Alderan Resources Limited
Annual Report 2020

Plain-text annual report

Alderan Resources Limited ABN 55 165 079 201 Annual Consolidated Financial Report 30 June 2020 Contents Page Alderan Resources Limited Corporate Information Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other 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 Additional Securities Information Tenement Schedule 3 4 23 24 25 26 27 28 51 52 55 64 67 2 CORPORATE INFORMATION ABN 55 165 079 201 Directors Mr. Ernest Thomas Eadie Mr. Frank David “Bruno” Hegner Mr. Peter Williams Company Secretary Mr. Mathew O’Hara Registered Address Suite 23, 513 Hay Street Subiaco WA 6008 Telephone: 08 6143 6711 Fax: 08 9388 8824 Principal Place of Business Suite 23, 513 Hay Street Subiaco WA 6008 Telephone: 08 6143 6711 Fax: 08 9388 8824 Bankers National Australia Bank 197 St Georges Terrace Perth WA 6000 Auditors RSM Australia Partners Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 Telephone: 08 9261 9100 Share Registry Automic Registry Services Level 5, 126 Phillip Street Surrey Hills NSW 2000 Telephone: 1300 288 664 (within Australia) +61 (0) 2 9698 5414 (outside Australia) Alderan Resources Limited 3 DIRECTORS’ REPORT Alderan Resources Limited 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 2020. 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. Position Date appointed / resigned Mr. Ernest Thomas Eadie* Non-executive Chairman Appointed on 23 January 2017 Mr. F. D. Hegner Executive Director Appointed on 1 November 2017 Mr. Nicolaus Heinen Non-executive Director Appointed on 1 March 2015, Resigned 23 September 2020 Mr. Peter Williams** Managing Director Appointed 13 May 2019 Dr. Marat Abzalov Non-executive Director Appointed 13 May 2019, Resigned 5 June 2020 Mr. Mathew O’Hara Company Secretary Appointed 15 July 2020 Mr. Brett William Tucker Company Secretary Appointed 19 October 2016, Resigned 15 July 2020 *Mr Eadie held the role of Executive Chairman between 11 February 2019 and 1 September 2019, when he was appointed Non- executive Chairman. **Mr Williams held the role of Non-executive Director from 13 May 2019 to 1 September 2019, when he was appointed Managing Director. Current Directors and Officers Mr. Ernest Thomas Eadie: Non-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. 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. 4 DIRECTORS’ REPORT (continued) Alderan Resources Limited 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. Mr. Nicolaus Heinen: Non-Executive Director (resigned 23 September 2020) 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 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. 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 Mongolia’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 creation and implementation of operational and financial structures, substantial capital raisings as well as financial/operational controlling. He structured and managed the sale of the Company. Other investments have included private equity transactions in various engineering companies as well as real estate. Mr. Peter Williams: Managing 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 led 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. Mathew O’Hara: Company Secretary Qualifications: Bachelor of Commerce, Accounting & Finance, Member of the Chartered Accountants in Australia & New Zealand Mr O’Hara is a Chartered Accountant and has over 15 years’ experience in corporate finance, accounting and governance. He has been employed by, and acted as, Non-Executive Director, Company Secretary and Chief Financial Officer of several companies in the resources sector. Prior to these roles Mr O’Hara spent several years with an international accounting firm specialising in the Corporate Finance, Advisory and Audit divisions gaining significant experience with ASX, TSX and AIM listed clients across a diverse range of industries. 5 Alderan Resources Limited DIRECTORS’ REPORT (continued) Directors’ Interests 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 Total Number of fully paid ordinary shares Number of options over ordinary shares Number of performance rights 3,901,250 7,121,417 1,148,751 512,800 12,684,218 3,146,875 16,171,875 900,000 2,000,000 22,218,750 - - - 600,000 600,000 1 Resigned on 23 September 2020 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 30/06/2020 Broker Options 07/08/2019 07/08/2019 30/06/2020 Consultant Options 04/09/2017 04/09/2017 04/09/2017 04/09/2017 Investor Options 07/08/2019 Tranche A-1 Tranche B Tranche C Tranche D Tranche E Tranche A Tranche B Tranche C Tranche A Tranche B Tranche C Tranche A Tranche B Tranche C Tranche D 755,000 2,300,000 1,570,000 1,570,000 1,570,000 4,500,000 7,000,000 10,000,000 5,000,000 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 0.08 0.10 0.20 0.12 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 30/06/2023 07/08/2021 07/08/2021 30/06/2023 22/02/2021 22/02/2021 22/02/2021 22/02/2021 Tranche A 22,890,625 0.10 07/08/2022 6 Alderan Resources Limited DIRECTORS’ REPORT (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 0.30 0.40 0.60 0.80 2.50 3.00 1.00 1.50 2.00 2.50 0.10 0.195 0.225 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 03/08/2023 03/08/2023 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 04/08/2020 04/08/2020 Total Tranche A Tranche B Tranche C Tranche D Tranche A Tranche B Tranche A Tranche B Tranche C Tranche D Tranche A Tranche E Tranche F 45,000 75,000 75,000 75,000 75,000 75,000 125,000 100,000 100,000 100,000 750,000 3,500,000 3,500,000 76,550,625 The following Options were exercised during the period: • • • 2,500,000 options exercisable at $0.06, expiring on 19 July 2022; 234,375 options exercisable at $0.10, expiring on 7 August 2022; and 1,875,000 options exercisable at $0.10, expiring 7 August 2022. The following Options lapsed or were cancelled during the period: • • • • 1,777,454 options exercisable at $0.20, expiring on 22 February 2020; 2,300,000 options exercisable at $0.30, expiring on 31 May 2020; 2,300,000 options exercisable at $0.40, expiring on 31 May 2020; and 750,000 unlisted options exercisable at $0.10 on or before 19 July 2022. 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 261,813,641 76,550,625 600,000 7 Alderan Resources Limited DIRECTORS’ REPORT (continued) Review of Operations The principal activity of the Company and its controlled subsidiaries (‘the Group’) is mineral exploration for gold and copper in Utah, USA. The Group was the first holder of the mineral rights over the entire Frisco Mineral Field. After review during the period it entered into an Option to Joint Venture Agreement with Kennecott Exploration Company, a member company of the Rio Tinto Group, in order to cost effectively advance exploration at the Frisco Project, and allowing it scope to be able to look at other opportunities more suited to a Junior Company. In April 2020, Alderan announced that it had signed binding Option Agreements with Tamra Mining Company LLC (‘Tamra’) to acquire up to a 70% interest in the highly prospective Valley / Crossroads copper-gold and the Detroit gold-copper- molybdenum projects in Utah, USA. The Group also continued exploration and assessment of its 100%-owned White Mountain epithermal gold project, 10km southwest of the Frisco Project in Utah, USA, and has examined various other properties in the Western USA. Figure 1: Alderan Project Locality Map showing its projects in Utah, USA. Tamra Option Agreements In April 2020, Alderan entered into binding option agreements with Tamra to acquire up to a 70% interest in the highly prospective Detroit gold-copper-molybdenum project (also referred to as the “Drum Project”) and Valley/Crossroads copper-gold project in Utah, USA. 8 DIRECTORS’ REPORT (continued) Alderan Resources Limited During June 2020, the Company successfully completed capital raising activities, raising approximately $2.1 million, with proceeds to be used to complete an initial drill program at both projects. Under the terms of the Option Agreements, Alderan has the option, but not the obligation (except for the Initial Program), to earn up to a 70% interest in each project over a 5-year period, with the initial program/earn-in for each project as follows: • Valley/Crossroads Project - commitment to an Initial Program of US$500,000 (as amended in August 2020) within one year before Alderan may earn a 51% interest in the project by sole funding an additional US$4 million on or before the third anniversary of the Option Agreement; and • Detroit Project - commitment to an Initial Program of US$250,000 within one year before Alderan may earn a 55% interest in the project by sole funding an additional US$2 million on or before the third anniversary of the Option Agreement. The Valley/Crossroads Project is adjacent to the Company’s existing Frisco Project in Utah and has hosted semi-continuous copper mining for more than 100 years, attracting major companies such as Anaconda Copper, Noranda, BHP and WMC to explore parts of the project. This project’s location is proximal to excellent infrastructure. However, a fragmented tenement situation has prevented systematic exploration. The project hosts known porphyry copper mineralisation as well as skarn hosted copper-gold and breccia pipes and breccia hosted gold mineralisation. Historically, very little exploration work has focussed on gold. Alderan completed an airborne magnetic and radiometric survey at Valley/Crossroads. 3D inversion of all of the magnetic data has been completed to determine geometries, depths to magnetic bodies and magnetite content. The company has acquired ASTER hyperspectral data over the district and processed it to highlight various mineral alteration assemblages. Alderan fast-tracked compilation and validation of previous historic exploration data, in conjunction with field inspection and mapping. A first soil geochemical survey at Gold Peak has been planned and at year-end, this work was underway. Rock chip sampling has been completed. A semi-regional stream/BLEG survey will commence after the soil geochemical survey. These initial exploration works have been used to plan drill holes with permitting commencing on 25 September 2020. The current program is for 3 holes with 500m of drilling in total. The Detroit Project is located in the underexplored Detroit Mining district, located about 56km northwest of Delta, Utah, which has hosted several producing copper/gold mines and is host to a range of mineralisation styles. The project contains a portion of the historical Basin Porphyry, covering porphyry copper/molybdenum mineralisation, as well as sediment and breccia-hosted gold mineralisation, evident in the historically (1980’s) mined Drum Gold Mine. The focus of Alderan’s exploration efforts is in the Drum Mountains, where it aims to discover a Carlin-like gold deposit. Carlin-like deposits have a number of key features: a) Favourable permeable reactive rocks (silty limestones and limey siltstones); b) Favourable structures; c) Gold-bearing hydrogeochemical solutions; d) Micron sized gold in disseminated pyrite; e) Common geochemical indicators As, Sb, Ba, Te, Se, Hg; f) Fairly common carbonaceous material. Alderan has completed detailed geological mapping initially indicating that most of these parameters are satisfied. In addition, Alderan has found previous drill results on the Mitzpah Prospect, which at year-end were being compiled, that include 2,889m of drilling from 124 shallow vertical holes in the gold oxide cap, averaging 23m depth. Alderan has defined a drill program which has been submitted for permitting. Details will be released once finalised, with drilling likely to commence in October 2020. 9 Alderan Resources Limited DIRECTORS’ REPORT (continued) Frisco Project In November 2019, the Group executed a strategically important agreement for the earn-in and joint venture over its Frisco Project with Kennecott Exploration Company (‘Kennecott’), a member of the Rio Tinto Group. The earn-in agreement provides Kennecott the option to sole fund a three-stage earn-in totalling US$30 million for up to an undivided 70% interest as follows: • Option 1 – a four-year option to acquire a 55% undivided interest in the Project by incurring US$6 million of expenditure within four years of the anniversary of the Agreement, with a minimum of US$1 million to be expended within the first 18 months; • Option 2 – if Kennecott exercises Option 1, a further option to acquire an additional 10% undivided interest (for a total of 65% undivided interest), by incurring an additional US$9 million in the three-year period after Option 1 has been exercised; and • Option 3 – if Kennecott exercises both Options 1 and 2, a further option to earn an additional 5% undivided interest (for a total of 70% undivided interest) by incurring an additional US$15 million in the three year period after Option 2 has been exercised. Kennecott has the right to elect to form a joint venture at any time following the satisfaction of the initial earn-in. Kennecott is required to maintain the tenements comprising the Frisco Project in good standing and meet all required annual claim and lease fees, which removes project maintenance costs from the Group. Kennecott advanced permitting and commenced its initial staged drill program, to comprise approximately 2,000 metres of drilling, to assess the Cactus, Bandit, Accrington and Reciprocity Zone prospects at Frisco. Kennecott and Alderan’s subsidiary, Volantis Resources Corp., worked closely with the Utah Division of Oil, Gas, and Mining to permit near term drilling activities. A total of 15 previously permitted drill sites were removed from Volantis’ existing permits and moved into a permit under Kennecott. During May 2020, Kennecott commenced an initial four-hole 2,000m drill program to test targets at the Cactus Breccias, Accrington Skarn and Reciprocity areas including: • At the Cactus Breccias, two holes to test for possible continuity between the Cactus and Comet Breccias and provide further insight into the style and controls on the mineralisation. • At Accrington Skarn, a hole to test an approximately 50m step-out from significant historic intercepts and to help determine continuity in the area. • At the Reciprocity target, a deeper hole is planned to test the IP anomaly where, based on Kennecott remodelling of geophysical data, a previous hole drilled by Volantis may have been terminated before reaching the anomaly depth. Progress was slowed due to COVID-19 related protocols in recent months. First assays were received by the laboratory for the first Cactus hole in the June quarter, with QA/QC checks and other internal signoffs awaited to release results to JV partners. Further drilling will be dependent on results of the initial program. White Mountain Project The White Mountain Gold prospect is a 5km long, outcropping epithermal system showing many attributes of a large, fully preserved epithermal gold/silver system, with similarities to the blind Midas discovery in Nevada. Alderan completed a field review at White Mountain to investigate the regional setting and project scale geology. The Project occurs on a western edge of a 15km diameter circular feature defined by regional aeromagnetics. The intersection of major NS and ENE structures coincides with the most intense alteration. Permitting is currently underway with drilling planned for late November. 10 Alderan Resources Limited DIRECTORS’ REPORT (continued) Corporate Activities During the year, the Company completed a number of capital raising activities including: • • • In March 2020, the Company announced a two-tranche placement whereby a total of 30,698,902 ordinary shares were issued at an issue price of $0.015 per share to raise a total of $460,484; In June 2020, the Company issued 18,000,000 ordinary shares at an issue price of $0.05 per share to raise a total of $900,000; and In June 2020, the Company also issued Convertible Notes with a face value of $1.215 million. Shareholders approved the conversion of these Convertible Notes at a Shareholder meeting held on 30 June 2020. On 5 June 2020, Marat Abzalov resigned as a Director of the Company and on 15 July 2020, Mathew O’Hara replaced Brett Tucker as the Company Secretary and the Company moved its registered corporate office and principle place of business to Suite 23, 513 Hay Street, Subiaco. On 23 September 2020, Nicolaus Heinen resigned as a Non-Executive Director. 11 Alderan Resources Limited DIRECTORS’ REPORT (continued) 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 2020, after providing for income tax amounted to $1,484,319 (2019: $3,854,787). Review of financial conditions The Group had a net bank balance of $2,133,424 as at 30 June 2020 (2019: $749,162). Loss Per Share Basic loss per share (cents per share) (0.92) (3.26) 30 June 2020 $ 30 June 2019 $ Employees The Company had 7 employees as at 30 June 2020 (2019: 7 employees). Laws and Regulations The 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. 12 Alderan Resources Limited DIRECTORS’ REPORT (continued) 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 2020. 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 Frank D Hegner Mr Nicolaus Heinen Position Non-Executive Chairman Executive Director Non-Executive Director Mr Peter Williams** Mr Marat Abzalov Managing Director Non-Executive Director Period of Employment Appointed on 23 January 2017 Appointed on 1 November 2017 Appointed 1 March 2015 Resigned 23 September 2020 Appointed on 13 May 2019 Appointed on 13 May 2019 Resigned 5 June 2020 *Mr Eadie held the role of Executive Chairman between 11 February 2019 and 1 September 2019, when he was appointed Non- executive Chairman. **Mr Williams held the role of Non-executive Director from 13 May 2019 to 1 September 2019, when he was appointed Managing Director. 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. 13 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) 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 2020 financial year. 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. 14 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Long-Term Incentive Plan Alderan Resources Limited 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 is to: i. ii. iii. iv. 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: i. ii. iii. iv. a director; a full-time or part-time employee; a contractor; or a casual employee 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 8,500,000 options issued under the Long-Term Incentive Plan during the year (2019: Nil). There were no shares issued under the Long-Term Incentive Plan during the year (2019: Nil). 15 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Service Agreements Alderan Resources Limited Managing Director Service Agreement – Mr Peter Williams The material terms of the employment agreement with Mr Peter Williams up until 1 September 2019 were as follows: • Mr Williams is employed in the position of Non-Executive Director. • Mr Williams will be paid an annual salary of $30,000. 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. The Company entered into an Executive Service Agreement with Mr Peter Williams on 1 September 2019. Mr Williams is to provide services as managing director and geological consultant. The material terms of the employment agreement with Mr Williams 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 – Mr Tom Eadie 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 1 September 2019. The material terms of the employment agreement with Mr Eadie up until 1 September 2019 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. The material terms of the employment agreement with Mr Eadie effective 1 September 2019 were as follows: • Mr Eadie is employed in the position of Non-executive Chairman. • Mr Eadie will be paid an annual salary of $30,000 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 – Mr Bruno Hegner The Company entered into an Executive Service Agreement with Mr Bruno Hegner on 23 October 2017. Mr Hegner is employed in the position of Executive Director and Vice President of the Company’s subsidiary, Volantis Resources Corp. The material terms of the employment agreement with Mr Hegner are as follows: • Mr Hegner will be paid an annual salary of US$129,600 plus superannuation for 60% full time equivalent work hours plus a rate of US$930 per day for additional days worked in excess of the 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. • 16 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Alderan Resources Limited 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 KMP and has implemented a Long- Term Incentive Plan which will generally be of value if the Company’s shares appreciate over time. 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 KMP of Alderan Resources Limited are as follows: Short-term benefits Super- annuation $ Salary & fees $ Share-based payment Shares $ Share-based payment Perf rights $ Share- based payment Options $ Total $ 30,000 94,934 53,117 326,508 45,000 549,559 - 8,392 2,612 - 4,275 15,279 - - 3,000 7,692 - 10,692 - - - - - - - 77,457 76,419 30,567 30,567 215,010 30,000 180,783 135,148 364,767 79,842 790,540 2020 Directors Nicolaus Heinen1 Peter Williams Marat Abzalov2 F.D. Hegner Ernest Thomas Eadie Total 1 Resigned as a Director on 23 September 2020. 2 Resigned as a Director on 5 June 2020. Short-term benefits Super- annuation $ Salary & fees $ Termination payments $ Share-based payment Perf rights $ Share- based payment Options $ 36,131 130,875 3,548 4,032 251,480 64,821 - 132,553 623,440 - 12,433 - 383 - 6,158 - - 120,735 2 - - - - - - - - - 101,420 4 - - 18,696 31,160 - - 1,058,699 12,464 - 1,267 20,241 - 120,735 - 31,160 101,420 1,152,179 Total $ 54,827 295,203 3,548 4,415 1,411,599 83,443 - 164,980 2,018,015 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 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. 17 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Remuneration of Key Management Personnel (continued) Alderan Resources Limited No member of KMP appointed during the period received a payment as part of his or her consideration for agreeing to hold the position. The proportion of remuneration linked to performance and the fixed proportion are as follows: Fixed remuneration At risk - STI At risk - LTI 2020 2019 2020 2019 2020 2019 Directors Nicolaus Heinen1 Chris Wanless 2 Peter Williams Marat Abzalov3 F.D. Hegner Ernest Thomas Eadie Brett Tucker4 Other KMP Peter Geerdts 5 100% - 57% 41% 90% 62% - - 66% 89% 100% 100% 17% 85% - 81% - - - - - - - - - - - - - - - - - - - - 43% 59% 10% 38% - - - 34% 11% - - 83% 15% - - 19% - - - - 1 Resigned as a Director on 23 September 2020. 2 Resigned as CEO and Director on 11 February 2019. 3 Resigned as a Director on 5 June 2020. 4 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. 5 Ceased employment on 30 April 2019. Cash bonuses granted as compensation for the current financial year. No cash bonuses were granted during the year ended 2020 (2019: nil). Other transactions with related parties There were no other transactions with related parties during the year ended 30 June 2020 (2019: nil). Loans from key management personnel As at 30 June 2020, there were no outstanding amounts due to KMP (2019: nil). Use of remuneration consultants During the financial year ended 30 June 2020, the Company did not engage the services of an independent remuneration consultant to review its remuneration for Directors, KMP and other senior executives. 18 DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) Alderan Resources Limited Voting and comments made at the company's Annual General Meeting ('AGM') The Company received 100% “for” votes on its Remuneration Report for the year ended 30 June 2019. Incentive Securities granted to KMP During the financial year, unquoted options were granted to the following key management personnel of the Company and the entities they controlled as part of their remuneration. KMP Peter Williams F.D. Hegner Ernest Thomas Eadie Peter Williams F.D. Hegner Ernest Thomas Eadie Marat Abzalov1 Peter Williams Number Grant Date 2,500,000 19 July 2019 1,000,000 19 July 2019 1,000,000 19 July 2019 2,500,000 19 July 2019 1,000,000 19 July 2019 1,000,000 19 July 2019 19 July 2019 5,000,000 30 June 2020 10,000,000 Exercise Price $0.06 $0.06 $0.06 $0.10 $0.10 $0.10 $0.10 $0.08 Expiry Date 19 July 2022 19 July 2022 19 July 2022 19 July 2022 19 July 2022 19 July 2022 19 July 2022 30 June 2023 Vesting Date Nil Nil Nil Nil Nil Nil Nil Nil 1 Resigned as a Director on 5 June 2020. KMP Equity Holdings Fully Paid Ordinary Shares Balance at beginning of year Number 1,148,751 - - - 2,140,833 30 June 2020 Directors Nicolaus Heinen Peter Williams Marat Abzalov1 F.D. Hegner Ernest Thomas Eadie Granted as compensation Number Received on exercise of options Number Net change other Number2 Balance at end of year Number - 2,777,667 200,000 512,800 - - - - - - - 4,343,750 1,562,500 - 1,760,417 1,148,751 7,121,417 1,762,500 512,800 3,901,250 1 Balance as at 5 June 2020 on resignation. 2 All movements relate to Director participation in a capital raising undertaken by the Company. 19 Alderan Resources Limited DIRECTORS’ REPORT (continued) REMUNERATION REPORT (AUDITED) (continued) KMP Equity Holdings (continued) Share Options Balance at beginning of year Number 900,000 - - - 600,000 30 June 2020 Directors Nicolaus Heinen Peter Williams Marat Abzalov1 F.D. Hegner Ernest Thomas Eadie Granted as compensation Number Exercised Number Net change other Number Balance at end of year Number - 15,000,000 5,000,000 2,000,000 2,000,000 - - - - - - 1,171,875 781,250 - 546,875 900,000 16,171,875 5,781,250 2,000,000 3,146,875 1 Balance as at 5 June 2020 on resignation. 2 All movements relate to Director participation in capital raisings undertaken by the Company. Performance Rights 30 June 2020 Directors Nicolaus Heinen Peter Williams Marat Abzalov F.D. Hegner Ernest Thomas Eadie Balance at beginning of year Number - - - 600,000 - END OF REMUNERATION REPORT Granted as compensation Number Converted Number Net change other Number Balance at end of year Number - - - - - - - - - - - - - - - - - - 600,000 - 20 Alderan Resources Limited DIRECTORS’ REPORT (continued) 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 2020 Nicolaus Heinen Peter Williams Marat Abzalov F.D. Hegner Ernest Thomas Eadie No. eligible to attend 8 8 6 8 8 Proceedings on behalf of the Company No. attended 8 8 5 8 8 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. Significant Events After the Reporting Date • On 15 July 2020, Brett Tucker resigned as Company Secretary and was replaced by Mathew O’Hara. The Company also changed its registered corporate office and principal place of business; • On 30 July 2020, the Company issued 500,000 ordinary shares in consideration for services performed by a consultant; • On 30 July 2020, the Company issued 1,875,000 ordinary shares following the exercise of 1,875,000 unquoted options with an exercise price of $0.10 and an expiry date of 7 August 2022; • On 3 August 2020, the Company issued 7,000,000 unquoted options to employee and consultants under the Company’s Long-Term Incentive Plan. 3,500,000 are exercisable at $0.195 and 3,500,000 are exercisable at $0.22, with both tranches having an expiry date of 3 August 2023; • On 23 September 2020, Nicolaus Heinen resigned as a Non-Executive Director; and 21 Alderan Resources Limited DIRECTORS’ REPORT (continued) Significant Events After the Reporting Date (continued) • The impact of the Coronavirus (COVID-19) pandemic is ongoing, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. 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 Tom Eadie Chairman Dated this 30th day of September 2020 22 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 2020, 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 2020 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 PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 Alderan Resources Limited Interest income Consulting and administration expenses Depreciation and amortisation expense Employee benefits expense Foreign exchange (loss)/gain Project expenditure Notes 30 June 2020 30 June 2019 3 $ 189 (454,148) (86,120) (707,434) $ 1,560 (1,233,357) (117,229) (1,073,207) (63) 14,000 (227,426) (120,160) Share based payment expense 15 (a) (214,779) (1,632,625) 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 (12,480) - (2,091) (4,348) (1,702,261) (4,167,457) 4 - - (1,702,261) (4,167,457) 217,942 217,942 312,670 312,670 (1,484,319) (3,854,787) Loss attributable to members of the Company (1,484,319) (3,854,787) Total comprehensive loss attributable to members the Company for the year (1,484,319) (3,854,787) Basic loss per share (cents per share) Basic loss per share from continuing operations (cents per share) 5 5 (0.92) (0.92) (3.26) (3.26) The accompanying notes form part of these consolidated financial statements. 24  CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 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 Total Liabilities Net Assets Equity Issued capital Options reserve Performance rights reserve Foreign currency reserve Accumulated losses Net Equity Note 30 June 2020 30 June 2019 $ $ 6 7 8 9 10 2,133,424 221,516 2,354,940 288,334 9,417,490 9,705,824 749,162 207,798 956,960 341,412 9,330,402 9,671,814 12,060,764 10,628,774 348,044 348,044 771,926 771,926 11,712,720 9,856,848 11(a) 11(d) 11(b) 11(c) 19,027,550 6,324,230 101,420 744,522 16,506,842 5,504,747 101,420 526,580 (14,485,002) (12,782,741) 11,712,720 9,856,848 The accompanying notes form part of these consolidated financial statements. 25 Alderan Resources Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020 Options reserve Performance rights reserve Issued capital $ Balance at 1 July 2018 12,372,806 3,973,542 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 - - - 4,134,036 - - - - - - - - - Share based payments - 1,531,205 101,420 Foreign currency reserve $ Accumulated losses Total equity $ $ 213,910 (8,615,284) 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 5,504,747 101,420 526,580 (12,782,741) 9,856,848 Balance at 1 July 2019 16,506,842 5,504,747 101,420 526,580 (12,782,741) 9,856,848 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 Equity settled transactions - - - 2,520,708 - - - - - - 214,779 604,704 - - - - - - - (1,702,261) (1,702,261) 217,942 - 217,942 217,942 (1,702,261) (1,484,319) - - - - - - 2,520,708 214,779 604,704 Balance at 30 June 2020 19,027,550 6,324,230 101,420 744,522 (14,485,002) 11,712,720 The accompanying notes form part of these consolidated financial statements. 26 Alderan Resources Limited CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 Cash flows from operating activities Payments to suppliers and employees Payments for exploration and evaluation expenditures Interest received Interest paid Note 30 June 2020 $ 30 June 2019 $ (925,970) (445,469) (681) (12,480) (2,492,601) (105,529) 1,560 (2,091) Net cash (used in) operating activities 6 (1,384,600) (2,598,661) Cash flows from investing activities Payments for exploration activities capitalised Receipt from sale of plant and equipment Security deposit Net cash (used in) investing activities Cash flows from financing activities Proceeds from issue of shares (net of capital raising costs) Proceeds from exercise of options Payment of borrowings (411,750) (2,370,929) - (10,000) (421,750) 39,703 - (2,331,226) 3,014,419 173,438 - 3,745,036 389,000 (37,861) Net cash provided by financing activities 3,187,857 4,096,175 Net increase / (decrease) in cash held Effect of foreign exchange Cash and cash equivalents at the beginning of the year 1,381,507 2,755 749,162 Cash and cash equivalents at the end of the year 6 2,133,424 (833,712) (82,490) 1,665,364 749,162 The accompanying notes form part of these consolidated financial statements. 27 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 These consolidated financial statements and notes represent those of Alderan Resources Limited (the Company or parent entity) and Controlled Entities (the Group or consolidated entity). Alderan Resources Limited is a listed public company incorporated and domiciled in Australia. The separate financial statements of the parent entity, Alderan Resources Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. Supplementary information about the parent entity is disclosed in Note 19. The financial statements were authorised for issue on 30th September 2020 by the Directors of the Company. NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial report is a general-purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards (IFRS). Except for cash flow information, the financial statements have been prepared on an accruals basis. Material accounting policies adopted in preparation of this financial report are presented below and have been consistently applied unless otherwise stated. Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets at fair value through profit or loss. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed within Note 1. New and Amended Accounting Policies adopted by the Group The Group has adopted all of the new and revised Accounting Standards and Interpretations issued by the Australian Accounting Standards Board that are mandatory for the current reporting period. The adoption of these new and revised Accounting Standards and Interpretations has not resulted in a significant or material change to the Group’s accounting policies. AASB 16 Leases The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of- use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (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 improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. When adopting AASB 16 from 1 July 2019, the Group has accounted for leases with a remaining term of 12 months or less as at 1 July 2019 as short-term leases. 28 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. a) Principles of Consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Alderan Resources Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent controls an entity when it 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 over the entity. A list of controlled entities is contained in Note 16. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non- controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of profit or loss and other comprehensive income. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance. 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. When the Group changes the proportion of ownership of a non-controlling interest, the difference between the fair value of the consideration paid or received and the adjustment to the balance of the non-controlling interest, is recognised in equity as an adjustment to retained earnings. Such an adjustment to retained earnings does not meet definitions of profit and loss, or other comprehensive income, so is not disclosed in the statement of profit or loss and other comprehensive income. Consideration paid or received for a non-controlling interest is valued as at the transaction date, not as at an earlier authorisation or contract date, because it does not meet the definition of a share-based payment. b) Operating Segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (CODM). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. 29 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) c) 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 current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve 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 twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. d) Cash and Cash Equivalents Cash on hand and in banks and short-term deposits are stated at nominal value. For the purpose of the consolidated statement of cash flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 90 days, net of outstanding bank overdrafts. e) Foreign Currency Translation The consolidated financial statements are presented in Australian dollars (AUD), which is also the functional currency of the parent company. Foreign currency transactions are translated into the functional currency of the parent company, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year end exchange rates are recognised in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. In the Group's financial statements, all assets, liabilities and transactions of group entities with a functional currency other than AUD (the Group's presentation currency) are translated into AUD upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into AUD at the closing rate at the reporting date. Income and expenses have been translated into the Group's presentation currency at the average rate over the reporting period. Exchange differences are charged/credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity are reclassified to profit or loss and recognised as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into AUD at the closing rate. 30 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) f) Financial Instruments Financial assets are measured at amortised cost if they are held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and are solely principal and interest. All other financial instrument assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income. Financial assets may be impaired based on an expected credit loss model to recognise an allowance. Such impairment is measured with a 12-month expected credit loss model unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime expected credit loss model is adopted For financial liabilities, the portion of the change in fair value that relates to the Group’s credit risk is presented in other comprehensive income. Hedge accounting requirements align the accounting treatment with the Group’s risk management activities. The Group does not currently have any impaired financial assets, financial liabilities with changes in fair value due to credit risk presented in other comprehensive income, or financial instruments requiring hedge accounting. g) Trade and Other Payables Trade payables and other accounts are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services. h) Trade and Other Receivables Trade and other receivable are amounts due from related parties and other receivables represent the principal amounts due at balance date plus accrued interest less, where applicable, any unearned income and provision for expected credit loss. i) Income Tax The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary difference at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probably that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the difference will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. 31 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) j) Plant and Equipment Plant and equipment has been 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 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. k) Exploration and Evaluation Expenditure 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. l) Leases The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. m) Revenue and Other Income Revenue from contracts with customers is recognised based on the transfer of promised goods or services to customers with an amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods or services. Other revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Research and development tax offset income is recognised when it is received or when the right to receive payment is established. Revenue is measured at the fair value of the consideration received or receivable. Interest income is recognised using the effective interest rate methods, which, for floating rate financial assets, is the rate inherent in the instrument. All revenue is stated net of goods and services tax. 32 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) n) Goods and Services Tax (GST) and other similar taxes Revenues, expenses and assets are recognised net of the amount of GST, except: – where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of any asset or as part of an item of expense; or – for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. o) Impairment of Assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation 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. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash flows (cash generating units). p) Share-Based Payment Transactions The Company provides benefits to KMP of the Group in the form of share-based payments, whereby the KMP render services in exchange for shares or rights over shares (equity settled transactions). The Company does not provide cash settled share-based payments. The cost of equity settled transactions with KMP are measured by reference to the fair value of the equity instruments at the date at which they are granted. The cost of equity settled transactions are recognised, together with a corresponding increase in equity, over the period in which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired, and the Company’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised for the period. No cumulative expense is recognised for awards that ultimately do not vest (in respect of non-market vesting conditions). q) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. r) Earnings per Share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Boss 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. 33 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) r) Earnings per Share (continued) 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. s) 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. t) New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below. Conceptual Framework for Financial Reporting (Conceptual Framework) The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the Group has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the Group may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the Group's financial statements. u) Critical Accounting Estimates and Assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Capitalised Exploration and Evaluation Expenditure 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. Share based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value 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. 34 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 2: SEGMENT REPORTING 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 2020 and 30 June 2019. 30 June 2020 Segment revenue Intersegment revenue Revenue from external customers Continuing Operations United States of America $ - - - Australia $ 189 - 189 Segment result (1,050,273) (651,988) Segment assets 9,890,232 2,170,532 Segment liabilities 15,710 332,334 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 Unallocated items $ Consolidated $ - - - - - - 189 - 189 (1,702,261) 12,060,764 348,044 Unallocated items $ Consolidated $ - - - - - - 1,560 - 1,560 (4,167,457) 10,628,774 771,926 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 3: EXPENSES Alderan Resources Limited Consulting and administration expense Accountancy fees Listing fees Rent Administration and consultancy fees Insurance Legal fees Exploration project related costs and others Promotion and investor relations Travel expenses NOTE 4: INCOME TAX (a) Income tax benefit (b) Numerical reconciliation between tax-benefit and pre-tax net loss Accounting (loss) before income tax Income tax benefit using the Company’s domestic tax rate of 27.5% (2019: 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 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% (2019: 27.5%) 30 June 2020 $ 30 June 2019 $ 55,250 30,499 37,844 217,391 32,932 56,284 20,073 256 3,619 70,480 43,711 126,289 753,762 97,706 45,268 32,911 15,822 47,408 454,148 1,233,357 - - (1,702,261) (468,122) (68,990) (4,167,457) (1,146,051) (553,882) 537,112 1,699,933 - - (5,891,143) (5,891,143) (9,068,666) (9,068,666) (1,620,064) (2,493,883) 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 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 5: LOSS PER SHARE Basic loss per share Basic loss per share from continuing operations Alderan Resources Limited 30 June 2020 30 June 2019 Cents per share Cents per share (0.92) (0.92) (3.26) (3.26) Losses used in the calculation of basic and diluted loss per share is as follows: $ $ Loss for the year Loss from continuing operations (1,702,261) (4,167,457) (1,702,261) (4,167,457) 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 185,884,127 127,879,527 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 30 June 2020 $ 2,133,424 2,133,424 30 June 2019 $ 749,162 749,162 Reconciliation of loss after tax to net cash outflow from operating activities: Loss for the year (1,702,261) (4,167,457) Adjustment for non-cash income and expense items Depreciation and amortisation Loss on sale of assets Share-based payment expense Change in assets and liabilities Trade and other receivables Trade and other payables Net cash (outflow) from operating activities 86,120 - 117,229 4,348 214,779 1,632,625 767 15,995 (14,377) (171,029) (1,384,600) (2,598,661) 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 7: TRADE AND OTHER RECEIVABLES Alderan Resources Limited Bonds GST receivable Sundry debtors Prepayment Security deposit NOTE 8: PLANT AND EQUIPMENT Balance at 1 July 2018 Asset sale Depreciation Balance at 1 July 2019 Depreciation Exchange differences Balance at 30 June 2020 Office Equipment $ Motor Vehicle $ 5,802 - (1,570) 4,232 (1,208) 417 3,441 140,773 (44,053) (18,530) 78,190 (12,413) 7,080 72,857 NOTE 9: EXPLORATION AND EVALUATION EXPENDITURE Carrying value at the beginning of the year Expenditure incurred during the year Expenditure reversal* Exchange differences Carrying value at the end of the year 30 June 2020 $ 169,022 27,387 871 14,236 10,000 221,516 Exploration Equipment $ 356,118 - (97,128) 258,990 (72,499) 25,545 212,036 30 June 2020 $ 9,330,402 411,750 (552,862) 228,200 9,417,490 30 June 2019 $ 175,711 16,811 - 15,276 - 207,798 Total $ 502,693 (44,053) (117,228) 341,412 (86,120) 33,042 288,334 30 June 2019 $ 6,564,208 2,370,929 - 395,265 9,330,402 *Related to reversal of liabilities recognised in prior year transferred to Kennecott Exploration Company upon execution of the Earn-In Agreement with Kennecott Exploration Company in November 2019. NOTE 10: TRADE AND OTHER PAYABLES Trade creditors Accruals and other payables Property acquisition payment Total 208,320 139,724 - 348,044 101,764 173,162 497,000 771,926 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 11: ISSUED CAPITAL Alderan Resources Limited a) Ordinary shares Year to 30 June 2020 Year to 30 June 2019 No. $ No. $ Fully paid Balance at beginning of year 162,011,135 16,506,842 112,963,908 Options exercised (i) Issue of shares (ii) Issue of shares (iii) Issue of shares (iv) Issue of shares (v) Issue of shares (vi) Issue of shares (vii) Issue of shares (viii) Less: share issue costs 2,734,375 605,989 17,597,773 27,032,235 18,000,000 3,666,667 3,490,467 24,300,000 - Balance at the end of the year 259,438,641 173,438 30,000 563,128 405,483 900,000 55,000 52,357 1,215,000 (873,698) 19,027,550 1,645,000 15,000,000 32,402,227 - - - - - - 162,011,135 12,372,806 389,000 3,000,000 1,036,871 - - - - - (291,835) 16,506,842 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) The Company issued a total of 2,734,375 shares on the exercise of 2,500,000 options exercisable at $0.06 each and 234,375 options exercisable at $0.10 each; The Company issued 605,989 ordinary shares in consideration for the deferral of acquisition payment for mineral claims within the Frisco Project; The Company issued 17,597,773 ordinary shares at a price of $0.032 per share under a Placement in August 2019; The Company issued 27,032,235 ordinary shares at a price of $0.015 per share under a Placement in April 2020; The Company issued 18,000,000 ordinary shares at a price of $0.05 per share under a Placement in June 2020; Following Shareholder approval received in June 2020 allowing Directors to participate in the April 2020 Placement, the Company issued an additional 3,666,667 ordinary shares at a price of $0.015 per share; Following Shareholder approval received in June 2020 a total of 3,490,467 ordinary shares were issued to Directors in lieu of Director fees; and Following Shareholder approval received in June 2020 a total of 24,300,000 ordinary shares were following conversion of convertible notes at a conversion price of $0.05 per share. 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. 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 11: ISSUED CAPITAL (CONTINUED) Alderan Resources Limited b) Performance rights reserve Year to 30 June 2020 Year to 30 June 2019 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 - 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 2020 or at the date of this report. c) Foreign Currency Reserves Balance at beginning of year Movement during the year Balance at the end of the year 30 June 2020 $ 526,580 217,942 744,522 30 June 2019 $ 213,910 312,670 526,580 40 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 11: ISSUED CAPITAL (CONTINUED) d) Options 30 June 2020 No. 30 June 2019 $ No. $ Balance at beginning of year Exercise of existing options (i) Issue of options to Directors and KMP (ii) Issue of free attaching options (iii) Issue of options to Lead Manager (iv) Issue of options to employees (v) Issue of options to Lead Manager (vi) Issue of options to Managing Director (vii) Existing options to employees and management vesting Options forfeited Options cancelled/expired (viii) Balance at the end of the year 15,787,454 (2,734,375) 14,750,000 25,000,000 10,000,000 750,000 5,000,000 10,000,000 - - (7,127,454) 71,425,625 5,504,747 20,707,454 3,973,541 - (1,645,000) 224,168 - 74,370 10,196 530,334 1,039 - - - - - - - - (20,624) (1,075,000) - (2,200,000) 6,324,230 15,787,454 - - - - - - - 534,491 (187,242) 1,183,957 5,504,747 The weighted average exercise price of options outstanding at the end of the financial year was $0.23 (2019: $0.11). The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.96 years (2019: 1.37 years). (i) The Company issued a total of 2,734,375 shares on the exercise of 2,500,000 options exercisable at $0.06 each and 234,375 options exercisable at $0.10 each; (ii) On 19 July 2019, 14,750,000 unlisted options were issued as follows: o 7,000,000 unlisted incentive options to Directors exercisable at $0.06 on or before 19 July 2022; o 7,000,000 unlisted incentive options to Directors exercisable at $0.10 on or before 19 July 2022; o 750,000 unlisted incentive options to KMP exercisable at $0.10 on or before 19 July 2022; (iii) On 7 August 2019, 25,000,000 free attaching unlisted options were issued as part of a Placement with an exercisable price of $0.10 on or before 7 August 2022; (iv) On 7 August 2019, 10,000,000 unlisted options were issued to the lead manager for services provided. 5,000,000 are exercisable at $0.10 on or before 7 August 2021 and 5,000,000 are exercisable at $0.20 on or before 7 August 2021. These have been allocated to capital raising costs; (v) On 19 July 2019, 750,000 unlisted options were issued to employees with an exercisable price of $0.10 on or before 19 July 2022; (vi) On 30 June 2020, 5,000,000 unlisted options, exercisable at $0.12 on or before 30 June 2023, were issued to the lead manager for services provided. These have been allocated to capital raising costs; (vii) On 30 June 2020, 10,000,000 unlisted options, exercisable at $0.08 on or before 30 June 2023, were issued to the Managing Director following shareholder approval. These options vest following 12 months continuous service (30 June 2021); and (viii) The following unlisted options expired or were cancelled during the year: o 1,777,454 unlisted options exercisable at $0.20 on or before 22 February 2020; o 2,300,000 unlisted options exercisable at $0.30 on or before 31 May 2020; o 2,300,000 unlisted options exercisable at $0.40 on or before 31 May 2020; and o 750,000 unlisted options exercisable at $0.10 on or before 19 July 2022. 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 11: ISSUED CAPITAL (CONTINUED) Alderan Resources Limited Number Grant Date Expiry Date 7,000,000 19-Jul-2019 19-Jul-2022 7,750,000 19-Jul-2019 19-Jul-2022 750,000 19-Jul-2019 19-Jul-2022 10,000,000 30-Jun-2020 30-Jun-2023 25,500,000 Share price at grant date 0.033 0.033 0.033 0.145 Exercise Price $ 0.06 0.10 0.10 0.08 Expected volatility Dividend yield Risk-free rate Fair value at Grant Date $ Vesting Date 102% 102% 102% 102% - - - - 0.95% 0.95% 0.95% 0.26% 118,814 19-Jul-2019 105,354 19-Jul-2019 10,196 19-Jul-2019 1,138,416 30-Jun-2021 1,372,780 * $214,779 share based payment expense per consolidated statement of profit or loss and other comprehensive income including $20,624 reversal for options unvested. Number Grant Date Expiry Date 5,000,000 7-Aug-2019 7-Aug-2022 5,000,000 7-Aug-2019 7-Aug-2022 5,000,000 30-Jun-2020 30-Jun-2023 15,000,000 Share price at grant date 0.033 0.033 0.145 Exercise Price $ 0.10 0.20 0.12 Expected volatility Dividend yield Risk-free rate 102% 102% 102% - - - 0.71% 0.71% 0.26% Fair value at Grant Date $ 47,565 26,805 Vesting Date 7-Aug-2019 7-Aug-2019 530,334 19-Jul-2019 604,704 Recognised as an Expense in 2020 $ 118,814 105,354 10,196 1,039 235,403* Recognised as Capital Raising costs in 2020 $ 47,565 26,805 530,334 604,704 42 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 12: CONTINGENT LIABILITIES There were no contingent liabilities as at 30 June 2020 (2019: nil). NOTE 13: SIGNIFICANT EVENTS AFTER THE REPORTING DATE • On 15 July 2020, Brett Tucker resigned as Company Secretary and was replaced by Mathew O’Hara. The Company also changed its registered corporate office and principal place of business; • On 30 July 2020, the Company issued 500,000 ordinary shares in consideration for services performed by a consultant; • On 30 July 2020, the Company issued 1,875,000 ordinary shares following the exercise of 1,875,000 unquoted options with an exercise price of $0.10 and an expiry date of 3 August 2022; • On 3 August 2020, the Company issued 7,000,000 unquoted options to employee and consultants under the Company’s Long-Term Incentive Plan. 3,500,000 are exercisable at $0.195 and 3,500,000 are exercisable at $0.22, with both tranches having an expiry date of 3 August 2023; • On 23 September 2020, Mr Nicolaus Heinen resigned as a Non-Executive Director; and • The impact of the Coronavirus (COVID-19) pandemic is ongoing, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. 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 2020 (2019: nil). 43 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 Net share based payment expense recognised in the profit or loss b) Summary of options granted as share-based payments 30 June 2020 $ 214,779 30 June 2019 $ 1,531,205 - 101,420 214,779 1,632,625 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 2020 30 June 2019 Number WAEP Number WAEP Outstanding at beginning of year Granted by the Company during the year Exercised during the year Forfeited/Expired during the year Cancelled during the year 15,787,454 40,500,000 (2,500,000) (6,377,454) - Outstanding at end of year 47,410,000 0.48 0.10 (0.06) (0.31) - 0.20 20,707,454 $0.83 - (1,645,000) (1,075,000) (2,200,000) 15,787,454 - ($0.24) ($1.83) ($3.27) $0.48 44 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 15: SHARE-BASED PAYMENTS (continued) 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. 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 Expiry Date Spot Price A B C 24 Aug-18 24 Aug-18 24 Aug-18 24 Aug-20 24 Aug-21 24 Aug-22 $0.34 $0.34 $0.34 Vesting Hurdle (120 days) $1.00 $1.50 $2.00 Fair value Expected Volatility Dividend Yield Interest Rate $0.15 $0.17 $0.19 100% 100% 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 – shares Share-based payments – performance rights Share-based payments - options b) Related party balances 30 June 2020 $ 564,838 - 10,692 - 215,010 790,540 30 June 2019 $ 643,681 120,735 - 101,420 1,152,179 2,018,015 As at 30 June 2020, there were no balances owed from/to key management personnel and or companies associated with the shareholders and Directors (2019: nil) c) Other transactions with related parties There were no other transactions with related parties during the year ended 30 June 2020 (2019: $18,732). 45 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 2020 30 June 2019 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 Group'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 30 June 2020 $ 2,133,424 221,516 2,354,940 348,044 348,044 30 June 2019 $ 749,162 207,798 956,960 771,926 771,926 46 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 2020 $ 2,133,424 221,516 2,354,940 30 June 2019 $ 749,162 207,798 956,960 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. 47 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 30 June 2020 $ 2,133,424 2,133,424 30 June 2019 $ 749,162 749,162 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 2019. 30 June 2020 - Profit or loss 30 June 2019 - Profit or loss 100bp Increase 100bp Decrease 100bp Increase 100bp Decrease 21,334 (21,334) 7,492 (7,492) 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 2020 Financial Liabilities Trade and other payables Total 30 June 2019 Financial Liabilities Trade and other payables Total ≤6 Months $ 6-12 Months $ 1-5 Years $ ≥5 Years $ Total $ 348,044 348,044 - - - - - - 348,044 348,044 ≤6 Months $ 6-12 Months $ 1-5 Years $ ≥5 Years $ Total $ 273,960 273,960 497,966 497,966 - - - - 771,926 771,926 48 Alderan Resources Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 Foreign currency sensitivity analysis 30 June 2020 $ 30 June 2019 $ 15,386 66,030 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 $150 (2019: $660); and net assets will increase/decrease by $150 (2019: $660). 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: COMMITMENTS 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 2020 $ 30 June 2019 $ 930,105 121,287 655,394 369,918 1,051,392 1,025,312 Where the commitments are due in US Dollars, the Company has used the spot rate on 30 June 2020 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. 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 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 Alderan Resources Limited Parent 30 June 2020 $ 30 June 2019 $ (1,484,320) (3,854,787) (1,484,320) (3,854,787) 12,045,054 10,078,913 (332,334) (222,065) 11,712,720 9,856,848 19,027,550 16,506,842 6,425,650 5,606,166 (13,740,480) (12,256,160) 11,712,720 9,856,848 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 2020 and 30 June 2019. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019. Capital commitments There are no commitments which 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. 30 June 2020 $ 30 June 2019 $ Audit or review of the financial statements 34,750 31,500 50 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 2020 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 2. 3. 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. 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 Tom Eadie Chairman Dated this 30th day of September 2020 51 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 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and 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 2020 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 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. Key Audit Matter How our audit addressed this matter Exploration and Evaluation Expenditure Refer to Note 9 in the financial statements The Group has capitalised exploration and evaluation expenditure with a carrying value of $9,417,490 as at 30 June 2020. Our audit procedures included:  Ensuring that the right to tenure of each area of interest is current; 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:  Agreeing a sample of additions to supporting documentation and ensuring the amounts are capital in nature and relate to the area of interest; 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 existence of an economically recoverable 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.  Assessing and evaluating management’s assessment that no indicators of impairment existed as at 30 June 2020;  Enquiring with management and reviewing budgets and other supporting documentation as evidence that active and significant operations in, or relation to, the area of interest will be continued in the future; and  Through discussions with the management and relevant supporting documentation, reviewing assessing management’s determination that exploration and evaluation activities have not yet reached a stage where the existence or otherwise of economically recoverable reserves may be reasonably determined. 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 2020, 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: https://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 2020. In our opinion, the Remuneration Report of Alderan Resources Limited, for the year ended 30 June 2020, 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 2020 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. Alderan Resources Limited No. PRINCIPLES AND RECOMMENDATIONS (Summary) COMPLIES COMMENT 1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 1.1 A listed entity should disclose the respective roles and responsibilities of its board and management; and those matters expressly reserved to the board and those delegated to management. Yes 1.2 A listed entity should: Yes (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. 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. 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. 55 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 the progress towards achieving those objectives. 1.6 A listed entity should: (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. 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. 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). 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. 56 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 and to ensure that the Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to responsibilities discharge effectively. its duties and Alderan Resources Limited 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. The Company’s Nomination Committee Charter and Remuneration Committee Charter are available on the Company’s website. 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 at 30 June 2020 as follows: (a) the names of the directors considered by the 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 independence of 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 (c) the length of service for each director - - Tom Eadie, Non-executive Chairman – Not independent Peter Williams, Managing Director – Not independent - Hegner, Executive Director - Not independent - Nicolaus Heinen, Non-executive Director – Not 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. 57 2.4 A majority of the board of a listed entity should be independent directors No As disclosed in the response to Recommendation 2.3 above, none of the Directors are considered to be independent. Alderan Resources Limited 2.5 2.6 independent director and, The chair of the board of a listed entity should be an in particular, should not be the same person as the CEO of the entity A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. 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. No Mr Eadie is the Chairman and is not considered to be independent by virtue of him acting in the capacity of an Executive Chairman between 11 February 2019 and 1 September 2019. 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. 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. 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 4.1 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 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. 58 4.2 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 records of the entity have been properly 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. 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 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. Alderan Resources Limited 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. 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. 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. 59 Yes Yes Yes Yes Yes 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 in place to facilitate and encourage participation at meetings of security holders. it has 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 employs risk for overseeing management framework. the entity’s 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 Alderan Resources Limited 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 Registry Services 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. 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. 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 60 (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 function is structured and what role it 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. adopted its risk framework and listed on the ASX. The Company intends to conduct this review prior to its next annual reporting date. Alderan Resources Limited 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. 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. 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, they do not guarantee title to the Tenements nor guarantee that the Tenements are free of any third party rights or claims. 61 Alderan Resources Limited 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: a) risks inherent in resource estimation; b) operation and technical risks; 62 c) environmental risks; d) tenure risks; e) contract counterparty risks; and f) competition risks. Alderan Resources Limited 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. 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. 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 is and ensuring appropriate and not excessive remuneration that such 8.2 and A listed entity should separately disclose its the practices policies remuneration of non-executive directors and the remuneration of executive directors and other senior executives. regarding 8.3 listed entity which has an equity-based A remuneration scheme should: Yes to enter (a) have a policy on whether participants are permitted transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and into (b) disclose that policy or a summary of 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. 63 Alderan Resources Limited Additional Securities Information Class of Shares and Voting Rights The voting rights attached to the Fully Paid Ordinary Shares of the Company are: a) b) at a meeting of members or classes of members each member entitled to vote may vote in person or by proxy or by attorney; and on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or attorney has one vote for each ordinary share held. Options do not carry any voting rights. Distribution of Shareholders (as at 25 September 2020) Spread of Holdings Number of Holders 1-1,000 1,001-5,000 5,001 - 10,000 10,001 -100,000 Over 100,001 Total 96 191 181 450 170 1,088 There are 226 holders of unmarketable parcels comprising a total of 379,482 ordinary shares. There are currently no shares subject to voluntary escrow. There is no current on-market buy back taking place. Company Secretary Mathew O’Hara Registered Office Suite 23, 513 Hay Street Subiaco WA 6008 Telephone: (08) 6143 6711 Share Registry Automic Registry Services Level 3 50 Holt Street Surry Hills NSW 2010 Ph: (02) 9698 5414 Substantial Shareholders Name Kitara Investments Pty Ltd Mr Petar Jurkovic & Ms Allison Parker

Number of Shares 46,283,081 18,333,333 % 17.68% 7.00% 64 Twenty Largest Shareholders (as at 25 September 2020) Name 1 Kitara Investments Pty Ltd 2 HSBC Custody Nominees (Australia) Limited 3 Mr Petar Jurkovic & Ms Allison Parker

4 TR Nominees Pty Ltd 5 Quaalup Investments Pty Ltd 6 BNP Paribas Nominees Pty Ltd 7 Kingslane Pty Ltd < Cranston Super Pension A/C> 8 RL Holdings Pty Ltd 9 JP Morgan Nominees Australia Pty Limited 10 Mr Marat Abzalov & Mrs Svetlana Abzalov 11 Kingslane Pty Ltd 12 Buprestid Pty Ltd 13 Mr Carlo Chiodo 14 Hawthorn Grove Investments Pty Ltd 15 Gondwana Investment Group Pty Ltd 16 Mr Peter Michael Gerhard Geerdts 17 Torr Family Pty Ltd 18 Cobra Investments Pty Ltd 19 Mr Peter Williams 20 Mr Christopher Robert Wanless TOTAL Unquoted Securities (as at 25 September 2020) Class Performance Rights: Performance rights vest on price of $1.00 for 120 days expiring 11-Sept-20 Performance rights vest on price of $1.50 for 120 days expiring 11-Sept-21 Performance rights vest on price of $2.00 for 120 days expiring 11-Sept-22 Unquoted Options: Unquoted options exercisable at $0.20 each on or before 22-Feb-21 Unquoted options exercisable at $0.30 each on or before 22-Feb-21 Unquoted options exercisable at $0.40 each on or before 22-Feb-21 Unquoted options exercisable at $0.60 each on or before 22-Feb-21 Unquoted options exercisable at $0.80 each on or before 22-Feb-21 Unquoted options exercisable at $0.30 each on or before 27-Jun-21 Unquoted options exercisable at $0.40 each on or before 27-Jun-21 Unquoted options exercisable at $0.60 each on or before 27-Jun-21 Alderan Resources Limited Number of Shares 46,283,081 36,781,669 18,333,333 11,489,584 8,338,337 5,306,458 4,775,000 4,343,641 4,343,635 4,233,333 4,000,000 3,925,000 3,667,504 3,637,500 3,078,334 3,000,000 2,777,667 2,670,796 2,343,750 2,196,247 % 17.68% 14.05% 7.00% 4.39% 3.18% 2.03% 1.82% 1.66% 1.66% 1.62% 1.53% 1.50% 1.40% 1.39% 1.18% 1.15% 1.06% 1.02% 0.90% 0.84% 175,524,869 67.04% Number 200,000 200,000 200,000 755,000 2,300,000 1,570,000 1,570,000 1,570,000 45,000 75,000 75,000 65 Unquoted options exercisable at $0.80 each on or before 27-Jun-21 Unquoted options exercisable at $0.60 each on or before 22-Feb-21 Unquoted options exercisable at $0.80 each on or before 22-Feb-21 Unquoted options exercisable at $1.00 each on or before 22-Feb-21 Unquoted options exercisable at $1.20 each on or before 22-Feb-21 Unquoted options exercisable at $2.50 each on or before 15-Nov-21 Unquoted options exercisable at $3.50 each on or before 15-Nov-21 Unquoted options exercisable at $1.00 each on or before 12-Jun-22 Unquoted options exercisable at $1.50 each on or before 12-Jun-22 Unquoted options exercisable at $2.00 each on or before 12-Jun-22 Unquoted options exercisable at $2.50 each on or before 12-Jun-22 Unquoted options exercisable at $0.06 each on or before 19-Jul-22 Unquoted options exercisable at $0.10 each on or before 19-Jul-22 Unquoted options exercisable at $0.10 each on or before 7-Aug-22 Unquoted options exercisable at $0.20 each on or before 7-Aug-21 Unquoted options exercisable at $0.08 each on or before 30-Jun-23 Unquoted options exercisable at $0.12 each on or before 30-Dec-21 Unquoted options exercisable at $0.195 each on or before 3-Aug-23 Unquoted options exercisable at $0.225 each on or before 3-Aug-23 Alderan Resources Limited 75,000 200,000 200,000 200,000 200,000 75,000 75,000 125,000 100,000 100,000 100,000 4,500,000 7,750,000 27,890,625 5,000,000 10,000,000 5,000,000 3,500,000 3,500,000 Unquoted Securities >20% Holders (as at 25 September 2020) F.D Hegner holds 100% of the unquoted performance rights on issue as at 25 September 2020. There were no substantial holders of unquote options as at 25 September 2020. 66 Alderan Resources Limited Schedule of Mining Tenements 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 67 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 CT 44 CT 45 CT 46 SF 82 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 426720 426721 426722 426723 Alderan Resources Limited 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 258691 258692 258693 258694 68 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 CT 106 CT 107 CT 108 CT 109 CT 110 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 434809 434810 434811 434812 434813 Alderan Resources Limited 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 261077 261078 261079 261080 261081 69 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 NW 114 NW 115 NW 116 NW 117 NW 118 NW 119 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 434849 434850 434851 434852 434853 434854 Alderan Resources Limited 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 261117 261118 261119 261120 261121 261122 70 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 NW 12 NW 13 NW 14 NW 15 NW 16 CT 78 SF 82 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 428563 428564 428565 428566 428567 428568 428569 Alderan Resources Limited 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 259881 259882 259883 259884 259885 259886 259887 71 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 SF 29 SF 30 SF 31 SF 32 SF 33 SF 34 SF 35 SF 36 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 426464 426465 426466 426467 426468 426469 426470 426471 Alderan Resources Limited 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 258270 258271 258272 258273 258274 258275 258276 258277 72 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 SF 70 SF 71 SF 72 SF 73 SF 74 SF 75 SF 76 SF 77 SF 78 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 426504 426505 426506 426507 426508 426509 426510 426511 426512 Alderan Resources Limited 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 258310 258311 258312 258313 258314 258315 258316 258317 258318 73 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 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 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 437549 437550 437551 437552 437553 437554 437555 437556 437557 437558 437559 437560 437561 437562 Alderan Resources Limited 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 264275 264276 264277 264278 264279 264280 264281 264282 264283 264284 264285 264286 264287 264288 74 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 437563 437564 437565 437566 437567 437568 437569 437570 437571 437572 437573 437574 437575 437576 437577 437578 437579 437580 437581 437582 Alderan Resources Limited 264289 264290 264291 264292 264293 264294 264295 264296 264297 264298 264299 264300 264301 264302 264303 264304 264305 264306 264307 264308 75 Alderan Resources Limited Unpatented Mining Claims Valyrian Resources Corp Star Range Group Claim Name Serial No. Beaver Co. Document No. 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 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 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 76 SR 193 SR 194 SR 195 SR 196 SR 197 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 436807 436808 436809 436810 436811 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 Alderan Resources Limited 263253 263254 263255 263256 263257 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 77 Elephant Canyon Group Alderan Resources Limited Claim Name Serial No. Beaver Co. Document No. 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 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 78 Cave Mine Group Claim Name Serial No. Beaver Co. Document No. Alderan Resources Limited 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 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 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 79 CM101 CM102 CM109 CM110 CM111 CM112 CM118 CM119 CM126 CM127 CM128 CM129 CM130 CM131 CM132 White Mountain Group 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 435795 435796 435803 435804 435805 435806 435812 435813 435820 435821 435822 435823 435824 435825 435826 Serial 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 Alderan Resources Limited 262224 262225 262232 262233 262234 262235 262241 262242 262249 262250 262251 262252 262253 262254 262255 Beaver Co. Document No. 267521 267522 267523 267524 267525 267526 267527 267528 267529 267530 267531 267532 267533 267534 267535 267536 267537 267538 267539 267540 267541 267542 80 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 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 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 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 Alderan Resources Limited 267930 267931 267932 267933 267934 267935 267936 267937 267938 267939 267940 267941 267942 267943 267944 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 81 Alderan Resources Limited 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 WM 86 WM 87 WM 88 WM 89 WM 90 WM 91 WM 92 WM 93 WM 94 WM 95 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 UMC 443978 UMC 443979 UMC 443980 UMC 443981 UMC 443982 UMC 443983 UMC 443984 UMC 443985 UMC 443986 UMC 443987 267971 267972 267973 267974 267975 267976 267977 267978 267979 267980 267981 267982 267983 267984 267985 267986 267987 267988 267989 267990 267991 267992 267993 267994 267995 267996 267997 267998 267999 276800 276801 276802 Lessee Valyrian Resources Corp. Utah State Lease for Metalliferous Minerals (ML53495) Term Rent Premises Acres Effective Date 1 November 2017 10 USD$1 per acre T28S, R11W, SLB&M Sec. 27: E2NE4 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) 82 

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