geoscience Technology for WMC Resources. He was one of the founding members of Independence Group Limited and developed high powered 3 component 3D TEM applications that lead to the discovery of over 75,000t of nickel at the Victor Long Nickel Mine in Kambalda. Peter has extensive experience in West Africa where he was the vendor of Gryphon Minerals’ Banfora Gold Project, was involved in the project generation of Papillion’s Mali projects and was a founding director of Ampella Mining Ltd. Peter was a co-founder of the International Resource Sector Intelligence company, Intierra, and was a co-founder of the first dedicated hard rock mineral seismic company in the world, HiSeis. Mr. Nicolaus Heinen Non-Executive Director Qualifications: BSc (Hon.) in Economics from the London School of Economics (LSE) and an MA in War Studies from King’s College, London Mr. Heinen is the founder and managing partner of Belgrave Capital Ltd, a London based investment management firm. He has been actively involved in the natural resources sector since 2004. Mr. Heinen joined private bank Sal. Oppenheim jr. & Cie. In 1992 as a founding member of its Corporate Finance team. From 1996-98, he co-managed the bank’s UK 4 Alderan Resources Limited institutional equity brokerage arm. From 1999-2004, he was managing partner of Rhein Trust, an investment company specialised in venture capital, pre-IPO investments and real estate. Current Directors and Officers (continued) In 2004, he founded Mongold Mining Inc., a gold exploration and mining company which developed one of Mongolia’s largest conglomerate gold deposits. As its CEO, he oversaw the acquisition of the assets, exploration, capital raising and development towards mine production. In 2005, he founded Universal Copper International Inc., which discovered, explored and developed one of Monoglia’s largest VMS-style copper deposits (“White Hill”). He served as the company’s CEO until its acquisition by Kerry Mining Group, Singapore in mid-2008. During his tenure, he was responsible for building up the company form a greenfield project into an advanced exploration/development project. His responsibilities included the financial structures, substantial capital raisings as well as creation and financial/operational controlling. He structured and managed the sale of the Company. implementation of operational and Other investments have included private equity transactions in various engineering companies as well as real estate. Mr. Frank D. Hegner Executive Director Qualifications: Bachelor of Arts in Russian History from Fort Lewis College; Juris Doctor from the University of Denver College of Law Mr Hegner has more than 25 years of experience as a corporate manager and executive. He was previously Managing Director of Rio Tinto’s Copper Projects Group and Vice-President / General Manager of Resolution Copper Company in Arizona USA. Mr Hegner has significant experience in management and development of major copper projects around the world including land titles, permitting, acquisitions, governmental relations, cost management, project management and operations. Mr. Hegner has also been a consultant to private equity groups on mineral development projects. He has extensive experience serving on the Board of Directors of both non-profit and publicly-traded entities. Dr. Marat Abzalov Non-Executive Director Qualifications: PhD Geology Dr Abzalov is a geologist with 35 years of experience holding a PhD degree in Geology obtained for studying nickel deposits in Russia and Fennoscandia. In his diverse geological career with the projects encompassing five continents, different commodities and deposit types, he has fulfilled various roles in research, exploration and mining geology, including senior management positions at WMC Resources (Geology Manager – Projects) and Rio Tinto (Exploration Manager – New Opportunities, Eurasia). Dr Abzalov has managed and consulted on a wide range of exploration and mining project studies from green-field exploration to bankable feasibility and using his innovative approach of geostatistically assisted 3D structural modelling, has led WMC Resources to successful resource growth at Olympic Dam and Cliffs Nickel deposits. He was also instrumental in the discovery of uranium resources in Jordan. His expertise and technical skills have been acknowledged in the industry. In 2015 he was awarded the Dani Krige’s Gold Medal by the South African Institute of Mining and Metallurgy (SAIMM) and his monograph “Applied Mining Geology”, published in 2016, has increasingly become the preferred technical guide for exploration and mining geology specialists. Mr. Christopher Robert Wanless Resigned as Director on 11 February 2019 Qualifications: Degree in Law and a Bachelor’s Degree in Economics both from Monash University, Melbourne Mr. Wanless has been involved in the resources sector for over 10 years in various management roles and as an investor, Director and entrepreneur. Mr Wanless was previously a founding Director and initial Managing Director of General Mining Corporation Ltd and oversaw its establishment, secured its projects and managed the IPO and listing on the ASX, whereafter he became a non-executive director. Mr. Wanless founded Alderan in 2013 and has identified and secured the Company’s projects and managed all aspects of the business and company. Mr Wanless previously worked for infrastructure consulting firm, The Peron Group (acquired by Coffey International) as a consultant. He is a director of Quaalup Investments Pty Ltd, a private resource and technology investment company. Mr. Brett William Tucker Resigned as Director on 14 May 2019 Company Secretary Qualifications: Bachelor of Commerce, Accounting & Finance, University of Western Australia and Graduate Diploma of Applied Finance, Member of the Chartered Accountants in Australia & New Zealand Mr Tucker has acted as Company Secretary to a number of ASX listed and private companies and has been involved in numerous public corporate acquisitions and transactions. Mr. Tucker is a Chartered Accountant with a strong corporate and compliance background gained from experience in an international accounting practice, working both audit and taxation across a wide range of industries. 5 DIRECTORS’ REPORT (continued) Alderan Resources Limited Directors’ Interests Interests in the shares, options and performance rights of the Company and related bodies corporate The following relevant interests in shares, options and performance rights of the Company or a related body corporate were held by the Directors as at the date of this report. Directors Ernest Thomas Eadie Peter Williams Nicolaus Heinen1 F.D. Hegner Marat Abzalov Total Number of fully paid ordinary shares Number of options over ordinary shares Number of performance rights 3,234,583 2,343,750 1,182,501 - 1,562,500 8,323,334 2,606,875 6,171,875 900,000 2,000,000 5,781,250 17,460,000 - - - 600,000 - 600,000 1) Mr Heinen acts as an agent of Belgrave Capital Management which holds 30,769,082 shares in the Company Shares under option or issued on exercise of options At the date of this report, unissued ordinary shares or interests of the Company under option are: Date options issued Tranche Number of shares under option Exercise price of option $ Expiry date of option KMP Options 21/02/2017 21/02/2017 21/02/2017 21/02/2017 21/02/2017 19/07/2019 19/07/2019 Broker Options 21/02/2017 31/05/2017 31/05/2017 07/08/2019 07/08/2019 Consultant Options 04/09/2017 04/09/2017 04/09/2017 04/09/2017 Investor Options 07/08/2022 Tranche A-1 Tranche B Tranche C Tranche D Tranche E Tranche A Tranche B - Tranche A Tranche B Tranche A Tranche B Tranche A Tranche B Tranche C Tranche D 755,000 2,300,000 1,570,000 1,570,000 1,570,000 7,000,000 7,000,000 1,777,454 2,300,000 2,300,000 5,000,000 5,000,000 200,000 200,000 200,000 200,000 0.20 0.30 0.40 0.60 0.80 0.06 0.10 0.20 0.30 0.40 0.10 0.20 0.60 0.80 1.00 1.20 22/02/2021 22/02/2021 22/02/2021 22/02/2021 22/02/2021 19/07/2022 19/07/2022 22/02/2020 31/05/2020 31/05/2020 07/08/2021 07/08/2021 22/02/2021 22/02/2021 22/02/2021 22/02/2021 Tranche A 25,000,000 0.10 07/08/2022 6 Alderan Resources Limited DIRECTORS’ REPORT (continued) Directors’ Interests (continued) Shares under option or issued on exercise of options (continued) Date options issued Tranche Number of shares under option Exercise price of option $ Expiry date of option Long-Term Incentive Plan 28/06/2017 28/06/2017 28/06/2017 28/06/2017 15/11/2017 15/11/2017 12/06/2018 12/06/2018 12/06/2018 12/06/2018 19/07/2019 07/08/2019 Total Tranche A Tranche B Tranche C Tranche D Tranche A Tranche B Tranche A Tranche B Tranche C Tranche D Tranche A Tranche A 45,000 75,000 75,000 75,000 75,000 75,000 125,000 100,000 100,000 100,000 750,000 750,000 66,287,454 0.30 0.40 0.60 0.80 2.50 3.00 1.00 1.50 2.00 2.50 0.10 0.10 27/06/2021 27/06/2021 27/06/2021 27/06/2021 15/11/2021 15/11/2021 12/06/2022 12/06/2022 12/06/2022 12/06/2022 19/07/2022 19/07/2022 On 9 August 2018, 30,000 unlisted Tranche A long-term incentive options were exercised at $0.30 per share for total option application funds of $9,000. On 11 September 2018, 1,045,000 unlisted Tranche A-1 management options were exercised at $0.20 per share for total application funds of $209,000 and the issue of 1,045,000 fully paid ordinary shares, and 570,000 unlisted Tranche B management options were exercised at $0.30 per share for total application funds of $171,000 and the issue of 570,000 fully paid ordinary shares. The following employee & consultant options lapsed during the year:- 500,000 options exercisable at $2.50, expiring on 30/11/2021 • 500,000 options exercisable at $3.00, expiring on 30/11/2021 • 500,000 options exercisable at $3.50, expiring on 30/11/2021 & vesting on 1/11/2019 • 500,000 options exercisable at $4.00, expiring on 30/11/2021 & vesting on 1/11/2020 • 25,000 options exercisable at $2.50, expiring on 02/11/2021 • 25,000 options exercisable at $3.00, expiring on 02/11/2021 • 25,000 options exercisable at $3.50, expiring on 02/11/2021 & vesting on 16/10/2019 • 25,000 options exercisable at $4.00, expiring on 02/11/2021 & vesting on 16/10/2020 • 75,000 options exercisable at $3.50, expiring on 15/11/2021 & vesting on 01/09/2019 • 75,000 options exercisable at $4.00, expiring on 15/11/2021 & vesting on 01/09/2020 • 275,000 options exercisable at $1.00, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 • 250,000 options exercisable at $1.50, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 • 250,000 options exercisable at $2.00, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 • 250,000 options exercisable at $2.50, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 • Total shares, options and convertible securities of the Company on issue as at the date of this report Number of fully paid ordinary shares Number of options over ordinary shares Performance rights 180,214,897 66,287,454 600,000 7 Alderan Resources Limited DIRECTORS’ REPORT (continued) Review of Operations Principal activities The principal activity of the Company is mineral exploration in Utah, USA. The Company is exploring the prospective Frisco project located in Beaver County, Utah, for copper, gold, zinc, silver and associated minerals. The Company secured the mineral rights to the Frisco Project over two years and became the first company to hold the mineral rights over the entire Frisco complex. Historical mining activities focused on extensive outcropping copper-silver-gold bearing breccia pipes (Cactus area prospects) and extensive copper-zinc-lead-silver-gold bearing skarns (Accrington & Horn prospect) associated with possible underlying porphyry system/s. Historical exploration across the Frisco project has targeted each of the specific styles of mineralisation present – skarn, intrusive breccia, porphyry and carbonate replacement, with exploration often limited to specific areas within the Frisco area due to access constraints. Summary of activities during the year Accrington The Group commenced drilling at Accrington in June 2018, focussing on copper-zinc-silver bearing garnet-magnetite skarns and an interpreted possible buried porphyry target, identified by Induced Polarisation surveying. In November 2018. Due to the onset of winter the Group then moved drilling to lower elevations because of the risk of access difficulties on elevated roads, and drilled two holes at the Peacock and Washington prospects. Road cuts on the access road to the top of the quartzite ridge at Accrington uncovered mineralised skarn. Channel sampling of the side of the road gave the following results:     28m @ 0.33% Cu, 15 gpt Ag, 0.19 gpt Au 10m @ 0.39% Cu, 12 gpt Ag 16m @ 0.44% Cu, 16 gpt Ag, 0.12 gpt Au 12m @ 0.33% Cu, 15 gpt Ag Hole FR18-004 was completed in August 2018, which targeted a deeply buried, interpreted large (diameter 2.5 kms), coincident chargeability (IP) and resistivity high, suggesting a buried porphyry system. Although the hole intersected weak mineralisation and alteration, the source of the deep chargeability anomaly is not known from the one hole test. However, shallower mineralisation occurring in the Upper Garnet Skarn was intersected (102m @ 0.58%Cu, 0.6% Zn from 194m down hole depth) and confirms that the mineralised system continues to the east of the Imperial Mine where historical drilling was undertaken by Bear Creek Mining Company in 1967. Refer to ASX announcement dated 24 September 2018 for complete assay results and JORC reporting. In October 2018 Alderan reported results for drill holes FR18-005 and FR18-006, which confirmed the continuation of thick garnet-skarn hosted copper-zinc-silver mineralisation. FR18-005 was drilled to target the eastern limb of an interpreted syncline and to target the upper and lower garnet skarn. Significant intercepts included: • • 40m @ 0.40% Cu, 0.60% Zn, 7 g/t Ag from 104m; and 14m @ 0.25% Cu, 0.27% Zn, 6 g/t Ag from 180m Drill hole FR18-006 was drilled from the same drill pad as FR18-004 and FR18-005 targeting the keel of the interpreted syncline and angled away from the Cactus Stock. Results were received for the first 206.5m and included:- • 26m @ 0.38% Cu, 3.06% Zn, 16 g/t Ag from 48m including 10m @ 0.52% Cu, 6.6% Zn, 32 g/t Ag, 0.11 g/t Au from 52m; and 90.6m @ 0.41% Cu, 0.29% Zn, 7 g/t Ag from 116m to 206.6m including 6m @ 1.8% Cu, 0.17% Zn, 29 g/t Ag, 0.18 g/t Au. • Refer to ASX announcement dated 22 October 2018 for full results and JORC reporting. Further drilling focused to the south of the Cactus Stock directly targeting the lower garnet skarn which outcrops at surface at Accrington East where it hosts magnetite skarn with mineralisation. In October 2018, Alderan announced that interpretation of geological, geochemical and geophysical data identified new base and precious metal targets in the southern parts of Accrington at the Washington, Peacock and Apex targets. These targets are located along a structural corridor historically named the “Reciprocity Shear Zone” at the southern edge of the 4km by 2km Accrington skarn. 8 DIRECTORS’ REPORT (continued) Alderan Resources Limited In November 2018 the Company reported results for drill hole FR18-007 which was drilled approximately 100m to the south- east from FR18-006, targeting the mineralisation within the upper garnet skarn. The drill hole intersected well mineralised magnetite and garnet skarn from 46m to 100m and variably mineralised skarn thereafter with the Cactus stock being intersected at 209m. Results include:-  54m @ 1.4% Cu, 0.45% Zn, 0.19 g/t Au, 20 g/t Ag from 46m, Including 14m @ 3.4% Cu, 1.15% Zn, 0.22 g/t Au, 28 g/t Ag from 82m. Further assays were also received for FR18-006 extending the zone of mineralisation beyond 206.5m to 216m. Refer to ASX announcement dated 14 November 2018 for full results and JORC reporting. Drill hole FR18-008 tested for extensions of copper-zinc-silver mineralisation to the south-east returning 60m @ 0.22% Cu, 0.47% Zn, 0.21 g/t Au, 5.4 g/t Ag from 20m. FR18-009, was drilled to the south-west of FR18-004/5 intersecting a fault, indicating that mineralised beds may be faulted off in this location. Copper-zinc-silver mineralisation has been mapped at surface to the south of FR18-008 and FR18-009 indicating a continuation of mineralisation. Full results and JORC disclosures for FR18-008 and FR18-009 were announced to the ASX on 30 January 2019. Figure 1: Results at Accrington confirm thick copper-zinc-silver bearing skarn across more than 800m strike. From results to date it appears that copper mineralisation at Accrington is strongly related to late stage retrograde alteration and exhibits strong structural controls. Mineralisation is therefore unlikely to be restricted to specific stratigraphic units. Copper mineralisation, associated with magnetite, also occurs approximately 2km to the west at the Cupric Mine, demonstrating that copper may be more widespread. 9 DIRECTORS’ REPORT (continued) Alderan Resources Limited Washington & Peacock Prospects At the Washington Prospect, a total of two holes were drilled following completion of drilling at Accrington. The first hole, FR18-010 was drilled to target stratigraphically and structurally controlled lead-zinc-silver mineralisation, as intersected in historical drilling, along with a zone of increased chargeability (>15 mV/V) at depth, possibly representing a zone of higher sulphide content associated with a several kilometre long structure historically named the Reciprocity Corridor. Drilling intersected a broad zone of lead-zinc-silver mineralisation within calc-silicate skarn before intersecting a porphyritic intrusive, fault zone and quartzite with moderate to strong iron oxides along fractures. Results from FR18-010 returned 30m @ 0.89% Pb, 0.25% Zn, 19.5 g/t Ag, 0.12 g/t Au from 6m; including 14m @ 1.54% Pb, 0.32% Zn, 36.5 g/t Ag, 0.19 g/t Au. FR18-011 was drilled to target a structure hosting mineralisation at the historical Washington Mine and to test for higher temperature mineralised garnet skarn at depth. FR18-011 intersected variably mineralised calc-silicate skarn to 196m and brown-garnet skarn to 250m. Numerous faults and breccia zones were intersected between 131m and 207m hosting pyrite and sphalerite. Assay results returned several broad intercepts of weak zinc mineralisation including some elevated molybdenum including 50m @ 0.2% Zn from 78m and 16m @ 305 ppm Mo from 160m. Following cessation of drilling, the Group continues to undertake a detailed review of the results of the 2018 drilling programme at Frisco and conducted additional mapping by an independent consultant. Targets of high interest arising from this include (see Announcement 12 March 2019)  New Years Breccia pipe  South West Zone (gold-tourmaline breccias)  The Copperopolis Prospect (gold tourmaline breecia system, historic mineralisation overs hundreds of meters, coincident IP anomaly and magnetic low)  Accrington Skarn area  Proximal Horn Lead-Silver Mine (Manto style mineralisation)  Copper King Prospect and extensions. The company conducted and continues to conduct a review of opportunities in the surrounding areas. The review has led to the 100% staking of the White Mountain Epithermal Gold Project, located 10km SW of Frisco. The company is reviewing the gold paragenesis and zoning in the mineralising systems peripheral to Frisco. White Mountain Epithermal Gold Project The White Mountain Gold prospect is a 5 kilometre long, outcropping epithermal system showing many attributes of a large, fully preserved epithermal gold/ silver system. Sinter terraces, large zones of chalcedony/quartz and argillite/alunite alteration occur over approximately 5km by 2km at surface indicate an upper level setting of the system with the potential of a larger hydrothermal system preserved at depth. Alunite has been historically mined in larger quantities in the area and historical minor workings for gold exist. The epithermal systems shows evidence of a high level setting of a large, epithermal system, which is a style of deposit seen in the nearby blind Midas discovery in Nevada1. 1 https://www.hecla-mining.com/midas/ 10 DIRECTORS’ REPORT (continued) Alderan Resources Limited Figure 2: View looking East from the chalcedony outcrop showing large scale epithermal alteration and silicification on surface for about 2.5km and historic WWII Alunite mines in the background Future Exploration The Company is continuing to assess the results from the previous 100 years of mining and exploration at Frisco and in the surrounding areas, to gain a better understanding of the mineralising systems, and the mineral potential. The company is conducting detailed mapping, geochemical sampling and a ground geophysical program, within the targeted areas at Frisco and at the Copper King areas, with the objective to define and refine commercially significant drill targets. A drill program, incorporating the recommendations of this review and detailed mapping is currently being planned. The Company continues to review its options to fund future exploration at its Frisco, Star Range and White Mountain projects. The company continues to review high value style mineralisation hosted in underexplored terrains. Corporate Events  On 9 August 2018 the Company issued 30,000 shares on exercise of incentive options at $0.30 each;  On 11 September 2018 the Company issued:- o o 1,615,000 shares on exercise of 1,045,000 incentive options at $0.20 each and 570,000 options at $0.30 each; and 600,000 performance rights to Director Bruno Hegner as an incentive for future performance as approved by shareholders. The performance rights comprise three tranches:-    200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.00 for more than a total of 120 trading days within two years from grant date; 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.50 for more than a total of 120 trading days within three years from grant date; and 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $2.00 for more than a total of 120 trading days within four years from grant date.  On 28 September 2018 the Company announced it had received firm commitments to raise $3 million at 20 cents per share. The shares were subsequently issued progressively on 8 October 2018 and 22 October 2018;  On 24 December 2018 the Company announced that a number of employee & consultant options had lapsed as disclosed elsewhere in the Director report;  On 3 January 2019 the Company advised of reductions to the remuneration of the CEO, Mr Chris Wanless and Mr Bruno Hegner as part of ongoing cost reduction measures; 11 DIRECTORS’ REPORT (continued) Alderan Resources Limited  On 11 February 2019 the Company announced the resignation of Christopher Wanless as CEO and Director, the appointment of Tom Eadie as interim Executive Chairman and the appointment of Brett Tucker as Non-Executive Director; and  On 13 May 2019 the Company announced the appointment of Mr Peter Williams and Dr Marat Abzalov as Non- Executive Directors. Dividends There were no dividends paid, recommended or declared during the year. Operating results for the year The comprehensive loss of the Group for the financial year ended 30 June 2019, after providing for income tax amounted to $3,854,787 (2018: $6,492,308). Review of financial conditions The Group had a net bank balance of $749,162 as at 30 June 2019 (2018: $1,665,364). Loss Per Share 30 June 2019 $ 30 June 2018 $ Basic loss per share (cents per share) (3.26) (6.15) Employees The Company had 7 employees as at 30 June 2019 (2018: 7 employees). Laws and Regulations Alderan Group’s operations are subject to various laws and regulations under the relevant government legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations to achieve the objectives of the Group. Instances of environmental non-compliance by an operation are identified either by internal investigations, external compliance audits or inspections by relevant government agencies. There have been no known breaches of laws and regulations by the Group during the year. REMUNERATION REPORT (AUDITED) This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place for the key management personnel (“KMP”) of Alderan Resources Limited for the financial year ended 30 June 2019. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company. Key Management Personnel The KMP of the Company during or since the end of the financial year were as follows: Directors Mr Ernest Thomas Eadie Mr Peter Williams Mr Frank D Hegner Mr Marat Abzalov Mr Nicolaus Heinen Mr. Brett William Tucker Position Executive Chairman Non-Executive Chairman Non-Executive Director Managing Director Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Mr Christopher Robert Wanless Executive Director Period of Employment Appointed on 23 January 2017 Appointed on 13 May 2019 Appointed on 13 May 2019 Appointed on 21 August 2019 Appointed on 1 November 2017 Appointed on 13 May 2019 Appointed 1 March 2015 Appointed on 11 February 2019 Resigned on 13 May 2019 Appointed on 31 July 2013 Resigned on 11 February 2019 12 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Remuneration Policy The Company’s remuneration policy for its KMP has been developed by the Board taking into account the size of the Company, the size of the management team, the nature and stage of development of the Company’s current operations, and market conditions and comparable salary levels for companies of a similar size and operating in similar sectors. In addition to considering the above general factors, the Board has also placed emphasis on the following specific issues in determining the remuneration policy for KMP: - - Exploration results; and The performance of the Company’s shares as quoted on the Australian Securities Exchange. Remuneration Committee Due to the current size of the Company, the Board did not implement a Remuneration Committee during the year, as such the Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the Directors and the executive team. Remuneration structure In accordance with best practice corporate governance, the structure of non-executive Director and executive remuneration is separate and distinct. Non-executive Director Remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration of non-executive Directors shall be determined from time to time by a general meeting. The Constitution states that the Company may pay to the Non-Executive Directors a maximum total amount of director's fees, determined by the Company in general meeting, or until so determined, as the Directors resolve. The Company intends to put to shareholders at the upcoming Annual General Meeting an aggregate remuneration amount to approve. Fees for the Non-Executive Directors’ are presently set at $250,000 per annum including superannuation. These fees cover main board activities only. Non-Executive Directors may receive additional remuneration for other services provided to the Company. The Non-Executive salary remuneration became effective from the date of their appointment as Non-Executive Directors. There were also Company Options issued to Non-Executive Directors in line with Company policy to attract suitable candidates to the position. Executive Remuneration The Company’s remuneration policy is to provide a fixed remuneration component and a short and long term performance based component. The Board believes that this remuneration policy is appropriate given the considerations discussed in the section above and is appropriate in aligning executives’ objectives with shareholder and business objectives. Fixed Remuneration Fixed remuneration consists of base salaries, as well as employer contributions to superannuation funds and other non- cash benefits. Fixed remuneration is reviewed annually by the Board. The process consists of a review of company and individual performance, relevant comparative remuneration externally and internally and, where appropriate, external advice on policies and practices. Performance Based Remuneration – Short Term Incentive The Board has not implemented a system where Executives are entitled to annual cash bonuses. No bonuses were paid or are payable in relation to the 2019 financial year. 13 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Performance Based Remuneration – Long Term Incentive Company Options The Board has previously chosen to issue Options (where appropriate) to some executives and employees as a key component of the incentive portion of their remuneration, in order to attract and retain the services of the executives and to provide an incentive linked to the performance of the Company. The Board may grant Options to executives and key consultants with exercise prices at and/or above market share price (at the time of agreement). As such, Incentive Options granted to executives will generally only be of benefit if the executives perform to the level whereby the value of the Company increases sufficiently to warrant exercising the Incentive Options granted. Other than service-based vesting conditions, there are no additional performance criteria on the Incentive Options granted to executives, as given the speculative nature of the Company’s activities and the small management team responsible for its running, it is considered the performance of the executives and the performance and value of the Company are closely related. The Company prohibits executives entering into arrangements to limit their exposure to Incentive Options granted as part of their remuneration package. Long-Term Incentive Plan The Company has implemented a Long-Term Incentive Plan. Under the Plan, the Company may grant options to subscribe for Shares or performance rights entitling the holder to be issued Shares on terms and conditions set by the Board at its discretion. The material terms of the Plan are as follows: (a) The purpose of the Plan are: (i) (ii) (iii) assist in the reward, retention and motivation of eligible persons; to align the interests of eligible persons more closely with the interests of shareholders, by providing an opportunity for eligible persons receive an equity interest in the form of Awards; and to provide eligible persons with the opportunity to share in any future growth in value of Alderan Resources. (b) The following persons can participate in the Plan if the Board makes them an offer to do so: a director; a full-time or part-time employee; a contractor; or a casual employee (i) (ii) (iii) (iv) of the Company or an associated body corporate and includes a person who may become an eligible person within (i) to (iv) above subject to accepting an offer of engagement for that role. (c) Plan Options and Plan Rights (collectively Awards) issued under the Plan are subject to the terms and conditions set out in the Rules, which include: (i) (ii) (iii) Vesting Conditions – which are time-based criteria, requirements or conditions (as specified in the offer and determined by the Board) which must be met prior to Awards vesting in a participant, which the Board may throughout the course of the period between the grant of an Award and its vesting, waive or accelerate as the Board considers reasonably appropriate; Performance Conditions – which are conditions relating to the performance of the Group and its related bodies corporate (and the manner in which those conditions will be tested) as specified in an offer and determined by the Board; and Exercise Conditions – which are criteria, requirements or conditions, as determined by the Board or under the Plan, which must be met (notwithstanding the satisfaction of any Vesting Conditions and/or Performance Conditions) prior to a Participant being entitled to exercise vested Awards in accordance with clauses 8 and 9. (d) In accordance with ASIC Class Order 14/1000, the total Awards that may be issued under the Plan will not exceed 5% of the total number of Shares on issue. In calculating this limit, Awards issued to participants under the Plan other than in reliance upon this Class Order are discounted. (e) The Board has the unfettered and absolute discretion to administer the Plan. (f) Awards issued under the Plan are not transferable and will not be quoted on the ASX. The Rules otherwise contain terms and conditions considered standard for long-term incentive plan rules of this nature. There were no options issued under the Long-Term Incentive Plan during the year (2018: 1,850,000). There were no shares issued under the Long-Term Incentive Plan during the year (2018: Nil). 14 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Managing Director Service Agreement The Company entered into an Executive Service Agreement with Mr Peter Williams on 21 August 2019. Mr Williams is to provide services as managing director and geological consultant. The material terms of the employment agreement with Mr Smith are as follows:  Mr Williams is employed in the position of Managing Director.  Mr Williams will be paid an annual salary of $100,000 plus superannuation for between two to three working days per week. This salary is inclusive of director’s fees and is intended to cover all the services that he may perform for the Company. He is also entitled to receive all reasonable expenses incurred in the fulfilment of his duties. Executive Director Service Agreement The Company entered into an Executive Service Agreement with Mr Tom Eadie on 11 February 2019. Mr Eadie is to provide services as executive director and chairman. Mr Eadie resigned as Executive Director in conjunction with the appointment of Mr Peter Williams as Managing Director on 21 August 2019. The material terms of the employment agreement with Mr Eadie were as follows:  Mr Eadie is employed in the position of Executive Chairman.  Mr Eadie will be paid an annual salary of $120,000 plus superannuation for between two to five working days per week. This salary is inclusive of director’s fees and is intended to cover all the services that he may perform for the Company. He is also entitled to receive all reasonable expenses incurred in the fulfilment of his duties. Executive Director Service Agreement The Company entered into an Executive Service Agreement with Mr Bruno Hegner on 23 October 2017. The material terms of the employment agreement with Mr Hegner are as follows:  Mr Hegner is employed in the position of Executive Director and Vice President of the Company’s subsidiary, Volantis Resources Corp;  Mr Hegner will be paid an annual salary of US$129,600 plus superannuation for 60% full time equivalent work hours. This salary is inclusive of director’s fees and is intended to cover all the services that he may perform for the Company. He is also entitled to receive all reasonable expenses incurred in the fulfilment of his duties;  Entitlement to severance and redundancy package payments shall continue to be calculated based on previous annual salary of US$216,000. Relationship between Remuneration of KMP and Shareholder Wealth and Earnings The Board anticipates that the Company will retain earnings (if any) and other cash resources for the development of its exploration projects. The Company does not currently have a policy with respect to the payment of dividends and returns of capital however this will be reviewed on an annual basis. Therefore, there was no relationship between the Board’s policy for determining, or in relation to, the nature and amount of remuneration of KMP and dividends paid and returns of capital by the Company during the current and previous four financial years. The Company did not consider appreciation of the Company’s shares when setting remuneration. The Board did issue Options to Key Management Personnel and has implemented a Long-Term Incentive Plan which will generally be of value if the Company’s shares appreciate over time. However, it should be noted that all Director Options have been imposed in escrow (sale) restriction period of up to two years. This is in line with the Company policy that Company Options be used for long term incentive for Directors. 15 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Remuneration of Key Management Personnel Details of the nature and amount of each element of the emoluments received by or payable to each of the Key Management Personnel (KMP) of Alderan Resources Limited are as follows: Short-term benefits Salary & fees $ Super- annuation $ Termination payments $ Share- based payment Perf rights $ Share- based payment options $ 2019 Directors Nicolaus Heinen Chris Wanless 1 Peter Williams Marat Abzalov F.D. Hegner Ernest Thomas Eadie Brett Tucker5 Other KMP Peter Geerdts 3 Total 36,131 130,875 3,548 4,032 251,480 64,821 - 132,553 623,440 - 12,433 - 383 - 6,158 - 1,267 20,241 - 120,735 2 - - - - - - - - - 101,420 4 - - 18,696 31,160 - - 1,058,699 12,464 - - 120,735 - 101,420 31,160 1,152,179 164,980 2,018,015 1 Resigned as CEO and Director on 11 February 2019 2 Termination paid upon the resignation of Chris Wanless 3 Ceased employment on 30 April 2019 4 Share based payment expense relates to an issue of 600,000 performance rights which convert into fully paid ordinary shares upon curtained share price milestones which remain unconverted at 30 June 2019 and at the date of this report. See Note 15 for further details 5 Was appointed as a non-executive director from 11 February 2019 to 13 May 2019. He did not receive any remuneration for his service as a director. Short-term benefits Salary & fees $ Super- annuation $ Termination payments $ Share- based payment shares $ Share- based payment options $ 40,000 235,290 60,179 188,813 34,500 139,861 698,643 - 15,604 4,055 11,706 2,850 - 34,215 - - 187,861 - - - 187,861 - - - - - - - - 89,430 320,693 - 1,332,7113 50,612 187,031 1,980,477 326,892 2,901,196 2018 Directors Nicolaus Heinen Christopher Wanless Donald Smith1 F.D. Hegner2 Ernest Thomas Eadie Other KMP Peter Geerdts Total 1 Ernest Thomas Eadie was appointed as Director on 23 January 2017. 2 Peter Geerdts resigned as Director on 9 January 2018. 3 Share based payment expense relates to an issue of 2,000,000 unlisted options which remain unexercised and unvested at 30 June 2018. See Note 16 for further details. No member of key management personnel appointed during the period received a payment as part of his or her consideration for agreeing to hold the position. 16 Total $ 54,827 295,203 3,548 4,415 1,411,599 83,443 - Total $ 129,430 571,587 252,095 1,533,230 87,962 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Directors Nicolaus Heinen Chris Wanless 1 Peter Williams Marat Abzalov F.D. Hegner Ernest Thomas Eadie Brett Tucker6 Other KMP Peter Geerdts 3 Fixed remuneration At risk - STI At risk - LTI 2019 2018 2019 2018 2019 2018 66% 89% 100% 100% 17% 85% - 31% 44% 100% - 13% 43% - 81% 43% - - - - - - - - - - - - - - - - - - 34% 11% - - 83% 15% - - 16% 56% - - 87% 57% - - 19% 57% Cash bonuses granted as compensation for the current financial year. No cash bonuses were granted during the year ended 2019 (2018: nil). Other transactions with related parties There were no other transactions with related parties during the year ended 30 June 2019. (2018: nil). Loans from key management personnel As at 30 June 2019, there were no outstanding amounts due to key management personnel (2018: nil). Use of remuneration consultants During the financial year ended 30 June 2019, the Company did not engage the services of an independent remuneration consultant to review its remuneration for Directors, key management personnel and other senior executives. Voting and comments made at the company's Annual General Meeting ('AGM') The Company received 96.7% “for” votes on its Remuneration Report for the year ended 30 June 2018. 17 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Incentive Securities granted to KMP During the financial year, performance rights were granted to the following key management personnel of the Company and the entities they controlled as part of their remuneration. Directors F.D. Hegner Total Grant date Expiry date Number of perf rights granted Total number of performance rights at the end of the year 11 Sept 2018 11 Sept 2018 11 Sept 2018 11 Sept 2020 11 Sept 2021 11 Sept 2022 200,000 200,000 200,000 600,000 200,000 200,000 200,000 600,000 600,000 performance rights to Director Bruno Hegner as an incentive for future performance as approved by shareholders. The performance rights comprise three tranches:- - - - 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.00 for more than a total of 120 trading days within two years from grant date; 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.50 for more than a total of 120 trading days within three years from grant date; and 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $2.00 for more than a total of 120 trading days within four years from grant date. The conditions for conversion of the performance rights into fully paid ordinary shares were not met by 30 June 2019 or at the date of this report. Key management personnel equity holdings Fully paid ordinary shares Balance at beginning of year Number Granted as compensation Number Received on exercise of options Number Net change other Number Balance at end of year Number Balance held nominally Number 732,501 10,541,196 - - 1,940,833 5,000,000 - - - - - - 450,000 - 1,182,501 450,000 745,000 - (11,286,196)4 - - 200,000 - - - - - 7,884,9494 - - - 2,140,833 57,500 - (5,000,000)4 - 5,000,0004 30 June 2019 Directors Nicolaus Heinen1 Christopher Wanless2 Peter Williams3 Marat Abzalov3 F.D. Hegner Ernest Thomas Eadie Executives Peter Geerdts 1 Mr Heinen acts as an agent of Belgrave Capital which held 30,769,082 shares in the Company at 30 June 2019 2 Chris Wanless resigned as CEO and Director on 11 February 2019 3 Appointed as a Director on 13 May 2019 4 Balance on resignation 18 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Key management personnel equity holdings (continued) Share options 30 June 2019 Directors Nicolaus Heinen Christopher Wanless1 Peter Williams2 Marat Abzalov2 F.D. Hegner Ernest Thomas Eadie Executives Peter Geerdts Balance at beginning of year Number 1,350,000 4,250,000 - - 2,000,000 800,000 2,700,000 Granted as compensation Number Exercised Number Net change other Number Balance at end of year Number - - - - - - - 450,000 - 1,182,501 745,000 (11,286,196)3 - - - - (2,000,000)4 - - - - (200,000) - 600,000 (150,000) (2,550,000)3 - 1 Chris Wanless resigned as CEO and Director on 11 February 2019 2 Appointed as a Director on 13 May 2019 3 Balance on resignation 4 Options were cancelled Year Revenue EBITDA EBIT Loss after income tax 2019 2018 2017 1,560 (4,481,137) (4,165,366) (4,167,457) 26,763 (6,598,091) (6,700,557) (6,706,218) 1,343 (1,571,934) (1,572,488) (1,574,377) 2016 33,848 (212,723) (212,091) (209,507) The factors that are considered to affect total shareholders return (“TSR”) are summarised below: Share price at financial year end ($) Total dividends declared (cents per share) Basic and diluted loss per share (cents per share) 0.044 - (3.26) 0.885 - (6.15) 0.465 * - (2.59) - - (0.45) * On 8 June 2017, the Company was admitted to the Official List of ASX Limited. Official quotation of the Company’s shares commenced on 9 June 2017 trading as “AL8”. END OF REMUNERATION REPORT 19 DIRECTORS’ REPORT (continued) Alderan Resources Limited Indemnification and insurance of Officers The Constitution of the Company requires the Company, to the extent permitted by law, to indemnify any person who is or has been a director or officer of the Company for any liability caused as such a director or officer and any legal costs incurred by a director or officer in defending an action for any liability caused as such a director or officer. During or since the end of the financial year, no amounts have been paid by the Company in relation to the above indemnities. During the financial year, insurance premiums were paid by the Company to insure against a liability incurred by a person who is or has been a director or officer of the Company. Indemnity and insurance of Auditor The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Directors’ meetings The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings attended by each Director were as follows: Directors’ meetings 2019 Nicolaus Heinen Christopher Wanless Peter Williams Marat Abzalov F.D. Hegner Ernest Thomas Eadie No. eligible to attend 12 5 1 1 12 12 No. attended 12 5 1 1 12 12 Proceedings on behalf of the Company No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. After Balance Date Events The Company held a meeting of shareholders on 19 July 2019 to ratify and approve the issue of placement shares to raise up to $1.6 million as announced to the ASX on 23 May 2019, amongst other matters. Following the meeting the Company issued the following securities:- - - - 605,989 shares as consideration for the deferral of acquisition payment for mineral claims within the Frisco project; 14,000,000 unlisted incentive options to Directors as an incentive for future performance as detailed in the notice of meeting dated 17 June 2019, broken down as:- o o 7,000,000 unlisted options over shares exercisable at $0.06 each and expiring 19 July 2022; and 7,000,000 unlisted options over shares exercisable at $0.10 each and expiring 19 July 2022; 750,000 incentive options to key management personnel pursuant to the Company’s long-term incentive plan, each exercisable at $0.10 and expiring 19 July 2022. On 7 August 2019, the Company issued 17,597,773 fully paid ordinary shares at an issue price of $0.032 per share, being the second tranche of the capital raising via a share placement. These shares were issued to participants in a placement to sophisticated and professional investors. Further, the Company issued 25,000,000 unlisted options which were free attaching to shares issued to placement participants, as approved by shareholders, on a 1-for-2 basis. The placement options are exercisable at $0.10 each and expire on 7 August 2022. Further the Company issued 10,000,000 unlisted options to a nominee of the lead manager to the placement as consideration for brokerage services, with the following terms:- - - 5,000,000 unlisted options exercisable at $0.10 each and expiring 7 August 2021; and 5,000,000 unlisted options exercisable at $0.20 each and expiring 7 August 2021. 20 Alderan Resources Limited DIRECTORS’ REPORT (continued) After Balance Date Events (continued) Finally, the Company issued 750,000 unlisted options to an employee under its option incentive plan, each exercisable at $0.10 and expiring 19 July 2022. On 21 August 2019 the Group announced that Mr Tom Eadie is to step down as Executive Chairman and that Mr Peter Williams was appointed as Managing Director. Other than disclosed above, the directors are not aware of any matters or circumstances not otherwise dealt with in this report or consolidated financial statements that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods. Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 20 to the financial statements. 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 are of the opinion that the services as disclosed in note 20 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons: (a) all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and (b) none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. Officers of the Company who are former partners of RSM Australia Partners There are no officers of the Company who are former partners of RSM Australia Partners. Auditor independence 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. Signed in accordance with a resolution of the Directors. Mr. Peter Williams Managing Director Dated this 30th day of September 2019 Competent Persons Statement The information in this report as it relates to geological, geochemical, geophysical and exploration results was compiled by Mr Tom Eadie, FAusIMM, who is a Director of Alderan Resources Ltd. Mr Eadie has more than 20 years experience in the activities being reported on and has sufficient expertise which is relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the 2012 edition of the JORC Code . He consents to the inclusion of this information in the form and context in which it appears in this report. 21 RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Alderan Resources Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) (ii) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS Perth, WA Dated: 30 September 2019 TUTU PHONG Partner THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019 Alderan Resources Limited Other income Interest income Notes 30 June 2019 $ 30 June 2018 $ 3 (a) - 1,560 11,145 15,618 Consulting and administration expenses 3 (b) (1,233,357) (2,118,603) Depreciation and amortisation expense Employee benefits expense Foreign exchange gain/(loss) Impairment of exploration and evaluation expenditure Project expenditure Share based payment expense Finance costs Asset sale Loss before income tax expense Income tax expense Loss after income tax for the year Other comprehensive income, net of income tax Exchange differences on translation of foreign operations Other comprehensive gain for the year, net of income tax Total comprehensive loss for the year (117,229) (108,128) (1,073,207) (1,405,083) 14,000 - (89,544) - (120,160) (258,162) 15 (a) (1,632,625) (2,747,800) (2,091) (4,348) (5,661) - (4,167,457) (6,706,218) 4 - - (4,167,457) (6,706,218) 312,670 312,670 213,910 213,910 (3,854,787) (6,492,308) Loss attributable to members of the Company (3,854,787) (6,492,308) Total comprehensive loss attributable to members the Company for the year (3,854,787) (6,492,308) Basic loss per share (cents per share) Basic loss per share from continuing operations (cents per share) 5 5 (3.26) (6.15) (3.26) (6.15) The accompanying notes form part of these consolidated financial statements. 23 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 Alderan Resources Limited Assets Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-Current Assets Plant and equipment Exploration and evaluation expenditure Total Non-current Assets Total Assets Liabilities Current Liabilities Trade and other payables Loans payable Total Liabilities Net Assets Equity Issued capital Options reserve Performance share reserve Foreign currency reserve Accumulated losses Net Equity Note 30 June 2019 $ 30 June 2018 $ 6 7 8 9 10 10 11(a) 11(d) 11(b) 11(c) 749,162 207,798 956,960 341,412 9,330,402 9,671,814 10,628,774 771,926 - 771,926 9,856,848 16,506,842 5,504,747 101,420 526,580 (12,782,741) 9,856,848 1,665,364 193,522 1,858,886 502,693 6,564,208 7,066,901 8,925,787 942,951 37,862 980,813 7,944,974 12,372,806 3,973,541 - 213,910 (8,615,283) 7,944,974 The accompanying notes form part of these consolidated financial statements. 24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019 Alderan Resources Limited Issued capital $ Options reserve Perform rights reserve Foreign currency reserve Accumulated losses $ $ Total equity $ Balance at 1 July 2017 9,551,762 1,225,741 Loss for the year Other comprehensive income for the year, net of income tax Total comprehensive loss for the year Contributions of equity, net of transaction costs Share based payments - - - 2,821,044 - - - - - 2,747,800 Balance at 30 June 2018 12,372,806 3,973,541 Balance at 1 July 2018 12,372,806 3,973,541 Loss for the year Other comprehensive income for the year, net of income tax Total comprehensive loss for the year Contributions of equity, net of transaction costs Share based payments - - - 4,134,036 - - - - - 1,531,205 101,420 - - - - - - - - - - - - - - (1,909,065) 8,868,438 (6,706,218) (6,706,218) 213,910 - 213,910 213,910 (6,706,218) (6,492,308) - - - - 2,821,044 2,747,800 213,910 (8,615,283) 7,944,974 213,910 (8,615,283) 7,944,974 - (4,167,457) (4,167,457) 312,670 - 312,670 312,670 (4,167,457) (3,854,787) - - - - 4,134,036 1,632,625 Balance at 30 June 2019 16,506,842 5,504,746 101,420 526,580 (12,782,740) 9,856,848 The accompanying notes form part of these consolidated financial statements. 25 Alderan Resources Limited CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019 Cash flows from operating activities Payments to suppliers and employees Payments for exploration and evaluation expenditures Interest received Interest paid Note 30 June 2019 $ 30 June 2018 $ (2,492,601) (2,476,458) 1,560 (2,091) (3,249,160) (5,036,532) 15,618 (5,661) Net cash (used in) operating activities 6 (4,969,590) (8,275,735) Cash flows from investing activities Receipt from sale of plant and equipment Payments for plant and equipment Net cash provided by / (used in) investing activities Cash flows from financing activities 39,703 - 39,703 - (575,380) (575,380) Proceeds from issue of shares (net of capital raising costs) 3,745,036 2,821,044 Proceeds from exercise of options Payment of borrowings Net cash provided by financing activities Net (decrease)/increase in cash held Effect of foreign exchange Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 6 389,000 (37,861) 4,096,175 (833,712) (82,490) 1,665,364 749,162 - (3,312) 2,817,732 (6,033,383) 17,572 7,681,175 1,665,364 The accompanying notes form part of these consolidated financial statements. 26 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation These consolidated financial statements are general purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The consolidated financial statements comprise the financial statements of Alderan Resources Limited (the “Company”) and its subsidiary (collectively referred to as the “Group” or “consolidated entity”). For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements have been prepared on a historical cost basis. Historical cost is based on the fair values of the consideration given in exchange for goods and services. Going concern These financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. As disclosed in the financial statements, the Group incurred a loss of $4,167,457 and had net cash outflows from operating activities of $4,969,590 for the year ended 30 June 2019. As at that date, the Group had net current assets of $185,034. The ability of the Group to continue as a going concern is principally dependent upon the ability of the Group to secure funds by raising additional capital from equity markets and managing cash flows in line with available funds. These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors:   As disclosed in Note 13, on 7 August 2019, the Company issued 17,597,773 fully paid ordinary shares at an issue price of $0.032 per share to raise $563,129 via a share placement. These shares were issued to participants in a placement to sophisticated and professional investors. The Group has the ability to issue additional equity securities under the Corporations Act 2001 to raise further working capital; and The Group has the ability to curtail administrative, discretionary exploration and overhead cash outflows as and when required.  Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the Group does not continue as a going concern. Adoption of new and revised standards Standards and Interpretations applicable to 30 June 2019 For the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group and effective for the current annual reporting period. AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments became mandatorily effective on 1 January 2018. Accordingly, these standards apply for the first time to this set of financial statements. The Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and, therefore, no material change is necessary to Group accounting policies. Any new or amended standards and interpretations that are not yet mandatory have not been early adopted. 27 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Standards and Interpretations in issue not yet adopted A number of Australian Accounting Standards that have been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2019. The effect of these new or amended Accounting Standards is expected to give rise to additional disclosures and new policies being adopted. Refer below for the Standards relevant to the Company that are not yet effective and have not been early adopted. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group will adopt this standard from 1 July 2019 and the impact of its adoption is expected to be minimal on the Group. Statement of compliance The financial report was authorised for issued in accordance with a resolution of the Directors on 28 September 2019. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Significant accounting judgments and key estimates The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Share-based payment transactions The consolidated entity 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 is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. 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 profit or loss and equity. Exploration and Evaluation Exploration and evaluation costs have been capitalised on the basis that activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. 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. 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 20. 28 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Alderan Resources Limited ('company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. Alderan Resources Limited and its subsidiaries together are referred to in these financial statements as the 'Group' or consolidated entity’. Subsidiaries are all those entities over which the company has control. The company controls an entity when the company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the group 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 group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Foreign currency translation The financial statements are presented in Australian dollars, which is the Group's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. Revenue recognition Revenue is recognised at an amount that reflects the consideration to which the company is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established 29 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:  When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or  When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, 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. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. 30 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 Company 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, it's carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Company intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Company 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 Company'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 measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a diminishing value basis to write off the net cost of each item of plant and equipment over their expected useful lives as follows: Office equipment Motor vehicles Exploration equipment 3-5 years 7 years 3-5 years 31 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. Exploration and evaluation assets Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year in which the decision is made. Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Borrowings 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. Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current. Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Discontinued operations A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the statement of profit or loss and other comprehensive income. Business combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss. Business combinations (continued) On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date. Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss. 32 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. 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 statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the 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. Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits. Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability. Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end of the lease term. Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease. Share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees and key management personnel. Equity-settled transactions are awards of shares, or options over shares that are provided to employees and key management personnel in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. 33 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees and key management personnel to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows: ● during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period. ● from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date. All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the group, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee / key management personnel, and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Alderan Resources Limited, 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 financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 2: SEGMENT REPORTING Alderan Resources Limited AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Directors in order to allocate resources to the segment and to assess its performance. Information regarding these segments is presented below. The accounting policies of the reportable segments are the same as the Group’s accounting policies. The following tables are an analysis of the Group’s revenue and results by reportable segment provided to the Directors for the years ended 30 June 2019 and 30 June 2018. 30 June 2019 Segment revenue Intersegment revenue Revenue from external customers Continuing Operations United States of America $ - - - Australia $ 1,560 - 1,560 Segment result (1,740,023) (2,427,434) Segment assets 9,913,554 715,220 Segment liabilities 549,861 222,065 30 June 2018 Segment revenue Intersegment revenue Revenue from external customers Continuing Operations United States of America $ - - - Australia $ 87,433 (60,670) 26,763 Segment result (2,368,590) (4,337,628) Segment assets 7,112,233 1,813,554 Segment liabilities 900,920 79,893 Unallocated items $ Consolidated $ - - - - - - 1,560 - 1,560 (4,167,457) 10,628,774 771,926 Unallocated items $ Consolidated $ - - - - - - 87,433 (60,670) 26,763 (6,706,218) 8,925,787 980,813 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Alderan Resources Limited NOTE 3: REVENUE AND EXPENSES a. Other income Refunds b. Consulting and administration expense Accountancy fees Listing fees Rent Admin & consultancy fees Insurance Legal fees Exploration project related costs and others Promotion and investor relations Travel expenses NOTE 4: INCOME TAX 30 June 2019 $ 30 June 2018 $ - - 11,145 11,145 70,480 43,711 126,289 753,762 97,706 45,268 32,911 15,822 47,408 126,327 49,271 46,175 798,764 112,606 375,184 379,409 81,642 149,225 1,233,357 2,118,603 30 June 2019 $ 30 June 2018 $ (a) Income tax benefit - - (b) Numerical reconciliation between tax-benefit and pre-tax net loss (Loss) before tax from continuing operations (Loss) before tax from discontinued operations Accounting (loss) before income tax Income tax benefit using the Company’s domestic tax rate of 27.5% (2018: 27.5%) Other non-deductible items Unrecognised deferred tax asset attributable to tax losses and temporary differences Income tax attributable to entity (c) Unrecognised deferred tax (4,167,457) (6,706,218) - (4,167,457) (1,146,051) (553,882) 1,699,933 - (6,706,218) (1,050,258) 755,645 793,951 - - Tax losses for which no deferred tax asset has been recognised Losses available for offset against future taxable income Total Potential tax benefits at 27.5% (2018: 27.5%) (9,068,666) (9,068,666) (2,887,094) (2,887,094) (2,493,883) (1,541,085) The benefit of deferred tax assets not brought to account will only be brought to account if:    future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised; the conditions for deductibility imposed by tax legislation continue to be complied with; and no changes in tax legislation adversely affect the Company in realising the benefit. 36 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 5: LOSS PER SHARE Basic loss per share Basic loss per share from continuing operations 30 June 2019 30 June 2018 Cents per share Cents per share (3.26) (3.26) (6.15) (6.15) Losses used in the calculation of basic and diluted loss per share is as follows: $ $ Loss for the year Loss from continuing operations (3,854,787) (6,706,218) (3,854,787) (6,706,218) The weighted average number of ordinary shares used in the calculation of basic and diluted loss per share is as follows: Number Number Weighted average number of ordinary shares for the purpose of basic loss per share 127,879,527 109,059,798 NOTE 6: CASH AND CASH EQUIVALENTS Reconciliation to the Statement of Cash Flows: For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand and at bank, net of outstanding bank overdrafts. Cash and cash equivalents as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash in bank and on hand Reconciliation of loss after tax to net cash outflow from operating activities: Loss for the year Adjustment for non-cash income and expense items Depreciation and amortisation Loss on sale of assets Write-off Share-based payment expense Change in assets and liabilities Trade and other receivables Trade and other payables Exploration and evaluation expenditure Net cash (outflow) / inflow from operating activities 30 June 2019 $ 749,162 749,162 30 June 2018 $ 1,665,364 1,665,364 30 June 2019 $ 30 June 2018 $ (4,167,457) (6,706,218) 117,229 4,348 108,128 22,544 1,632,625 2,747,800 (14,277) (171,025) 50,126 704,285 (2,371,033) (5,202,400) (4,969,590) (8,275,735) 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 7: TRADE AND OTHER RECEIVABLES Alderan Resources Limited Bonds GST receivable Sundry debtors Prepayment NOTE 8: PLANT AND EQUIPMENT 30 June 2019 $ 175,711 16,811 - 15,276 207,798 Office Equipment $ Motor Vehicle $ Exploration Equipment $ Balance at 1 July 2017 Additions Write-off Depreciation Exchange differences Balance at 1 July 2018 Asset sale Depreciation Balance at 30 June 2019 19,547 6,807 (19,547) (977) (28) 5,802 - (1,570) 4,232 - 153,508 - (12,365) (370) 140,773 (44,053) (18,530) 78,190 NOTE 9: EXPLORATION AND EVALUATION EXPENDITURE Carrying value at the beginning of the year Expenditure incurred during the year Exchange differences Carrying value at the end of the year NOTE 10: FINANCIAL LIABILITIES Trade and other payables Trade creditors Accruals and other payables Property acquisition payment Total Loans payable Unsecured loans Total 2,997 453,738 (2,997) (94,786) (2,834) 356,118 - (97,128) 258,990 30 June 2019 $ 6,564,208 2,370,929 395,265 9,330,402 30 June 2019 $ 101,764 173,162 497,000 771,926 30 June 2018 $ 153,271 40,251 - - 193,522 Total $ 22,544 614,053 (22,544) (108,128) (3,232) 502,693 (44,053) (117,228) 341,412 30 June 2018 $ 1,162,236 5,202,401 199,571 6,564,208 30 June 2018 $ 132,170 810,781 - 942,951 - - 37,862 37,862 38 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 11: ISSUED CAPITAL a) Ordinary shares Year to 30 June 2019 Year to 30 June 2018 No. $ No. $ Fully paid Balance at beginning of year 112,963,908 12,372,806 107,963,908 9,551,762 Options exercised (i) Issue of shares (ii) Issue of shares (iii) Less share issue costs 1,645,000 15,000,000 32,402,227 - 389,000 3,000,000 1,036,871 (291,835) - - 5,000,000 3,000,000 - - - (178,956) Balance at the end of the year 162,011,135 16,506,842 112,963,908 12,327,806 (i) (ii) (iii) The Company issued a total of 1,645,000 shares on exercise of 1,045,000 incentive options at $0.20 each and 600,000 options at $0.30 each The Company issued 15,000,000 shares at $0.20 per share to raise a total $3,000,000 The Company issued 32,402,227 shares to sophisticated investors at $0.032 per share to raise a total of $1,036,871 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. b) Performance rights reserve Year to 30 June 2019 Year to 30 June 2018 No. $ No. $ Fully paid Balance at beginning of year Issue of performance rights (i) Balance at the end of the year - 600,000 600,000 - 101,420 101,420 - - - - - - (i) 600,000 performance rights to Director Bruno Hegner as an incentive for future performance as approved by shareholders. The performance rights comprise three tranches:- - 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.00 for more than a total of 120 trading days within two years from grant date; 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.50 for more than a total of 120 trading days within three years from grant date; and 200,000 converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $2.00 for more than a total of 120 trading days within four years from grant date. - - The conditions for conversion of the performance rights into fully paid ordinary shares were not met by 30 June 2019 or at the date of this report. 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Alderan Resources Limited NOTE 11: ISSUED CAPITAL (CONTINUED) c) Foreign Currency Reserves Balance at beginning of year Movement during the year Balance at the end of the year NOTE 11: ISSUED CAPITAL (CONTINUED) d) Options 30 June 2019 $ 213,910 312,670 526,580 30 June 2018 $ - 213,910 213,910 30 June 2019 30 June 2018 No. $ No. $ Balance at beginning of year 20,707,454 3,973,541 19,857,454 1,225,741 Exercise of incentive options by directors and management (i) Issue of options to Directors and key management (iii) Options issued to consultant (iv) Options issued under the long-term incentive plan (v) Existing options to employees and management vesting Options forfeited (ii) (vi) Options cancelled (ii) Balance at the end of the year (1,645,000) - - - - (1,075,000) (2,200,000) 15,787,454 - - - - - - 2,000,000 1,332,711 800,000 1,850,000 609,555 254,323 534,491 (187,242) 1,183,956 5,504,746 - 665,480 (3,800,000) (114,269) - - 20,707,454 3,973,541 (i) (ii) The Company issued a total of 1,645,000 shares on exercise of 1,045,000 incentive options at $0.20 each and 600,000 options at $0.30 each The following employee & consultant options cancelled and forfeited during the year:- • • • • • • • • • • • • • • 500,000 options exercisable at $2.50, expiring on 30/11/2021 500,000 options exercisable at $3.00, expiring on 30/11/2021 500,000 options exercisable at $3.50, expiring on 30/11/2021 & vesting on 1/11/2019 500,000 options exercisable at $4.00, expiring on 30/11/2021 & vesting on 1/11/2020 25,000 options exercisable at $2.50, expiring on 02/11/2021 25,000 options exercisable at $3.00, expiring on 02/11/2021 25,000 options exercisable at $3.50, expiring on 02/11/2021 & vesting on 16/10/2019 25,000 options exercisable at $4.00, expiring on 02/11/2021 & vesting on 16/10/2020 75,000 options exercisable at $3.50, expiring on 15/11/2021 & vesting on 01/09/2019 75,000 options exercisable at $4.00, expiring on 15/11/2021 & vesting on 01/09/2020 275,000 options exercisable at $1.00, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 250,000 options exercisable at $1.50, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 250,000 options exercisable at $2.00, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 250,000 options exercisable at $2.50, expiring on 12/06/2022 & vesting on 12/06/2019 and 12/06/2020 40 Alderan Resources Limited (iii) Hegner (Directors). The details of the options granted are as follows: On 30 November 2017, the Company issued 2,000,000 unlisted options over fully paid ordinary shares to Mr. Series Number Grant date Expiry date Exercise Price $ Fair value at grant date $ Tranche A 500,000 30/11/2017 30/11/2021 Tranche B 500,000 30/11/2017 30/11/2021 Tranche C 500,000 30/11/2017 30/11/2021 Tranche D 500,000 30/11/2017 30/11/2021 2.50 3.00 3.50 4.00 Total 2,000,000 638,840 609,072 583,183 560,316 2,391,411 Vesting date 30/11/2017 01/11/2018 01/11/2019 01/11/2020 Recognised as Expense in 2018 $ 638,840 399,820 180,609 113,442 1,332,711 (iv) On 4 September 2017, the Company issued 800,000 unlisted options over fully paid ordinary shares, with various exercise prices and vesting periods, to an employee of the Company to provide an equity-based incentive for future performance. The details of the options granted are as follows: Series Number Grant date Expiry date Exercise Price $ Fair value at grant date $ Tranche A 200,000 04/09/2017 22/02/2021 Tranche B 200,000 04/09/2017 22/02/2021 Tranche C 200,000 04/09/2017 22/02/2021 Tranche D 200,000 04/09/2017 22/02/2021 0.60 0.80 1.00 1.20 Total 800,000 194,113 183,697 174,908 167,307 720,025 Vesting date 04/09/2018 04/09/2018 04/09/2018 04/09/2018 Recognised as Expense in 2018 $ 164,331 155,513 148,073 141,638 609,555 (v) During the 2018 financial year, a total of 1,850,000 unlisted options over fully paid ordinary shares were issued to key employees to provide an equity-based incentive for future performance. The details of the options granted are as follows: Series Number Grant date Expiry date Exercise Price $ Fair value at grant date $ Tranche A Tranche B Tranche C Tranche D Tranche A Tranche B Tranche C Tranche D 25,000 25,000 25,000 25,000 75,000 75,000 75,000 75,000 02/11/2017 02/11/2021 02/11/2017 02/11/2021 02/11/2017 02/11/2021 02/11/2017 02/11/2021 15/11/2017 15/11/2021 15/11/2017 15/11/2021 15/11/2017 15/11/2021 15/11/2017 15/11/2021 Tranche A-1 166,666 12/06/2018 12/06/2022 Tranche A-2 233,334 12/06/2018 12/06/2022 Tranche B-1 116,666 12/06/2018 12/06/2022 Tranche B-2 233,334 12/06/2018 12/06/2022 Tranche C-1 116,666 12/06/2018 12/06/2022 Tranche C-2 233,334 12/06/2018 12/06/2022 Tranche D-1 116,666 12/06/2018 12/06/2022 Tranche D-2 233,334 12/06/2018 12/06/2022 2.50 3.00 3.50 4.00 2.50 3.00 3.50 4.00 1.00 1.00 1.50 1.50 2.00 2.00 2.50 2.50 32,148 30,653 29,352 28,203 56,230 77,881 74,414 71,362 60,486 84,681 37,361 74,723 33,740 67,481 30,926 61,852 Vesting date 02/11/2017 16/10/2018 16/10/2019 16/10/2020 15/11/2017 01/09/2018 01/09/2019 01/09/2020 12/06/2019 12/06/2020 12/06/2019 12/06/2020 12/06/2019 12/06/2020 12/06/2019 12/06/2020 Recognised as Expense in 2018 $ 32,148 19,483 9,328 5,970 56,230 65,085 31,094 19,861 2,983 2,085 1,842 1,840 1,664 1,662 1,525 1,523 Total 1,850,000 851,493 254,323 (vi) During the 2018 financial year, 3,800,000 unlisted options that were issued to previous Directors and employees were forfeited due to the failure to satisfy vesting conditions of remaining with the Company. 41 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 12: CONTINGENT LIABILITIES There were no contingent liabilities as at 30 June 2019 (2018: nil). NOTE 13: SIGNIFICANT EVENTS AFTER THE REPORTING DATE The Company held a meeting of shareholders on 19 July 2019 to ratify and approve the issue of placement shares to raise up to $1.6 million as announced to the ASX on 23 May 2019, amongst other matters. Following the meeting the Company issued the following securities:- - - - 605,989 shares as consideration for the deferral of acquisition payment for mineral claims within the Frisco project; 14,000,000 unlisted incentive options to Directors as an incentive for future performance as detailed in the notice of meeting dated 17 June 2019, broken down as:- o o 750,000 incentive options to key management personnel pursuant to the Company’s long-term incentive plan, each exercisable at $0.10 and expiring 19 July 2022. 7,000,000 unlisted options over shares exercisable at $0.06 each and expiring 19 July 2022; and 7,000,000 unlisted options over shares exercisable at $0.10 each and expiring 19 July 2022; On 7 August 2019, the Company issued 17,597,773 fully paid ordinary shares at an issue price of $0.032 per share, being the second tranche of the capital raising via a share placement. These shares were issued to participants in a placement to sophisticated and professional investors. Further, the Company issued 25,000,000 unlisted options which were free attaching to shares issued to placement participants, as approved by shareholders, on a 1-for-2 basis. The placement options are exercisable at $0.10 each and expire on 7 August 2022. Further the Company issued 10,000,000 unlisted options to a nominee of the lead manager to the placement as consideration for brokerage services, with the following terms:- - - 5,000,000 unlisted options exercisable at $0.10 each and expiring 7 August 2021; and 5,000,000 unlisted options exercisable at $0.20 each and expiring 7 August 2021. Finally, the Company issued 750,000 unlisted options to an employee under its option incentive plan, each exercisable at $0.10 and expiring 19 July 2022. On 21 August 2019 the Group announced that Mr Tom Eadie is to step down as Executive Chairman and that Mr Peter Williams was appointed as Managing Director. Other than disclosed above, the directors are not aware of any matters or circumstances not otherwise dealt with in this report or consolidated financial statements that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial periods. NOTE 14: DIVIDENDS The directors have not declared any dividend for the year ended 30 June 2019 (2018: nil). 42 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 15: SHARE-BASED PAYMENTS a) Recognised share-based payment expense From time to time, the Company provides Incentive Options to officers, employees, consultants and other key advisors as part of remuneration and incentive arrangements. The number of options granted, and the terms of the options granted are determined by the Board. Shareholder approval is sought where required. During the past two years, the following equity- settled share-based payments have been recognised: Expense arising from option-settled share-based payment transactions Expense arising from performance right-settled share-based payment transactions 30 June 2019 $ 1,531,205 101,420 30 June 2018 $ 2,747,800 - Net share based payment expense recognised in the profit or loss 1,632,625 2,747,800 b) Summary of options granted as share-based payments The following table illustrates the number and weighted average exercise prices (WAEP) of Incentive Options granted as share-based payments at the beginning and end of the financial year: 30 June 2019 30 June 2018 Number WAEP Number WAEP Outstanding at beginning of year 20,707,454 $0.83 19,857,454 Granted by the Company during the year Exercised during the year Forfeited during the year Cancelled during the year Outstanding at end of year - - 4,650,000 1,645,000 (1,075,000) (2,200,000) 15,787,454 $0.24 ($1.83) ($3.27) $0.48 - (3,800,000) ($0.44) - 20,707,454 - $0.83 $0.44 $2.37 - c) Summary of performance rights granted as share-based payments On 24 August 2018, 600,000 performance rights were issued to Mr. Hegner under the Long-Term Incentive Plan, on the terms and conditions detailed as follows: Class A Number 200,000 Expiry Date 24 August 2018 B C 200,000 24 August 2018 200,000 24 August 2018 Vesting Conditions Converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.00 for more than a total of 120 trading days within 2 years from grant date. Converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $1.50 for more than a total of 120 trading days within 3 years from grant date. Converting into fully paid ordinary shares once the closing share price as quoted on the ASX is greater than $2.00 for more than a total of 120 trading days within 4 years from grant date. 43 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 15: SHARE-BASED PAYMENTS (continued) The Group has measured the fair value of the performance rights issued during the half year by using the Monte-Carlo pricing model with the following inputs. Class Grant Date A B C 24 Aug 2018 24 Aug 2018 24 Aug 2018 Expiry Date 24 Aug 2020 24 Aug 2021 24 Aug 2022 Spot Price Vesting Hurdle (120 days) Fair value Expected Volatility Dividend Yield Interest Rate $0.34 $1.00 $0.15 100% $0.34 $1.50 $0.17 100% $0.34 $2.00 $0.19 100% 0% 0% 0% 1.98% 2.03% 2.21% NOTE 16: RELATED PARTY TRANSACTIONS a) Key management personnel Short-term employee benefits Post-employment benefits Share-based payments – performance rights Share-based payments - options b) Related party balances 30 June 2019 $ 643,681 120,735 101,420 1,152,179 2,018,015 30 June 2018 $ 698,643 222,076 - 1,980,477 2,901,196 As at 30 June 2019, there were no balances owed from/to key management personnel and or companies associated with the shareholders and Directors (2018: nil) c) Other transactions with related parties Mr Brett Tucker was a related party to the Company while appointed as a Director between 11 February 2019 and 14 May 2019. Mr Tucker is an employee of Ventnor Capital which received fees for providing Company Secretarial, accounting, book- keeping and registered office services during his appointment as a Director, totalling $18,732 (ex GST). There were no other transactions with related parties during the year ended 30 June 2019 (2018: nil). 44 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 16: RELATED PARTY TRANSACTIONS (continued) d) Subsidiaries The consolidated financial statements include the financial statements of Alderan Resources Limited and the following subsidiaries: Subsidiary Country of incorporation Equity interest (%) 30 June 2019 30 June 2018 Volantis Resources Corp, Inc. Valyrian Resources Corp. Alderan US Holdings, Inc Star Range US Holdings, Inc Star Range Resources Limited USA USA USA USA AUS 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Alderan Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group. NOTE 17: FINANCIAL INSTRUMENTS a) Overview The Group's principal financial instruments comprise receivables, payables, cash and cash equivalents. The main risks arising from the Company's financial instruments are credit risk, liquidity risk, interest rate risk and foreign currency risk. This note presents information about the Company's exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk, and the management of capital. Other than as disclosed, there have been no significant changes since the previous financial year to the exposure or management of these risks. The Group manages its exposure to key financial risks in accordance with the Company's risk management policy. Key financial risks are identified and reviewed annually and policies are revised as required. The overall objective of the Company's risk management policy is to recognise and manage risks that affect the Company and to provide a stable financial platform to enable the Company to operate efficiently. The Group does not enter into derivative transactions to mitigate the financial risks. In addition, the Company's policy is that no trading in financial instruments shall be undertaken for the purposes of making speculative gains. As the Company's operations change, the Directors will review this policy periodically going forward. The Directors have overall responsibility for the establishment and oversight of the risk management framework. The Directors review and approve policies for managing the Company's financial risks as summarised below. Categories of financial instruments Financial assets Cash on hand and in bank Trade and other receivables Financial liabilities Trade and other payables Loans payable 30 June 2019 $ 749,162 207,798 956,960 771,926 - 771,926 30 June 2018 $ 1,665,364 193,522 1,858,886 942,951 37,862 980,813 45 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 17: FINANCIAL INSTRUMENTS (continued) b) Capital risk management The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Company’s overall strategy remains unchanged from prior years. The capital structure of the Company consists of debt, cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings (accumulated losses). Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. c) Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Company uses publicly available financial information and its own trading record to rate its major customers. The Company does not have any significant credit risk exposure to any single counterparty or any Company of counterparties having similar characteristics. Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other receivables. There are no significant concentrations of credit risk within the Company. The carrying amount of the Company's financial assets represents the maximum credit risk exposure, as represented below: Cash on hand and in bank Trade and other receivables Total 30 June 2019 $ 749,162 207,798 956,960 30 June 2018 $ 1,665,364 193,522 1,858,886 Trade and other receivables are comprised primarily of sundry receivables and GST refunds due. Where possible the Company trades only with recognised, creditworthy third parties With respect to credit risk arising from cash and cash equivalents, the Company's exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. d) Interest Rate Risk The Company's exposure to the risk of changes in market interest rates relates primarily to the bank deposits with floating interest rate. These financial assets with variable rates expose the Company to cash flow interest rate risk. All other financial assets and liabilities, in the form of receivables and payables are non-interest bearing. 46 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 17: FINANCIAL INSTRUMENTS (continued) At the reporting date, the interest rate profile of the Company's interest-bearing financial instruments was: Interest-bearing financial instruments Bank balances Total 30 June 2019 $ 749,162 749,162 30 June 2018 $ 850,516 850,516 The Company currently does not engage in any hedging or derivative transactions to manage interest rate risk. Interest rate sensitivity A sensitivity of 0.1% (10 basis points) has been selected as this is considered reasonable given the current level of both short term and long term interest rates. A 1% (100 basis points) movement in interest rates at the reporting date would have increased (decreased) equity and profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2018. 30 June 2019 Profit or loss 30 June 2018 Profit or loss 100bp Increase 100bp Decrease 100bp Increase 100bp Decrease 7,492 (7,492) 8,505 (8,505) e) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to ensure, as far as possible, that the Company will always have sufficient liquidity to meet its liabilities when due by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The contractual maturities of financial liabilities, including estimated interest payments, are provided below. There are no netting arrangements in respect of financial liabilities. 30 June 2019 Financial Liabilities ≤6 Months $ 6-12 Months $ 1-5 Years $ ≥5 Years $ Total $ Trade and other payables 273,960 497,966 - - 273,960 497,966 - - - - - - 771,926 - 771,926 Loans payable Total 30 June 2018 Financial Liabilities Trade and other payables Loans payable Total ≤6 Months $ 6-12 Months $ 1-5 Years $ ≥5 Years $ Total $ 470,311 37,862 508,173 472,640 - 472,640 - - - - - - 942,951 37,862 980,813 47 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 17: FINANCIAL INSTRUMENTS (continued) f) Foreign Exchange Risk The Company has an exposure to foreign exchange rates given that the Company operates in the United States of America. A fluctuation in foreign exchange rates may affect the cost base of the costs and expenses of the company. The carrying amounts of the Company’s foreign currency denominated monetary liabilities as at the reporting date expressed in Australian dollars are as follows: US dollar denominated balances 30 June 2019 $ 30 June 2018 $ 66,030 504,950 Foreign currency sensitivity analysis The sensitivity analysis below details the Company’s sensitivity to an increase/decrease in the Australian Dollar against the United States Dollar. The sensitivity analysis includes only outstanding foreign currency denominated monetary items. A 100 basis point is the sensitivity rate used when reporting foreign currency risk internally to management and represents management’s assessment of the possible change in foreign exchange rates. At reporting date, if foreign exchange rates had been 100 basis points higher or lower and all other variables held constant, the Company’s loss will increase/decrease by $660 (2018: $5,049); and net assets will increase/decrease by $660 (2018: $5,049). The Company’s sensitivity to foreign exchange rates has not changed significantly from prior year. g) Fair values The net fair value of financial assets and financial liabilities approximates their carrying value. The methods for estimating fair value are outlined in the relevant notes to the financial statements. NOTE 18: COMMITTMENTS Exploration expenditure and annual lease/claim payments Committed at the reporting date but not recognised as liability: Within one year One to five years 30 June 2019 $ 30 June 2018 $ 655,394 369,918 1,025,312 465,888 1,120,832 1,586,720 Where the commitments are due in US Dollars, the Company has used the spot rate on 30 June 2019 as a conversion for the commitments into Australian Dollars. In order to maintain current rights of tenure to exploration tenements, the Company is required to outlay rentals and to meet the minimum expenditure requirements by the Mineral Resources Authority. Minimum expenditure commitments may be subject to renegotiation and with approval may otherwise be avoided by sale, farm out or relinquishment. These obligations are not provided for in the financial statements. 48 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 19: PARENT ENTITY INFORMATION Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive loss Financial Position Total Assets Total Liabilities Net Assets Issue Capital Reserves Accumulated Losses Total Equity Parent 30 June 2019 $ 30 June 2018 $ (3,854,787) (6,492,308) (3,854,787) (6,492,308) 10,078,913 8,031,965 (222,065) (86,991) 9,856,848 7,944,974 16,506,842 12,372,806 5,606,166 3,973,541 (12,256,160) (8,401,373) 9,856,848 7,944,974 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018. Capital commitments The commitments disclosed in Note 18 relate solely to the parent entity. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following: a. Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity NOTE 20: AUDITOR’S REMUNERATION The auditor of the Group is RSM Australia Partners. Audit or review of the financial statements 30 June 2019 $ 31,500 31,500 30 June 2018 $ 28,000 28,000 49 Alderan Resources Limited DIRECTORS’ DECLARATION In the opinion of the Directors: 1. The consolidated financial statements and notes thereto are in accordance with the Corporations Act 2001 including: a. b. giving a true and fair view of the Group’s financial position as at 30 June 2019 and its performance for the year then ended; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Regulations 2001 and other mandatory professional reporting requirements; and There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The consolidated financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. 3. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001. This declaration is signed in accordance with a resolution of the Board of Directors. Mr. Peter Williams Managing Director Dated this 30th day of September 2019 50 RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALDERAN RESOURCES LIMITED Opinion We have audited the financial report of Alderan Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial performance for the year then ended; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation Material Uncertainty Related to Going Concern We draw attention to Note 1, which indicates that the Group incurred a loss of $4,167,457 and had net cash outflows from operating activities of $4,969,590 for the year ended 30 June 2019. As at that date, the Group had net current assets of $185,034. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How our audit addressed this matter Exploration and Evaluation Expenditure Refer to Note 9 in the financial report The Group has capitalised exploration and evaluation expenditure with a carrying value of $9,330,402 as at 30 June 2019. We considered this to be a key audit matter due to the significant management judgments involved in assessing the carrying value of the asset including: finding the basis on which  Determination of whether the expenditure can be specific mineral that associated with resources, and expenditure is allocated to an area of interest;  Determination of whether exploration activities have progressed to the stage at which the recoverable existence of an economically mineral reserve may be assessed; and  Assessing whether any indicators of impairment are present, and if so, judgments applied to determine and quantify any impairment loss. Our audit procedures included:  Obtaining evidence that the Group has valid rights to explore in the specific area of interest;  Reviewing and enquiring with management the basis on which they have determined that the exploration and evaluation of mineral resources has the stage which permits a not yet reached reasonable assessment of the existence or otherwise of economically recoverable reserves;  Enquiring with management and reviewing budgets and other documentation as evidence that active and significant operations in, or relation to, the area of interest will be continued in the future;  Agreeing a sample of additions to supporting documentation and ensuring the amounts are capital in nature and relate to the area of interest; and  Critically assessing and evaluating management’s impairment indicators of that no assessment existed. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2019, but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporation Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor's report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Alderan Resources Limited, for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. RSM AUSTRALIA PARTNERS Perth, WA Dated: 30 September 2019 TUTU PHONG Partner CORPORATE GOVERNANCE The Company has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. To the extent applicable, our Company has adopted the Recommendations. No. PRINCIPLES AND RECOMMENDATIONS (Summary) COMPLIES COMMENT 1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 1.1 responsibilities A listed entity should disclose the respective roles and and management; and those matters expressly reserved to the board and those delegated to management. board its of 1.2 A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Yes The Board is ultimately accountable for the performance of the Company and provides leadership and sets the strategic objectives of the Company. It appoints all senior executives and assesses their performance on at least an annual basis. It is responsible for overseeing all corporate reporting systems, remuneration frameworks, governance issues, and stakeholder communications. Decisions reserved for the Board relate to those that have a fundamental impact on the Company, such as material acquisitions and takeovers, dividends and buybacks, material profits upgrades and downgrades, and significant closures. The Company has developed a Board Charter which sets out the roles and responsibilities of the Board, a copy of which is available on the Company's website. Yes The Company undertakes comprehensive reference checks prior to appointing a director or putting that person forward as a candidate to ensure that person is competent, experienced, and would not be impaired in any way from undertaking the duties of a director. In addition, the Company’s Nomination Committee Charter establishes accountability for requiring appropriate checks of potential directors to be carried out before appointing that person or putting them forward as a candidate for election, and this will be undertaken with respect to all future appointments. 1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. Yes The Company maintains written agreements with each of its Directors and senior executives setting out their roles and responsibilities and the terms of their appointment. 54 1.4 1.5 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the Board. A listed entity should have a diversity policy and should disclose at the end of each reporting period the measurable objectives for achieving gender diversity and towards achieving those objectives. the progress Yes The Company Secretary is engaged by the Company to manage the proper function of the Board. The Company Secretary reports directly to the Chair and is accountable to the Board. Alderan Resources Limited Partial The Company recognises the importance of equal employment opportunity. The Company's corporate code of conduct provides a framework for undertaking ethical conduct in employment. Under the corporate code of conduct, the Company will not tolerate any form of discrimination or harassment in the workplace. However, the Company has determined to not initially adopt a formal policy and establish measurable objectives for achieving gender diversity (and accordingly, will not initially be in a position to report against measurable objectives). The Board considers that its approach to gender diversity and measurable objectives is justified by the current nature, size and scope of the business, but will consider in the future, once the business operations of the Company mature, whether a more formal approach to diversity is required. The Company currently has no female board members or senior executives. 1.6 A listed entity should: Yes The Board will review its performance annually, as well as the performance of individual Committees and individual directors (including the performance of the Chairman as Chairman of the Board). (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; (b) and disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 1.7 A listed entity should have and disclose a process for periodically evaluating the performance of its senior executives and disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. The Company has undertaken an annual review which is still ongoing and will be reported in the Company’s next Annual Report. Yes The Board is responsible for periodically evaluating the performance of senior executives. The Board is to arrange an annual performance evaluation of the senior executives. Performance evaluations were undertaken during the reporting period in accordance with the process. 2. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 2.1 The Company should have a Nomination Committee which has at least 3 members a majority of whom are independent and is chaired by an independent director. Yes If it does not have a nomination committee, the Board should disclose that fact and the processes it employs to address board succession issues The Board has not established a separate nomination committee. Given the scale of the Company’s operations, it is anticipated that the full Board will be able to continue adequately discharge the functions of a Nomination Committee for the short to medium term. The Board will consider establishing a Nomination Committee when the size and complexity of the Company’s operations and management warrant it. In the meantime, the Company has adopted a Nomination Committee Charter and Remuneration Committee Charter, which includes specific responsibilities to be carried out by those committees when they are established. 55 and to ensure that the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge responsibilities effectively. its duties and The Company’s Nomination Committee Charter and Remuneration Committee Charter are available on the Company’s website. Alderan Resources Limited 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. No The Board has been specifically constituted with the mix of skills and experience that the Company requires to move forward in implementing its business objectives. The composition of the Board and the performance of each Director will be reviewed from time to time to ensure that the Board continues to have a mix of skills and experience necessary for the conduct of the Company’s activities as the Company’s business matures and evolves. 2.3 A listed entity should disclose: Yes Details of the Directors and their independence status as follows:-. (a) the names of the directors considered by the Tom Eadie, Non-executive Chairman – Independent board to be independent directors; (b) if a director has an interest, position, association or relationship which may otherwise be seen as a conflict to the director’s obligation to the company but the board is of the opinion that it does not compromise the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and independence of the Peter Williams, Managing Director – Not independent Hegner, Executive Director - Not independent Nicolaus Heinen, Non-executive Director – Not independent Marat Abzalov, Non-executive Director – Independent The independence of each Director has been determined in taking into account the relevant factors suggested in The Corporate Governance Principles and Recommendations (3rd Edition) as published by ASX Corporate Governance Council (Recommendations) (Independence Factors). The length of service for each director is disclosed in this Annual Report. (c) the length of service for each director 2.4 A majority of the board of a listed entity should be independent directors Yes As disclosed in the response to Recommendation 2.3 above, only two of the Directors are considered to be independent. However, the Company is confident that current composition of the Board is optimal for its current level of operations, and is therefore in the best interests of the Company and its shareholders. The Board will review the balance of independence on the Board on an on-going basis, and will implement changes at its discretion having regard to the Company’s growth and changing management and operational circumstances. 2.5 2.6 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity Yes Mr Eadie is the Chairman and is considered to be independent. directors A listed entity should have a program for inducting appropriate new and professional development opportunities for directors to develop and maintain the skills and provide Yes Upon appointment to the Board new Directors are provided with Company policies and procedures and are provided an opportunity to discuss the Company's operations with senior management and the Board. 56 knowledge needed to perform their role as directors effectively. The Company encourages its Directors to participate in professional development opportunities presented to the Company and provides appropriate industry information to its Board members on a regular basis. Alderan Resources Limited 3. PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING 3.1 A listed entity should have a code of conduct for its directors, senior executives and employees and disclose that code or a summary of it. Yes The Company has adopted a Code of Conduct, which provides a framework for decisions and actions in relation to ethical conduct in business. All of the Company’s directors and employees are required to comply with the standards of behaviour and business ethics in accordance with the law and the Code of Conduct. The Code of Conduct is disclosed on the Company’s website. 4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING Yes The Board has not established a separate audit committee. Given the present size of the Company and the scale of its operations, the Board has decided that the full Board can adequately discharge the functions of an audit committee. The Board will establish an Audit Committee when the size and complexity of the Company’s operations and management warrant it. In the meantime, the Board has adopted an Audit and Risk Committee Charter, which includes specific responsibilities relating to audit and risk, and which the Board uses as a guide when acting in the capacity of the Audit Committee. The Company’s Audit and Risk Committee Charter is available on the Company’s website. Yes The Board will continue to require a conforming declaration from the relevant key executive or executives before it approves the entity’s financial statements for each financial period, consistent with practise to date. 4.1 4.2 The Board of a listed entity should have an audit committee which consists of at least 3 members all of whom are non- executive directors and a majority of whom are independent directors and the committee should be chaired by an independent director who is not the chair of the board. If it does not have an audit committee, the Board should disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial the entity have been properly records of maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. 57 4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. 5. MAKE TIMELY AND BALANCED DISCLOSURES 5.1 A listed entity should have a written policy for complying with its continuous disclosure obligations under the Listing Rules and disclose that policy or a summary of it. 6. RESPECTS THE RIGHTS OF SHAREHOLDERS 6.1 6.2 6.3 6.4 A listed entity should provide information about itself and its governance to investors via its website. A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. 7. RECOGNISE AND MANAGE RISK 7.1 The Board should establish a risk management committee made up of at least 3 members, a majority of whom are independent directors, and chaired by an independent director. If it does not have a risk committee, the Board should disclose that fact and the processes it Yes The Company’s external auditor will be invited to attend all Annual General Meetings of the Company and will be available to answer questions from security holders relevant to the audit. Alderan Resources Limited Yes The Company has a Continuous Disclosure Policy which includes processes to ensure compliance with ASX Listing Rule 3.1 disclosure and to ensure accountability at a senior executive level for compliance and factual presentation of the Company’s financial position. The Continuous Disclosure Policy is disclosed on the Company’s website. Yes Yes Yes Yes Yes The Company has established a website on which it maintains information in relation to corporate governance, directors and senior executives, Board and committee charters, annual reports, ASX announcements and contact details. The Company has adopted a Shareholder Communications Policy, which establishes principles to ensure that the shareholders are informed of all major developments affecting the Company’s state of affairs. The Shareholder Communications Policy is disclosed on the Company’s website. The Company encourages shareholders to participate in general meetings of the Company as a means by which feedback can be given to the Company and allocates scheduled question time at meetings of Shareholders to facilitate participation at those meetings. The Company engages its share registry to manage the majority of communications with shareholders. Shareholders are encouraged to receive correspondence from the Company electronically, thereby facilitating a more effective, efficient and environmentally friendly communication mechanism with shareholders. Shareholders not already receiving information electronically can elect to do so through the share registry, Automic Share Registry Pty Ltd at www.automic.com.au. The Board has not established a separate risk committee. Given the present size of the company, the Board has decided that the full Board can adequately discharge the functions of a risk committee for the time being. The Board will establish a Risk Committee when the size and complexity of the Company’s operations and management warrant it. 58 employs for overseeing management framework. the entity’s risk In the meantime, the Company’s Audit and Risk Committee Charter includes principles to guide the Board’s oversight of the Company’s risk function. Alderan Resources Limited 7.2 The board or a committee of the board should: Yes (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place. 7.3 A listed entity should disclose: (a) if it has an internal audit function, how the is structured and what role it function performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. The identification and management of risk has been continually at the forefront of the Company’s recent activities. In accordance with the Audit and Risk Committee Charter, the Board will review the Company’s risk management framework on an annual basis. Such as review has not taken place since the Company adopted its risk framework and listed on the ASX. The Company intends to conduct this review prior to its next annual reporting date. Yes Given the present size of the company, the Board has decided that a formal internal audit function is not required for the time being. The risk management functions employed by the Board are summarised above. Yes The Company provides its material risks below, including exposure to economic, environmental and social sustainability risks. The Company will continue to disclose these material risks in the future in its annual report or elsewhere as appropriate. Liquidity risk Certain securities are likely to be classified as restricted securities. To the extent that Shares are classified as restricted securities, the liquidity of the market for Shares may be adversely affected. Limited exploration on the Frisco Project Although there have been various phases of exploration across the Tenements that comprise the Frisco Project, the prospects on which the Company are focusing are in the early stages of exploration and do not contain any resources that are consistent with the current JORC Code guidelines. Further evaluation of data and exploration is required to determine whether any historical mineralisation estimates within the licences may be upgraded to be consistent with the current JORC Code guidelines. Exploration and evaluation risks Mineral exploration, development and mining activities are high-risk undertakings. There can be no assurance that exploration on these Tenements, or any other claims or leases that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. 59 Alderan Resources Limited Title risks Mineral rights in the USA may be owned by private parties, local government, state government, federal government, or indigenous groups. Verifying the chain of title for USA mineral rights can be complex and may require that remedial steps be taken to correct any defect in title. Securing exploration and extraction rights to federally-owned mineral rights requires strict adherence to claim staking and maintenance requirements. The Company has taken reasonable steps to verify the title to the Tenements in which it has, or has a right to acquire, an interest. Although these steps are in line with market practice for exploration projects such as the Frisco Project, they do not guarantee title to the Tenements nor guarantee that the Tenements are free of any third party rights or claims. Future capital requirements The Company's activities are likely to require substantial expenditure, in additional to the amounts raised under the Offer. Any additional equity financing may be dilutive to Shareholders and any debt financing if available may involve restrictive covenants, which may limit the Company's operations and business strategy. Although the Directors believe that additional capital can be obtained, there can be no assurance that appropriate capital or funding, if and when needed, will be available on terms favourable to the Company or at all. The Company's failure to raise capital if and when needed could delay or suspend the Company's business strategy and could have a material adverse effect on the Company's activities. Reliance on key personnel The Company’s future depends, in part, on its ability to attract and retain key personnel. Its future also depends on the continued contributions of its executive management team and other key management and technical personnel, the loss of whose services would be difficult to replace. In addition, the inability to continue to attract appropriately qualified personnel could have a material adverse effect on the Company’s business. Fluctuations in Commodity prices The Company’s business, prospects, financial condition and results of operations are heavily dependent on prevailing metals prices, particularly copper. There can be no assurance that the existing level of metals prices will be maintained in the future. Any future declines, even relatively modest ones, in metals prices could adversely affect the Company's business, prospects, financial condition and results of operations. Exchange rate risks The Company operates in multiple currencies and exchanges rates are constantly fluctuating. International prices of various commodities, as well as the exploration expenditure of the Company are denominated in United States dollars, whereas the Company will rely principally on funds raised and accounted for in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets. Other industry specific risks The Company’s activities are subject to a number of risks common to the conduct of mining exploration and the financing of mining exploration activities, including but not limited to: 60 8. REMUNERATE FAIRLY AND RESPONSIBLY 8.1 The board should establish a remuneration committee which has at least three members, a majority of whom are independent and which is chaired by an independent director. If it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. 8.3 A listed entity which has an equity- based remuneration scheme should: N/A (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. Alderan Resources Limited (a) (b) (c) (d) (e) (f) risks inherent in resource estimation; operation and technical risks; environmental risks; tenure risks; contract counterparty risks; and competition risks. Yes The Board has not established a separate remuneration committee. Given the present size of the company, the Board has decided that the full Board can adequately discharge the functions of a remuneration committee for the time being. The Board will establish a Remuneration Committee when the size and complexity of the Company’s operations and management warrant it. In the meantime, the Board has adopted a Remuneration Committee Charter, which includes principles for setting and reviewing the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive, including if required, the ability to obtain independent advice on the appropriateness of remuneration packages. Until such time as the Remuneration Committee is established, the functions of this committee will continue to be carried out by the full Board. Yes Each director has entered a separate employment or consultancy agreement with the Company. The remuneration of directors and senior executives is generally reviewed annually. As discussed under Recommendation 8.1 above, a Remuneration Committee Charter is in place, and the Board (in its capacity as the Remuneration Committee) in will consider its approach to remuneration in due course having regard to the Remuneration Committee Charter. Disclosure of the remuneration arrangements for Directors and senior executives will be disclosed in the annual reports of the Company in the future. The Company maintains a Securities Trading Policy which restricts the permission for employees and directors to enter transactions which limit the economic risks associated with the participation in any of the Company's equity based incentive schemes. A copy of the Securities Trading Policy is available on the Company's website. The use of derivatives or other hedging arrangements for unvested securities of the Company or vested securities of the Company which are subject to escrow arrangements is prohibited. Where a director or other senior executive uses derivatives or other hedging arrangements over vested securities of the Company, this will be disclosed. 61 SCHEDULE OF MINING CLAIMS HELD AT REPORTING DATE Patented Mining Claims The Horn Patented Claims ClaimName Survey Number Sec Twn Rng 022** Absolom Accrington No. 1 Accrington No. 2 Accrington No. 3 Accrington No. 4 Accrington No. 5 Accrington No. 6 Accrington No. 7 Antwerp Bonanza Castle Rock Lode Part A Castle Rock Lode Part B Champion Congress No. 2 Copper Glance No. 1 Copper Glance No. 2 Copper Glance No. 3 Cupric Fraction Cupric** Dick Dolly Dolly Drum Drum Drum Dumbarton Emporia Emporia No. 7 Emporia No. 8 5946 5921 5986 5986 5986 5986 5986 5986 5986 43 49 6202 6202 5986 5986 5295 5295 5295 6481 5946 3399 61 5921 5986 5986 5986 15 23 22 22 22 22 22 22 22 15 23 24 24 22 23 15 15 15 15, 16 16 23 23 23 22 22 22 73 14, 23 5921 5986 5986 26 22 22 T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S 127S T27S 127S T27S 127S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W 62 Emporia No. 9 5986 23 127S R13W Alderan Resources Limited Patented Mining Claims (Continued) ClaimName Emporia No. 10 Emporia No. 11 Emporia Fraction Florida Survey Number 5986 5986 5921 42 Fraction (aka Elinore Fraction) 5303 General Warner** George Dewey Grampian Grampian Smelter Granite* Gulch & Switch Harrison** Hedges Fraction* Hope Lode Horn Silver Apex No. 1 Horn Silver Apex No. 2 Horn Silver Apex No. 3 Horn Silver Apex No. 4 Horn Silver Apex No. 5 Horn Silver Apex No. 7 Horn Silver Apex No. 8 Horn Silver Apex No. 9 Horn Silver Apex No. 10 Horn Silver Apex No. 11 Horn Silver Apex No. 12 Horn Silver Apex No. 13 Horn Silver Apex No. 14 Horn Silver Extension Horn Silver Fraction Horn Silver Millsite 5946 5986 51 40 72 6356 5946 4751 54 5921 5921 5921 5921 5921 5921 5921 5921 5921 5921 5921 5921 5921 5921 5989 38B Sec Twn Rng 26 26 26 15 2 16 22, 23 23 13 15 23 16 15 23 23 23 23 23 23 22, 23 23 23 22 23 23 26 22 23 23 13 T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W T278 R13W T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W 63 Horn Silver Mine Humbug 38A 5922 23 22 T27S T27S R13W R13W Patented Mining Claims (Continued) Alderan Resources Limited ClaimName Humbug No. 1 Independence No. 1 Independence No. 3 Jay Hawker Jennie Fraction King Bird King David Lady Franklin Lady Franklin Fraction Lady Washington Little Dick Massachusetts* Millsite No. 1 Millsite No. 2 Nineteen Hundred Oil City* Old Warrior Quartzite No. 2* Quartzite* Reciprocity Reciprocity No. 1 Reciprocity No. 3 Relief No. 2** Relief** St. Louis No. 1 St. Louis No. 2 St. Louis No. 3 St. Louis No. 4 St. Stephen No. 2 Sumner Lode Sunbeam Mine Survey Number Sec Twn Rng 5922 5921 5921 60 6170 5265 5921 3400 5921 3401 5921 65 58 59 4655 4749 5921 71 66 5986 5986 5986 6483 6482 5986 5986 5986 5986 5921 74 22 26 26 23 22 31 23 26 26 23 23 15 13 13 23 15 23 14, 15 14 22 22 22 16 16 T27S T27S T27S T27S T27S T26S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W 22,23 T275 R13W 23 23 23 23 23 T27S T27S T27S T27S T27S R13W R13W R13W R13W R13W 5922 15,16,21,22 T27S R13W 64 Sunbeam No. 1 Transcendent* 5922 5946 21,22 16 T27S T275 R13W R13W Patented Mining Claims (Continued) Alderan Resources Limited ClaimName Utah No. 1 Utah No. 2 Utah No. 3 Vorheas* Warner No. 2** Washington Washington No. 2 Washington No. 3 Washington No. 4 Washington No. 5 Washington No. 6 Washington No. 7 Washington No. 8 Washington No. 10 Young America Survey Number Sec Twn Rng 5986 5986 5986 4750 6480 5946 5946 5946 5946 5946 5946 5946 5946 5946 70 22 22 22 15 16 15 15, 22 15 15 22 15 15 15,22 15 23 T27S T27S T27S T27S T27S T27S T27S T27S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W T275 R13W T27S T27S T27S T27S T27S R13W R13W R13W R13W R13W *These claims are owned 50% by Horn Silver Mines, 50% by Shoshone Resources. Volantis holds an option to purchase a 100% interest in these claims under two separate option agreements. ** These claims are subject to a March 1, 2010 lease from Horn Silver Mines Inc. to Great American Resources, LLC in which have the carbonates are leased to Great American Resources. Volantis holds an option to purchase all non-carbonate minerals on the same claims, subject to the terms of the GAR lease. Note: The listed township and ranges are all according to the Salt Lake Base & Meridian. The section numbers are listed for convenience in locating a particular claim and do not indicate that the entirety of a particular claim lies within the listed section or sections. All of the claims are located in the San Francisco Mining District except for the King Bird Claim, which is located in the Beaver Lake Mining District. Most of the mining claims were located and surveyed before the area was surveyed according to the public land survey system. Thus, a formal, updated survey would be necessary to precisely locate the claims within the public land survey system. A 50.5% undivided interest in the following described patented lode mining claims located in the San Francisco Mining District, Beaver County, Utah: ClaimName Granite Hedges Fraction Survey Number 72 4751 Sec Twn Rng 15 15 T27S T27S RI3W R13W 65 Alderan Resources Limited Massachusetts Oil City Quartzite No. 2 Quartzite Vorheas 65 4749 71 66 4750 15 15 14,15 14 15 T27S T27S T27S T27S T27S R13W R13W RI3W R13W R13W The Cactus Patented Claims Sec Twn Rng ClaimName Alturas Anaconda Mining Claim Anchor No. 2* Antelope Antler Aransas Pass Augusta Bandit Belmont Copper Silver Blackbird No. 4 Boston Buckhorn Burro Burro No. 1 Burro No. 2 Burro No. 3 Burro No. 4 Burro No. 5 Cactus Extention Cactus Milisite Cactus Mine U.S. Calliope Camille Comet Contact** Copper Spring Mine Copperopolis No. 3 Survey Number 5303 4673 5118 5303 5303 2 3 7 2 2 4492A 3,4 4611 5827 4492A 6010 4611 5303 5393 5826 5826 5393 5393 5393 4492A 39B 39A 5303 4709 64 5303 4709 4709 3 3 3 2,11 3 2 10 10 10 10 3,10 3,10 3 24 3 2 2 2, 3 3 11,14 10 T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S 127S T27S T27S R13W R13W R12W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W 66 Copperopolis No. 4 4709 10 T27S R13W Patented Mining Claims (Continued) ClaimName Survey Number Sec Twn Rng Alderan Resources Limited Copperopolis No. 5 Copperopolis No. 6 Copperopolis No. 7 Copperopolis No. 8 Copperopolis No. 9 Cottonwood Daisy Dandy Divide** Dull Knife Dump Earth Elinore Elk Emerald Estelle EVA Excelsior Excelsior No. 2 Excelsior No. 3 Excelsior No. 4 Excelsior No. 6 Excelsior No. 7 Franklin Frisco Frisco No. 3 Gadfly* Good Fortune Good Luck 4709 4709 4709 4709 4709 4709 4709 5303 5303 5205 5825 5394 5303 5303 5303 4611 5303 4709 4709 4709 4709 4709 4709 5303 5205 5205 5303 5394 5394 10 11 10 10 11 2,11 2 3 3 14 4 4 3 2 2 3 2 11 11 11 11,14 11 11 2 14 14 34 3 3 T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T26S T27S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W 67 Homestake No. 1 5118 7,12 T27S Patented Mining Claims (Continued) ClaimName Goodhope No. 1 Goodhope No. 2 Gray Horse Hesperides High High Point Hillside Lode Survey Number 5199 5199 4709 5205 4709 5303 4706 Homestake No. 2 Igneous Iron Chief Jinney No. 1 Jinney No. 2 Jinney No. 3 Jinney No. 4 Jupiter Lambson Laura Lookout No. 2 Louise R Maggie No. 1 Maggie** Mamie Mars Mascot May Queen May Queen No. 2 Midvale Placer Moose Morrison No. 2 Nana 5118 5303 4673 5394 5394 5394 5394 5394 5303 4611 5199 4611 5303 5303 5394 5394 5827 4709 4709 4877 5303 4876 4754 Alderan Resources Limited Sec Twn Rng 12 12 11 14 11 2,3 3,10 T27S T27S T27S T27S T27S T27S T27S 7,12 3 2 T27S T27S T27S R13W R13W R13W R13W R13W R13W R13W R12- 13W R12- 13W R13W R13W 4,33 T27S,T26S R13W 33 4,33 4,33 4 34 3 11,12 3 34 34 4 4 3,4 11 11 9 3 8 3 T26S R13W T27S,T26S R13W T27S,T26S R13W T27S T26S T27S T27S T27S T26S T26S T27S T27S T27S T27S T278 T27S T27S T27S T27S R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R9W R13W R13W R13W 68 Patented Mining Claims (Continued) ClaimName Survey Number Sec Twn Rng Alderan Resources Limited Neptune New Years New Year's Spring Olga Ophir Pathfinder Puritan Purity Quartz No. 1** Raleigh Regulator Regulator No. 2 Royalist Ruby Lode San Antonio Sapho Saturn Scorpion Scorpion No. 1 Sun 5394 4492A 4492B 4709 4492A 4709 4673 4492A 5303 5303 4709 4709 5303 5205 4492A 4709 5394 5199 5199 5394 Texas Mining Claim 4492A Townsite Townsite Extention Triumphant Tunnel U Bet Uncle Sam Union Venus Volcanic W. P. J. West Dip 4755 4753 5303 4611 5303 4709 4752 5394 5827 4709 4492A 4 3 34 11 3 11 2,3 3 34 3 11 11 2 14 3 11 4 11 11 4 3,4 3,10 10,11 2 3,4 2 2 3 4 3 10 3 T278 T27S T26S T27S T27S T27S T27S T27S T26S T27S T27S T27S T27S 127S 127S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T27S T26S T27S T27S T27S R13W R13W R13W R13W R11W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W R13W 69 Alderan Resources Limited *These claims are owned 50% by Horn Silver Mines, 50% by Shoshone Resources. Volantis holds an option to purchase a 100% interest in these claims under two separate option agreements. ** These claims are subject to a March 1, 2010 lease from Horn Silver Mines Inc. to Great American Resources, LLC in which have the carbonates are leased to Great American Resources. Volantis holds an option to purchase all non-carbonate minerals on the same claims, subject to the terms of the GAR lease. Note: The listed township and ranges are all according to the Salt Lake Base & Meridian. The section numbers are listed for convenience in locating a particular claim and do not indicate that the entirety of a particular claim lies within the listed section or sections. All of the claims are located in the San Francisco Mining District. Most of the mining claims were located and surveyed before the area was surveyed according to the public land survey system. Thus, a formal, updated survey would be necessary to precisely locate the claims within the public land survey system. MEMORANDUM OF MINING LEASE THE PROPERTY ClaimName Survey Number Sec Twn Rng District Owner Contact Lot 37 33 26S 13W Cunningham Lot 38 33 26S 13W Belcher Eagle Fraction Genuine Contact Good Luck Good Luck No. 2 Granite Granite Extension Granite No. 2 Granite No. 3 Granite No. 4 Indian Indian Chief Indian Queen MS 5815 MS 5815 MS 5833 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 34 26S 13W 28 26S 13W 34 26S 13W 34 26S 13W 33 26S 13W 33 26S 13W 33 26S 13W 32,33 26S 13W 33 26S 13W 33 26S 13W 33 26S 13W 34 26S 13W 34 26S 13W 33,34 26S 13W Patented Mining Claims (Continued) Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK Ownership % 50% / 25% 50% / 25% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 70 ClaimName Survey Number Sec Twn Rng District Owner Ownership % Alderan Resources Limited Jumbo Jumbo Fraction Jumbo No. 2 Jumbo No. 3 Jumbo No. 4 Jumbo No. 5 Leland No. 1 Leland No. 2 Leland No. 3 Leland No. 4 Leland No. 5 Leland No. 7 Little Jenna Papoose Papoose Extension Pirate Ricko Senga (AKA Senaca) Sunnyside Treasure Ute Venus MS 5815 MS 5847 MS 5846 MS 5846 MS 5847 MS 5847 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 3269 MS 5815 MS 5933 MS 3270 MS 3269 MS 5815 MS 5815 MS 3269 MS 5815 MS 5815 28,33 26S 13W 28,34 26S 13W 28,35 26S 13W 33 26S 13W 28,33 26S 13W 27,28 26S 13W 27,34 26S 13W 34 26S 13W 27 26S 13W 27 26S 13W 27,34 26S 13W 33,34 26S 13W 33 26S 13W 34 26S 13W 34 26S 13W 33 26S 13W 33,34 26S 13W 34 26S 13W 34 26S 13W 33,34 26S 13W 33 26S 13W 33 26S 13W Patented Mining Claims (Continued) Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 71 Alderan Resources Limited ClaimName Venus No. 2 Venus No. 3 Venus No. 4 Venus No. 5 Willow Wino Survey Number MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 MS 5815 Sec Twn Rng District Owner 33 26S 13W 33 26S 13W 33 26S 13W 33 26S 13W 34 26S 13W 33 26S 13W Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco Pruess- San Francisco TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK TANK LC / W HUGHES BROCKBANK Ownership % 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 50% /50% 2 All claims are located in Beaver County, Utah, with the township and ranges listed according to the Salt Lake Base & Meridian. The section numbers are listed for convenience in locating a particular claim and do not indicate that the entirety of a particular claim lies within the listed section or sections. 72 Alderan Resources Limited Unpatented Mining Claims Volantis Resources Corp Claim Name Serial No. Beaver Co Document No. AW 1 AW 2 AW 3 AW 4 AW 5 AW 6 AW 7 AW 8 AW 9 AW 10 AW 11 AW 12 AW 13 AW 14 AW 15 AW 16 AW 17 AW 18 AW 19 AW 20 AW 21 AW 22 AW 23 AW 24 AW 25 AW 26 AW 27 AW 28 AW 29 AW 30 AW 31 CT 1 CT 2 CT 3 CT 4 437250 437251 437252 437253 437254 437255 437256 437257 437258 437259 437260 437261 437262 437263 437264 437265 437266 437267 437268 437269 437270 437271 437272 437273 437274 437275 437276 437277 437278 437279 437280 426677 426678 426679 426680 264029 264030 264031 264032 264033 264034 264035 264036 264037 264038 264039 264040 264041 264042 264043 264044 264045 264046 264047 264048 264049 264050 264051 264052 264053 264054 264055 264056 264057 264058 264059 258648 258649 258650 258651 73 Unpatented Mining Claims (Continued) Alderan Resources Limited Claim Name CT 5 CT 6 CT 7 CT 8 CT 9 CT 10 CT 11 CT 12 CT 13 CT 14 CT 15 CT 16 CT 17 CT 18 CT 19 CT 20 CT 21 CT 22 CT 23 CT 24 CT 25 CT 26 CT 27 CT 28 CT 29 CT 30 CT 33 CT 34 CT 35 CT 36 CT 37 CT 38 CT 39 CT 40 CT 41 CT 42 CT 43 Serial No. Beaver Co Document No. 426681 426682 426683 426684 426685 426686 426687 426688 426689 426690 426691 426692 426693 426694 426695 426696 426697 426698 426699 426700 426701 426702 426703 426704 426705 426706 426709 426710 426711 426712 426713 426714 426715 426716 426717 426718 426719 258652 258653 258654 258655 258656 258657 258658 258659 258660 258661 258662 258663 258664 258665 258666 258667 258668 258669 258670 258671 258672 258673 258674 258675 258676 258677 258680 258681 258682 258683 258684 258685 258686 258687 258688 258689 258690 74 Alderan Resources Limited CT 44 CT 45 CT 46 SF 82 CT 47 CT 48 CT 49 CT 50 CT 51 CT 52 CT 53 CT 54 CT 55 CT 56 CT 57 CT 58 CT 59 CT 60 CT 61 CT 62 CT 63 CT 64 CT 65 CT 66 CT 67 CT 68 CT 69 CT 70 CT 71 CT 72 CT 73 CT 74 CT 75 CT 76 CT 77 CT 101 CT 102 CT 103 CT 104 CT 105 426720 426721 426722 426723 426967 426968 426969 426970 426971 426972 426973 426974 426975 426976 426977 426978 426979 426980 426981 426982 426983 426984 426985 426986 426987 426988 426989 426990 426991 426992 426993 426994 426995 426996 426997 434804 434805 434806 434807 434808 258691 258692 258693 258694 258845 258846 258847 258848 258849 258850 258851 258852 258853 258854 258855 258856 258857 258858 258859 258860 258861 258862 258863 258864 258865 258866 258867 258868 258869 258870 258871 258872 258873 258874 258875 261072 261073 261074 261075 261076 75 Alderan Resources Limited CT 106 CT 107 CT 108 CT 109 CT 110 CT 111 CT 112 CT 113 CT 114 CT 115 CT 116 CT 117 CT 118 CT 119 CT 120 CT 121 CT 122 CT 123 CT 124 CT 125 CT 126 CT 127 CT 128 CT 129 CT 130 CT 131 CT 132 NW 101 NW 102 NW 103 NW 104 NW 105 NW 106 NW 107 NW 108 NW 109 NW 110 NW 111 NW 112 NW 113 434809 434810 434811 434812 434813 434814 434815 434816 434817 434818 434819 434820 434821 434822 434823 434824 434825 434826 434827 434828 434829 434830 434831 434832 434833 434834 434835 434836 434837 434838 434839 434840 434841 434842 434843 434844 434845 434846 434847 434848 261077 261078 261079 261080 261081 261082 261083 261084 261085 261086 261087 261088 261089 261090 261091 261092 261093 261094 261095 261096 261097 261098 261099 261100 261101 261102 261103 261104 261105 261106 261107 261108 261109 261110 261111 261112 261113 261114 261115 261116 76 Alderan Resources Limited NW 114 NW 115 NW 116 NW 117 NW 118 NW 119 NW 120 NW 121 NW 122 NW 123 NW 124 NW 125 NW 126 NW 127 NW 128 NW 129 NW 130 NW 131 NW 132 NW 133 NW 134 NW 135 NW 136 NW 137 NW 138 NW 139 NW 141 NW 142 LIR 31 NW 1 NW 2 NW 3 NW 4 NW 5 NW 6 NW 7 NW 8 NW 9 NW 10 NW 11 434849 434850 434851 434852 434853 434854 434855 434856 434857 434858 434859 434860 434861 434862 434863 434864 434865 434866 434867 434868 434869 434870 434871 434872 434873 434874 434875 434876 434877 428552 428553 428554 428555 428556 428557 428558 428559 428560 428561 428562 261117 261118 261119 261120 261121 261122 261123 261124 261125 261126 261127 261128 261129 261130 261131 261132 261133 261134 261135 261136 261137 261138 261139 261140 261141 261142 261143 261144 261145 259870 259871 259872 259873 259874 259875 259876 259877 259878 259879 259880 77 Alderan Resources Limited NW 12 NW 13 NW 14 NW 15 NW 16 CT 78 SF 82 SF 83 SF 84 SF 85 NW 17 NW 18 SF 1 SF 2 SF 3 SF 4 SF 5 SF 6 SF 7 SF 8 SF 9 SF 10 SF 11 SF 12 SF 13 SF 14 SF 15 SF 16 SF 17 SF 18 SF 19 SF 20 SF 21 SF 22 SF 23 SF 24 SF 25 SF 26 SF 27 SF 28 428563 428564 428565 428566 428567 428568 428569 428570 428571 428572 435319 435320 426435 426436 426437 426438 426439 426440 426441 426442 426443 426444 426445 426446 426447 426448 426449 426450 426451 426452 426453 426454 426455 426456 426457 426458 426459 426460 426461 426463 259881 259882 259883 259884 259885 259886 259887 259888 259889 259890 261331 261332 258176 258177 258178 258179 258180 258181 258182 258183 258184 258185 258186 258187 258188 258189 258190 258191 258192 258193 258194 258195 258196 258197 258198 258199 258200 258201 258202 258269 78 Alderan Resources Limited SF 29 SF 30 SF 31 SF 32 SF 33 SF 34 SF 35 SF 36 SF 37 SF 38 SF 39 SF 40 SF 41 SF 42 SF 43 SF 44 SF 45 SF 46 SF 47 SF 48 SF 49 SF 50 SF 51 SF 52 SF 53 SF 54 SF 55 SF 56 SF 57 SF 58 SF 59 SF 60 SF 61 SF 62 SF 63 SF 64 SF 65 SF 66 SF 67 SF 69 426464 426465 426466 426467 426468 426469 426470 426471 426472 426473 426474 426475 426476 426477 426478 426479 426480 426481 426482 426483 426484 426485 426486 426487 426488 426489 426490 426491 426492 426493 426494 426495 426496 426497 426498 426499 426500 426501 426502 426503 258270 258271 258272 258273 258274 258275 258276 258277 258278 258279 258280 258281 258282 258283 258284 258285 258286 258287 258288 258289 258290 258291 258292 258293 258294 258295 258296 258297 258298 258299 258300 258301 258302 258303 258304 258305 258306 258307 258308 258309 79 Alderan Resources Limited Unpatented Mining Claims (Continued) Claim Name Serial No. Beaver Co Document No. SF 70 SF 71 SF 72 SF 73 SF 74 SF 75 SF 76 SF 77 SF 78 SF 79 SF 80 SF 81 WC 1 WC 2 WC 3 WC 4 WC 5 WC 6 WC 7 WC 8 WC 9 WC 10 WC 11 WC 12 WC 13 WC 14 WC 15 WC 16 WC 17 WC 18 WC 19 WC 20 WC 21 WC 22 WC 23 WC 24 426504 426505 426506 426507 426508 426509 426510 426511 426512 426513 426514 426515 437525 437526 437527 437528 437529 437530 437531 437532 437533 437534 437535 437536 437537 437538 437539 437540 437541 437542 437543 437544 437545 437546 437547 437548 258310 258311 258312 258313 258314 258315 258316 258317 258318 258319 258320 258321 264251 264252 264253 264254 264255 264256 264257 264258 264259 264260 264261 264262 264263 264264 264265 264266 264267 264268 264269 264270 264271 264272 264273 264274 80 Alderan Resources Limited WC 25 WC 26 WC 27 WC 28 WC 29 WC 30 WC 31 WC 32 WC 33 WC 34 WC 35 WC 36 WC 37 WC 38 WC 39 WC 40 WC 41 WC 42 WC 43 WC 44 WC 45 WC 46 WC 47 WC 48 WC 49 WC 50 WC 51 WC 52 WC 53 WC 54 WC 55 WC 56 WC 57 WC 58 437549 437550 437551 437552 437553 437554 437555 437556 437557 437558 437559 437560 437561 437562 437563 437564 437565 437566 437567 437568 437569 437570 437571 437572 437573 437574 437575 437576 437577 437578 437579 437580 437581 437582 264275 264276 264277 264278 264279 264280 264281 264282 264283 264284 264285 264286 264287 264288 264289 264290 264291 264292 264293 264294 264295 264296 264297 264298 264299 264300 264301 264302 264303 264304 264305 264306 264307 264308 81 Alderan Resources Limited Unpatented Mining Claims Valyrian Resources Corp Star Range Group Serial No. Beaver Co. Document No. 436723 436724 436725 436726 436727 436728 436729 436730 436731 436732 436733 436734 436735 436736 436737 436738 436739 436740 436741 436742 436770 436772 436774 436776 436795 436796 436797 436798 436799 436800 436801 436802 436803 436804 436805 436806 436807 436808 436809 436810 436811 263169 263170 263171 263172 263173 263174 263175 263176 263177 263178 263179 263180 263181 263182 263183 263184 263185 263186 263187 263188 263216 263218 263220 263222 263241 263242 263243 263244 263245 263246 263247 263248 263249 263250 263251 263252 263253 263254 263255 263256 263257 82 Claim Name SR 109 SR 110 SR 111 SR 112 SR 113 SR 114 SR 115 SR 116 SR 117 SR 118 SR 119 SR 120 SR 121 SR 122 SR 123 SR 124 SR 125 SR 126 SR 127 SR 128 SR 156 SR 158 SR 160 SR 162 SR 181 SR 182 SR 183 SR 184 SR 185 SR 186 SR 187 SR 188 SR 189 SR 190 SR 191 SR 192 SR 193 SR 194 SR 195 SR 196 SR 197 Alderan Resources Limited SR 198 SR 199 SR 200 SR 221 SR 223 SR 224 SR 225 SR 231 SR 232 SR 233 SR 234 SR 235 SR 236 SR 237 SR 238 SR 239 SR 240 SR 245 SR 246 SR 247 SR 248 SR 249 SR 250 SR 251 SR 252 SR 253 SR 254 SR 257 SR 259 SR 261 SR 262 SR 263 SR 264 SR 265 436812 436813 436814 436835 436837 436838 436839 436845 436846 436847 436848 436849 436850 436851 436852 436853 436854 436859 436860 436861 436862 436863 436864 436865 436866 436867 436868 436871 436873 436875 436876 436877 436878 436879 263258 263259 263260 263281 263283 263284 263285 263291 263292 263293 263294 263295 263296 263297 263298 263299 263300 263305 263306 263307 263308 263309 263310 263311 263312 263313 263314 263317 263319 263321 263322 263323 263324 263325 83 Elephant Canyon Group Alderan Resources Limited Serial No. Beaver Co. Document No. 438373 438392 438394 438406 438407 438408 438411 438413 438418 438419 438420 438421 438450 438578 438580 438582 438584 438586 438588 438590 438604 438606 438618 438619 438620 438621 438622 438623 438624 438625 438626 438627 438628 438629 438630 438631 438635 438636 264591 264610 264612 264624 264625 264626 264629 264631 264636 264637 264638 264639 264668 264796 264798 264800 264802 264804 264806 264808 264822 264824 264836 264837 264838 264839 264840 264841 264842 264843 264844 264845 264846 264847 264848 264849 264853 264854 Claim Name ECR20 ECR39 ECR41 ECR53 ECR54 ECR55 ECR58 ECR60 ECR65 ECR66 ECR67 ECR68 ECR97 ECR225 ECR227 ECR229 ECR231 ECR233 ECR235 ECR237 ECR251 ECR253 ECR265 ECR266 ECR267 ECR268 ECR269 ECR270 ECR271 ECR272 ECR273 ECR274 ECR275 ECR276 ECR277 ECR278 ECR282 ECR283 84 Claim Name CM25 CM26 CM27 CM28 CM29 CM30 CM31 CM32 CM33 CM34 CM39 CM40 CM41 CM42 CM43 CM44 CM45 CM50 CM51 CM52 CM53 CM54 CM68 CM69 CM70 CM71 CM72 CM73 CM74 CM75 CM89 CM90 CM91 CM92 CM93 CM94 CM95 CM101 CM102 CM109 CM110 CM111 CM112 CM118 CM119 Cave Mine Group Alderan Resources Limited Serial No. Beaver Co. Document No. 435719 435720 435721 435722 435723 435724 435725 435726 435727 435728 435733 435734 435735 435736 435737 435738 435739 435744 435745 435746 435747 435748 435762 435763 435764 435765 435766 435767 435768 435769 435783 435784 435785 435786 435787 435788 435789 435795 435796 435803 435804 435805 435806 435812 435813 262148 262149 262150 262151 262152 262153 262154 262155 262156 262157 262162 262163 262164 262165 262166 262167 262168 262173 262174 262175 262176 262177 262191 262192 262193 262194 262195 262196 262197 262198 262212 262213 262214 262215 262216 262217 262218 262224 262225 262232 262233 262234 262235 262241 262242 85 CM126 CM127 CM128 CM129 CM130 CM131 CM132 Claim Name WM 1 WM 2 WM 3 WM 4 WM 5 WM 6 WM 7 WM 8 WM 9 WM 10 WM 11 WM 12 WM 13 WM 14 WM 15 WM 16 WM 17 WM 18 WM 19 WM 20 WM 21 WM 22 WM 23 WM 24 WM 25 WM 26 WM 27 WM 28 WM 29 WM 30 WM 31 WM 32 WM 33 WM 34 WM 35 WM 36 WM 37 Alderan Resources Limited 435820 435821 435822 435823 435824 435825 435826 262249 262250 262251 262252 262253 262254 262255 White Mountain Group Serial No. Beaver Co. Document No. UMC 442729 UMC 442730 UMC 442731 UMC 442732 UMC 442733 UMC 442734 UMC 442735 UMC 442736 UMC 442737 UMC 442738 UMC 442739 UMC 442740 UMC 442741 UMC 442742 UMC 442743 UMC 442744 UMC 442745 UMC 442746 UMC 442747 UMC 442748 UMC 442749 UMC 442750 UMC 443915 UMC 443916 UMC 443917 UMC 443918 UMC 443919 UMC 443920 UMC 443921 UMC 443922 UMC 443923 UMC 443924 UMC 443925 UMC 443926 UMC 443927 UMC 443928 UMC 443929 267521 267522 267523 267524 267525 267526 267527 267528 267529 267530 267531 267532 267533 267534 267535 267536 267537 267538 267539 267540 267541 267542 267930 267931 267932 267933 267934 267935 267936 267937 267938 267939 267940 267941 267942 267943 267944 86 Alderan Resources Limited WM 38 WM 39 WM 40 WM 41 WM 42 WM 43 WM 44 WM 45 WM 46 WM 47 WM 48 WM 49 WM 50 WM 51 WM 52 WM 53 WM 54 WM 55 WM 56 WM 57 WM 58 WM 59 WM 60 WM 61 WM 62 WM 63 WM 64 WM 65 WM 66 WM 67 WM 68 WM 69 WM 70 WM 71 WM 72 WM 73 WM 74 WM 75 WM 76 WM 77 WM 78 WM 79 WM 80 WM 81 WM 82 WM 83 WM 84 WM 85 UMC 443930 UMC 443931 UMC 443932 UMC 443933 UMC 443934 UMC 443935 UMC 443936 UMC 443937 UMC 443938 UMC 443939 UMC 443940 UMC 443941 UMC 443942 UMC 443943 UMC 443944 UMC 443945 UMC 443946 UMC 443947 UMC 443948 UMC 443949 UMC 443950 UMC 443951 UMC 443952 UMC 443953 UMC 443954 UMC 443955 UMC 443956 UMC 443957 UMC 443958 UMC 443959 UMC 443960 UMC 443961 UMC 443962 UMC 443963 UMC 443964 UMC 443965 UMC 443966 UMC 443967 UMC 443968 UMC 443969 UMC 443970 UMC 443971 UMC 443972 UMC 443973 UMC 443974 UMC 443975 UMC 443976 UMC 443977 267945 267946 267947 267948 267949 267950 267951 267952 267953 267954 267955 267956 267957 267958 267959 267960 267961 267962 267963 267964 267965 267966 267967 267968 267969 267970 267971 267972 267973 267974 267975 267976 267977 267978 267979 267980 267981 267982 267983 267984 267985 267986 267987 267988 267989 267990 267991 267992 87 Alderan Resources Limited WM 86 WM 87 WM 88 WM 89 WM 90 WM 91 WM 92 WM 93 WM 94 WM 95 UMC 443978 UMC 443979 UMC 443980 UMC 443981 UMC 443982 UMC 443983 UMC 443984 UMC 443985 UMC 443986 UMC 443987 267993 267994 267995 267996 267997 267998 267999 276800 276801 276802 Utah State Lease for Metalliferous Minerals (ML53495) Lessee Valyrian Resources Corp. Effective Date 1 November 2017 Term Rent Premises 10 USD$1 per acre T28S, R11W, SLB&M Sec. 27: E2NE4 Acres 817.08 T28S, R12W, SLB&M Sec. 2: Lots 1(24.31), 2 (24.28), 3 (24.26), 4 (24.23), 5 (40.00), 6 (40.00), 7 (40.00), 8 (40.00), S2N2, S2 (ALL) Patented Mining Claims Valyrian Resources Corp. Claim Name Survey Number Sec Twn Rng Interest* Copper King Copper King # 2 Copper Queen Copper Queen # 2 Copper Queen # 3 Copper Mountain Copper Mountain # 2 Copper Head # 1 Copper Head # 2 Bear Bear # 2 Moccasin 5242 5242 5242 5242 5242 5242 5242 5242 5242 5242 5242 5242 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 5,6,8 28S 28S 28S 28S 28S 28S 28S 28S 28S 28S 28S 28S 11W 11W 11W 11W 11W 11W 11W 11W 11W 11W 11W 11W 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% * Valyrian Resources Corp holds an Option to Purchase a 50% interest in the Patented Claims from the Rosemary D. Bowman Trust 88 Alderan Resources Limited ADDITIONAL SECURITIES INFORMATION SHAREHOLDER INFORMATION The security holder information set out below was applicable as at 27 September 2019. Quoted Securities – Fully Paid Ordinary Shares There is one class of quoted securities, being fully paid ordinary shares. a) Distribution of Security Number Category (Size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Ordinary Shares Shareholders 99 141 108 203 96 647 Shares 48,113 413,953 910,164 7,935,484 170,907,183 180,214,897 There are 647 holders of ordinary shares. Each shareholder is entitled to one vote per share held. b) Marketable parcel There are 53 shareholders with less than a marketable parcel, being 10,090 shares, amounting to 0.01% of issued capital. c) Voting rights On a show of hands every person present who is a member or a proxy, attorney or representative of a member has one vote and upon a poll every person present who is a member or a proxy, attorney or representative of a member shall have one vote for each share held d) Substantial Shareholders There were 2 substantial shareholders listed on the Companies register as at 27 September 2019, holding 61,023,582 fully paid ordinary shares, being 33.86% of the fully paid ordinary shares on issue. 1 2 BELGRAVE CAPITAL MANAGEMENT LIMITED KITARA INVESTMENTS PTY LTD 30,769,082 30,254,500 17.07% 16.79% e) On market buy-back There is no on-market buy-back scheme in operation for the company’s quoted shares or quoted options. 89 ASX ADDITIONAL INFORMATION (continued) g) Top 20 security holders The names of the twenty largest holders of each class of quoted equity security, being fully paid ordinary shares, the number of equity security each holds and the percentage of capital each holds is as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Number Shareholder Name / Entity BELGRAVE CAPITAL MANAGEMENT LIMITED KITARA INVESTMENTS PTY LTD QUAALUP INVESTMENTS PTY LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED Number of Ordinary Shares % of Issued Capital 30,769,082 30,254,500 8,838,337 8,675,990 17.07% 16.79% 4.90% 4.81% KINGSLANE PTY LTD 7,375,000 4.09% TR NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD PETER GEERDTS J P MORGAN NOMINEES AUSTRALIA PTY LIMITED GONDWANA INVESTMENT GROUP PTY LTD 6,156,250 5,512,292 5,150,000 4,908,448 3,078,334 3.42% 3.06% 2.86% 2.72% 1.71% BUPRESTID PTY LTD 2,975,000 1.65% HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 2,667,827 1.48% RL HOLDINGS PTY LTD TAURUS CORPORATE SERVICES PTY LTD MR CARLO CHIODO HAWTHORN GROVE INVESTMENTS PTY LTD CHRISTOPHER WANLESS SANDHURST TRUSTEES LTD MR PETER WILLIAMS KINGSLANE PTY LTD 2,643,641 2,510,308 2,475,474 2,437,500 2,401,247 1.47% 1.39% 1.37% 1.35% 1.33% 2,343,750 1.30% 2,073,259 2,000,000 1.15% 1.11% 135,246,239 75.05% 90 ASX ADDITIONAL INFORMATION (continued) 2) Unquoted Securities – Company Options The Company’s options are unquoted. 2A) Company Options a) Distribution of unquoted Options holder numbers Category (Size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Ordinary Options Optionholders Options - - - 5 34 39 - - - 396,952 65,890,502 66,287,454 There are 39 holders of Company Options. b) Voting rights Unlisted options do not entitle the holder to any voting rights. c) Holders of more than 20% of unquoted options. There were no substantial option holders as at 27 September 2019 3) Performance Rights Category (Size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Performance Rights Holders Number held - - - - 1 1 - - - - 600,000 600,000 The performance rights convert 1:1 to fully paid ordinary shares upon satisfaction of conditions as announced to the ASX on 26 July 2018 which have not been satisfied. Consistency with business objectives - ASX Listing Rule 4.10.19 The Company states that it has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. The Company believes it has used its cash in a consistent manner to which was disclosed under the prospectus dated 5 April 2017. 91 

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