AMC Entertainment
Annual Report 2020

Plain-text annual report

AMUR MINERALS CORPORATION ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 AMUR MINERALS CORPORATION CORPORATE DIRECTORY Directors Registered office Auditors Nominated adviser and broker Legal advisers Solicitors Mr R Schafer Mr R Young Mr P Gazzard Mr T Bowens Kingston Chambers P.O. Box 173 Road Town Tortola British Virgin Islands BDO LLP 55 Baker Street London W1U 7EU United Kingdom S. P. Angel Corporate Finance LLP Prince Fredrick House 35 – 39 Maddox Street London W1S 2PP United Kingdom Maples and Calder PO Box 173 Sea Meadow House Road Town Tortola British Virgin Islands Bryan Cave Leighton Paisner (Russia) LLP Capital City Complex Moscow City Business Centre 8 Presnenskaya Nab. Bldg. 1 Moscow 123100 Russian Federation Field Fisher Waterhouse LLP Riverbank House 2 Swan Lane London EC4R 3TT United Kingdom AMUR MINERALS CORPORATION CONTENTS Chairman's statement Corporate governance Operating risks and uncertainties Statement of Directors' responsibilities Remuneration committee report Audit committee report Directors' report Independent auditors' report to the members of Amur Minerals Corporation Consolidated statement of financial position Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the financial statements Page(s) 1 - 4 5 - 11 12 - 15 16 17 - 18 19 - 20 21 - 22 23 - 27 28 29 30 31 32 33 - 64 AMUR MINERALS CORPORATION CHAIRMAN'S STATEMENT Dear Shareholder, It is with pleasure that I update you on the activities of the Company for the twelve months period to 31 December 2020. Along with all worldwide corporate entities, Amur Minerals Corporation (the “Company”) has had to balance and endure the challenging year given the Covid-19 pandemic, despite which the Company progressed its Federation of Russia Kun- Manie Nickel/Copper sulphide project (“Kun-Manie”). In addition, the Company established a source of income generated through its ownership of 14% interest Convertible Loan Notes (“CLN””) supporting the resumption of Nathan River Resources’ (“NRR”) Roper Bar iron ore production located in the Northern Territories of Australia. We present the Annual Report and Accounts for the year to 31 December 2020. It is noted that over the course of the year 2020, the Company continued to remain debt free and its cash reserve increased by 600% from US$398,000 (1 January 2020) to US$2,800,000 (31 December 2020). Going forward, the NRR CLN will generate interest revenue through to Q3 2023 and at the rate of approximately US$170,000 per quarter. Looking forward, we continue our work toward the completion of the funded Permanent Conditions TEO (“Feasibility Study level work”) for identification of reserves per the Russian mineral classification system. Subsequent Russian Federation and western required documentation allowing for production approvals, development and compilation of the necessary information to provide both a Russian compatible Bankable Feasibility Study (“RBFS”) and western BFS standard studies shall be undertaken. This binary study approach should provide the Company with the flexibility to evaluate and identify the best approaches to develop and advance the Company. Kun-Manie Nickel-Copper Sulphide project The 2019 Kun-Manie project focus of the Company has been and continues to be the Kun-Manie nickel copper sulphide project in the far east of Russia. Despite the disruption of the global pandemic, work on the TEO continued throughout the year with a one year extension to the delivery date being granted. The TEO is a mandatory Russian feasibility study, independently compiled, addressing the physical and operating project considerations and paving the way for registration of a project’s mineral reserve by the State Committee on Reserves (“GKZ”). Reserve registration is a necessary milestone for all companies to undertake detailed engineering, procurement and construction designs suited for compilation of a Russian Bankable Feasibility Study (“RBFS”). Planned for delivery in December 2020, the impact of having to work remotely meant that the Company had to request an extension for the delivery date of the TEO to 1 December 2021. Approved by the Russian Federation, the Company still accomplished the majority of its TEO related tasks including: • Russian grade estimates for nickel, copper, cobalt, platinum, palladium, gold and silver. Maiden estimates for gold and silver were generated; • Hydrological assessment determined that a more than sufficient water supply is available to support the project; • Rock mechanics study work confirmed that open pit and/or underground operations can be successfully implemented; • Base Line Environmental Assessment have defined the base line preproduction environmental settings and operational considerations; • Metallurgical test work confirming that individual copper sulphide and nickel sulphide concentrates can be generated using standard industry sulphide floatation methods; • Key equipment list of the key components based the global metallurgical test works has establish specific equipment lists; • The 10 tonne representative bulk sample, (as well as multiple test programmes conducted over the years), had established the nickel and copper can be recovered in individual sulphide concentrate streams improving revenue generation streams for the project; • Process flow sheets and estimated operating costs have been substantially refined; • Non-binding off-take terms and conditions by a confidential metals trader have provided guidance to assist in the determination of revenue generation; 1 AMUR MINERALS CORPORATION • Pit designs at four cut-off grades have been generated for each of the three deposits. Reserve resource models indicate an as yet uncertified potential mine life ranging from 24 to 41 years based on a 6.0 mtpa nominal operating capacity; • A comprehensive mine site layout has been identified. Oreall (a Moscow based independent company licenced to compile TEO study results) has compiled the document to be provided to the GKZ for reserve certification. As with the the Temporary Conditions TEO done in the past, the Company is independently verifying the draft results including independent reviews and the inclusion of the newly acquired metallugical test work results. Concurrently and separate from the TEO work, RPM Global has recently completed (post 2020) an update to the JORC resource estimates including all drilling and trenching. The resource for all categories of Measured, Indicated and Inferred has been increased from the most recent resource number by as much as 14.1% to 15.4% for tonnage of ore and tonnages of nickel and copper. With regard to Measured and Indicated resources used to define reserves, these have been increased from 25 to 31% by tonnage of ore and tonnages of nickel and copper. A 0.3% Nickel cut-off grade has been used to calculate the JORC Resource compared to a 0.4% Nickel cut off-grade. The reduction in the COG is primarily due to the metallurgical test results by Gipronickel which confirmed that two revenue generating concentrate products (Ni and Cu) could be produced. Previous resource estimates were based on a single nickel only payable concentrate being produced with zero revenue contribution being derived from the copper. Below is a summary of the newly reported JORC resource within the global mineral resource within the 100% owned (and the operator) Kun-Manie licence area. These results have only recently been obtained from RPM Global. Kun-Manie Nickel Copper Sulphide Mineral Resource Estimate (0.3% Ni Eq COG) Resource Classification Ore Mt Ni % Cu % Ni T (1,000’s) Cu T (1,000’s) Maly Kurumkon / Flangovy Measured Indicated M+I Inferred MKF TOTAL 7.3 38.0 45.3 3.1 49 0.76 0.80 0.79 0.79 0.79 0.22 0.22 0.22 0.23 0.22 55 300 355 24 380 Ikenskoe / Sobolevskey /Kubuk Measured Indicated M+I Inferred ISK TOTAL Measured Indicated M+I Inferred VOD TOTAL 11 88 99 25 120 0.70 0.74 0.73 0.68 0.72 0.19 0.21 0.20 0.19 0.20 Vodorazdelny 1.8 2.2 4.0 1.3 5.3 0.84 0.80 0.80 0.78 0.81 0.24 0.22 0.23 0.22 0.23 77 650 727 170 890 15 17 32 10 43 TOTAL KUN-MANIE Measured Indicated 20.1 128.2 0.73 0.75 0.20 0.21 147 697 2 16 84 100 7 110 21 180 201 48 250 4 5 9 3 12 41 269 AMUR MINERALS CORPORATION M+I Inferred 148.3 29.4 GLOBAL TOTAL 174.3 0.75 0.69 0.75 TEO Resource (0.3% Ni COG) 0.76 0.21 0.20 0.21 168.1 0.21 1,114 204 1,313 1,279 All (B, C1, C2) 310 58 372 353 Notes; 1. 2. and Ore Reserves (The Joint Ore Reserves Committee Code – JORC 2012 Edition). Totals may differ due to rounding, Mineral Resources reported on a dry in-situ basis. Mineral Resources are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources NRR Rope Bar Iron Ore Operation On 25 August 2020, the Company completed an equity placing of £6,100,000 and an investment of US$4,670,000 to hold a Convertible Loan Note (“CLN”) on Nathan River Resources Pte Limited (“NRR”) which owns the Roper Bar Iron Ore Project (“Roper Bar”). Roper Bar is a large established iron ore deposit in the Northern Territory of Australia with a defined JORC resource of 446,000,000 tonnes at 39.9% Fe and a JORC reserve of 4,760,000 tonnes at 60.1% Fe. NRR has re-established the mining and shipping of iron ore to China under an offtake agreement with Glencore The Company is paid on the 14% coupon of the CLN which is convertible into 17% of the current issued share capital of NRR. During 2020 the Company was due US$205,000 in interest payments, of which US$43,000 was received during the year and US$162,000 post year end. These notes have a three year maturity life. Financial Overview As at 31 December 2020 the Company had cash reserves of US$2,800,000 up from US$398,000 at the start of 2020 and remains debt free. The Company undertook a number of funding initiatives during 2020 providing total funds from equity placings of approximately US$10,000,000 net of issue costs. In addition, on 12 March 2020, the Company entered into a £1,500,000 fixed term loan with Plena Global securities LLC (“Plena”) with an immediate initial advance of £500,000. As part of this loan facility, the Company also granted Plena 52,447,552 warrants with an exercise price of 1.43 pence per ordinary share. On 16 April 2020, the Company completed an equity placing of 75,000,000 new ordinary shares at a price of 1p per share to raise gross proceeds of £750,000. Funds raised from this placing were used to repay in full the initial advance of the Plena loan facility on 4 May 2020. On 27 May 2020, the Company completed an equity placing of 47,619,048 new ordinary shares at a price of 1.05 pence per share to raise gross proceeds of £500,000. During 2020, Plena has exercised 47,723,776 warrants providing £682,450 of additional funding for the Company. As at time of writing this report, Plena have 4,723,776 warrants outstanding. On 19 June 2020, the Company held an Extraordinary General Meeting during which a resolution was passed to increase the number of shares which the Company is authorised to issue to 2,000,000,000. On 25 August 2020, the Company completed an equity placing of $6,100,000 and an investment of US$4,670,000 in a Convertible Loan Note (“CLN”) in NRR. On the 13 February 2020, the Company appointed Mr. Adam Habib as Advisor to the Board. As part of his appointment, Mr. Habib was granted 12,809,630 options with an exercise price of 1.95 pence per share, with a further 12,809,630 options subject to the successful completion by the Company of a non-binding off-take agreement, for the completion of a producing asset investment. On the 3 April 2020, the Company made a grant of 30,000,000 options with an exercise price of 1.75 pence per ordinary share to Directors, executives and employees. As at 31 December 2020, the Company has 55,619,260 options outstanding. 3 AMUR MINERALS CORPORATION Administration expenses for the 2020 year totalled US$3,000,000 (2019: US$2,000,000). The main reason for the increase in administration expenses was caused by the hiring of a new Officer and Adviser and modest employee salary increases totalling US$1,400,000 (2019: US$1,100,000) and professional fees of US$874,000 (2019: US$402,000) associated with TEO activities. Other Comprehensive income was charged with a translation loss of US$4,100,000 (2019: gain of US$2,900,000) was due to the weakening of the Russian rouble to the US dollar. Expenditure on exploration was US$1,200,000 (2019: US$1,300,000) as the Company remained focused on the completion of the TEO. Exploration assets realized an exchange loss of US$3,800,000 (2019: exchange gain US$2,700,000) also due to the weakening of the Russian rouble to the US dollar. As detailed in the notes to the financial statements, the Kun-Manie asset value have been restated by US$486,000. This is due to certain exploration costs that were incurred and were capitalised within the Parent Company, whereas these costs should have been capitalised within Russian operating subsidiary in its functional currency, with resulting foreign exchange gains or losses being recognised at the end of each reporting period end. Covid-19 Since the start of January 2020, Covid-19 created significant disruption to the global markets and economies, including Russia. To keep safe its personnel, the Company has put in place special measures to protect its workforce while at the same time ensuring business continuity. Prior to the outbreak, the Company had the facilities in place to allow remote working for most members of staff. This capability was enhanced to ensure that the Company can now operate effectively over an extended period of time without requiring regular access to physical offices. The Company maintains close contact with its contractors working on the Permanent Conditions TEO as the contractors have also put in place procedures to work effectively over the coming months in order to ensure that these projects are delivered within their original schedules. As an additional assurance to shareholders, the Russian Federation subsoil law allows for and was granted extensions to filing dates. As of the date of this report, Covid-19 also created significant uncertainty and disruption in the financial markets. The Company has not realised a negative impact of Covid-19 on its ability to raise funds, having completed equity placements in April 2020 of £750,000, May 2020 of £500,000 and £6,100,000 in August 2020. However, the Directors are cognizant that conditions in the financing market are changeable and will continue to monitor developments. Outlook The Company’s primary objectives for 2021 are the completion of the TEO and continued work on the commencement of the Bankable Feasibility Study and the required incumbent study work. The BFS provides the necessary technical, environmental and economic detail for institutional investors to advance funding for construction and into production. The BFS is itself a considerable undertaking and the Amur team has been working on the detailed planning and costing of the BFS programme. This has required considerable interaction with both Russian and international organisations qualified in conducting BFS level work. In conjunction with the development of the BFS work programme, the Company has also been maintaining open discussions with potential offtake partners which the Company believes will provide access to the types of institutional investors who provide financing, principally through debt, for BFS programmes. The Company is well placed to take advantage of the growing interest in the global development of low carbon economies and the key battery materials, especially nickel and copper, that underpin this movement. We believe shareholders have a good cause to be optimistic about the future of the Company, and we thank them for their patience and continued support. On behalf of the Board of Directors, I would like to thank all the staff for their dedication and hard work throughout this period in getting the TEO programme organised and progressing toward its completion. Mr. Robert W. Schafer Non Executive Chairman 29 June 2021 4 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE Dear Shareholders, As Chairman of the Company, I firmly believe that strong corporate governance helps provide the building blocks that allow an organisation to be successful. The Board is committed to good governance across the business, at executive level and throughout its operations. In March 2018, the Company adopted The Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code” or the “Code”). The Board not only sets expectations for the business but also works towards ensuring that strong values are set and carried out by the Directors across the business. The Board strives to ensure that the objectives of the business, the principles and risks are underpinned by values of good governance throughout the Company. The importance of engaging with our shareholders is key to the success of the business, and the Board strives to ensure that there are numerous opportunities for investors to engage with both the Board and executive team. Mr R Schafer Non-Executive Chairman 29 June 2021 Set out below are the 10 key principals of the QCA code adopted by Amur. In addition to the details provided below, governance disclosures can be found on the Company’s website at https://amurminerals.com/corporate- governance-code/. Principle 1: Establish a strategy and business model which promote long-term value for shareholders The Board has concluded that the highest medium and long-term value can be delivered to shareholders through the continued development of the Kun-Maine sulphide nickel deposit located in the far east of Russia. The Company will continue to develop the project to increase its value whilst simultaneously looking for suitable strategic partners who can assist in bringing the project to production. Principle 2: Seek to understand and meet shareholder needs and expectations The Company remains committed to listening and communicating openly with its shareholders to ensure that its strategy, business model and performance are clearly understood and communicated. Understanding what analysts and investors think about us, and in turn, helping these audiences understand our business, is a key part of driving our business forward and we actively seek dialogue with the market. We do so via investor roadshows, attending investor conferences, maintaining regular updates on the Companys FAQ page and our regular reporting. Amur is committed to providing full and transparent disclosure of its activities via the Regulatory News Service (RNS) of the London Stock Exchange. Company announcements are also available on the Company’s website. Amur has an active and effective investor relations programme that includes institutional road-shows and presentations, effective Annual General Meetings with presentations to shareholders and a high level of disclosure of the Company’s activity to its shareholders. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting and investors have access to current information on the Company through its website (www.amurminerals.com) and via the info@amurminerals.com email address. The Company also retains the services of Blytheweigh as PR advisor. 5 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE (CONTINUED) Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. The Company has staff dedicated to ensuring that it has active relationships with local communities who are within the vicinity of its operations to understand their concerns and expectations thereby seeking to ensure a mutually beneficial co-operation for both sides. The Company is subject to oversight by a number of different governmental and other bodies who directly or indirectly are involved with the licencing and approval process of exploration and mining operations in Russia. The Company makes all reasonable efforts, directly or through its advisers, to engage in and maintain active dialogue with each of these governmental bodies, to ensure that any issues faced by the Company, including but not limited to regulations or proposed changes to regulations, are well understood and ensuring to the fullest extent possible that the Company is in compliance with all appropriate regulation, standards and specific licencing obligations, including environmental, social and safety, at all times. The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company, and the Board is regularly updated on wider stakeholder insights into issues that matter to them and the business to enable the Board to understand and consider these issues in decision making. The Board recognises that our employees are one of our most important stakeholder groups. Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation Financial controls The Company has an established framework of internal financial controls, the effectiveness of which is regularly reviewed by the Executive Management, the Audit Committee and the Board in light of an ongoing assessment of significant risks facing the Company. • The Board is responsible for reviewing and approving overall Company strategy, approving revenue and capital budgets and plans, and for determining the financial structure of the Company including treasury, tax and dividend policy. Monthly results and variances from plans and forecasts are reported to the Board. • The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business, and operational and financial controls, including the review of results of work performed by the Group controls function. • There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the Board business performance against those budgets and plans, and for forecasting expected performance over the remainder of the financial period. These cover cash flows, capital expenditure and balance sheets. Monthly results are reported against budget and compared with the prior year, and forecasts for the current financial year are regularly revised in light of actual performance. • The Company has a consistent system of prior appraisal for investments, overseen by the Chief Financial Officer and Chief Executive Officer, with defined financial controls and procedures with which each business area is required to comply in order to be granted investment funds for development. 6 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE (CONTINUED) Non-financial controls The Board recognises that maintaining sound controls and discipline is critical to managing the downside risks to our plan. The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. However, any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. The principal elements of the Group’s internal control system include: • Close management of the day-to-day activities of the Group by the Executive Directors • An organisational structure with defined levels of responsibility, which promotes entrepreneurial decision-making and rapid implementation while minimising risks • A comprehensive annual budgeting process producing a detailed integrated profit and loss, balance sheet and cash flow, which is approved by the Board • Detailed monthly reporting of performance against budget • Central control over key areas such as capital expenditure authorisation and banking facilities The details of the Group's principal risks and controls to mitigate them are outlined on pages 12-15. Principle 5: Maintaining the Board as a well-functioning, balanced team led by the Chairman The Board comprises the Non-Executive Chairman, one Executive Director and three Non-Executive Directors. The Board of Amur is supported by two members of the senior management team. The details and background of the members of the Board and senior management can be found on the Company's website at https:// amurminerals.com/management-team/. The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the Company on the other, to enable it to discharge its duties and responsibilities effectively. All Directors are encouraged to use their independent judgement and to challenge all matters, whether strategic or operational. The following Directors are considered to be independent Directors: • Robert Schafer (Non-Executive Chairman) • Paul Gazzard (Non-Executive Director) • Tom Bowens (Non-Executive Director) The Board has established an Audit Committee and a Remuneration Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole. The Non- Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board considers that this is appropriate given the Companyʼs current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be two independent non-executives. The Board shall review further appointments as scale and complexity grows. Attendance at Board and Committee Meetings The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. In order to be efficient, the Directors meet formally and informally both in person and by telephone. During the year there were 17 board meetings and their attendance was as follows; Mr R Schafer 17 Mr R Young Mr B Savage Mr P Gazzard Mr L Naumovski Mr T Bowens A Habib 17 14 17 5 15 4 7 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE (CONTINUED) Key Board activities this year included: • Discussing strategic priorities • Continue dialogue with the investment community • Discussing the Company’s capital structure and financial strategy • Discussing internal governance processes • Discussing the Company’s risk profile • Developing the Bankable Feasibility Study Directors’ conflict of interest The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board. Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience required for the Company. Biographies of the directors are available on the Company’s website. All Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. The Board recognises that it currently has limited diversity and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required. The Board will also review annually the appropriateness and opportunity for continuing professional development whether formal or informal. Appointment, removal and re-election of Directors The Board makes decisions regarding the appointment and removal of Directors, and there is a formal, rigorous and transparent procedure for appointments. The Company’s Articles of Association require that one-third of the Directors must stand for re-election by shareholders annually in rotation; that all Directors must stand for re- election at least once every three years; and that any new Directors appointed during the year must stand for election at the AGM immediately following their appointment. Independent advice All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company Secretary and Westend Corporate (external accountancy and financial service). Principle 7: Evaluate the Board performance based on clear and relevant objectives, seeking continuous improvement The Board has determined that it shall itself be responsible for assessing the effectiveness and contributions of the Board as a whole, its committees (which currently comprise the Audit Committee, the Remuneration Committee) and individual directors. The size of the Board allows for open discussion and the Chairman has regular dialogue with the Chief Executive whereby the Board’s role and effectiveness can be considered. The Chief Financial Officer also has regular dialogue with the Head of the Audit Committee whereby that Committee’s effectiveness can be considered. Internal evaluation of the Board, the Committee and individual Directors is to be undertaken on an annual basis in the form of peer appraisal and discussions to determine the effectiveness and performance of the Directors and their continued independence. No formal assessments have been prepared however the Board will keep this matter under review and especially if either the size of the Board or the number of committees increases which in turn may require a more formalised assessment and evaluation process to be established to ensure continued effectiveness. Principle 8: Promote a culture that is based on ethical values and behaviours The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is very aware that the 8 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE (CONTINUED) tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that Amur delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. A large part of Amurʼs activities is centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. Additionally, the Company has adopted a code for Directorsʼ and employeesʼ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016. Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board Maintenance of Governance Structures and Processes Ultimate authority for all aspects of the Companyʼs activities rests with the Board, the respective responsibilities of the Chairman and Chief Executive Officer arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Companyʼs business and primary contact with shareholders has been delegated by the Board to the Chief Executive Officer. Audit Committee The Audit Committee currently comprises Paul Gazzard and Robert Schafer. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee shall meet not less than twice in each financial year and it has unrestricted access to the Companyʼs auditors. Remuneration Committee The Remuneration Committee comprises Paul Gazzard and Robert Schafer. The Remuneration Committee reviews the performance of the executive directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Companyʼs Remuneration Policy. Nominations Committee Given the size and complexity of Amur, the Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee. Non-Executive Directors At each Annual General Meeting one third of the directors must retire by rotation, whereupon they can offer themselves for re-election if eligible. The Board evaluates its performance and composition on a regular basis and will make adjustments as and when indicated. When assessing the independence of each Non-Executive Director, length of service is one of the considerations. The Board will when assessing new appointments in the future consider the need to balance the experience and knowledge that each independent director has of the Company and its operations, with the need to ensure that independent directors can also bring new perspectives to the business. 9 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE (CONTINUED) Executive Team The Executive Team consists of Robin Young, with input from the outsourced CFO and the subsidiary managers and teams. They are responsible for formulation of the proposed strategic focus for submission to the Board, the day- to-day management of the Group’s businesses and its overall trading, operational and financial performance in fulfilment of that strategy, as well as plans and budgets approved by the Board of Directors. It also manages and oversees key risks, management development and corporate responsibility programmes. The Chief Executive Officer reports to the Corporation Board on issues, progress and recommendations for change. The controls applied by the Executive Team to financial and non-financial matters are set out earlier in this document, and the effectiveness of these controls is regularly reported to the Audit Committee and the Board. Principle 10: Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Companyʼs Annual General Meeting. The outcomes of all votes will be disclosed in a clear and transparent manner via the RNS of the London Stock Exchange. Investors also have access to current information on the Company through its website, www.amurminerals.com, and via the info@amurminerals.com email post questions that are incorporated into the FAQ page of the Company’s website. The Company lists contact details on its website and on all announcements released via RNS, should shareholders wish to communicate with the Board. The Company shall include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees. The Board The Board is comprised of the non-executive chairman, three non-executive directors and a Chief Executive Officer (“CEO”). The Board has significant industry, financial, public markets and governance experience, possessing the necessary mix of experience, skills, personal qualities and capabilities to deliver on the Group’s strategy for the benefit of shareholders over the medium to long-term. The Chairman has the responsibility of ensuring that the Board discharges its responsibilities and is also responsible for facilitating full and constructive contributions from each member of the Board in determination of the Group’s strategy and overall commercial objectives. The Board is responsible for the overall management and performance of the Group and operates within a framework of prudent and effective controls which enables risk to be assessed and managed. The CEO leads the business with the support of a strong team ensuring that the strategic and commercial objectives are met. They are accountable to the Board for the operational and financial performance of the business. The Board as a whole is kept abreast with developments of governance and AIM regulations. The Company’s lawyers provide updates on governance issues and the Company’s NOMAD provides updates on listing regulations as well training as part of a director’s onboarding The directors have access to the Company’s NOMAD, company secretary, lawyers and auditors and are able to obtain advice from other external bodies as and when required. The 2020 performance of the business and its staff will be measured across both financial and operational functions and is captured in a corporate scorecard. The scorecard is made up of various KPIs and is tracked throughout the year. 10 AMUR MINERALS CORPORATION CORPORATE GOVERNANCE (CONTINUED) Matters Reserved for the Board The Board retains full and effective control over the Group and is responsible for the Group’s strategy and key financial and compliance issues. There are certain matters that are reserved for the Board which are reviewed on an annual basis, and they include but are not limited to: • Strategy and Management – approval of strategic aims and objectives; approval of the Group’s annual operating and capital expenditure budgets and changes; decision to cease to operate all or any material part of the Group’s business; • Structure and Capital – major changes to the Group’s corporate structure; any change to the Company’s listing; • Financial Reporting and Controls – approval of: financial results; annual reports and accounts; dividend policy and declaration of any dividend; significant changes in accounting policies/practice; treasury policies; • Internal Controls – ensuring maintenance of a sound system of internal control and management; • Contracts – major capital contracts; contracts which are material or strategic; major investments or any acquisitions/disposals; • Communications – approval or resolutions and documentation put forward to shareholders; • Board Membership and Other Appointments; • Remuneration – determining the remuneration policy for directors, senior execs and non-executive directors, introduction of new share incentive plans, changes to existing plans; • Corporate Governance Matters – review of the Group’s overall corporate governance arrangements; • Policies – approval of Group policies, including the share dealing code; Board Evaluation The directors consider seriously the effectiveness of the Board, its Committees and individual performance. The Board generally meets formally five times a year with ad hoc Board meetings as the business demands. There is a strong flow of communication between the directors, and in particular between the CEO and Chairman. Board meeting agendas are set in consultation with both the CEO and Chairman, with consideration being given to both standing agenda items and the strategic and operational needs of the business. Comprehensive board papers are circulated in advance of meetings, giving directors ample time to review the documentation and enabling an effective meeting. Resulting actions are tracked for appropriate delivery and follow up. The directors have a broad knowledge of the business and understand their responsibilities as directors of a UK company quoted on AIM and developing appropriate corporate governance procedures and looking forward to building further on the governance structure already in place. The Company’s Nomad provides annual boardroom training as well as initial training as part of a director’s onboarding. The Company Secretary helps keep the Board up-to-date with developments in corporate governance and liaises with the Nomad on areas of AIM requirements. The Company Secretary has frequent communication with both the Chairman and CEO and is available to other members of the Board as required. The directors also have access to the Company’s auditors and lawyers as and when required, and the directors are able, at the Company’s expense, to obtain advice from other external advisers if required. The Board entered 2020 looking forward to building further on the governance structure already in place. Whilst being mindful of the size and stage of development of the Company, the board reviews and ensures the highest level of governance is maintained. 11 AMUR MINERALS CORPORATION OPERATING RISKS AND UNCERTAINTIES Set out below are the key operating risks and uncertainties affecting the Group. The Group’s licences The Group’s activities are dependent upon the grant and renewal of appropriate licences, permits and regulatory consents. The Group’s Exploration and Mine Production licence is valid until 1 July 2035 and grants the Company’s wholly owned subsidiary ZAO Kun-Manie the rights to recover all value from the mineral defined to be present at Kun-Manie. The Group’s licences are regulated by the Russian governmental agencies and contain a range of obligations, failure to comply with which could result in additional costs, penalties being levied or the suspension or revocation of the licence. This would have a material adverse impact on the Group. Mitigation: management closely monitor compliance with the terms of the Group’s licences and utilises the legal services of Bryan Cave Leighton Paisner who review all documentation and filings to ensure that communications, filings and any other required contacts maintain conformity with the regulatory agencies of the Russian Federation. Project development risks Resource estimates are based upon the interpretation of geological data. Project feasibility studies derive estimates of operating costs based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates and other factors. As a result, actual operating costs and economic returns may differ from those currently estimated. Mitigation: the scale of the project mandates that all work is conducted by Russian experienced, independent and internationally recognised companies in all areas of proposed and actual project development. Any internally generated studies are held confidentially within the Company until an independent and qualified group, company or experts have reviewed, commented and confirmed the results of Company work. Project work is undertaken by Russian Federation approved agencies prior to the approval of any study, preproduction, construction and operational approvals are granted. The Company adheres to these regulatory statutes. Reserve and resource estimates Reserve and resource estimates may require revision based on actual production experience. The volume and grade of reserves mined and processed and recovery rates achieved may vary from those anticipated and a decline in the market price of metals may render reserves containing relatively lower grades of nickel and copper mineralisation uneconomic. Mitigation: resources and reserves are independently calculated by internationally recognised organisations to JORC standards. Information related to the calculation of such estimates is based on reports from external companies experienced in metallurgical and processing work as well as the evaluation of long term metal pricing where the Company utilises information provided by external organisations. As the Company is not in production at this time, actual production results cannot be utilised to verify predicted resources and reserves. The Russian Federation requires a separate assessment of reserves and does not recognise resources which are not contained within a mine plan based on a Russian certified study calculated by a qualified agency or organisation. Final reserve numbers are audited by the State Commission on Mineral Reserves who is responsible for tracking and certifying all reserve estimates within the Russian Federation.” 12 AMUR MINERALS CORPORATION OPERATING RISKS AND UNCERTAINTIES (CONTINUED) Environmental issues The Group’s operations are subject to environmental regulation, including environmental impact assessments and permitting. Russian environmental legislation comprises numerous federal and regional regulations which are not fully harmonised and may not be consistently interpreted. Mitigation: the Company utilises Equator Principles standards with regard to its monitoring and maintenance of environmental protection. Equator Principles is a risk management framework, widely adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects. These standards are among the highest in the world and implementation of such standards is required when international financing of a project is undertaken. By utilising the highest level of standard, the Company meets both Russian and International standards. On an internal Russian Federation basis, the Company is inspected on an annual basis to ensure that the Company is performing and maintaining protection of the environment. The Company employs three suitably qualified individuals to ensure that all work is done to the highest standards and ultimately approved by the appropriate Russian authorities and organisations. Financial risks The Group operates as a natural resources exploration and development group. To date, it has not earned revenues and is considered to be in the final stages of exploration and evaluation activities of its Kun-Manie project. It is therefore reliant on raising additional financing through share placings with new or existing partners or combination of debt and equity financing from financial institutions. The Group may not be able to raise additional funds that will be required to support the development of its projects and any additional funds that are raise may cause dilution to existing shareholders. Mitigation: the Company maintains a close monitoring of its projected cash requirements and Directors are in regular negotiations with various parties in respect of raising further funds to ensure sufficient funding is available as and when required. Business disruption due to Covid-19 The current situation surrounding Covid-19 global pandemic represents significant uncertainty for the mining industry. The potential impact could include operational disruptions due to Government restrictions, staff absences and supply chain delays as well as disruptions to key partners and capital markets. Mitigation: While the Company has seen little direct impact from Covid-19 pandemic, management have focused on implementing measures to ensure safety of employees and contractors, and to prepare business to face potential challenges that could emerge. These include, amongst other things: following Government's guidelines in all jurisdictions the Company operates, communicating precautionary measure to staff to prevent the spread of the virus, enabling remote working, exploring available liquidity options, implementing business continuity measures. 13 AMUR MINERALS CORPORATION OPERATING RISKS AND UNCERTAINTIES (CONTINUED) Nickel price volatility The net present value of the Group’s capitalised exploration assets is directly related to the long-term price of nickel. The market price of nickel is volatile and is affected by numerous factors which are beyond the Company’s control. These factors include world production levels, international economic trends, currency exchange fluctuations and industrial demand. Mitigation: the Company regularly reviews expected nickel and copper prices from internationally recognised expert sources and assesses the economic viability of its project based upon long term trends and surveys compiled by several resource groups specialised in long term price projection. Nickel and copper price sensitivity is built into the Company’s economic models. Presently, the long term forecast price for nickel is US$7.48 per pound and is US$3.79 per pound for copper. All study work currently utilises prices of US$8 and US$3 for nickel and copper respectively. Political and economic risks Most of Group’s assets and operations are based in Russia and are subject to Russian federal and regional laws and regulations. Russian legal and regulatory regime is still undergoing a substantial transformation and is subject to frequent changes and interpretations. Amendments to current laws and regulations governing the Group’s operating activities or more stringent implementation or interpretation of these laws and regulations could have a material adverse impact on the Group. Additionally, Russian Federation is currently subject to sanctions imposed by various countries, prolonging and tightening of which could have an impact on the Group’s operations. Mitigation: the Company utilises its Moscow based legal representatives of Bryan Cave Leighton Paisner to continuously monitor the situation regarding sanctions and conduct periodic meetings to review changes in the legal and regulatory regime. The updates are typically undertaken on a 60 day basis. In addition, the Company is a member of the Mining Advisory Council which consistently works with Russian authorities to assist in the understanding of regulatory constraints and assists in the modification of legislation designed to clarify inconsistencies in legislation and interpretation of the law. The regulatory environment The Group’s activities are subject to extensive federal and regional laws and regulations governing various matters, including licensing, production, taxes, mine safety, labour standards, occupational health and safety and environmental protections. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation or interpretation of these laws and regulations could have a material adverse impact on the Group, cause a reduction in levels of production and delay or prevent the development or expansion of the Group’s properties in Russia. Mitigation: the Company utilises its Moscow legal team of Bryan Cave Leighton Paisner to monitor changes to the regulatory system. In addition, the Mining Advisory Council also participates in reviews and working with the governmental groups responsible for regulatory control and the authoring of new legislation. Proactively, the Company assesses the potential impact of any proposed modifications and is dynamically changing Company policies and approaches to match the Russian regulatory environment. Often planning and work is completed in advance of changes when they are identifiable and could impact exploration and operations. Taxation Russian tax legislation has been subject to frequent change and some of the laws relating to taxes to which the Group is subject are relatively new. The government’s implementation of such legislation, and the courts’ interpretation thereof, has been often unclear or non-existent, with few precedents established. Differing opinions regarding legal interpretation may exist both among and within government ministries and organisations and various local inspectorates. The introduction of new tax provisions may affect the Group’s overall tax efficiency and may result in significant additional tax liability. Mitigation: the Company continually assesses the tax regime and utilises experienced local staff and state agencies in submission of taxes at all levels. This includes personal taxes, social taxes and any other taxes that the Company must pay on behalf of its employees. These documents and approaches are reviewed by the tax authorities on an annual basis and modifications are undertaken as required. 14 AMUR MINERALS CORPORATION OPERATING RISKS AND UNCERTAINTIES (CONTINUED) Russia's physical infrastructure Some of Russia’s physical infrastructure is in poor condition. This may disrupt the transportation of supplies, add to costs and interrupt operations, with a potentially material adverse effect on the Group’s business. The Company's project is remotely located and will need to construct an access road of approximately 320 kilometres from the Baikal Amur rail line to the project site. The Company's position is that they will have to construct the access road to a standard suitable to support the operation on a year round basis. This includes the ability to restock consumables and fuel at site. The fuel transported to the project site will support the mobile equipment fleet (mining fleet included) as well as to fuel on site power generation using diesel fuelled generator sets which will preclude the need to construct a power line to the site. The Prefeasibility Study incorporates the construction of the access road into the initial capital expenditures. 15 AMUR MINERALS CORPORATION STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE YEAR ENDED 31 DECEMBER 2020 The Directors are responsible for preparing the financial statements and have, as required by the AIM Rules of the London Stock Exchange, elected to prepare the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union in order to give a true and fair view of the state of affairs of the Group and of its profit or loss for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping records that are sufficient to show and explain the Group’s transactions and will, at any time, enable the financial position of the Group to be determined with reasonable accuracy. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps to prevent and detect fraud and other irregularities and for the preparation of any additional information accompanying the financial statements that may be required by law or regulation. Website publication The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the British Virgin Islands governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. Mr R Young Director 29 June 2021 16 AMUR MINERALS CORPORATION REMUNERATION COMMITTEE REPORT Dear Shareholders, I am pleased to present this report on behalf of the Remuneration Committee and to report on progress made by the Committee during the year. Throughout 2020 the Committee has focused on how best to align reward with results and specifically how to incentivise our people to act like business owners. Remuneration Policy and Aims of the Remuneration Committee Our overall aim is to align employee remuneration with the successful delivery of long-term shareholder value. We have adopted three key principles to enable us to achieve this goal: • To offer competitive salary packages that attract, retain and motivate highly-skilled individuals; • To align remuneration packages with performance related metrics that mirror our long-term business strategy; and, • To encourage accountability in the workplace and link reward with success. The Group currently operates the following remuneration framework: • Annual salary and associated benefits such as paid holiday; The Remuneration Committee consists of myself as the Chairman together with one other independent Non- Executive Director, Paul Gazzard. The Committee aims to meet at least once each year and its key responsibilities include reviewing the performance of senior staff, setting their remuneration and determining the payment of bonuses. The Chief Executive Officer and Chief Financial Officer are invited to attend meetings of the Committee, but no Director is involved in any decisions relating to their own remuneration. None of the Committee has any personal financial interest (other than as shareholders), conflicts of interests arising from cross-directorships, or day-to-day involvement in running the business. Terms of reference The terms of reference of the Remuneration Committee are set out below. • Determine and agree with the Board the Company’s overall remuneration policy and monitor the efficacy of the policy on an ongoing basis; • Determine and agree with the Board the remuneration of the Executive Directors and senior management; • Determine the objectives and headline targets for any performance-related bonus or incentive schemes; • Monitor, review and approve the remuneration framework for other senior employees; and, • Review and approve any termination payment such that these are appropriate for both the individual and the Company. Directors Remuneration Executive Directors Robin Young Adam Habib Non-Executive Directors Robert Schafer Brian Savage Paul Gazzard Lou Naumovski Tom Bowens Salaries US$'000 Fees US$'000 2020 Total US$'000 Salaries US$'000 Fees US$'000 2019 Total US$'000 316 153 - - - - - 469 - - 58 172 56 25 50 361 17 316 153 58 172 56 25 50 830 316 - - - - - - - - 61 52 51 52 20 316 - 61 52 51 52 20 316 236 552 AMUR MINERALS CORPORATION REMUNERATION COMMITTEE REPORT (CONTINUED) Details of Directors’ holdings in share options can be found at Note 23 to the financial statements. The year ahead We believe that remuneration throughout the business is structured appropriately to incentivise performance, rewarding behaviour in the spirit of ownership throughout the organisation. This will undergo ongoing review as the business evolves, in order to ensure that our employees and executives are remunerated optimally in the interests of the Company. The Committee and I remain focused on ensuring that reward at the Company continues to be closely aligned with the delivery of long-term shareholder value. Mr R Schafer Chair of the Remuneration Committee 29 June 2021 18 AMUR MINERALS CORPORATION AUDIT COMMITTEE REPORT Dear Shareholders, I am pleased to present this report on behalf of the Audit Committee and to report on progress made by the Committee during the year. Aims of the Audit Committee Our overall aim is to assist the Board in discharging its duties regarding the financial statements, to ensure that a robust framework of accounting policies is in place and enacted, and to oversee the maintenance of proper internal financial controls. The Audit Committee consists of myself as the Chairman together with the non-executive Chairman Robert Schafer. The Committee aims to meet at least twice each year and its key responsibilities include monitoring the integrity of the Group’s financial reporting. The Chief Executive Officer and Chief Financial Officer are invited to attend meetings of the Committee. Key responsibilities The Audit Committee is committed to: • Maintaining the integrity of the financial statements of the Company and reviewing any significant reporting matters they contain; • Reviewing the Annual Report and Accounts and other financial reports and maintaining the accuracy and fairness of the Company’s financial statements including through ensuring compliance with applicable accounting standards and the AIM Rules; • Monitoring external auditors' independence, including the scope and extent of non-audit services provision; • Reviewing the adequacy and effectiveness of the internal control environment and risk management systems; and, • Overseeing the relationship with and the remuneration of the external auditor, reviewing their performance and advising the Board members on their appointment. The Audit Committee met three times in 2020 and the external auditors were present during each of these meetings. Activities of the Audit Committee during the year On behalf of the Board, the Audit Committee has closely monitored the maintenance of internal controls and risk management during the year. Key financial risks are reported during each Audit Committee meeting, including developments and progress made towards mitigating these risks. The Committee received reports from the Chief Financial Officer throughout the year and was satisfied with the effectiveness of internal controls and risk mitigation. It supports recommendations made by the Chief Financial Officer and is satisfied with the actions taken and plans in place by management for further improvement. External audit The Audit Committee considers various areas when reviewing the appointment of an external auditor including their performance in conducting the audit and its scope, terms of engagement including remuneration and their independence and objectivity. 19 AMUR MINERALS CORPORATION AUDIT COMMITTEE REPORT (CONTINUED) BDO have been appointed as external auditor since 2011. The Audit Committee has confirmed it is satisfied with BDO’s knowledge of the Company and its effectiveness as external auditor. As such the Audit Committee has recommended the reappointment of BDO to the Board. There will be a resolution to this effect at the forthcoming Annual General Meeting. The year ahead The Committee and I remain focused on ensuring that the standard of the Group’s financial reporting is maintained moving forward, and that the robust framework of internal controls and systems in place is both maintained and regularly reviewed for improvement. The Committee will also continue to closely monitor the financial risks faced by the business and progress made towards mitigating these. Mr P Gazzard Chair of the Audit Committee 29 June 2021 20 AMUR MINERALS CORPORATION DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2020 The Directors present their annual report and the audited financial statements for the year ended 31 December 2020. Principal activities The Group’s principal activity during the year was that of mineral exploration and development. A full review of the activity of the business and of future prospects is contained in the chairman’s statement which accompanies these financial statements. Results and dividends The results for the year are set out on page 29. No ordinary dividends were paid (2019: US$nil). The Directors do not recommend payment of a final dividend (2019: US$nil). Directors The Directors who held office during the year and up to the date of signature of the financial statements were as follows: Mr R Schafer Mr R Young Mr B Savage Mr P Gazzard Mr L Naumovski Mr T Bowens A Habib (Resigned 16 October 2020) (Resigned 20 May 2020) (Appointed 2 September 2020, resigned 10 December 2020) Details of Directors' remuneration and other interests are detailed in note 23. Listing The Company’s ordinary shares have been traded on the AIM market of the London Stock Exchange since 15 March 2006. SP Angel Corporate Finance LLP is the Company’s Nominated Adviser and Broker. The share price at 31 December 2020 was 1.60p. Donations The Group has not made any charitable or political donations during the year (2019: US$nil). Principal risks and uncertainties The management of the Group’s business and the execution of its strategy are subject to a number of risks. Risks are formally reviewed by the Board and appropriate processes put in place to monitor and mitigate them. If more than one event occurs, the overall impact of such events may compound the possible adverse effects on the Group. The key financial risks affecting the Group are set out in note 24. The key operating risks affecting the Group are set out on pages 12 - 15. Auditors BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting. Statement of disclosure to auditors So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the Company’s auditors are unaware. Additionally, the Directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the Company’s auditors are aware of that information. 21 AMUR MINERALS CORPORATION DIRECTORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 Going Concern The Group operates as a natural resources exploration and development group. To date, it has not earned any revenues and is considered to be in the final stages of exploration and evaluation activities of its Kun-Manie project. The Directors have reviewed the Group’s cash flow forecast for the period to 31 December 2022 and note that the Group’s ability to continue to meet its obligations as and when they fall due is dependent on a variety of factors, one being the receipt of quarterly interest payments from NRR in respect of the convertible loan facility. Should no further quarterly interest payments be received from the date of this report, it is foreseen that cash will run out in April 2022. As the Group approaches bankable feasibility, an alternative funding option will need to be secured in order to adequately fund this step. The Directors are currently in negotiations with a number of parties in respect of raising further funds. Whilst progress is being made on a number of potential transactions which would provide adequate funding to the Group, there are no binding agreements in place. The Company was successful in completing three equity placements in 2020 and while the Directors are confident of raising additional funding should it be required, their ability to do this is not completely within in their control. The uncertainties associated with the level of future cash inflows indicate the existence of a material uncertainty which may cast significant doubt over the Group’s ability to continue as a going concern. Based on the current progress of the negotiations with potential investors and providers of finance the Directors believe that the necessary funds to provide adequate financing to continue with the current work program on its Kun-Manie project will be raised as required and accordingly they are confident that the Group will continue as a going concern and have prepared the financial statements on that basis. The financial statements do not include the adjustments that would result if the Group was not able to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. Approved by the Board of Directors and signed on behalf of the Board by: Mr R Schafer Director 29 June 2021 22 AMUR MINERALS CORPORATION INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AMUR MINERALS CORPORATION Opinion on the financial statements In our opinion: • • the financial statements give a true and fair view of the state of the Group’s affairs as at 31 December 2020 and of the Group’s loss for the year then ended; and the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. We have audited the financial statements of Amur Minerals Corporation (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2020 which comprise the Consolidated statement of financial position, the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated statement of changes in equity, the Consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern We draw attention to note 2.3 in the financial statements, which indicates that the Group is dependent on the receipt of quarterly interest payments from Nathan River Resources Pte Limited in respect of a convertible loan facility. In addition to this, the Group is reliant on raising additional funds to continue with the current work programme on its Kun-Manie Project. These conditions, as set out in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. We considered going concern to be a Key Audit Matter as the directors have to make highly subjective judgements and assumptions in this area. We performed the following work in response to this matter: • • • Considered whether the assumptions and inputs in the cash flow forecast prepared by the directors were in line with our understanding of the Group’s operations and other information obtained by us during the course of the audit; corroborated the December 2020 and May 2021 cash positions by reference to supporting documentation; critically challenged the forecast expenditure by comparing it to historical run rate. We confirmed that contractually committed amounts were included; reviewed the appropriateness of Management’s sensitised cash flows and assessed the impact of reduced income, reasonably possible changes to costs and mitigating factors available to the Group; tested the integrity and arithmetic accuracy of the cash flow forecast model prepared by Directors; discussed with Management and the Board the Group’s strategy to access capital to fund its development plans; and reviewed and considered the adequacy of the disclosure within the financial statements relating to the directors’ assessment of the going concern basis of preparation and the disclosure of the material uncertainties. • • • • Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 23 AMUR MINERALS CORPORATION INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AMUR MINERALS CORPORATION Overview Coverage1 Key audit matters Materiality 100% (2019: 100%) of Group loss before tax 99% (2019: 99%) of Group total assets Going concern Carrying value of Exploration and Evaluation assets 2020 ü ü 2019 ü ü Group financial statements as a whole $453,000 (2019: $400,000) based on 1.4% (2019: 1.4%) of Total assets An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. The Group’s principal operating location is in Russia, being the Kun-Manie exploration project owned by its subsidiary ZAO Kun-Manie. Together with the Parent Company and a fellow subsidiary, Carlo Holdings Limited, these represent the significant components of the Group and were subjected to full scope audits. The remaining component of the Group was considered non-significant and was principally subject to analytical review procedures. The audits of each of the components were performed in the United Kingdom. All of the audits were conducted by BDO LLP. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Carrying value of Exploration and Evaluation assets. See Note 3 and Note 6 At 31 December 2020, the Group held exploration and evaluation assets of $23.5m, related to the Kun-Manie mineral exploration licence. As the carrying value of these exploration assets represent a significant asset to the Group, we How the scope of our audit addressed the key audit matter Our specific audit testing in this regard included: • we reviewed the Kun-Manie licence agreements to confirm its validity, key terms, to and verified changes supporting documentation; the year in • we confirmed that substantive expenditure for further exploration is planned and that 1 These are areas which have been subject to a full scope audit by the group engagement team 24 AMUR MINERALS CORPORATION INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AMUR MINERALS CORPORATION to the financial statements it necessary to considered assess whether any facts or circumstances exist to suggest that the carrying amount of this asset may exceed its recoverable amount. As a result, the assets were for required in indicators impairment accordance with IFRS 6. to be assessed Because of judgement involved in this, we considered this to be a key audit matter. the contractually committed expenditure included within forecasts; is the Group’s 2021-22 • we reviewed board minutes and market indications of for any announcements impairment; • we critically challenged the key judgments and assumptions made by management in the discounted cash flow forecasts within the pre-feasibility study, including forecast nickel prices, royalties, costs and discount rates. We assessed the assumptions against empirical data, independent reserve reports and to external evidence where available; • we performed sensitivity analysis on the discounted cash flow forecasts to establish the impact of reasonably possible changes in key variables such as pricing and the discount rate; and • we assessed the adequacy of the related disclosure within the accounting policies and Note 6 of the financial statements against the requirements of the accounting standards. Key observations: We found management’s conclusion that no indication of impairment exists on the exploration and evaluation assets to be reasonable. The disclosures in the financial statements in relation to this matter are considered appropriate. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Materiality Basis for determining materiality the Rationale benchmark applied for Group financial statements 2020 $453,000 1.4% of Total assets 2019 $400,000 1.4% of Total assets We determined that an asset-based measure is appropriate as the Group’s principal activity is the exploration & evaluation of the Kun-Manie mine, such that the asset base is considered to be a key financial metric for users of the financial statements. Performance $339,000 $300,000 25 AMUR MINERALS CORPORATION INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AMUR MINERALS CORPORATION materiality Basis for determining performance materiality Component materiality 75% of materiality was considered a reasonable basis, taking into consideration: • • the expected value of misstatements was likely to be low based on past experience; and there are few accounts which are subject to estimation. We set materiality for each component of the Group based on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from $200,000 to $300,000. In the audit of each component, we further applied performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $8,000 (2019: $8,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and financial statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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 Directors As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s ability 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 statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 ISAs (UK) 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 these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud are detailed below: 26 AMUR MINERALS CORPORATION INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AMUR MINERALS CORPORATION • We obtained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates and considered the significant laws and regulations to be those relating to the financial reporting framework, BVI Companies Act, tax legislation and environmental regulations in Russia; • we held discussions with management and the Board to consider any known or suspected instances of non- compliance with laws and regulations or fraud identified by them; • we reviewed minutes from board meetings of those charged with governance to identify any instances of non- compliance with laws and regulations; • we assessed the susceptibility of the Group's financial statements to material misstatement, including how fraud might occur; • we responded to the risk of management override of control by identifying and testing any large or unusual (those with key risk characteristics) journal entries made in the year; • we reviewed estimates and judgements applied by Management in the financial statements to assess their appropriateness and the existence of any systematic bias (refer to Key Audit Matters above); and • we communicated relevant identified laws and regulations and potential fraud risks to all audit team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Parent Company’s members, as a body in accordance with the terms of our engagement letter. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Peter Acloque For and on behalf of BDO LLP, Statutory Auditor London, UK 29 June 2021 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 27 AMUR MINERALS CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Non-current assets Exploration and evaluation assets Property, plant and equipment Financial assets at fair value through profit and loss Current assets Inventories Other receivables Cash and cash equivalents Notes 6 7 8 9 10 2020 US$'000 23,542 452 5,255 29,249 207 158 2,790 3,155 Restated* 2019 US$'000 Restated* 2018 US$'000 26,227 1,154 - 27,381 276 211 398 885 22,204 1,668 - 23,872 257 191 1,257 1,705 Total assets 32,404 28,266 25,577 Current liabilities Trade and other payables Convertible loan notes Derivative financial liabilities 12 13 Non-current liabilities Rehabilitation provision Total liabilities Net assets Equity Share capital Share premium Foreign currency translation reserve Share options reserve Retained deficit Total equity 913 - - 913 141 1,054 965 - - 965 164 1,129 802 1,663 153 2,618 146 2,764 31,350 27,137 22,813 15, 16 15, 16 15 15, 17 15 80,449 4,278 (17,474) 577 (36,480) 31,350 69,510 4,790 (13,351) 1,136 (34,948) 27,137 65,674 4,904 (16,282) 2,034 (33,517) 22,813 * Refer to note 27 Prior period adjustment. The financial statements were approved by the Board of directors and authorised for issue on 29 June 2021 and were signed on its behalf by: Mr R Young Director The accompanying notes on pages 33 – 64 form an integral part of these financial statements. 28 AMUR MINERALS CORPORATION CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 Notes 2020 US$'000 Administrative expenses Operating loss Finance income Finance costs Fair value movements on derivative financial instruments Gain on revaluation of assets held at fair value through profit and loss Loss on early redemption (Loss)/Gain on loan modification Loss before taxation Tax expense 18 19 20 8 13 21 Loss for the year attributable to owners of the parent (3,083) (3,083) 205 (104) - 423 (109) - (2,668) - (2,668) 2019 US$'000 (1,984) (1,984) 1 (803) 342 - - 115 (2,329) - (2,329) Loss per share (expressed in cents) Basic and diluted 22 (0.25) (0.32) The items in the above statement are derived from continuing operations. The accompanying notes on pages 33 – 64 form an integral part of these financial statements. 29 AMUR MINERALS CORPORATION CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Loss for the year Other comprehensive (loss)/income Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Total other comprehensive (loss)/income for the year Total comprehensive (loss)/income for the year attributable to owners of the parent 2020 US$'000 Restated* 2019 US$'000 (2,668) (2,329) (4,123) 2,931 (4,123) 2,931 (6,791) 602 * Refer to note 27 Prior period adjustment. The accompanying notes on pages 33 – 64 form an integral part of these financial statements. 30 AMUR MINERALS CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 Share capital Share Foreign premium currency translation reserve Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Share options reserve Retained deficit Total equity Balance at 1 January 2019 (as previously stated) 65,674 4,904 (15,476) 2,034 (33,517) 23,619 Prior year restatement 27 - - (806) - - (806) Balance restated at 1 January 2019 65,674 4,904 (16,282) 2,034 (33,517) 22,813 Year ended 31 December 2019: Loss for the year Other comprehensive income: Exchange differences on translation of foreign operations Total comprehensive income for the year 16 Issue of share capital Conversion of loan 16 Options expired 17 - - - - - 2,931 - - (2,329) (2,329) - 2,931 - 1,988 1,848 - - 2,931 (114) - - - - - - - - (898) (2,329) - - 898 602 1,874 1,848 - Balance at 31 December 2019 69,510 4,790 (13,351) 1,136 (34,948) 27,137 Balance at 1 January 2020 Year ended 31 December 2020: Loss for the year Other comprehensive income: Exchange differences on translation of foreign operations 69,510 4,790 (13,351) 1,136 (34,948) 27,137 - - - - - (4,123) - - (2,668) (2,668) - (4,123) Total comprehensive income for the year 16 Issue of share capital Conversion of warrants 16 Options charge for the year 17 Options expired 17 - 10,063 876 - - - (512) - - (4,123) - - - - - - 577 (2,668) - - - (6,791) 9,551 876 577 - - (1,136) 1,136 - Balance at 31 December 2020 80,449 4,278 (17,474) 577 (36,480) 31,350 The accompanying notes on pages 33 – 64 form an integral part of these financial statements. 31 AMUR MINERALS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020 Notes US$'000 US$'000 US$'000 US$'000 2020 2019 Cash flows from operating activities Payments to suppliers and employees Interest expense Net cash outflow from operating activities Cash flow from investing activities Payments for exploration expenditure Loans granted Payments for property, plant and equipment Interest received (2,196) - (2,196) (1,884) (18) (1,902) (564) (4,658) - 43 (501) - 1 Net cash used in investing activities (5,179) (500) Cash flow from financing activities Cash received on issue of shares, net of issue costs Issue of convertible loans, net of issue costs Repayment of convertible loans 16 13 13 10,005 607 (720) 1,845 492 (835) Net cash generated from financing activities Net Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange differences on cash and cash equivalents Cash and cash equivalents at end of year 9,892 2,517 398 (125) 2,790 1,502 (900) 1,257 41 398 The accompanying notes on pages 33 – 64 form an integral part of these financial statements. 32 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 General information Amur Minerals Corporation is incorporated under the British Virgin Islands Business Companies Act 2004. The registered office is Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands. The Company and its subsidiaries (“Group”) locates, evaluates, acquires, explores and develops mineral properties and projects in the Russian Far East. The Company owns 100% of the share capital of Carlo Holdings Limited, which was acquired in the year. The Company is also the 100% owner of Irosta Trading Limited (“Irosta”), an investment holding company incorporated and registered in Cyprus. Irosta holds 100% of the shares in ZAO Kun-Manie (“Kun-Manie”), an exploration and mining company incorporated and registered in Russia, which holds the Group’s mineral licences. The Group’s principal place of business is in the Russian Federation. The Group's principal asset is the Kun-Manie production licence, which was issued in May 2015. The licence is valid until 1 July 2035 and allows the Company’s subsidiary, ZAO Kun-Manie, to recover all revenues from 100% of the mined metal that specifically includes nickel, copper, cobalt, platinum, palladium, gold and silver. The Company’s management are evaluating the project with a view of determining an appropriate model for the development and ultimate exploitation of the project. 2 Significant accounting policies 2.1 Basis of preparation These financial statements have been prepared under the historical cost convention, except for the valuation of derivative financial instruments, on the basis of a going concern and in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) as adopted by the European Union. The financial statements are presented in thousands of United States Dollars. The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The areas involving a higher degree of judgement or complexity, or where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of revision and future periods if the revision affects both current and future periods. 33 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) 2.2 Changes in accounting policies and disclosures A number of new and amended standards and interpretations issued by IASB have become effective for the first time for financial periods beginning on (or after) 1 January 2020 and have been applied by the Group in these financial statements. None of these new and amended standards and interpretations had a significant effect on the Group because they are either not relevant to the Group’s activities or require accounting which is consistent with the Group’s current accounting policies. New standards, amendments and interpretations that are not yet effective and have not been early adopted There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods and which have not been adopted early. None of these are expected to have a significant effect on the Group, in particular: Standard   IAS 1 (Amendments) IAS 37 (Amendments) Impact on initial application Classification of Liabilities as Current or Non- Current. Provisions, contingent liabilities and contingent assets Effective date 1 January 2022 *1 January 2022 * Subject to endorsement 2.3 Going concern The Group operates as a natural resources exploration and development group. To date, it has not earned any revenues and is considered to be in the final stages of exploration and evaluation activities of its Kun- Manie project. The Directors have reviewed the Group’s cash flow forecast for the period to 31 December 2022 and note that the Group’s ability to continue to meet its obligations as and when they fall due is dependent on a variety of factors, one being the receipt of quarterly interest payments from NRR in respect of the convertible loan facility. Should no further quarterly interest payments be received from the date of this report, it is foreseen that cash will run out in April 2022. As the Group approaches bankable feasibility, an alternative funding option will need to be secured in order to adequately fund this step. The Directors are currently in negotiations with a number of parties in respect of raising further funds. Whilst progress is being made on a number of potential transactions which would provide adequate funding to the Group, there are no binding agreements in place. The Company was successful in completing three equity placements in 2020 and while the Directors are confident of raising additional funding should it be required, their ability to do this is not completely within in their control. The uncertainties associated with the level of future cash inflows indicate the existence of a material uncertainty which may cast significant doubt over the Group’s ability to continue as a going concern. Based on the current progress of the negotiations with potential investors and providers of finance the Directors believe that the necessary funds to provide adequate financing to continue with the current work program on its Kun-Manie project will be raised as required and accordingly they are confident that the Group will continue as a going concern and have prepared the financial statements on that basis. The financial statements do not include the adjustments that would result if the Group was not able to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. 34 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) 2.4 Basis of consolidation The consolidated financial statements of the Group include the accounts of Amur Minerals Corporation and its subsidiaries. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. These consolidated financial statements include accounts of the Company and its subsidiaries as set out in note 1. The Company’s Russian subsidiary maintains its books and records in accordance with accounting principles and practices mandated by Russian Accounting Regulations. These records have been adjusted to comply with IFRS for the purposes of preparing these consolidated financial statements. Accounting policies of other subsidiaries are consistent with those applied by the Company and the Group. 2.5 Functional and presentation currency Items included in the financial information of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in US Dollars (US$), which is the Group's presentation currency and is the functional and presentation currency of the Company. The functional currency of the Group’s operating subsidiary is the Russian Rouble (RUB). The exchange rate on 31 December 2020 was US$1:RUB 74.35 (2019: US$1:RUB 62.04), with the average rates applied to transactions during the year of US$1:RUB 72.27 (2019: US$1:RUB 64.67). In preparing the financial statement of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the date of the transaction. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Exchange differences arising on the settlement and on the retranslation of monetary items are included in profit or loss for the period. On consolidation, the results of the Group's subsidiaries that have functional currency different from the Group's presentation currency are translated into the presentation currency at rates approximating to those ruling when the transactions took place. All assets and liabilities of these subsidiaries are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening equity and reserves at opening/historic rates and the results at actual rates are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences recognised in profit or loss of group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation. On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated income statement as part of the profit or loss on disposal. 35 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) 2.6 Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers have been identified as the Chief Executive Officer and non-executive Board Members. The operating results of each of these segments are regularly reviewed by the Group’s chief operating decision makers in order to make decisions about the allocation of resources and to assess their performance. The accounting policies of these segments are in line with those set out in these notes. 2.7 Exploration and evaluation assets All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred. All costs associated with mineral exploration and investments are capitalised on a project by project basis, pending determination of the feasibility of the project. Costs incurred include appropriate technical expenses as well as administrative costs closely associated with finding specific mineral resources such as remuneration of employees directly evolved in evaluating technical feasibility or depreciation of property, plant and equipment used for the evaluation and exploration works. If an exploration project is successful and the project is determined to be commercially viable (which is when a bankable feasibility study is obtained, and sufficient project finance is in place) the related costs will be transferred to mining assets and amortised over the estimated life of the mineral reserves on a unit of production basis. Where a project is relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are written off. Impairment reviews performed under IFRS 6 'Exploration for and evaluation of mineral resources' are carried out on a project by project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise; typically when one of the following circumstances applies: title to the asset is compromised; • sufficient data exists that render the resource uneconomic and unlikely to be developed; • • budgeted or planned expenditure is not expected in the foreseeable future; • insufficient discovery of commercially viable resources leading to the discontinuation of activities. 36 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) 2.8 Property, plant and equipment Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses. Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost of each asset on a straight-line basis over its expected useful life as follows: Office and computer equipment Operating equipment Vehicles and machinery 3 to 8 years 5 to 7 years 2 years The costs of maintenance, repairs and replacement of minor items of property, plant and equipment are charged to profit or loss for the period. Property, plant and equipment 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 of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash generating units). Prior impairments are reviewed for possible reversal at each reporting date. 2.9 Inventory Inventories are stated at the lower of cost and net realisable value and comprise mainly fuel, materials and spare parts. Costs comprise all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. 2.10 Cash and cash equivalents Cash and cash equivalents are carried at cost and include all highly liquid investments with a maturity of three months or less. 2.11 Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of equipment that are considered of low value (i.e., below $5,000). Lease payments on short-term leases and leases of low-value assets are recognized as occupancy expense on a straight-line basis over the lease term. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. The right of use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right of use asset) whenever: 37 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 · · · The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used); or A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate. Right of use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right of use asset reflects that the Group expects to exercise a purchase option, the related right of use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right of use assets are presented as a separate line in the statement of financial position. The Group applies IAS 36 Impairment of Assets to determine whether a right of use asset is impaired. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right of use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs. 2.12 Financial instruments Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the consolidated statement of financial position and income statement when there is a currently enforceable legal right to offset the recognised amounts and the Group intends to settle on a net basis or realise the asset and liability simultaneously. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. 38 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised. Financial assets All Group's recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. Classification of financial assets Financial assets that meet the following conditions are measured subsequently at amortised cost using the effective interest rate method: • The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and, • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The company classifies the following financial assets at fair value through profit or loss (FVPL): • debt instruments that do not qualify for measurement at either amortised cost (see above) or FVOCI; • equity investments that are held for trading; and • equity investments for which the entity has not elected to recognise fair value gains and losses through OCI. Information about the methods and assumptions used in determining fair value is provided in note 8. For information about the methods and assumptions used in determining fair value refer to note 8. The Group does not hold any financial assets that meet conditions for subsequent recognition at fair value through other comprehensive income (“FVTOCI”). Impairment of financial assets The Group does not hold any material financial assets subject to the expected credit loss model as defined within IFRS 9 "Financial Instruments", except for cash. As such it does not calculate a loss allowance for the expected credit losses on financial assets that are measured at amortised cost. Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. 39 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) Financial liabilities The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Group’s financial liabilities approximate to their fair values. The Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss. Financial liabilities measured subsequently at amortised cost Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held for trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method. The Group’s financial liabilities measured at amortised cost comprise convertible loan notes, trade and other payables, and accruals. The effective interest method is a method of calculating the amortised cost of a financial asset/liability and of allocating interest income/expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts/payments through the expected life of the financial asset/liability or, where appropriate, a shorter period. Convertible loan notes On issue of a convertible loan, the fair value of the liability component is determined by discounting the contractual future cash flows using a market rate for a non-convertible instrument with similar terms. This value is carried as a liability on the amortised cost basis unless is designated as a Fair Value Through Profit and Loss (“FVTPL”) at inception. Financial instruments designated as FVTPL are classified in this category irrevocably at inception and are derecognised when extinguished. They are initially measured at fair value and transaction costs directly attributable to their acquisition are recognised immediately in profit or loss. Subsequent changes in fair values are recognised in the income statement with profit or loss. Equity instruments are instruments that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Therefore, when the initial carrying amount of a compound financial instrument is allocated to its equity and liability components, the equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. The value of any derivative features (such as a call option) embedded in the compound financial instrument other than the equity component (such as an equity conversion option) is included in the liability component. Management have designated the convertible loan note with Plena Global Opportunities as a FVTPL financial instrument. In arriving to its fair value, management used the best available market data and have applied judgement in arriving to the present value of future cash flows. After determining the fair value at inception, management have allocated the residual value to the equity component. Upon early settlement, the financial liability has caused a fair value loss which was recognised as a “Fair value movements on derivative financial instruments and loans” in the statement of comprehensive income. 40 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) Derecognition of financial liabilities A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the income statement. Fair value measurement hierarchy The Group classifies its financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurement (note 8). The fair value hierarchy has the following levels: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); • • Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (level 2); Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). The level in the fair value hierarchy within the financial asset or financial liability is determined on the basis of the lowest level input that is significant to the fair value measurement. 2.13 Equity instruments Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability. The ordinary shares are classified as equity instruments. Equity instruments issued by the Company are recorded at the proceeds received. Costs which are directly attributable to the issue of new shares, net of any taxes, are set off against share premium. 2.14 Share-based payments Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non- market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted at the date the entity obtains the goods or the counterparty renders the service. Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. 41 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 2 Significant accounting policies (Continued) 2.15 Taxation The tax expense represents the sum of the tax currently payable and deferred tax. Current tax Current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Company and its subsidiaries operate. Taxable profit differs from net profit as reported due to income tax effects of permanent and temporary differences. Non-profit based taxes are included within administrative expenses. Deferred tax Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences relating to initial recognition of assets or liabilities that affect neither accounting nor taxable profit are not provided for. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 42 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 3 Critical accounting estimates and judgements The preparation of financial statements requires management to make estimates and assumptions concerning the future, which by definition will seldom result in actual results that match the accounting estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within next financial year are discussed below: Critical judgements Recoverability of the exploration and evaluation assets The most significant judgement in the preparation of these financial statements relates to the recoverability of capitalised exploration costs included in non-current assets. The Directors have assessed whether there are any indicators of impairment in respect of exploration and evaluation costs. In making this assessment they have considered resource estimates, future processing capacity, the forward market and longer term price outlook for nickel. Management’s estimates of these factors are subject to risk and uncertainties affecting the recoverability of the exploration and evaluation costs. Any changes to these estimates may result in the recognition of an impairment charge with a corresponding reduction in the carrying value of such assets. After consideration of the above factors, the Directors do not consider that there are any indicators that exploration and evaluation costs are impaired at the year end. In February 2019 the Group announced the results of its Pre-feasibility study on the Kun-Manie nickel- copper sulphide project. The study looked at two possible production scenarios, with the first being a toll smelt and the second option being the production of a low-grade matte. The study produced economic results on each production scenario of: • Toll smelt – NPV post tax of US$614.5 million using long-term nickel price of US$8 per pound and a discount rate of 10% with free post-tax cashflow of US$2,041 million. Initial capital expenditure of US$570.4 million • Low-grade matte – NPV post tax of US$987.4 million using long-term nickel price of US$8 per pound and a discount rate of 10% with free post-tax cashflow of US$2,980 million. Initial capital expenditure of US$695.0 million. The recoverability of the amounts shown in the Group statement of financial position in relation to deferred exploration and evaluation expenditure are dependent upon the discovery of economically recoverable reserves, continuation of the Group’s interests in the underlying mining claims, the political, economic and legislative stability of the regions in which the Group operates, compliance with the terms of the relevant mineral rights licences, the Group’s ability to obtain the necessary financing to fulfil its obligations as they arise and upon future profitable production or proceeds from the disposal of properties. 43 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 3 Critical accounting estimates and judgements (Continued) Key sources of estimation uncertainty Valuation of derivative financial liabilities The Group issued a hybrid financial instrument which comprised a convertible loan that could be converted to share capital at the option of the holder. The loan was recognized at present value at the initiation date using a market rate of interest which was higher than the nominal interest rate. In arriving to its fair value, management used the best available market data and have applied judgement in arriving to the present value of future cash flows. After determining the fair value at inception, management have allocated the residual value to the equity component. At the reporting date the derivative financial liability was fully extinguished through conversion and repayment of the related loan. Share-based payments The Company makes equity-settled share-based payments to certain directors, employees, advisers and funding providers. Equity-settled share-based payments are measured at the fair value of the services received, unless the fair value cannot be estimated reliably in which case they are measured using a Black-Scholes valuation model at the date of grant based on certain assumptions. Those assumptions are described in the notes to the accounts and include, among others, expected, volatility, expected life of the options and number of options expected to vest. These inputs are considered to be key sources of estimation in the opinion of management. This is discussed further in note 17. Valuation of convertible loan receivable The Group purchased convertible loan notes from Nathan River Resources in the year which had a value at cost of $4,670,000 at the year end. In accordance with IFRS 9, the instrument is measured at fair value through profit and loss and management are required to undertake a valuation exercise at the period end to determine the instrument’s fair value as at that date. In doing so, the Directors considered the movement in various inputs between the inception of the loan and the period end, such as the risk free rate, volatility and corporate bond yields. These inputs are considered to be key sources of estimation in the opinion of management. At the reporting date, the Directors concluded that the fair value of the convertible loan note had increased by $423,000 and a fair value gain was recognised in the loss for the year. 44 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 4 Segmental reporting The Group has one reportable segment being Kun-Manie which is involved in the exploration for minerals within the Kun-Manie licence areas in Russia. The Group's non-current assets are located in Russia. The operating results of this segment is regularly reviewed by the Group's chief operating decision makers in order to make decisions about the allocation of resources and assess the performance. As the Group has no revenue, the following is an analysis of the Group’s results from continuing operations by reportable segment. Reportable information as at 31 December 2020: Administrative expenses Finance income Finance expense Fair value movements on derivative financial instruments Loss on loan modification Gain on revaluation of assets held at fair value through profit and loss Corporate (Unallocated) US$'000 Kun-Manie Total US$'000 US$'000 (2,742) 205 (104) - (109) 423 (341) - - - - - (3,083) 205 (104) - (109) 423 Loss for the year (2,327) (341) (2,668) Non-current assets Inventories Trade and other receivables Cash and cash equivalents 5,255 - 121 2,652 23,994 207 37 138 29,249 207 158 2,790 Segment assets 8,028 24,376 32,404 Trade and other payables Rehabilitation provision Segment liabilities (865) - (865) (48) (141) (913) (141) (189) (1,054) Segment net assets 7,163 24,187 31,350 Capital expenditure Property, plant and equipment Exploration and evaluation - - - 1,155 - 1,155 45 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 4 Segmental reporting (continued) Reportable information as at 31 December 2019 (restated): Corporate (Unallocated) US$'000 Kun-Manie US$'000 Total US$'000 Administrative expenses Finance income Finance expense Fair value movements on derivative financial instruments Gain on loan modification (1,564) 1 (803) 342 115 (420) - - - - (1,984) 1 (803) 342 115 Loss for the year (1,909) (420) (2,329) Non-current assets Inventories Trade and other receivables Cash and cash equivalents Segment assets Trade and other payables Rehabilitation provision Segment liabilities Segment net assets Capital expenditure Property, plant and equipment Exploration and evaluation - - 20 346 366 (27) - (27) 27,381 276 191 52 27,381 276 211 398 27,900 28,266 (938) (164) (965) (164) (1,102) (1,129) 339 26,798 27,137 - - 3 1,310 3 1,310 The accounting policies of the reportable segment are the same as the Group’s accounting policies described in note 2 Segment loss represents the loss incurred by the segment without allocation of central administration costs and Directors’ salaries and finance income or costs. This is the measure reported to the chief operating decision makers for the purposes of resource allocation and assessment of segment performance. 46 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 5 Acquisition of Carlo Holdings On 25th August 2020 Amur Minerals Corporation acquired 100% of the issued share capital of Carlo Holdings Limited, a holding company for the purpose of the NRR convertible loan (see Note 8). The purchase consideration was £1 which was equal to the net assets of Carlo Holdings Limited on the acquisition date, thus no goodwill arose on acquisition. The share capital of Carlo Holdings was acquired from a related party, details of which have been disclosed in Note 26. The result of Carlo Holdings Limited for the year ended 31 December 2020 was revenue of $nil and profit of $215,000 which includes interest received in the amount of $205,000. 100% of this profit occurred post-acquisition and has been included in the consolidated loss for the year. There were no acquisitions in the year ended 31 December 2019. 6 Exploration and evaluation assets Cost and carrying amount At 1 January 2019 (as previously stated) Restatement At 1 January 2019 (restated) Additions Foreign currency adjustments At 31 December 2019 (restated) Additions Foreign currency adjustments At 31 December 2020 Exploration and evaluation assets US$'000 23,010 (806) 22,204 1,310 2,713 26,227 1,155 (3,840) 23,542 Exploration and evaluation assets relate to the Group’s mineral exploration licence, Kun-Manie and include the following costs capitalised during the year: • Wages and salaries of US$244,000 (2019: US$259,000). • Depreciation of US$504,000 (2019: US$683,000). Total accumulated depreciation capitalised on exploration and evaluation assets amounted to US$2.6m at the year end. 47 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 7 Property, plant and equipment Cost At 1 January 2019 Additions Foreign currency adjustments At 31 December 2019 Disposals Foreign currency adjustments At 31 December 2020 Accumulated depreciation At 1 January 2019 Charge for the year Foreign currency adjustments At 31 December 2019 Charge for the year Depreciation on disposals Foreign currency adjustments At 31 December 2020 Carrying amount At 1 January 2019 At 31 December 2019 At 31 December 2020 Office and computer equipment US$'000 Operating equipment US$'000 Vehicles and machinery US$'000 Total US$'000 52 - 6 58 - (9) 49 24 6 3 33 6 - (5) 34 28 25 15 1,444 3 173 1,620 - (268) 2,982 - 357 3,339 (23) (554) 4,478 3 536 5,017 (23) (831) 1,352 2,762 4,163 1,250 108 154 1,512 18 - (250) 1,536 574 208 2,318 486 (23) (384) 2,810 688 365 3,863 510 (23) (639) 1,280 2,397 3,711 194 1,446 1,668 108 1,021 1,154 72 365 452 48 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 8 Financial assets at fair value through profit and loss Convertible loan notes receivable Convertible loan note interest receivable The movement in the asset is analysed as follows: At 1 January 2020 Principal loaned Interest income charged Interest payments received FV gain on revaluation At 31 December 2020 2020 US$'000 5,093 162 5,255 2019 US$'000 - - - US$'000 - 4,670 205 (43) 423 5,255 During the year, the Group acquired convertible loan notes of US$4,670,000 from Nathan River Resources (“the issuer”, “NRR”). The loan notes are owned by Carlo Holdings Limited, a subsidiary of Amur Minerals Corporation which was acquired during the period. See Note 5. The loan notes carry an interest rate of 14%, of which US$205,000 was charged in the year and US$163,000 has been included as a receivable at the year end. Other key terms of the convertible loan notes are as follows; · Date of maturity of July 2023. · Conversion price is equal to A/B, where A means the AUD equivalent of the total initial aggregate principal amount of the Notes issued on the Issue Date; and B means the number of Ordinary shares equal to 19% of the Ordinary Shares in NRR as at the issue date. The asset is secured by way of an equitable mortgage over the issuer’s secured property, being all of the Issuer’s present and future interest in or under any marketable securities, its intercompany loan receivables and all of the issuer’s additional rights. · · Covenants attached to the asset are as follows; o The issuer must provide a report in relation to the implementation status of the project plan on a quarterly basis; and o Upon request, the issuer must provide evidence of the net operating cash flow conditions, which must be in a net positive position over any 6 month period. Upon the completion of the transaction, a success fee was paid to a related party and has been disclosed in Note 26. At the year end management undertook a valuation exercise to determine the fair value of the instrument in line with the requirements of IFRS 9 and the fair value hierarchy per IFRS 13; • • • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 inputs are unobservable inputs for the asset or liability. NRR is a private company and quoted prices were unavailable for use in the valuation exercise. However, Level 2 inputs were observable from comparable companies who operate in similar jurisdictions and within the iron- ore market. 49 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 The table below shows the input ranges for the assumptions used in the valuation model: Volatility Vega Change in share price of comparable companies Strike price of comparable options Change in base rate Interest yield 40.08 – 41.62% 0.04 – 0.05 29.16% 0.8 – 2.38 0.021% 15.02% The key estimates and judgements applied by management during this exercise have been detailed in note 3. 9 Inventories Other materials and supplies Fuel 9 10 Other receivables VAT recoverable Prepayments 2020 US$'000 2019 US$'000 123 84 207 160 116 276 2020 US$'000 2019 US$'000 5 153 158 32 179 211 Prepayments represent prepayment and annual fees paid in advance under the normal course of business. 11 Financial assets - credit risk The principal financials assets of the Group are bank balances. The credit risk on liquid funds is limited because the counterparties are banks with credit ratings assigned by international credit rating agencies. The Group’s maximum exposure to credit risk by class of individual financial instrument is shown in the table below: Carrying value Maximum exposure 2020 US$'000 2019 US$'000 2020 US$'000 2019 US$'000 Cash and cash equivalents 2,790 398 2,790 398 The fair values of financial assets are considered to approximate to their book values due to their short term nature. 50 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 12 Trade and other payables Trade payables Accruals Other payables 13 Convertible loan notes 2020 US$'000 2019 US$'000 306 606 1 913 352 579 34 965 On 13 March 2020, the Group entered into a £1.5 million (US$4,625,000) convertible loan facility with Plena Global Opportunities LLC (“the Investor”). Under the agreement, the Group received a US$596,000 (principal less transaction costs) advance on 13 March 2020. A second advance of £0.5 million is available after three months and a final advance of £0.5 million is available after six months by mutual consent. The loan was unsecured, bore 10% annual compound interest and was repayable 3 months after the advance. Upon redemption of the loan notes, the Company shall make a repayment equal to 105 per cent of the principal amount plus interest equal to 10 per cent. The Investor can also elect to convert the outstanding advance into ordinary shares of the Company at a price of 90% of the VWAP over the last three trading days. In conjunction with the Initial Advance, the Investor was issued with 52,447,552 three year warrants with an exercise price of 1.43 pence per ordinary share. The convertible loan was fully repaid on 30 April 2020. Attached warrant equity instrument were allocated with a residual value of US$93k. The movement in convertible loan is analysed as follows: At 1 January 2020 Principal loaned Warrant instrument Transaction costs Interest charged on principal Early redemption fee FV loss on early redemption Foreign exchange gain Loan and accrued interest repaid At 31 December 2020 14 Financial liabilities - Liquidity risk US$'000 - 607 (93) 29 13 62 109 (11) (716) - The Group has to date funded its operations through equity and seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Management monitors rolling cash flow forecasts of the Group to ensure that the sufficient funds are available to meet the Group’s commitments. The review consists of considering the liquidity of local markets, projecting cash flows and the level of liquid assets to meet these commitments. Management raises additional capital financing when the review indicates this to be necessary. At the reporting date all Group's financial liabilities had the contractual maturities of 1 month or less (2019: 6 months or less). 51 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 52 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 15 Reserves Group reserves comprise the following: Share capital Amounts subscribed for share capital at proceeds received (note 16). Share premium Share premium represents the amounts received by the Company on the issue of its shares which was in excess of the nominal value of the terms of the shares prior to the shares being changed to having no par value, presently utilised for share issue costs. Foreign currency translation reserve The foreign currency translation reserve includes movements that relate to the retranslation of the subsidiaries whose functional currencies are not the US Dollars and the long-term monetary items forming part of the Group's net investment in the overseas operations. Share options reserve The balance held in the share options reserve relates to the fair value of the share options that have been charged to the profit or loss since adoption of IFRS 2 'Share-based payment'. Retained deficit Cumulative net gains and losses recognised in the income statement and the statement of other comprehensive income less any amounts reflected directly in other reserves. 53 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 16 Share capital Ordinary share capital Authorised Ordinary shares of no par value Issued and fully paid 1,379,872,315 (2019: 845,441,101) ordinary shares of no par value Reconciliation of movements during the year: At 1 January 2019 Service providers Cash issue Conversion of loan notes At 31 December 2019 Service providers Cash issue Conversion of warrants At 31 December 2020 2020 Number 2019 Number 2,000,000,000 1,000,000,000 2020 US$'000 2019 US$'000 80,449 69,510 Number US$'000 685,939,046 65,674 (a) (b) and (c) (d) 2,463,965 85,137,702 71,900,388 66 1,922 1,848 845,441,101 69,510 (e) and (f) (g), (h) and (i) (j) 15,516,969 471,190,469 47,723,776 422 9,641 876 1,379,872,315 80,449 (a) During 2019 the Company issued 2,463,965 new Ordinary Shares to certain directors and senior management in settlement for their outstanding fees in the amount of US$66,000, measured at the fair value of the services received. (b) During 2019 the Company raised US$387,000 through issued of 14,549,467 new Ordinary Shares to certain directors and advisers (c) On 4 November 2019, the Company raised US$1,536,000 (£1.2 million) before expenses through the subscription of 70,588,235 ordinary shares of no par value of the Company at a price of 1.7 pence per share ("Subscription"). The subscription is by an asset manager specialising in natural resources. 54 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 16 Share capital (Continued) (d) Between January and November 2019, pursuant to the convertible loan agreement entered into on 13 February 2018, the Company issued 71,900,388 new Ordinary Shares to Cuart Investment PPC Ltd and YA II PN Ltd in settlement of US$1,848,000 of principal and accrued interest. (e) On 25 August 2021 the Company issued 6,671,429 Ordinary Shares to a Company in which A Habib is a Director in settlement of outstanding fees, totaling US$151,775. (f) During the year the Company issued 8,845,540 new Ordinary Shares to certain directors and senior management in settlement for their outstanding fees in the amount of US$270,231, measured at the fair value of the services received. (g) On 16 April 2020, the Company raised US$870,252 through the subscription of 75,000,000 ordinary shares of no par value of the Company at a price of 1 pence per share. (h) On 27 May 2020, the Company raised US$632,800 through the subscription of 47,619,048 ordinary shares of no par value of the Company at a price of 1 pence per share. (i) On 25 August 2020, the Company raised US$8.14m before expenses through the subscription of 348,571,421 ordinary shares of no par value of the Company at a price of 1.75 pence per share. (j) Between July and September 2020, the Company issued 47,723,776 new Ordinary Shares to Pelena Global Opportunities LLC in respect of the conversion of warrants, raising US$875,693. 17 Share-based payment transactions Options granted Number of share options Weighted average exercise 2020 2019 price 2020 (pence) 2019 (pence) Outstanding at 1 January Granted Expired 6,912,000 55,619,260 (6,912,000) 12,374,000 - (5,462,000) 26.25 1.84 26.25 Outstanding at 31 December 55,619,260 6,912,000 1.84 Vested 25,619,260 - 1.95 26.25 - 8.47 26.25 - Exercisable at 31 December 25,619,260 6,912,000 1.95 26.25 The fair value of the options is estimated at the grant date using a Black-Scholes model, taking into account the terms and conditions on which the options were granted. This uses inputs for share price, exercise price, expected volatility, option life, expected dividends and risk-free rate. 6,912,000 options expired in the year resulting in a charge to retained earnings of $1,136,000. 55 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 The table below shows the input ranges for the assumptions used in the valuation models: 13 February 2020 issue; Fair value at grant date Exercise price Share price at grant date Annual share price volatility (weighted average) Risk free rate Expected life 3rd April 2020 issue; Fair value at grant date Exercise price Share price at grant date Annual share price volatility (weighted average) Risk free rate Expected life 1.2p 1.95p 1.85p 85% 0.5% 5 years 0.5p 1.75p 1.1p 85% 0.5% 3 years The 30 million options granted to Directors, management and Russian employees vest 12 months from the grant date. Of the 25,619,260 options granted to Mr. Adam Habib, 12,809,630 vested immediately on grant and the remaining 12,809,630 is performance based and will vest upon the successful completion by the Company of an off-take agreement or completion of a producing asset investment. The share price is the price at which the shares can be sold in an arm’s length transaction between knowledgeable, willing parties and is based on the mid-market price on the grant date. The expected volatility is based on the historic performance of Amur Minerals shares on the Alternative Investment Market of the London Stock Exchange. The option life represents the period over which the options granted are expected to be outstanding and is equal to the contractual life of the options. The risk-free interest rate used is equal to the yield available on the principal portion of US Treasury Bills with a life similar to the expected term of the options at the date of measurement. A charge of US$484,546 has been recognised in loss for the year in respect of these options. 56 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 18 Operating loss Operating loss for the year is stated after charging: Employee costs, including Directors' fees Share options expense Legal fees Consultancy Net foreign exchange gains Fees payable to the Company's auditors for the audit of the Group's financial statements Fees payable to the Company’s auditors for non-audit services Depreciation of property, plant and equipment 2020 US$'000 2019 US$'000 1,480 485 215 337 (6) 109 35 5 1,179 - 113 - (1) 89 - 6 The average number of employees for the Group for the period to 31 December 2020 was 32 (2019: 28 employees). 19 Finance income Interest received on convertible loan notes (note 8) Other finance income 20 Finance costs Effective interest on convertible loan notes (note 13) Other finance costs expensed 2020 US$'000 2019 US$'000 205 - 205 - 1 1 2020 US$'000 2019 US$'000 13 91 104 723 80 803 57 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 21 Tax expense Current tax - BVI corporation tax Current tax - Russian corporation tax Continuing operations 2019 US$'000 - - 2020 US$'000 - - - - The charge for the year can be reconciled to the loss per the income statement as follows: Loss before taxation Expected tax charge based on the BVI corporation tax rate of 0% Expenses not deductible in determining taxable profit Income not taxable Utilisation of tax losses not previously recognised Effect of overseas tax rates Tax charge for the year 2020 US$'000 2019 US$'000 (2,668) (2,329) - 545 (119) - (426) - - 590 (191) (2) (397) - During the exploration and development stages, the Group will accumulate tax losses which may be carried forward. At the reporting date, the subsidiary in Russia had unrecognised tax losses carried forward of: Tax losses carried forward Potential deferred tax impact at the standard rate of corporation tax in Russia of 20% 2020 US$'000 2019 US$'000 18,068 14,905 3,614 2,981 On 23 May 2016, certain tax incentives for regional investment projects in excess of US$5 million were introduced in Russia. Although assessed on project by project basis, this could reduce the Group’s future regional profit tax to between 0% - 10% for the first 10 years of production. 58 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 22 Loss per share Basic and diluted loss per share are calculated and set out below. The effects of warrants and share options outstanding at the year ends are anti-dilutive and the total of 90.1 million (2019: 27.1 million) of potential ordinary shares have therefore been excluded from the following calculations: Number of shares Weighted average number of ordinary shares used in the calculation of basic earnings per share 1,071,175,000 735,839,463 2020 2019 Earnings Net loss for the year from continued operations attributable to equity shareholders 2020 US$'000 2019 US$'000 (2,688) (2,329) Loss per share for continuing operations (expressed in cents) Basic and diluted loss per share (0.25) (0.32) 59 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 23 Directors' remuneration The aggregate remuneration of the Directors of the Company was as follows: Executive Directors Robin Young Adam Habib Non-Executive Directors Robert Schafer Brian Savage Paul Gazzard Lou Naumovski Tom Bowens Salaries US$'000 Fees US$'000 2020 Total US$'000 Salaries US$'000 Fees US$'000 2019 Total US$'000 316 153 - - - - - - - 58 172 56 25 50 316 153 58 172 56 25 50 316 - - - - - - - - 61 52 51 52 20 316 - 61 52 51 52 20 469 361 830 316 236 552 The following tables show the beneficial interests of the Directors who held office at the end of the year in the ordinary shares of the Company and the interests of the Directors in share options: Shares held At 1 January 2019 Additions Robert Schafer Robin Young 576,748 2,444,567 3,924,751 1,157,044 Brian Savage 478,512 Paul Gazzard 138,499 58,226 1,423,372 Lou Naumovski Tom Bowens A Habib 138,499 58,226 - 7,527,604 - - At 31 December 2019 6,369,318 Additions 1,733,792 1,561,871 - 1,433,715 4,000,000 1,196,809 536,738 196,725 - 7,527,604 1,217,676 - 6,671,429 At 31 December 2020 6,369,318 3,167,507 4,536,738 2,758,680 196,725 8,745,280 6,671,429 60 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 23 Directors' remuneration Options held Exercise Exercise price dates £0.2625 27.07.15- (US$0.32) 27.07.20 £0.2625 19.09.16- (US$0.32) 27.07.20 3,301,000 748,000 635,000 - - - - 338,000 Robin Young Robert Schafer Brian Savage Paul Gazzard Lou Naumovski Tom Bowens A Habib - - - - - - - - - - - 25,619,260 At 1 January 2020 3,301,000 748,000 635,000 338,000 Options granted; £0.0195 (US$0.03) 13.02.25 13.02.20- £0.0175 (US$0.02) 03.04.23 03.04.20- - - - 3,900,000 5,800,000 5,800,000 - - 3,900,000 5,800,000 - - Options expired / lapsed (3,301,000) (748,000) (635,000) (338,000) - - At 31 December 2020 3,900,000 5,800,000 5,800,000 - 3,900,000 5,800,000 25,619,260 US$ exercise prices are shown for indicative purposes only, calculated at 31 December 2020 exchange rates. 61 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 24 Financial and capital risk management The Group is exposed to risks that arise from its use of financial instruments and capital management. The main purpose of financial instruments is to raise and utilise finance in the Group’s operations. The main risks arising from the Group’s financial instruments are credit risk (note 11), liquidity risk (note 14), interest risk, and currency risk. The Directors review and agree policies for managing these risks and these are summarised below. Interest rate risk The Group finances its operations through equity financing to alleviate the interest rate risk. The interest rate exposure of the financial assets of the Group as at 31 December 2020 related wholly to floating interest rates in respect of cash at bank. Cash at bank in interest bearing accounts was held in demand accounts with one-month maturities throughout the year. This policy was unchanged from 2019. The Group is exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with banks. The cash balances maintained by the Group are managed in order to ensure that the maximum level of interest is received for the available funds but without affecting working capital flexibility. The Group is not currently exposed to cash flow interest rate risk on borrowings as it has no debt with variable interest rates or fixed rate finance leases. No subsidiary of the Group is permitted to enter into any borrowing facility or lease agreement without the Company’s prior consent. Currency risk The Group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters by holding bank deposits in Russian Roubles, US Dollars and Pound Sterling. The NRR convertible loan receivable is denominated in USD, however the value of shares received upon conversion of the notes is dictated by the AUD equivalent of the notes, translated at the spot rate on the date of conversion. The Directors do not deem it necessary to hedge against the Australian Dollar at this time. Management reviews its currency risk exposure periodically and hedges part of its exposure to Pound Sterling by buying and holding on Pound Sterling deposits. The Group also hold Roubles in order to cover a proportion of anticipated Rouble expenditures. As at 31 December 2020 the Group had on deposit approximately US$2,350,000 in Pound Sterling (2019: US$330,000) and US$32,000 in Rouble (2019: US$24,000) bank accounts. An analysis of the Group’s net monetary assets and liabilities by functional currency of the underlying companies at the year-end is as follows: Functional currency Russian Rouble 2020 US$'000 US Dollar 2020 US$'000 Total 2020 US$'000 51 2,288 13 2,352 118 - 20 138 169 2,288 33 2,490 Currency of net monetary assets/liabilities US Dollar Pound Sterling Russian Rouble At 31 December 62 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 24 Financial and capital risk management (Continued) Currency of net monetary assets/liabilities US Dollar Pound Sterling Russian Rouble At 31 December Functional currency Russian Rouble 2019 US$'000 US Dollar 2019 US$'000 Total 2019 US$'000 6 (318) 16 (296) 27 - (69) 33 (318) (53) (42) (338) The table above indicates that the Company’s primary exposure is to exchange rate movements between UK Pound Sterling and the US Dollar. The table below shows the impact of changes in exchange rates on the result and financial position of the Company. Pound Sterling 10% weakening against US Dollar Pound Sterling 10% strengthening against US Dollar Pound Sterling 20% weakening against US Dollar Pound Sterling 20% strengthening against US Dollar 2020 US$'000 235 (235) 464 (464) 2019 US$'000 32 (32) 64 (64) In the Directors’ opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure reflects only the impact on the year-end balance sheet of changes in exchange rates and does not reflect the exposure on on-going and future expenditure. Rouble denominated expenditures is seasonal with higher volumes in the second and third quarters of the financial year. Capital risk The Group’s objectives when managing capital (i.e. share capital, share premium and retained deficit) and loans/debt are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other shareholders. Historically the Company has issued share capital to provide funds for the exploration programmes. The need for further finance is kept under review by the Board through review of cash flow forecasts and further finance, from equity or debt, will be considered for future exploration and development work. 63 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 25 Commitments Capital commitments Contracted for but not provided in the financial statements: 2020 US$'000 2019 US$'000 Acquisition of property, plant and equipment - - Short-term lease commitments The Group leases two offices in Russia under non-cancellable lease agreements. The leases are short-term in nature and the minimum non-cancellable payments at the reporting date were as follows: 2020 US$'000 2019 US$'000 Less than 1 year 26 Related party transactions 18 18 26 26 Remuneration of key management personnel The remuneration of key management personnel, who are considered to be the Directors and senior management, is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'. Short-term employee benefits Share based payments 2020 US$'000 2019 US$'000 1,218 270 1,488 948 - 948 US$nil (2019: US$77,000) of the short-term employee benefits amount related to key management personnel were capitalised within exploration and evaluation assets. The fees of US$316,000 (2019: US$316,000) in respect of Robin Young's director services are paid to Western Services Engineering Inc., a company of which he is also a director and a shareholder. US$239,217 was outstanding at the reporting date (2019: US$nil). During the year various transactions occurred between the Group and La Tourelle Consulting Ltd (“LTCL”), a Company in which A Habib’s partner is the sole-shareholder. Details of these transactions are as follows; · On the 25th August 2020, the Group purchased Carlo Holdings Limited from LTCL and details of the · · transaction are disclosed in Note 5. Fees totaling US$16,117 were charged to the Group by LTCL for the management of Carlo Holdings and for other consultancy work during the year. La Tourelle received a consultancy fee in relation to the successful transaction with NRR. A payment of US$235,039 was made in cash and shares. There were no other related party transactions in the current or preceding years. 64 AMUR MINERALS CORPORATION NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2020 27 Prior year restatement Since incorporation in 2005 costs incurred by Amur Minerals Corporation (the “Company”), relating to exploration and mining activity, have been capitalised on the Group Statement of Financial Position as Exploration and Evaluation costs. During the year ended 31 December 2020 management has undertaken an exercise to reassess these costs and has determined that, given the parent company does not hold the overarching exploration and mining licences of the Group or directly controls these assets, the capitalisation of these costs as Exploration and evaluation costs in the parent company was done in error. These costs have been incurred on behalf of the Parent company’s subsidiaries and should have been capitalised within the Russian Operating subsidiary’s functional currency with resulting foreign exchange gains or losses being recognised at each reporting period end on consolidation into the Group’s presentation currency. These costs would have been capitalised using the subsidiaries’ functional currency, which is the Russian Rouble. A cumulative adjustment has been calculated to reflect the translation of these costs into Russian Rouble and then back to the Group’s presentation currency of USD on consolidation. This has had the following impact – Group Balance Sheet (2019) Exploration and Evaluation assets has decreased by $486,193 to an adjusted balance of $26,227,000. The Foreign Currency translation reserve within equity has increased by $486,193 to an adjusted balance of $13,351,000. A third balance sheet has been included in the financial statements to demonstrate the effects of this adjustment on prior periods. Group Statement of Comprehensive Income/(Loss) (2019) The Exchange difference on translating foreign operations has increased by $319,104 to $2,931,000. We note that these adjustments have had no impact upon the Group Profit after Tax. 28 Events after the reporting date The terms and conditions for the Company's Kun-Manie "Detailed Exploration and Mine Production Licence" ("DEMP"), were amended and registered with Rosnedra, the State Licencing Agency. The certified modification to the DEMP was received 9 February 2021 from Amurnedra and is dated effective 30 November 2020. The Company submitted the application to amend the delivery date of the 1 December 2020 TEO which has now been successfully extended to 1 December 2021 for its delivery. 65 

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