Artemis Resources
Annual Report 2019

Plain-text annual report

ARTEMIS RESOURCES LIMITED ACN 107 051 749 ANNUAL REPORT For Year Ended 30 June 2019 Corporate Directory Directors Sheikh Maktoum Hasher al Maktoum (Non-Executive Chairman) Edward Mead (Executive Director) Daniel Smith (Non-Executive Director) Share Registry Automic Registry Service Level 2, 267 St Georges Terrace Perth WA 6000 Telephone: 1300 288 664 Web: www.automicgroup.com.au Company Secretary Bankers Guy Robertson Westpac Limited Royal Exchange Corner Pitt & Bridge Streets Sydney NSW 2000 Principal Registered Office Auditors Suite 1, 11 Ventnor Avenue West Perth WA 6005 Telephone: +61 8 6139 0000 Facsimile: +61 2 9078 7661 Email: info@artemisresources.com.au Web: www.artemisresources.com.au HLB Man Judd Level 4, 130 Stirling Street Perth WA 6000 Telephone: +61 8 9227 7500 Facsimile: +61 8 9227 7533 Securities Exchange Listing Australia Securities Exchange Limited (ASX: ARV) OTC Markets Group (OTCQB: ARTFF) Frankfurt Stock Exchange (Frankfurt: ATY) Table of Contents CHAIRMAN’S LETTER REVIEW OF OPERATIONS ANNUAL MINERAL RESOURCES STATEMENT TENEMENT SCHEDULE CORPORATE GOVERNANCE DIRECTORS’ REPORT REMUNERATION REPORT AUDITOR’S INDEPENDENCE DECLARATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS DECLARATION INDEPENDENT AUDITOR’S REPORT ASX ADDITIONAL INFORMATION 1 2 43 45 46 47 52 61 62 63 64 65 66 106 107 112 Chairman’s Letter Dear fellow shareholders, The 2019 financial year saw a significant amount of exploration and development work within the Group, at a cost of approximately $24 million. The exploration work resulted in resource upgrades at five of the Group’s projects. This work which included approximately 33,000 metres of drilling was necessary to prioritise the Artemis projects feed to the Fox Radio Hill processing plant. Our strategic review of all of the Group’s projects and resource results, clearly identified Artemis as a gold company, and the Carlow Castle (CC) project as having the capacity to move Artemis into production in the medium term. More recent work is focused on upgrading the CC resource to indicated status, which will allow the project to move forward to a scoping study, feasibility study and then decision to mine. The Group spent $13.2 million during the year in bringing the Fox Radio Hill processing plant to within ~80% of completion. Works included the installation of additional crushing equipment, Gekko gold circuit, tailings dewatering facilities and a gold room. Once minimum tonnages of potential ore sources are secured and the metallurgical requirements are defined, the plant refurbishment will be completed. The granting of the ≈600km2 Armada Project in the highly prospective Paterson Province of Western Australia, has opened up an exciting new gold frontier for Artemis. The Artemis tenement E45/5276 surrounds AIM listed Greatland Gold Plc’s (GGP) Havieron Project, which is being drilled by Newcrest Mining Limited through a Joint Venture, to the north, south and east. This project was enhanced early in the new financial year when Artemis agreed to acquire Rincon Resources Limited. The acquisition, to be completed later this year, will take Artemis to 1,140km² and make us one of the areas’ largest land holders, giving the Company scale in close proximity to some of the region’s largest miners. Given an exceptional asset base, including near complete processing facilities, and a strong gold price, the Company is focussed on developing its core assets to add shareholder value. A further capital raise in 2H calendar 2019 to supplement the $2.7 million raised through the recent share purchase plan will enable the Company to further its objectives. To enable the Group to take advantage of the opportunities presented during the year the Company arranged a convertible note facility of approximately US$3.9 million. To avoid diluting shareholders’ interests our preference is also to repay rather than equity convert a portion of this debt. Following my appointment as Chairman in February of this year and realignment of the Group’s strategy shortly thereafter I am confident that we are well placed to make good progress in the year ahead. On behalf of the Board I thank our shareholders for their ongoing support. Sheikh Maktoum Hasher al Maktoum Chairman Artemis Resources Limited Annual Financial Report – June 2019 1 | P a g e Review of Operations Artemis Resources Limited (“Artemis” or the “Company”) is pleased to outline the Company’s progress for the financial year end 30 June 2019. Artemis is a gold exploration company with a large and prospective suite of assets in the Pilbara region of Western Australia. The Company now has 72 tenements over an area of ≈2,400 km² (Figure 1) and owns 100% of the strategically located Radio Hill processing plant and infrastructure, located approximately 30km south of Karratha. The Company has signed a binding term sheet for the acquisition of Rincon Resources, to further expand the Artemis holding in the Paterson Province (ASX released on 16 July 2019). During the financial year, the Company updated key 2012 JORC Code compliant resources of gold, nickel-copper, gold-copper-cobalt and copper-zinc, all situated within a 40 km radius of the Radio Hill plant. The following is a summary of the key work programs completed or resources updates during this reporting period. Figure 1: Artemis’s Projects in the Karratha Area and Proximity to Radio Hill Process Plant Artemis Resources Limited Annual Financial Report – June 2019 2 | P a g e Review of Operations RESOURCE DEVELOPMENT During the year, Artemis completed over 33,000m of drilling across eight of its prospects. The objective was to prioritise and determine which targets could support long term mining and then processing at the Radio Hill plant. During the year, resource updates on Carlow Castle (Au-Cu-Co), Whundo (Cu-Zn), Weeriana (Au), Radio Hill (Ni-Cu) and Ruth Well (Ni-Cu) were released to the market (summarised below – refer to ASX releases for full details): • Carlow Castle (Au-Cu-Co) – Inferred Resources of 7.7Mt @ 1.06 g/t Au, 0.51% Cu and 0.08% Co for 260,000oz Au, 38,000t Cu and 5,900t of Co (ASX release 6 March 2019) • Whundo (Cu-Zn) - Indicated JORC Resource of 2.6Mt @ 1.14% Cu and 1.12% Zn for 30,4191t Copper and 29,992t Zinc (ASX release 26 October 2018) • Weeriana (Au) - Inferred JORC Resource of 975Kt @ 2.0 g/t Au for 62,739oz Au (ASX release 19 December 2018) • Radio Hill (Ni-Cu) - Indicated JORC Resource of 1.15 Mt @ 0.52% Ni, 0.73% Cu and 277ppm Co for 5,980t Nickel, 8,395t Copper and 318t Cobalt (ASX release 21 December 2018) • Ruth Well (Ni-Cu) – Indicated JORC Resource of 152kt @ 0.63% Ni and 0.47% Cu for 965t Nickel and 713t Copper (ASX release 7 May 2019) CARLOW CASTLE (Au-Cu-Co) Carlow Castle (Au-Cu-Co) is in the West Pilbara region of Western Australia, ~45 km by road east of Karratha. Access is via the Northwest Coastal Highway and then by the unsealed Cherratta Road which passes through the project area. Carlow Castle is on the granted exploration license E47/1797 held by KML No 2 Pty Ltd (which is a 100% owned subsidiary of Artemis). Carlow Castle is ~35 km from Artemis’ 100% owned Radio Hill Processing Plant. In January 2018, the Company announced a JORC Code (2012) compliant resource estimate with a total Indicated and Inferred resource estimated at 4.5Mt at 0.9 g/t Au, 0.4% Cu and 0.07% Co. In the second half of calendar 2018 the Group drilled 189 RC holes and 12 diamond drill for 24,754m. An updated JORC 2012 Resource was released in the first quarter of 2019 with 7.7Mt @ 1.06 g/t Au, 0.51% Cu and 0.08% Co for 260,000oz Au, 38,000t Cu and 5,900t of Co (ASX release 6 March 2019). Geology and Mineralisation The Carlow Castle South Au-Cu-Co deposit is hosted by east-west shears in basalt and ultramafics. Oxidation of the primary mineralisation occurs to depths of 25-65 m below the surface. The Quod Est Au-Cu-Co deposit is hosted by north-south shears immediately north of Carlow Castle South in basalt with oxidation of the primary mineralisation down to an estimated 25-40 m below the surface. The gold-copper-cobalt mineralisation at Quod Est and Carlow Castle South is hosted in chloritic shear zones within the predominantly Archean mafic sequence. The ore zones appear partially oxidised above 20m with sulphides extending to depth, the primary sulphides are chalcopyrite, cobaltite and pyrite; the presence of chalcocite in some samples indicates supergene enrichment in the upper portions of the sulphide zone. Artemis Resources Limited Annual Financial Report – June 2019 3 | P a g e Review of Operations The structural environment of the area is complex; Quod Est strikes north-south and dips steeply to the east whereas Carlow South strikes east-west and dips steeply to the north. Figure 2: Geology and Drill Hole Location Plan of Artemis Carlow Castle Drilling The 189 RC and 12 diamond drill holes in the Carlow Castle database includes 22,676 samples assayed for each of modelled assays, i.e. gold, cobalt and copper, along with a suite of other elements. Table 1 presents the range of drill holes used in the resource estimate. Hole Type Hole IDs Num. holes Diamond RC TOTAL 18CCAD001 - 18CCAD012 ARC001 - ARC189 12 188 200 Total Depth (m) 1,504.6 23,217.0 24,721.6 Num. Samples Assayed 1,554 21,122 22,676 Table 1: Drill holes used for resource modelling Carlow Castle Metallurgical Testwork Artemis has completed preliminary metallurgical testwork on the Carlow Castle Au-Co-Cu Project at ALS Metallurgy in Western Australia focussing on the metallurgical amenability of selected samples from the Carlow Castle deposit employing conventional gravity gold, cyanide leach and flotation processes. The metallurgical test work scope was focused on recovery of: • Gold – from both gravity recovery and cyanide leaching processes to produce a gold product suitable for on-site smelting and production of gold dore; and • Copper and cobalt – via conventional flotation to produce separate copper and cobalt concentrates Artemis Resources Limited Annual Financial Report – June 2019 4 | P a g e Review of Operations The metallurgical test flowsheet utilises typical processing pathways for precious and base metal ores. Each composite was crushed and ground with coarse gold removed using conventional gravity devices. The ground-gravity tailing is then subjected to a series of sulphide flotation stages. The flotation stages employ mineral specific reagents to selectively recover copper and cobalt minerals. Copper flotation is performed first with the tailings sent for selective cobalt flotation. Copper and Cobalt mineral rougher concentrates may require a light regrind to release any locked minerals and improve the final grades of the respective cleaned concentrates. Tailings from the flotation process containing fine or non-floating gold is subjected to conventional cyanide leach and carbon adsorption processes. Analysis of the metallurgical results from these samples indicate: Gold • A significant gold component ranging up to 48% is recoverable using gravity separation; and • Most of the balance of the non-gravity gold is recoverable in sulphide concentrates as a by- product using standard flotation. This gold could be sold in concentrates as a credit or recovered on site using a cyanide leach process. Copper • Quick floating copper minerals produced a high-grade, premium copper concentrate of approximately 30% Cu; • Deleterious elements including arsenic are easily managed with a light concentrate polishing using regrind or blend control; and • Recoveries depended on mineralogy with 77–85% copper recoveries achieved. Unrecovered copper minerals are predominantly represented by non-floating silicates or secondary oxide copper minerals. Cobalt • Cobalt recoveries ranged 73-79%; • Saleable Cobalt concentrate grades ranging 2.3–5.3% Co were produced; • Cobaltite (CoAsS) is the dominant cobalt bearing mineral - and is therefore intrinsically linked to arsenic affecting it sale price; and • Testwork continues to improve cobalt concentrate grades and ultimately aims to maintain optimal recovery and reduce shipping/smelter treatment charges. Targeting lower specification concentrates, but at a lower sale price, will minimise processing capital costs while producing high specification concentrates, commanding higher sale prices, will require a higher capital input. A trade-off study of capital and operating expense versus revenue from differing grade product streams will be evaluated prior to final flowsheet selection to optimise financial returns. The results of the metallurgical testwork program released on 11 February 2019 provides Artemis with a basis to plan and advance project development activities. The planned development work bringing Carlow Castle through a Pre-Feasibility Study and into production includes: • Resource delineation drilling including improved definition of existing resources and conceptual mining studies; • Structural and geotechnical drilling; and • Further metallurgical testing of alternative low-cost process flowsheets to improving cobalt flotation chemistry and optimise gold cyanide leach recoveries to produce doré on site. A detailed development timeline for Carlow Castle is being developed. Artemis Resources Limited Annual Financial Report – June 2019 5 | P a g e Review of Operations Prospectivity and proposed exploration and project development The number of old workings and surface geochemical anomalies along strike and within the tenement indicate that the prospectivity of the Carlow Castle lease can be considered moderately high. Artemis exploration objectives are to further develop knowledge of the geological controls on mineralisation and improve confidence in the resource at Carlow Castle. Further plans are to convert the Inferred Mineral Resources to Indicated, and the complete initial mine optimisation evaluation and financial modelling. A program of approximately 5,000m of drilling is planned, to drill three critical sections at Carlow East and Carlow West. The majority of Carlow Castle activity will be resource drilling and definition, however the recently completed aircore drilling shows continuation of mineralization to the west. Testing of this area will require a new heritage survey and POW approvals. Whilst clearly structurally controlled the system at Carlow is yet to be defined, with currently two styles being considered: • A continuation west south west within the broad geological sequence as a dominantly shear system, or, • Arcing to the south around the Andover Complex intrusion as a ring and radial fracture system. Both systems will require more detailed soil sampling on 100m x 100m spacing to identify the broad location of mineralization in conjunction with geophysics, preferably HeliSAM to develop close definition of the structural setting to better define the broad location of mineralisation. Any high priority targets identified by the geochemical and geophysical surveys are planned to be tested by aircore drilling in 2020. Subsequent to year end a Sub-Audio Magnetics (SAM) survey was completed identifying a total of 21 targets indicating geological structures for additional gold-copper-cobalt may extend to the west of the resource area. WHUNDO (Cu-Zn) In October 2018, Artemis announced a significant upgrade to its Whundo (Cu-Zn) project. The company reported a JORC 2012 Indicated tonnage of 2.6Mt @ 1.14% Cu and 1.12% Zn for 30,4191t contained Copper and 29,992 t contained Zinc. Whundo is in the West Pilbara region of Western Australia, ≈50 km by road south of Karratha. Access is via the Karratha - Tom Price Hwy and then mine access tracks. Whundo is on a mining lease (M47/7) and is located only 7 km from Artemis’ 100% owned Radio Hill Processing Plant. Whundo was the last ore to be processed through Radio Hill prior to the sulphide plant being placed into care and maintenance in 2008 due to low copper prices and the GFC. The copper/zinc deposit at Whundo and West Whundo is confined to a single stratigraphic horizon as a series of NW to NNW plunging shoots that outcropped as a sinuous line of discontinuous goethite- hematite gossans that could be traced for some 500m along strike. Individual ore shoots have a restricted strike length and are commonly 1-5 m thick but reach a maximum thickness of 20 m in the hinge zone of two small upright synclines in the axis of the major synclinal structure where they form Artemis Resources Limited Annual Financial Report – June 2019 7 | P a g e Review of Operations the Whundo and West Whundo deposits. The ore shoots plunge about 35-40° to the NW and extend down plunge as much as 150 m. Primary sulphides, mostly pyrrhotite, pyrite, sphalerite and chalcopyrite are only preserved below the weathering profile (often below a depth of 30 m). No galena or any other lead minerals have been reported from these deposits. Modern exploration at Whundo commenced in the 1960s with Fox Resources eventually mining part of the oxide resource in 2005-2006. During 2H calendar 2018 Artemis completed RC drilling of the Whundo deposit, to verify older drilling and to increase the drill data available in the upper levels of the mineralisation. Previous drilling comprised 870 drill holes including open hole percussion, RAB, RC and diamond drilling for a total of 52,586 metres. Artemis drilled another 64 Reverse Circulation (“RC”) drill holes and 7 diamond drill holes for an additional 5,490 metres in 2H Calendar 2018. In addition, Artemis drilled a further 56 RC drill holes for 3,528 m following QAQC procedures meeting JORC Code (2012) requirements, in-filling some of the previously drilled resources, and to confirm by drilling several twin holes to verify the reliability and accuracy of the historic drilling. The recent Artemis drilling confirmed that the historic drilling was sufficiently reliable for an Indicated Mineral Resource estimate reported in accordance with the JORC Code. The Whundo deposit occurs in two zones, Whundo and Whundo West, hosted within a single stratigraphic horizon as a series of NW-NNW plunging shoots, which may be traced on surface over 500m as discontinuous goethite-hematite gossans. The mineralised shoots typically vary from 1m to 5m thick but may thicken to 20m in fold hinge zones. The shoots plunge to the NW at 35-40o with a down plunge extent of up to 150m. Figure 3: Whundo Mine Deposits – 7km from Radio Hill Processing Plant Artemis Resources Limited Annual Financial Report – June 2019 7 | P a g e Review of Operations Figure 4: Whundo Cross section (492500E - looking west) A resource table for Whundo is as outlined hereunder. Material Type Tonnage (tonnes x1000) Copper Grade (Cu %) Zinc Grade (Zn %) Copper Metal (tonnes Cu) Zinc Metal (tonnes Zn) Oxide Fresh Total 383 2,286 2,669 1.78 1.03 1.14 0.43 1.24 1.12 6,845 23,574 30,419 1,666 28,326 29,992 Table 2: Resource Estimate for the Whundo Cu-Zn Project - (October 2018 - INDICATED RESOURCES 0.2% Cu cut-off grade) WEERIANNA (Au) In December 2018 Artemis completed a new resource update for the Weeriana gold project, announcing an Inferred, shallow resource of 975,000t @ 2.0g/t Au for 62,739 ounces of gold. Drilling and Resource Update Artemis undertook a reverse circulation (RC) drilling program in 2018 comprising 19 drillholes for a total of 1,644m. Including drilling undertaken by previous companies, there are a total of 163 RC holes, 3 open-hole percussion holes and 5 diamond drill holes for 11,827m drilled at Weerianna. Drill hole depths vary from 30 -180 m, averaging 69m. Drilling tested for extensions to previously interpreted locations for mineralisation and to provide confirmation of previous results. In December 2018, the Company announced an updated resource estimate incorporating both the Company’s Artemis Resources Limited Annual Financial Report – June 2019 8 | P a g e Review of Operations recent drilling data and drilling data collected during exploration previously undertaken by other companies. Weerianna is located in the West Pilbara region of Western Australia, approximately 25km east of Karratha and 5km west of Roebourne) and is adjacent to the Northwest Coastal Highway. Weerianna is situated on mining lease M47/223 (granted until 27 December 2031). M47/223 is 100% held by Western Metals Pty Ltd, an entity in which Artemis has an ~80% interest (via its wholly owned subsidiary, Karratha Metals Pty Ltd). The deposit is 35km by road to the Radio Hill plant where a new gravity gold circuit has recently been installed. The 2018 Weerianna resource estimate was performed by Fleur Muller, Director of Geostat Services Pty Ltd (“Geostat”), using Surpac software, utilising historic data and data from the recent RC drilling program completed by Artemis. A classified mineral resource for the Weerianna deposit was calculated by Geostat (27 October 2018) to be 975,700 tonnes at 2 g/t Au for 62,700 ounces (above a cut-off of 1 g/t Au). The classified Mineral Resource is tabulated in Table 3 as at 27 October 2018 and is reported beneath the topography surface using a 1g/t Au cut-off. Tonnage has dropped by approximately 3% from the previous reported estimate (refer ASX 26 June 2014) as the transitional density of 2.39 for the 2018 resource is lower than that of 2.6 used for the 2009 resource, and this material carries the bulk of the resource tonnage. Another contributing factor is that the recent WERC holes have generally reported lower grades. Material Type Volume (cubic metres) Tonnage1 (tonnes) Gold Grade (g/t Au) Au Metal (oz) Oxide Transition Fresh Total 52,891 265,125 69,594 387,609 126,409 649,556 199,734 975,699 2.15 2.03 1.82 2.00 8,738 42,394 11,687 62,739 Table 3: Inferred Mineral Resource Estimate – Weerianna Gold Project - (October 2018 - above a 1.0 g/t Au cut off) 1 Note: tonnage is calculated on a wet tonnage basis. Geology and mineralisation Weerianna is mainly comprised of Roebourne Group of greenstones consisting of the Nickol River Formation composed of grey- and white-banded chert, ferruginous chert, Banded Iron Formation (BIF), fine-grained clastic sedimentary rocks, quartzite, felsic volcanic rocks, carbonate-rich sediments and conglomerates; and the basal Ruth Well Formation consisting of ultramafic and mafic volcanic rocks. The poorly outcropping ultramafic chlorite-serpentinite schists at Weerianna show variable amounts of silicification and carbonate alteration. Moderately thick to narrow cherty intercalations representing interflow sedimentary rocks are frequently found within the ultramafic schist sequence. Artemis Resources Limited Annual Financial Report – June 2019 9 | P a g e Review of Operations Other lithologies present include BIF and a substantial amount of mainly white quartz veins varying in thickness between 1 cm and several metres. Ultramafic intercalations are also present within this main chert sequence but these are very poorly outcropping as they are often covered by thick chert scree shedding off the ridges. The 500m wide zone of ultramafic schists and cherts lies between two relatively competent basaltic terrains. The northern basalt is poorly outcropping but the southern forms substantial hills comprising dark coloured basaltic rock types. These basalts are intruded by gabbroic rocks belonging to the Andover Intrusive Complex which is the largest differentiated Intrusive Complex in the West Pilbara. Relatively late fresh undeformed micro dolerite intrusions have been intersected in several holes. The chert-ultramafic sequence at Weerianna represents portions of both the Ruth Well and Nickol River Formation of the Roebourne Group of greenstones. The southern basalt forms part of the Ruth Well Formation. The identity of the northern basalts is not certain, but these are likely to belong to the Regal Formation. At Weerianna, the dominant structural and lithological trend is north-east with a generally moderate to steep south-east dip. The schistosity is parallel to the bedding and controls the quartz veining. At places the schistosity and quartz veins are folded. The depth of weathering indicated by the drilling varies but is generally around 50 to 60 m in mineralised areas. Figure 5: Weerianna local geology Artemis Resources Limited Annual Financial Report – June 2019 10 | P a g e Review of Operations Mineralisation Epigenetic gold (with or without copper) within the West Pilbara is almost invariably associated with shearing and faulting in a variety of geological settings. Favourable settings include sheared units associated with the Regal Thrust (including Weerianna), splay faulting associated with the Sholl Shear Zone and also around the edges of several mafic/ultramafic intrusions. At Weerianna, the gold mineralisation is associated with quartz veining within chlorite-serpentine schists of the Roebourne Group immediately beneath the Regal Thrust that have undergone variable degrees of silicification and carbonate alteration. Sulphides including pyrite, arsenopyrite and chalcopyrite are sometimes present in substantial amounts. The quartz veins generally strike between N and ENE and the main ore zone dips 70° to the south east. Other nearby gold prospects within a similar geological setting are found at Carlow Castle, Sing Well, Camper Day and No. Six Well. They are all close to the brecciated chert horizon along the Regal Thrust and are either hosted by schists or are found as small discontinuous quartz veins in basalts. This “gold belt” can be traced for more than 20 km. RADIO HILL SHALLOWS (Ni-Cu) In December 2018 the Company reported a new, shallow Indicated JORC resource of 1.15 Mt @ 0.52% Ni, 0.73% Cu and 277ppm Co for 5,980 t contained Nickel, 8,395t contained Copper and 318t contained Cobalt for the Radio Hill Project. The Radio Hill nickel-copper underground mine is in the West Pilbara region of Western Australia, ~35 km by road south of Karratha (Figure 1). Access is via the Karratha - Tom Price Hwy sealed road and then via the Rio Tinto dirt access road. Radio Hill is on a mining lease (M47/161, M47/337) and contains Artemis’ 100% owned Radio Hill processing plant and the historic Radio Hill underground mine. The underground mine ore was processed through Radio Hill prior to the plant being placed into care and maintenance by Fox Resources (Fox) in September 2008 due to low commodity prices. The Radio Hill Ni-Cu-Co deposit was discovered in the early 1970s. The Radio Hill deposit forms part of a small Archaean, synorogenic-synvolcanic Ni-Cu bearing mafic intrusion containing a minor ultramafic component near its basal contact. The massive and disseminated Ni-Cu-Co sulphides are hosted by thin gabbroic units underlying layered ultramafic-mafic sequence. Sulphides are confined to the feeder conduit or depressions of the basal contact. The deposit has been extensively drilled by earlier companies, most notable being Fox Resources between 2003 and 2009 when they intensely drilled and partly mined the deposit using both open cut and underground mining methods. Artemis drilled the shallow mineralisation up-dip from the Fox underground workings on a regular grid in 2H Calendar 2018, using reverse circulation (RC) drilling. Drilling by previous operators of Radio Hill comprised 1,052 drill holes including open hole percussion, RAB, RC, underground sludge and diamond drilling for a total of approximately 89,885 metres. Artemis drilling included a further 80 Reverse Circulation (“RC”) drill holes and 7 diamond drill holes for an additional 6,779 metres, aiming to verify older drilling and to increase the drill data available in the upper levels of the mineralisation. Artemis Resources Limited Annual Financial Report – June 2019 11 | P a g e Review of Operations Geology and Mineralisation Radio Hill is a small Archaean, 2892 ± 34 Ma, synorogenic-synvolcanic Ni-Cu bearing mafic intrusion containing a minor ultramafic component near its basal contact and is probably comagmatic with nearby Mount Sholl and Munni Munni intrusions. It is considered to be a Voisey's Bay, Canada analogue. The massive and disseminated Ni-Cu-Co sulphides are hosted by thin gabbroic units underlying layered ultramafic-mafic sequence. Sulphides are confined to feeder conduit or depressions of basal contact. Mineralisation is patchy blebs of medium grained disseminated to matrix sulphides in the basal peridotite to olivine pyroxenite. Pyrrhotite, with sub-ordinate pentlandite, and chalcopyrite, forms lobate aggregates up to 12% volume of the Ultramafic host. Pyrrhotite forms layers up to 20 m thick, 8 m above the basal contact of an intrusion. Post-intrusion deformation has tilted the deposit 25-40° to the southeast. The geometry has been modified by northerly trending sinistral faults. Dolerite dykes have intruded the orebody with relaxation, following deformation, into pre-existing weakness created by faulting. Two mine-site wide dolerite dykes have truncated the orebody and act as pillars for the underground mining. Three types of mineralisation have been observed at the Radio Hill mine, which are summarised as follows: • Massive medium to very coarse grained pyrrhotite-chalcopyrite-pentlandite ore that is often strongly brecciated and displays quartz-carbonate-chlorite veining, • Stringer/gash vein, disseminated and blebby pyrrhotite-chalcopyrite-pentlandite mineralisation associated with tremolite-actinolite-chlorite alteration and minor carbonate veining, • Disseminated fine grained pyrrhotite-chalcopyrite-pentlandite sulphides hosted by the gabbro, and pyrrhotite dominant sulphides within the ultramafic immediately overlying the gabbro. The gabbroic portion of the layered cumulate complex hosts the mineralisation. A generalised stratigraphic profile within the mining domain, in order of decreasing stratigraphic height, consists of ultramafic, orebody gabbro and volcanic basement. Mineral Resources AM&A estimated a Mineral Resource for Radio Hill nickel-cobalt-copper deposit using the Artemis drilling only, ignoring earlier drilling as it could not be verified as conforming to the standards required by the JORC Code (2012) for reporting mineral resources. The Indicated Mineral Resources were estimated within wireframes using a lower cut-off grade based on a metal factor where Cu%*0.5 + Ni% >0.5% at Radio Hill as 1.2 Mt at 0.5% Ni, 0.7% Cu and 277 ppm Co. (Artemis Announcement 21 Dec 2018) Cobalt is a probable by-product that may be included in the Ni concentrate and so is included in the resource estimate, see Table 4. Historically there are substantial previously reported resources that are not reported in accordance with the JORC Code (2012) and therefore cannot be disclosed. For example, estimates exist at depth Artemis Resources Limited Annual Financial Report – June 2019 12 | P a g e Review of Operations and at F Zone to the north-west of this reported resource that need to be verified using suitable drilling that complies with the current industry standards. Drilling, sampling and assaying has been verified by Al Maynard & Associates (AM&A) as complying with the JORC Code (2012) for reporting exploration results and Mineral Resources. AM&A used the Artemis drilling only to model the shallow resources, ignoring the earlier drilling as it could not be verified as conforming to the JORC Code (2012). These Indicated resources, as estimated by AM&A are 1.15 million tonnes at 0.52% Ni, 277ppm Co and 0.73% Cu. Cobalt is a potential by-product that may report to the nickel concentrate and so is included in the resource estimate. Considering the spacing of the drill intersections, quality of the drilling and sampling and the degree of understanding of the geological controls on the mineralisation, AM&A have classified all the reported resources at Radio Hill as Indicated according to the JORC Code (2012). Ore Type Tonnage (Million) Nickel Grade (Ni %) Copper Grade (Cu %) Cobalt Grade (Co%) Nickel Metal (tonnes Ni) Copper Metal (tonnes Cu) Cobalt Metal (tonnes Co) Fresh 1.15 Total 1.15 0.52 0.52 0.73 0.0277 5980 8395 0.73 0.028 5980 8395 318 318 Table 4: AM&A Resource Estimate for the Radio Hill Ni-Cu Project - (December 2018 - Indicated Resources @ 0.0% Cu cut-off grade) Figure 6: Radio Hill Mine area, processing plant and resource drilling location Artemis Resources Limited Annual Financial Report – June 2019 13 | P a g e Review of Operations RUTH WELL (Ni-Cu) The Ruth Well nickel–copper deposits were discovered by Whim Creek Consolidated in 1971. Artemis completed RC drilling of the Ruth Well Ni-Cu deposit on E47/3487 to verify that older drilling met the JORC Code (2012) standards required for reporting a Mineral Resource estimate and to improve the definition of the Mineral Resource. Mineralisation comprises sulphides and magnetite within serpentinised extrusive peridotite of the Ruth Well Formation. This association suggests that the deposits are of a similar type to the extrusive Kambalda nickel deposits of the eastern Yilgarn Craton. AM&A estimated the Indicated Sulphide Mineral Resource at Ruth Well in December 2018. Geology and Mineralisation Mineralisation comprises violaritised pentlandite, pyrrhotite, gersdorffite, niccolite, chalcopyrite, and magnetite within serpentinised extrusive peridotite of the Ruth Well Formation. This association suggests that the deposits are of a similar type to the extrusive Kambalda nickel deposits of the eastern Yilgarn Craton. The mineralisation however probably lies within a tectonic slice of the Andover Intrusion that has been faulted into the Ruth Well Formation of the Roebourne Group on the northern side of the major, approximately 300 km long Sholl Shear Zone. The Ruth Well deposit, considered to be an intrusion related Ni-Cu-Co sulphide deposit, lies within the Ruth Well Formation of the Roebourne Group on the northern side of the Sholl Shear Zone, a major (ca. 300 km long) shear. The Ruth Well Formation is dated 3,270-3250 Ma and consists of basalt and spinifex textured ultramafic flows, similar to the extrusive Kambalda nickel deposits of the eastern Yilgarn Craton. Drilling Artemis drilling of the Ruth Well Ni-Cu deposit was aimed to verify older drilling and to improve the definition of the resource. Previous historic drilling in and around Ruth Well comprised 426 drill holes including open hole percussion, RAB, RC and diamond drilling for a total of approximately 18,827 metres. Artemis has drilled another 37 RC drill holes and one diamond drill hole for an additional 2,923 metres in 2H calendar 2018. A considerable amount of drilling was completed prior to the Artemis drilling and prior to the adoption of the JORC 2012 code and guideline for the reporting of mineral resource estimates. It was not possible to discover reports detailing sampling and assay QAQC procedures pertaining to the pre- Artemis drilling. Therefore, assays from the older drilling have not been used to estimate grades. Artemis Resources Limited Annual Financial Report – June 2019 14 | P a g e Review of Operations Mineral Resources AM&A estimated the Indicated Sulphide Mineral Resource at Ruth Well to be 152,000t at 0.5% Cu and 0.6% Ni, in December 2018, and the estimate is reported above a 0.3% nickel cut-off in Table 5. (Artemis Announcement 4 May 2018). Figure 7 illustrates a typical cross-section. This resource estimate is based on 37 Reverse Circulation (RC) drill holes for 2,839m and one diamond drill hole of 84.3m. Tonnage (kt) Ni % Cu % Ni Metal (t) Cu Metal (t) 152 0.63 0.47 965 713 Table 5: AM&A Resource Estimate for the Ruth Well Ni-Cu Project - (December 2018 - INDICATED RESOURCES 0.3% Ni cut-off grade) Figure 7: Ruth Well interpretative Cross Section 486020mE Artemis Resources Limited Annual Financial Report – June 2019 15 | P a g e Review of Operations ARMADA PROSPECT (100% ARV) – Paterson Range, WA In July 2018, Artemis announced that it had submitted an exploration licence application for 600km2 of exploration tenure within the prospective Paterson Range region of the Pilbara. This tenement was granted on 14 February 2019. The Armada Prospect (Figure 8) is well located to several known mineral discoveries in the region including the large Telfer Au-Cu Mine, O’Callaghan’s Deposit (W-Cu) owned by Newcrest Mining Limited, and the Nifty Cu Mine owned by Metals X Limited. Figure 8: Regional Location Map – Paterson Ranges, Pilbara Region, Western Australia Recent exploration by Greatland Gold at their Haverion Prospect (Figure 8 and Figure 9) has highlighted the potential for a new iron oxide copper gold (IOCG) district, with recent exploration success at Haverion representing a potentially very large mineralised system, which has gathered interest from Rio Tinto, FMG and Newcrest. Artemis Resources Limited Annual Financial Report – June 2019 16 | P a g e Review of Operations Figure 9: Armada Location Map with Major Deposits Located Geology and mineralisation The nearby Telfer deposit is located within the north-western exposure of the Palaeoproterozoic to Neoproterozoic Paterson Orogen (formerly Paterson Province). The Paterson Orogen includes the Palaeoproterozoic Rudall Complex, Neoproterozoic Yeneena Supergroup (Throssell Range and Lamil Groups), and the Neoproterozoic Tarcunyah Group of the northwest Officer Basin. The Yeneena Supergroup hosts the Telfer Mining District and consists of a 9km thick sequence of marine sedimentary rocks that unconformably overlie the Palaeoproterozoic Rudall Complex. The Yeneena Basin covers an area of approximately 24,000 km2 and consists of a middle to upper Proterozoic succession of calcareous and argillaceous siltstones, sandstones and carbonate sediments of the Yeneena Supergroup. The Yeneena Basin unconformably overlies the Pilbara Craton and the Manganese Subgroup of the Bangemall Basin on its western boundary and the Rudall Complex Inlier on a south-eastern boundary. The Yeneena Basin is unconformably overlain by the Karara Basin to the southeast, by the Savory Basin to the southwest, by unconformable Phanerozoic sediments of the Canning Basin along the northern and eastern boundaries and the Officer Basin along the south- eastern boundary. Artemis Resources Limited Annual Financial Report – June 2019 17 | P a g e Review of Operations The Telfer region is highlighted by the presence of north to northwest/south to southeast and northwest to southeast trending moderate to tight fold patterns in the Lamil Group sedimentary rocks, oriented slightly asymmetric to the southwest. These fold patterns are aligned with the Pilbara Craton and Rudall Complex boundaries respectively. In the Telfer region, the two fold patterns overprint each other and are intruded by discordant granites. The interference of these fold patterns in the Lamil Group rocks formed doubly plunging domal structures characteristic of the Telfer district. Domes vary from tight (eg. Tims Dome) to open and rounded (eg. Telfer and 17 Mile Hill Domes). The Paterson Province contains two suites of Neoproterozoic granitic intrusions that have a close spatial and possibly genetic relationship to mineralisation in the Telfer district. Intrusions are subdivided into two granite trends, the Mount Crofton to Minyari Granite trend, and the Wilki to O'Callaghans Granite trend, based upon petrographic and major element geochemical studies. These intrusions were emplaced episodically over a prolonged period ranging from approximately 600 to 650 million years. Gold and copper mineralisation at Telfer consist of stratiform reefs and stockworks hosted by sedimentary rocks of the Malu Formation of the Lamil Group. The Lamil Group comprises relatively weakly deformed and metamorphosed Proterozoic sediment units northeast of the Camel-Tabletop Fault. The important attributes of the Lamil Group are the presence of abundant carbonate units, and weakly developed penetrative deformation. Almost all the Proterozoic basement rocks within our Armada tenement have been unconformably overlain by the Early Permian Paterson Formation and in part, again, unconformably by the Jurassic to Cretaceous Callawa and Ankatell Formations. In December 2018 Artemis commenced a magnetic survey on its Armada Prospect in the Paterson Range region in the Pilbara, within a 22km radius of Haverion. The airborne survey covered the western 47% of the Armada exploration licence application (E45/5276) and consisted of 3,311 line- kilometres with a line spacing of 100m at a nominal flight height of 35m. This survey provided high quality data for our geophysical consultants, Southern Geoscience to process. The survey initially identified eight targets within a 22 km radius of the Havieron Prospect with these targets arbitrarily ranked on magnetic signature/structural character (Figure 10). Artemis Resources Limited Annual Financial Report – June 2019 18 | P a g e Review of Operations Figure 10: Artemis Aeromagnetic data, reduced to pole - 1st vertical derivative merged with Greatland Gold Plc magnetic data Artemis Resources Limited Annual Financial Report – June 2019 19 | P a g e Review of Operations Exploration An airborne magnetic survey covering the western 47% of the Armada tenement was flown in late November 2018. This survey consisted of 3,311 line-km with a line spacing of 100 m at a nominal flight height of 35 m and provided high quality data for geophysical consultants, Southern Geoscience, to process. The survey has identified eight targets within a 22 km radius of Havieron with these targets arbitrarily ranked on magnetic signature/structural character: • KAZON (Priority 1) - This magnetic unit is ~1km long, striking ~ENE-WSW, terminating against the extensive ~NNW-SSE striking magnetic unit on eastern end (directly along strike from Havieron), structural complexity striking ~ENE-WSW and ~NW-SE. • FERENGI (Priority 1) - A magnetic unit is ~2km long, striking ~NE-SW - curvilinear in nature, possibly along strike of KAZON structural complexity striking ~NW-SE and ~N-S (terminating eastern end of this magnetic unit). • BOLIAN (Priority 1) - This magnetic unit is ~1-1.5km long. Distortion/flexure in the extensive overall ~NS striking magnetic unit (directly along strike from Havieron) from ~N-S to ~NNW- SSE, some apparent thickening or circular zonation in the magnetic unit, structural complexity striking ~NW-SE. • KZINTI (Priority 1) - Based on the recent detailed magnetic survey data this magnetic unit is ~1km long. Distortion/strike change in the extensive overall ~N-S striking magnetic unit (directly along strike from Havieron) from ~NE-SW to ~N-S, structural complexity striking ~NW-SE. • ARCADIAN (Priority 2) - Low amplitude, broader magnetic unit perhaps at deeper bedrock level, >2km length, striking ~NNE-SSW, structural complexity striking ~NE-SW and ~N-S. • EDOSIAN (Priority 2) - Adjacent to the tenement boundary, based on our recent detailed magnetic survey data this magnetic unit is >1km long although may extend W/NW off tenement, terminating against the extensive ~NNW-SSE striking magnetic unit on eastern side (directly along strike from Havieron), structural complexity striking ~NW-SE. • OCAMPA (Priority 2) - Low amplitude, linear magnetic unit perhaps at deeper bedrock level, >2km length, striking ~ENE-WSW, structural complexity striking clearly ~NE-SW and ~N-S. • VIDIIAN (Priority 2) - Based on the recent detailed magnetic survey data and surrounding regional magnetic data, this magnetic unit is ~3-4kms long, striking ~NW-SE, structural complexity on the western and eastern ends. Likely a SE extension of the Greatland Gold – Scally Wag linear/extended magnetic trend. Artemis Resources Limited Annual Financial Report – June 2019 20 | P a g e Review of Operations Gravity Surveys The results of the gravity survey identified three new gravity targets: Bandi, Orion and Romulan, ~4km northeast of Haverion, shown in Figure 11. This is in additional to the previously identified eight magnetic targets. The recent gravity and airborne magnetic surveying have identified eleven (11) new targets within a 22 km radius of the Havieron Project. Artemis has now ranked these targets on magnetic signature, density contrasts and structural character/complexity. Initial detailed aeromagnetic survey results and high-level interpretation defined 8 primary targets (as announced on the 17th January 2019), with four of these were rated a Priority 1 ranking (Kazon, Ferengi, Bolian, Kzinti). • Priority 1 Targets – Kazon, Ferengi, Bolian and KzintiI given more coherent/stronger magnetic anomalism and or structural complexity/controls, proximity to the known Havieron mineralised system. • Priority 2 Targets – Arcadian, Edosian, Ocampo and Vidiian - given subtler magnetic signature / lower confidence or lack of full survey coverage The semi-regional gravity survey and 3D inversion outcomes have defined limited density contrast targets in several locations, however very few were directly coincident with the eight (8) aeromagnetic primary targets. The 3D gravity inversion-isosurface results (Figure 11) with the earlier defined aeromagnetic targets has re-ranked targets. Bandi, Orion and Romulan have been now added along a ~NW-SE trending gravity ridge situated ~4km NE of Havieron. The previous eight targets have been refined and three new targets have been claimed. Looking at these surveys together: • Ocampa, Orion and Romulan are coincident/near coincident gravity and magnetic bedrock targets, all of these also exhibit alignment along structural breaks/trends in either a ~NW-SE or ~NE-SW sense and are believed worthy of follow-up/potential deep drill testing. • Kazon, Ferengi, Bolian and Bandi represent higher priority/ranked aeromagnetic targets believed worthy of follow-up/potential deep drill testing given their clearer magnetic signatures, alignment along structural breaks/trends and proximity to the Havieron mineralisation. Artemis Resources Limited Annual Financial Report – June 2019 21 | P a g e Review of Operations Figure 11: Armada Project, Paterson Ranges - Aeromagnetic/Gravity Targets with 3D Inversion isosurfaces for Gravity (0.02 to 0.06 - light blue to purple/magenta) and defined/updated target positions for potential deep drill testing (yellow circles) - 7 total. Artemis Resources Limited Annual Financial Report – June 2019 22 | P a g e Review of Operations Figure 12: Armada Project, Paterson Ranges - 3D Inversion Results for Aeromagnetic/Gravity – Primary Target/Potential Deep Drill Holes Highlighted. Warm colours gravity inversion shells and green/cooler colours magnetic inversion shells (with exception of Havieron which is an intense magnetic high). Future Plans At Armada with the primary ranked geophysical targets generated and given a suitable partner, there is an exploration pathway that may include: • Orientation high powered EM/MT ground surveying/soundings - limited transects over primary target zones to characterise the conductivity properties of the thick cover sequence and also the thickness/depth to basement. • Drilling an initial deep drill hole on deemed primary target and completing downhole geophysical logging to define the conductivity/physical properties of the thick cover sequence and also the thickness/depth to basement. Artemis has also undertaken reprocessing of open file seismic data collected from the Moodoo seismic survey line NC87-13. This data was acquired in 1987, processed and initially interpreted to determine the hydrocarbon prospectivity of the Mesozoic sediments overlying the Proterozoic Patterson Province geology. Since then there have been significant advances and improvements made in processing techniques which appreciably enhance and improve resolution of stratigraphy and more importantly structures. The information obtained is not expected to have direct exploration application but will provide valuable additional information on structures and thickness of cover which can be integrated with the gravity data to improve modelling of targets. This line passes directly over the Armada tenement and approximately 2.5km southeast of Greatland Gold’s Havieron Prospect. Artemis will be continuing with their data compilation from historic exploration records sourced from the DMIRS WAMEX data repository and from other public documents from neighbouring projects. Artemis Resources Limited Annual Financial Report – June 2019 23 | P a g e Review of Operations 47 PATCH Au Bulk sampling and testing were continued throughout the year at 47K Patch. Based upon handheld GPS surveying of disturbed areas, a total of 14,500m2 has been examined and detected, virtually all of which is within the drainage system. Interpretation of satellite imagery (Figure 13) shows this drainage to be strongly controlled by minor faults/joints within the host stratigraphy. The sampling has indicated gold is sourcing from multiple zones within the profile with the only zone positively identified being on the basal contact of the sequence. It is believed that the gold has then been concentrated into the drainage by erosional processes. Structural holes Figure 13: 47K Patch Drainage, Structure and Sampling Map Artemis Resources Limited Annual Financial Report – June 2019 24 | P a g e Review of Operations A total of 8,188g of >5mm gold nuggets have been recovered from near surface. Generally, the nuggets recovered display a more rounded character than those derived from Purdy’s Reward, suggesting a higher energy, more aggressive deposition environment. This general coarseness of the nuggets recovered encourages the company to believe the source is within close proximity. Two short diamond structural drill holes were completed during the December quarter in accessible areas to determine the stratigraphy of the area, both holes were found to have collared directly in Pilbara Supergroup basement. Both holes intersected anomalous gold values derived from thin <5mm thick quartz carbonate pyrite veins within brecciated andesite. Subsequently a Sub-Audio-Magnetic (SAM) survey was completed over the 47 Patch area defining multiple large features within the basement which are interpreted to be significant structural corridors. It should be noted that the Company has completed all necessary heritage and biodiversity surveys, therefore once the mining area is defined, a Mining Proposal can be submitted to the Department of Mines, Industry Regulation and Safety (DMIRS) to support a mining lease application. NOVO JOINT VENTURE – WITH PALEOPLACER AND CONGLOMERATE GOLD There has been strong progress at Purdy’s Reward by our JV partners Novo Resources during 2018/19. Environmental surveys were extensive and included baseline surveys on flora/vegetation, vertebrate fauna, stygofauna, hydrogeology, soil assessments, mine waste characterisation, groundwater monitoring, studies of the geochemical characterisation of the lithological units and Aboriginal heritage surveys with the Ngarluma Aboriginal Corporation. These background studies will allow for further exploration, including drilling, trenching and bulk sampling – followed by applications for mining. Novo has generated a Mineralisation Report covering exploration results on the Purdy’s Reward (and their adjacent Comet Well) exploration lease. The Mineralisation Report forms the basis for conversion of an exploration license (E47/1745 at Purdy’s Reward) to a future mining lease. During the December quarter, Novo used detailed geological mapping to assess geological scrapes to determine effective bulk sampling sites. Six bulk samples, each ≈5 tonnes were taken and four sent to the SGS laboratories for assay. Some results are pending. In addition, seven diamond drillholes (Figure 14) for a total of 360.98m were drilled between August- October 2018. The core is being logged for use in a ‘mine sequence’ for Purdy’s Reward. Holes 18PDD001, 18PDD002 and 18PDD005 intersected approximately 12m of conglomerate and sands, while 18PDD003 intersected the conglomerate unit much deeper, believed to be due to a steep dipping fault. Unfortunately, 18PDD004, 18PDD006, and 18PDD007 did not intersect conglomerate. Novo are also re-logging historical diamond drillholes which will be incorporated into a MicroMine 3D Model that is being developed. Furthermore, Novo are using CoreScan© technology to provide geochemical and geophysical results. Artemis Resources Limited Annual Financial Report – June 2019 25| P a g e Review of Operations Figure 14: Bulk sampling and drill hole location at Purdy’s Reward BALMORAL The Blacktop diamond project is approximately 85 km SSW of Karratha and 60 km south of the Radio Hill plant. The diamond potential at Balmoral was previously assessed by a DeBeers/Tawana Resources NL JV during 2006/07. As well as being prospective for diamonds the tenements are also prospective for cobalt, base metals and gold. Deep Drilling Program Artemis completed its deep hole drilling program in the West Pilbara in August 2018. Hole ASD-1 was terminated at a depth of 1,348.5 metres while ASD-2 was terminated at a depth of 790.5 metres. The CSIRO completed Minalyser and Hylogger scans of both Balmoral deep drillholes. ASD-01 was co-funded via $120,000 of funding from the State Government’s Exploration Incentive Scheme (EIS). Artemis thanks GSWA and DMIRS for their support. All drill core has been donated to the GSWA Core Library. The CSIRO has completed with characterisation sampling of the lithological units within the stratigraphy. Although the drilling disappointingly did not penetrate the full thickness of the Fortescue Group to test the prospective Mt Roe Basalt basal contact, drilling did show the level of complexity of the geology and topography of the base of the Hamersley Basin sediments and top of the Pilbara Supergroup basement. Artemis Resources Limited Annual Financial Report – June 2019 26 | P a g e Review of Operations With coarse nuggety gold being recovered from this Mt Roe Basalt basal contact zone at Purdy’s Reward/Comet Well in the West Pilbara, the Bellary Dome near Paraburdoo and Loudens Patch south of Whim Creek indicates an area approximately 450km wide by >250km east-west where this style of gold occurrence may have been recognised rather recently, despite >100 years of prospecting and exploration. The significance of this and distribution of basin margins and basal topography show that much more research of this geological position is imperative. Geology and Mineralisation The project area is dominated by the Fortescue Group, a thick sequence of Archaean mafic and felsic volcanic piles and associated sedimentary rocks that unconformably overly the Archaean Pilbara Craton granite-greenstones. The geology within the tenements is dominated by the Tumbiana overlain by the Maddina Formations. The Tumbiana Formation conformably overlies the Kylena Formation and contains mainly coastal and near-shore facies sedimentary rocks ranging from stromatolitic and clastic carbonates, argillite, sandstone, primary and reworked tuff and minor conglomerate; with a minor mafic lava component. The Maddina Formation comprises mainly basalt flows, pillow lavas, fine- to coarse-grained and mafic volcanic rocks. Non-volcanic sedimentary rocks include stromatolitic carbonate, quartz sandstone, conglomerate and argillite. Diamond bearing Kimberlites have intruded the basement series. To date no Kimberlite outcrops have been identified within the Artemis tenements. All the diamonds found at Blacktop have been in alluvial sediments along creeks. Deposit Exploration Regional sampling at Blacktop in 2006 by De Beers consisted of stream geochemistry and BLEG (Bulk Leach Extractable Gold) with Fox Resources conducting validation BLEG and stream sampling along with numerous rock chip samples. All samples were analysed for numerous elements including cobalt, copper, silver nickel and gold. Many of these rock chip samples were in and around the numerous VTEM anomalies identified by a regional scale survey completed in September 2007. Most of the anomalies were ascribed to pyritic sediments. Artemis believes the inferred presence of Kimberlites indicate deep crustal structures that could be conduits for other styles of mineralisation. A 6,000 t bulk sample from Blacktop consisting of a composite of 10 separate samples of kimberlite of variable country rock dilution was tested by De Beers for diamond grade and quality. The samples produced 2,320 stones totalling 163.89 carats with an average stone size of 0.0706 carats. The reported grades varied between 0.08-8.63 carats per hundred tons (cpht) and possibly reflected to some extent the country rock dilution and also the variable grade along strike. The parcel of stones was valued at US$52.56/ct as a reflection of the small stone size rather than the quality of the diamonds, which were generally clear and exhibited variable resorption from very low to dominant. Commenting on the diamonds, Tawana reported that the valuers considered that the parcel was unusual as it contained no boart (low quality industrial) diamonds. Artemis Resources Limited Annual Financial Report – June 2019 27 | P a g e Review of Operations MUNNI MUNNI Munni Munni is approximately 35 km by road SSW of Karratha and less than 10 km by road south of the Radio Hill plant. (Artemis Announcement 20 Aug 2018). Munni Munni is prospective for platinum, palladium, gold and rhodium across four mining leases. The Platinum Group Elements (“PGE”) potential was first recognised by Dr. John Ferguson in the 1980's, and accordingly the mineralised horizon is referred to as the "Ferguson Reef". Exploration activities since the initial discovery have identified a significant PGE and gold resource. The entire known resource is contained within four granted mining leases and all possible extensions of the Ferguson Reef are within Artemis exploration tenements. Geology and Mineralisation The Munni Munni deposit is located within the Archaean Pilbara Craton, hosted by the Munni Munni Igneous Complex (MMIC). The MMIC is a layered mafic-ultramafic package of predominantly gabbroic rock. The PGE mineralisation is located within the Ferguson Reef at the contact between the lower ultramafic rocks and the upper gabbroic rocks. The main section of the Ferguson Reef averages 2.6 m thick with a strike length of approximately 2 km extending from surface dipping approximately 45° to more than 1 km deep. The mineralisation has two ore domains comprising 'high sulphide' (Cu >1,000 ppm) and 'Iow sulphide' (Cu <1,000 ppm). The dominant sulphides are chalcopyrite and pyrrhotite with trace pentlandite, typically comprising 1% to 2% of the rock. Chromite does not occur as an accessory mineral in the reef making any concentrates produced more valuable than traditional higher chromium concentrates. There is potential for extensions of the Ferguson Reef along the eastern side of the Munni Munni intrusion where it is untested by drilling. The southern portion of the MMIC is unconformably overlain by flat-lying sediments and volcanics of the Mount Bruce Supergroup and more particularly the Fortescue Group. Figure 15: Cross section through Munni Munni Intrusion showing Ferguson Reef Artemis Resources Limited Annual Financial Report – June 2019 28 | P a g e Review of Operations MT CLEMENT The Mt Clement tenements are 30 km southwest of the Northern Star Resources Ltd (ASX: NST) Paulsens gold mine and plant. Northern Star has entered into a JV on this project with Artemis maintaining an 80% interest as project operators, (Artemis Announcement 18 May 2017). Geology and mineralisation The main prospect at Mount Clement lies within a lens of oxidized and silicified siliciclastic and chemical rocks which are generally conformably confined within the Ashburton Formation, see Figure 16 and Figure 17. The lower part of the lens (LMZ) contains anomalous levels of silver, arsenic and gold. The upper part of the lens (UBZ) is extensively silicified and ferruginised and characterised by anomalous manganese. The main prospect is interpreted by Davy et al (1991) as a sediment-hosted, deep-marine, hot-spring deposit. The Eastern prospect at Mount Clement is a sulphide bearing fracture filling formed as a result of dextral wrenching after the deposition of the Ashburton Formation. It is characterised by anomalous levels of silver, arsenic and gold which may have been derived, in part by leaching of wall rocks. Metal-bearing fluids were probably released during burial metamorphism of the supracrustal sequence, and subsequently transported along major fractures. These fractures were either formed, or reactivated, during continental crustal collision between the Pilbara and Yilgarn Cratons. Mineral Resources Artemis commissioned Apex Geoscience (Apex) in July 2011 to complete a mineral resource estimate for Mt Clement. This resource estimate, was reported in accordance with the 2004 JORC Code and utilised all existing data including a total of 90 RC and diamond drill holes. Apex estimated an Inferred Resource at a lower cut-off grade of 0.5 g/t Au of approximately 1.1 Mt @ 1.77 g/t Au and 17.0 g/t Ag for a contained 64,400 oz Au and 618,500 oz Ag. The mineralisation remains open at depth and along strike, indicating strong potential to substantially increase these resources with further drilling. Artemis plan further work at Mt Clement including upgrading of the resource estimate so that it can be reported in accordance with the 2012 JORC Code. Nagrom’s LeachWELL bottle roll tests in February 2017 with gold recoveries at over 97% confirms that the Mt Clement project mineralisation is amenable to conventional cyanide leaching. A scoping study, managed and co-funded by Blackrock Metals Pty Ltd, will determine the feasibility of open pit mining and heap leaching of the gold Artemis Resources Limited Annual Financial Report – June 2019 29 | P a g e Review of Operations Figure 16: Mt Clement local geology Figure 17: Significant drilling results from Artemis drilling 2010/11 at Mt Clement Artemis Resources Limited Annual Financial Report – June 2019 30 | P a g e Review of Operations NICKOL RIVER The historical gold production at Nickol River comes from four main areas: Tozer’s, Boiler, Nickol South and Lydia. These prospects are located 14 km east of Karratha and just north of the Northwest Coastal Highway, Figure 18. Artemis has entered into a partnership with D & K Corps Investments Pty Ltd for access to some of their mining leases. Mining The Company has identified significant areas at Nickol River that are highly weathered and free-dig from surface to depths of between 2 - 6 m that would potentially be amenable to bulk scale mining and processing using a modern gravity plant for gold recoveries. Also, as previously reported on 25 January 2017, previous trial mining operations at Nickol River reported by Sir Samuel Mines NL listing Prospectus, noted that in 1984 a 10 tonne per hour plant tested 600 t of surface material yielding a recovered grade of 0.33 g/t Au and in 1985 a bigger 40 t/hr pilot plant processed 42,500 t of surface material yielding a recovered grade of 0.15 g/t Au. There are currently no Mineral Resources reported in accordance with the JORC Code at Nickol River as the previous work outlined in the 1980’s in the Sir Samuel Mines NL Prospectus was published prior to the existence of the JORC Code. Figure 18: Nickol River tenements Artemis Resources Limited Annual Financial Report – June 2019 31 | P a g e Review of Operations Exploration Prior to Artemis historic work on the Nickol River tenements included 58 RC Drill holes, mapping and soil sampling. In 2012 Artemis carried out auger soil sampling in the western portion of P47/1518 (now M47/1527) as well as a limited rock chip sampling program to confirm the earlier results. The auger sampling identified broad gold anomalies, with a maximum assay result of 6.9 g/ t Au. The rock chip sampling also returned anomalous Au with results of up to 14.8 g/t Au from the Samantha Lode. The work completed by Artemis confirmed the tenor of gold mineralisation as identified in the historic exploration activities. The gold geochemistry from the 2018 regional sampling program discussed earlier in this section is strong over the Nickol River alluvial area, Figure 18. This is in part due to the extensive disturbance by mining over the area, however the geochemistry generally suggests the known shear zones hosting primary mineralisation as at the Samantha, Tozers and Boiler zones may be replicated elsewhere. Artemis has taken bulk samples from a series of trenches to better define gold mineralisation and guide further drill hole planning. MOUNT OSCAR Significant gold bearing sedimentary sequences have recently been identified by Artemis geologists on the Mt Oscar tenement that are considered to be part of the Archean Fortescue Group and hence can be correlated with the Purdy’s Reward sequence of mafic sediments and polymictic conglomerates located 21 km to the south-west. This is contrary to the governmental mapping by DMIRS on the Roebourne 1:100,000 map sheet which interprets the sequence to be at the base of the older Whim Creek Group and accordingly part of the regional Pilbara Supergroup, see Figure 19 (Artemis Announcement 14 Nov 2017). Geology and Mineralisation The Mt Oscar sedimentary sequences extend over an east-west strike length of 14 km (Figure 19) with true widths up to 75m thick in outcrops at the Churnside Prospect. Artemis geologists have collected gold bearing samples at both the eastern and western ends of these conglomerates. The conglomerates at Mt OscarWits are more quartz rich and appear ‘cleaner’ than the Purdy’s Reward more mafic rich conglomerates with the matrix at Mt OscarWits primarily quartz sand and the conglomerate clasts composed of quartz and chert pebbles and boulders. The sedimentary sequences at Mt OscarWits appear to have been folded and faulted creating duplication with four units mapped in several places over the significant strike length. Significant gold bearing sedimentary sequences have recently been identified by Artemis geologists that are considered to be part of the Archean Fortescue Group and hence can be correlated with the Purdy’s Reward sequence of mafic sediments and polymictic conglomerates located 21 km to the south-west. The Mt OscarWits sedimentary sequences extend over an east-west strike length of 14 km with true widths up to 75m thick in outcrops at the Churnside Prospect. The sedimentary sequences at Mt Oscar appear to have been folded and faulted creating duplication with four units mapped in several places over the significant strike length. Artemis Resources Limited Annual Financial Report – June 2019 32 | P a g e Review of Operations Recent geological mapping, rock chip and stream sediment sampling at Mt Oscar identified extensive sequences of principally quartz and chert clast conglomerates with anomalous gold mineralisation. The discovery of these watermelon seed nuggets using metal detectors adds to the further prospectivity of Mt Oscar conglomerate gold potential. Exploration A total of 8.3 gm of “watermelon seed” nuggets were found by Artemis by using a metal detector at the “Fairmont Prospect” along the Mt Oscar conglomerate trend. Recent geological mapping, rock chip and stream sediment sampling at Mt Oscar identified extensive sequences of principally quartz and chert clast conglomerates with anomalous gold mineralisation confirmed over a 14 km strike length. The discovery of these watermelon seed nuggets adds to the further prospectivity of Mt Oscar conglomerate gold potential. Figure 19: Artemis reconnaissance sampling and mapped conglomerates at Mt OscarWits. The Fairmont prospect has returned the highest gold assay in rock chips of 21.5 g/t Au from a ferruginous pebble conglomerate. A conglomerate unit at White Quartz Hill, 12 km east of Fairmont, returned a peak gold assay in rock chips of 6.38 g/t Au. Another rock chip sample at the Churnside Prospect, 4 km east of Fairmont, returned a peak assay from a rock chip of 10.93 g/t Au. The Churnside sample was recovered from a coarse-grained clast supported cobble conglomerate and likely represents a primary placer style form of mineralisation in a high-energy environment with a high coarse gold component. Artemis Resources Limited Annual Financial Report – June 2019 33 | P a g e Review of Operations OTHER GOLD PROJECTS Regional Exploration Besides exploring for conglomerate hosted gold at Purdy’s Reward under the Novo JV, Artemis is exploring for other styles of gold in its other West Pilbara tenements. The West Pilbara has a long history of small-scale gold production predominantly from quartz vein related systems. Artemis noted the presence of shear zone hosted gold at Nickol River feeding the alluvial/eluvial systems in the area and the axial plane quartz-gold-arsenopyrite mineralisation at Weerianna along with the multiple other known gold sources within the greenstones. After consideration of this information, geochemical exploration was initiated in the Carlow Castle area where Artemis has confirmed with drilling a Au-Cu-Co JORC Code (2012) Resource. Based on the Carlow Castle success, sampling was subsequently expanded to cover virtually all Artemis’ tenure, Figure 20 (Artemis Announcement 5 Nov 2018). Artemis took soil samples 100 m apart along 400 m spaced lines aligned north-south. A total of 12,247 samples have been collected and analysed for a suite of elements. All data presented in Figure 21 below has been domained based on the GSWA 1:100,000 geological mapping, then ratioed using the 25th percentiles of the data. Data was contoured using Surfer software using Inverse distance squared (ID2) and the search ellipse long axis orientated to 80° east of north, contouring/plotting colours are then based on the 99th, 97.5th, 95th, 90th and 75th percentiles of the ratioed values. The specific purpose of this processing was to highlight the anomalous samples and to minimise the lithological effects/contents of the differing underlying geological sequences. All the main areas identified in the geochemistry show multi-element responses as summarized below: • • • • • • Carlow Castle - Au, Ag, Co, Cu, Ni, Hg, Mo, Se, Te, Pd, Zn Monarch - Au, Ag, As, Mo, Ni, Sb, Se, Te, W Conqueror - Au, Ag, Hg, Mo, Sb, W Pipeline - Au, Ag, As, Co, Mo, Se, Tl Silica Hills - Au, Ag, Bi, Mo, Sb Nickol River - Au, Ag, Hg, Mo, Se, Tl Artemis Resources Limited Annual Financial Report – June 2019 34 | P a g e Review of Operations Figure 20: Soil sampling location and areas with Au related targets identified Figure 21: Targets identified or highlighted by regional gold geochemistry The main non-conglomerate gold exploration targets in Artemis’ West Pilbara tenements are at Monarch and Conqueror, identified as significant soil geochemical gold anomalies during a regional geochemical survey carried out by Artemis in 2018. Figure 20 illustrates the location of the Monarch and Conqueror prospects. Artemis Resources Limited Annual Financial Report – June 2019 35 | P a g e Review of Operations Figure 22: Location of Monarch and Conqueror prospects, relative to the Radio Hill plant MONARCH Monarch is an entirely new area of gold in soil anomalism (to 68 ppb Au) and mineralisation. The soil geochemistry shows a continuous anomaly >95th percentile over 4.5 km with an additional 1.7 km to the west after a discontinuity, Figure 22. Geological mapping shows the area to be within a wide zone of sheared talcose and cherty schists with multiple strike parallel quartz veins, Figure 22. Rock chip sampling returned values up to 11.4 g/t Au. A discontinuous traverse of 20 rock chip samples over a width of 250m showed 9 samples with responses >1g/t Au to a maximum of 9.89 g/t Au. Most samples were from quartz veins, but three samples were within gossanous chert, cherty gossan or chert with gossanous lenses which contained 1.41 g/t, 1.32 g/t and 2.41 g/t Au respectively. Of note is that many samples show a silver to gold ratio >10:1 possibly indicative of sulphide mineralisation. Artemis Resources Limited Annual Financial Report – June 2019 36 | P a g e Review of Operations Figure 23: Monarch Central Target with gold in soil and rock chip values over 4.5km strike The Monarch target is just less than 7km long with rock chip sample grades up to 11 g/t Au. The soil geochemistry suggests the system could be significantly longer. Unfortunately, some 2.5 km of the strike length of the defined shear zone is within tenements pending approval by the DMIRS and are not yet accessible for drilling. Initial aircore drilling will be used to precisely locate mineralization at depth to be followed by RC drilling to delimit any resources. Statutory Program of Works (POW) approval for the proposed aircore drilling has been granted but a heritage survey is required before proceeding. Figure 24 illustrates the Monarch exploration targets. Figure 24: Monarch exploration targets Artemis Resources Limited Annual Financial Report – June 2019 37 | P a g e Review of Operations CONQUEROR Conqueror is located to the north of the Ruth Well Ni-Cu mineralisation. A discontinuous gold in soil anomaly to a maximum 146ppb Au is traceable for 14 km, apparently relating to a prominent chert ridge and outcrop. To date geological mapping and sampling has had limited success with only one significant sample of silicified laminated sediment containing 5.04g/t Au. Historic Rotary Air blast (RAB) drilling 5.5km to the east of the main anomalous area along the siliceous laminated chert horizon returned one sample of 0.5 g/t Au over 1 m. Figure 25: Conqueror Central target with gold in soil values and significant rock chips Soil sampling and rock chip sampling have defined a shear zone system containing anomalous gold up to 5 g/t Au at Conqueror. Artemis geologists interpret that this system could be over 40 km long. An extensive aircore drilling program is planned in the central area of Ruth Well where geochemical anomalism appears strongest with coincident anomalous Ag and Cu soil responses. This drilling will be followed by RC drilling to test any mineralisation located by the aircore drilling. POW approval for the proposed aircore drilling has been granted but a heritage survey is required before proceeding. Figure 26 illustrates the Conqueror exploration targets. Figure 26: Conqueror exploration targets PIPELINE The Pipeline prospect is located to the south east of Radio Hill. Soil geochemistry and metal detected nuggets with a Minelab GPZ 7000 identified two parallel trends approximately 1km apart coincident with aeromagnetic trends. The aeromagnetic trends are interpreted to represent shear zones along the southern contact of the small Yannery Granite intrusion. Artemis Resources Limited Annual Financial Report – June 2019 38 | P a g e Review of Operations Outcrop in the area is subdued with metal detected nuggets being small angular fragments near quartz vein outcrops or scree, and are interpreted to represent the shear zones. RADIO HILL OPERATIONS, CONSTRUCTION AND REFURBISHMENT Figure 27: Radio Hill Operations The Radio Hill processing plant is 35 km from Karratha in the Pilbara region of Western Australia. This base metal flotation concentrator and associated infrastructure was built in 1988. Previous operators have invested more than $60m between 1988 and 2002 (Fox Resources 2004 Annual Report). In September 2002, Fox Resources (Fox) acquired the process plant and underground mine and associated mining leases. The 425,000t flotation concentrator produced copper and nickel concentrates from the Whundo Copper Mine and the Radio Hill underground mine for export via Dampier Port. In mid-2008 Fox placed Radio Hill on care and maintenance due to weakening copper price which saw US$ copper prices fall to circa US$3,000 by the end of 2008. In March 2017, Artemis acquired the Radio Hill plant, associated infrastructure and tenements from Fox for approximately $4M in cash and Artemis shares (announced 2 March 2017). In November 2017, Artemis appointed Process 26 Engineers and Constructors (“Process 26”) to refurbish and upgrade the existing Radio Hill crushing and grinding circuits (announced 27 Nov 2017). Construction activities commenced on 20 August 2018 to upgrade the facility with the installation of additional crushing equipment, tailings dewatering facilities and a gold room. Gekko Systems (“Gekko”) were mobilised to install and commission the gravity gold extraction circuit. Artemis Resources Limited Annual Financial Report – June 2019 39 | P a g e Review of Operations Process 26 and Gekko completed the following: ▪ ▪ ▪ ▪ ▪ ▪ ▪ Crushing circuit refurbishment program complete - including ROM wall replacement, installation of refurbished primary and secondary crushers, conveyor belts, and vibrating screen; Milling and classification area – steelwork, cyclone cluster and DSM screen installation near completion; Gekko gold circuit complete – including installation of Inline Pressure Jig, Falcon, Inline Spinner and associated gold room equipment; Gold room building – structure, cladding and fit out complete with Gemini Table and Barring Furnace placed into position; All slurry pumps have been overhauled; Thickener and flocculant plant - foundations and ground slabs complete with thickener lifted into place; and High voltage – HV cables installed and terminated. The new flowsheet for Radio Hill is below (28). Figure 28: Updated Stage 1 Flowsheet for Radio Hill including Gold Circuit The final approvals needed to operate Radio Hill with TSF3 were received in June 2019. The mechanical refurbishment and installation of key processing equipment at Radio Hill (29) remains at ≈ 80% complete with outstanding electrical and instrumentation, minor structural repairs and plant piping to be completed once Artemis has defined: • 2-3 years of plant feed from its extensive gold and base metal asset base; or • equivalent tonnages of gold ore from third parties or joint venture partners. Artemis Resources Limited Annual Financial Report – June 2019 40 | P a g e Review of Operations Either of these options could support the final investment decision to complete plant refurbishment, but we are pleased to now have all regulatory approvals in place from the DWER and DMIRS. CORPORATE Figure 29: Radio Hill plant ▪ Munni Munni JV During the period, Artemis completed its 70% earn-in on the Munni Munni Project with Platina Resources Ltd (Platina). The Munni Munni Project, Australia’s largest PGE deposit, is contiguous to Artemis tenements on all sides and is located approximately 20km from the company’s 100% owned Radio Hill Operations. ▪ Toll Treating / Campaign Processing at Radio Hill The Radio Hill processing plant now has gravity gold processing capability and as such, bulk sampling or campaign processing could be considered from both Artemis-held and third-party tenure. The alliance with Pacton Gold Inc. (TSX.V:PAC, refer ASX announcement 18 October 2018) provides Artemis with a strategic relationship with another regional explorer who could provide ore to be processed at Radio Hill from their portfolio of conglomerate and shear hosted gold targets. ▪ Artemis begins trading on U.S. OTCQB Venture Exchange In parallel to the Frankfurt listing, Artemis commenced trading on the US OTCQB Venture Market under the ARTTF ticker. This exchange offers early stage and developing international companies the benefits of being publicly traded in the USA with lower cost and complexity than other North American exchanges. Artemis Resources Limited Annual Financial Report – June 2019 41 | P a g e Review of Operations ▪ Board and management changes On 5 February 2019, His Highness Sheikh Maktoum Hasher al Maktoum was appointed Non-Executive Chairman. On the same day Mr David Lenigas and Mr Alex Duncan-Kemp resigned as directors and Mr Daniel Smith was appointed Non-Executive Director. CEO Wayne Bramwell resigned in mid-2019 and Executive Director Ed Mead has taken over as interim-CEO. ▪ Share Purchase Plan On 31 July 2019, a total of 87,338,535 shares were issued under a Share Purchase Plan at a price of $0.031 per share, raising $2,707,500 before costs. ▪ Mine Development Artemis’ long-term strategy is to advance their mineral resources to support the transformation of their 100% owned Radio Hill plant into a long-term producer of gold and base metal concentrates. Artemis’ first step in achieving this goal is to advance the Carlow Castle project through final resource definition into a pre-feasibility study with mine planning, then develop the project into a fully producing mine as soon as possible. At Carlow Castle: • Approximately 5,000 m of drilling is required to increase and re-classify the resources (≈36 holes ranging in depth from 100m-280m) o Carlow East – drilling three sections of Carlow East to confirm interpretation. Currently drilling is interpreted as sub-parallel to dip in in the wide, high grade zones in Carlow East. Phase 1 will yield three well drilled sections and provide each with 4 to 6 holes spaced at 20-25m metre intervals downdip – improving confidence in the interpreted grade and structure in these important zones. o Carlow West – drilling three infill sections on higher grade zones in Carlow West. This will provide confidence in the continuity of grade and structure in this important zone. o East of Quod Est – drilling to test high priority structural positions inferred from new data to the east of Quod Est. These holes aim to improve structural understanding and provide information to improve targeting models for the Stage 2 DDH programme. • Detailed metallurgical program to optimise preliminary flowsheet and process design; • Target completion of a pre-feasibility study in Q1 2020. Secondary Focus; • Work with partners and other regional explorers to aggregate potential toll-treating gold ore for Radio Hill; • Advance Artemis exploration on high value vein and shear hosted gold targets within trucking distance to Radio Hill such as Monarch and Conqueror; and • Maintain the Radio Hill plant until at least three years of plant feed is defined and available to support plant start up. Artemis will be reviewing all non-core assets for divestment or JV. Artemis plan to seek a well- funded JV partner to advance the Armada Prospect in the Paterson Ranges. Artemis Resources Limited Annual Financial Report – June 2019 42 | P a g e Annual Mineral Resources Statement 30 June 2019 In accordance with Listing Rule 5.23.2, Artemis confirms that it is not aware of any new information or data that materially affects the information included in the Annual Mineral Resources Statement above, and that in the case of mineral resources that all material assumptions and technical parameters underpinning the estimates in the Annual Mineral Resources Statement continue to apply and have not materially changed. Artemis Resources Limited Annual Financial Report – June 2019 43 | P a g e Annual Mineral Resources Statement 30 June 2019 Material Changes and Resource Statement Comparison The Company during this year has continued to review and report its mineral resources at least annually and provide an Annual Mineral Resources Statement. The date of reporting is 30 June each year, to coincide with the Company’s end of financial year balance date. If there are any material changes to its mineral resources over the course of the year, the Company is required to promptly report these changes. In completing the annual review for the year ended 30 June 2019, the historical resource factors for Projects were reviewed and found to be relevant and current. Governance Arrangements and Internal Controls Artemis has ensured that the mineral resources quoted are subject to good governance arrangements and internal controls. The mineral resources reported have been generated by independent external consultants who are experienced in best practices in modelling and estimation methods. The consultants have also undertaken reviews of the quality and suitability of the underlying information used to generate the resource estimation. In addition, Artemis’ management carries out regular reviews of internal processes and external contractors that have been engaged by the Company. The Weerianna, Carlow Castle, Radio Hill, Ruth Well and Whundo mineral resources were compiled in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code) 2012 Edition. The Mt Clement, Ayshia-Whundo and Mt Oscar mineral resources were compiled in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code) 2004 Edition. Competent Person Statements The information in this statement that relates to Exploration Results and Exploration Targets is based on information compiled or reviewed by Allan Younger, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Younger is a consultant to the Company. Mr Younger has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Younger consents to the inclusion in this statement of the matters based on his information in the form and context in which it appears. ASX Announcement, Artemis Resources – 19 December 2018 2018 estimate (Geostat Services). Cut-off grade 1.0% Au. Estimated according to JORC Code (2012). ASX Announcement, Artemis Resources – 26 July 2011 2011 estimate (Apex Geoscience). Cut-off grade 0.5% Au. Estimated according to JORC Code (2004). ASX Announcement, Artemis Resources – 6 March 2019 2019 estimate (AM&A). Cut-off grade 0.3% Cu. Estimated according to JORC Code (2012). ASX Announcement, Artemis Resources – 21 December 2018 2018 estimate (AM&A). Cut-off grade 0.0% Cu. Estimated according to JORC Code (2012). ASX Announcement, Artemis Resources – 7 May 2019 2019 estimate (AM&A). Cut-off grade 0.3% Ni. Estimated according to JORC Code (2012). ASX Announcement, Artemis Resources – 26 October 2018 2018 estimate (AM&A). Cut-off grade 0.2% Cu. Estimated according to JORC Code (2012). ASX Announcement, Fox Resources – 3 October 2007 2006 estimate (RSG Global) Cut-off grade 0.4% Zn. Estimated according to JORC Code (2004). Weerianna: • • Mt Clement: • • Carlow Castle: • • Radio Hill: • • Ruth Well: • • Whundo: • • Ayshia-Whundo: • • Mt Oscar: • • ASX Announcement, Fox Resources – 5 September 2013 2009 estimate (Golder Associates) Inferred Mineral Resource at Fe cut-off grade of 20%. Estimated according to JORC Code (2004). Artemis Resources Limited Annual Financial Report – June 2019 44 | P a g e Annual Mineral Resources Statement 30 June 2019 1 – 50% Artemis – Joint Venture with Novo Resources 2 – 70% Artemis – Karratha Gold Joint Venture 3 – 80% Artemis 4 – 70% Artemis 5 – 34% Artemis 6 – 70% Artemis – Joint Venture with Platina Resources 7 – 80% Artemis – Joint Venture with Northern Star Resources Artemis Resources Limited Annual Financial Report – June 2019 45 | P a g e Corporate Governance Statement Artemis, through its Board and executives, recognises the need to establish and maintain corporate governance policies and practices that reflect the requirements of the market regulators and participants, and the expectations of members and others who deal with Artemis. These policies and practices remain under constant review as the corporate governance environment and good practices evolve, ASX Corporate Governance Principles and Recommendations The third edition of ASX Corporate Governance Council Principles and Recommendations (the “Principles”) sets out recommended corporate governance practices for entities listed on the ASX. The Company has issued a Corporate Governance Statement which discloses the Company’s corporate governance practices and the extent to which the Company has followed the recommendations set out in the Principles. The Corporate Governance Statement was approved by the Board on 27 September 2019 and is available on the Company’s website: https://artemisresources.com.au/company/corporate-governance Artemis Resources Limited Annual Financial Report – June 2019 46 | P a g e Directors’ Report The Directors of Artemis Resources Limited submit herewith the financial report of Artemis Resources Limited (“Artemis” or “Company”) and its subsidiaries (referred to hereafter as the “Group”) for the year ended 30 June 2019. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: The names of the Directors who held office during or since the end of the year and until the date of this report are as follow: H.H. Sheikh Maktoum Hasher al Maktoum Edward Mead Daniel Smith David Lenigas Alex Duncan-Kemp Current Directors Non-Executive Chairman (appointed 5 February 2019) Previously Non-Executive Director Executive Director Non-Executive Director (appointed 5 February 2019) Executive Chairman (resigned 5 February 2019) Executive Director (resigned 5 February 2019) H.H. SHEIKH MAKTOUM HASHER AL MAKTOUM Non-Executive Chairman H.H. Sheikh Maktoum Hasher al Maktoum is a member of Dubai’s ruling family. He is the President of Al Fajer Group and Chairman of Dubai International Holdings, Chairman of Manannan Hydro Limited and is a Non-Executive board member of the Commercial Bank of Dubai. MR EDWARD MEAD Executive Director H.H. Sheikh Maktoum Hasher al Maktoum has a BSc. Business Administration and Finance from Suffolk University in Boston, USA and was awarded CEO of the Year by CEO Middle East in 2009 and was awarded Young Global Leader by the World Economic Forum in 2007. H.H. Sheikh Maktoum Hasher al Maktoum was appointed as a director on 26 October 2017 and Non-Executive Chairman on 5 February 2019. There were no other directorships held by H.H. Sheikh Maktoum Hasher al Maktoum in the last 3 years. Interest in Securities as at 27 September 2019: Fully paid ordinary shares: 10,150,000 Mr Edward Mead is a geologist with over 25 years’ experience in gold and base metals exploration, mine development and mine production. Mr Mead has also worked in the oil and gas industry on offshore drilling platforms. Other commodities that he has significant experience with are iron ore, magnetite, coal, manganese, lithium, potash and uranium. Mr Mead has a Bachelor of Science (Geology) from Canterbury University in New Zealand and is a member of the Australian Institute of Mining and Metallurgy. Mr Mead is a director of White Cliff Minerals Limited. Mr Mead was appointed as a Director on 31 December 2014. Interest in Securities as at 27 September 2019: Fully paid ordinary shares: 2,483,870 Performance rights: 2,000,000 Unlisted options: 9,000,000 Artemis Resources Limited Annual Financial Report – June 2019 47 | P a g e Directors’ Report MR DANIEL SMITH Non-Executive Director Company Secretary MR GUY ROBERTSON Mr Daniel Smith holds a Bachelor of Arts, is a member of the Australian Institute of Company Directors and the Governance Institute of Australia and has a strong background in finance having previously worked in the broking industry. Mr Daniel Smith has 10 years’ primary and secondary capital markets expertise and has advised on and been involved in a number of IPOs, RTOs and capital raisings on the ASX and NSX. Mr Smith is a non-executive chairman of White Cliff Minerals Limited and Alien Metals Limited, non-executive director and company secretary of Europa Limited, Hipo Resources Limited and Lachlan Star Limited, and is company secretary of Taruga Minerals Limited and Vonex Limited. Mr Smith was appointed as a non-executive director on 5 February 2019. Interest in Securities as at 27 September 2019: Unlisted options: 9,000,000 Mr Guy Robertson was appointed Company Secretary on 12 November 2009. Mr Robertson has over 30 years’ experience as a Director, CFO and Company Secretary of both public (ASX- listed) and private companies in both Australia and Hong Kong. He has had significant experience in due diligence, acquisitions, IPOs and corporate management. Mr Robertson has a Bachelor of Commerce (Hons) and is a Chartered Accountant. He is a director of Hastings Technology Metals Ltd and Metal Bank Limited and was previously a director of Bellevue Gold Limited. Interest in Securities as at 27 September 2019: Fully paid ordinary shares: 452,999 Performance rights: 2,000,000 Significant Changes in State of Affairs There were no significant changes in the state of affairs of the Company during the year. Principle Activities The principal activity of the Company during the financial year was mineral exploration and the re- commissioning of the Fox Radio Hill Plant. There have been no significant changes in the nature of the Company’s principal activities during the financial year. Artemis Resources Limited Annual Financial Report – June 2019 48 | P a g e Directors’ Report Significant Events after Balance Sheet Date On 31 July 2019, a total of 87,338,535 shares were issued under a Share Purchase Plan at a price of $0.031 per share, raising $2,707,500 before costs. The Company also issued 16,500,000 options to Directors (Exercise price: $0.08; Expiry date: 15 May 2022), 18,652,175 options to financiers (Exercise price: $0.08; Expiry date: 31 July 2022), 10,000,000 options to underwriters (Exercise price: $0.08; Expiry date: 31 July 2022) and 10,000,000 options to an advisor (Exercise price: $0.08; Expiry date: 31 July 2022). On 16 July 2019, the Company signed a binding agreement to acquire 100% of Rincon Resources Ltd, which holds rights to three highly prospective Au-Cu projects in Western Australia. The Company has paid a non-refundable exclusivity fee of $75,000. The Company will also issue fully paid ordinary shares with a total value of $2.7m which is conditional upon the completion of due diligence by the Company. Upon completion of this transaction, Mr Zeffron Reeves will be appointed as a Non-Executive director of the Company. Other than as outlined above there are currently no matters or circumstances that have arisen since the end of the financial year that have significantly affected or may significantly affect the operations the Group, the results of those operations, or the state of affairs of the Group in the future financial years. Likely Future Developments and Expected Results The primary objective of Artemis is to explore its current tenements in Australia with a view to determining an economically viable gold resource for processing at the Fox Radio Hill processing plant. Performance in relation to Environmental Regulation The Group will comply with its obligations in relation to environmental regulation on its projects when it undertakes exploration. The Directors are not aware of any breaches of any environmental regulations during the period covered by this Report. Operating Results and Financial Review The loss of the Group after providing for income tax amounted to $9,347,739 (2018: profit of $12,073,913). The loss position for the year includes non-cash items comprising a write off of exploration costs of $701,261, a loss on the sale of investments $533,183 and share based payments in the amount of $3,518,684. The Group’s operating income decreased to $12,127 (2018: $18,928,727) with $18,546,823 attributable to the sale of Novo shares in prior year, net of an amount of $1,559,575 applied as a recovery of exploration costs, and sales of gold and copper ore in prior year. The Group’s expenses increased to $9,359,866 (2018: $6,854,814). The increase was attributable to higher share-based payments expense, as a result of the convertible loan note restructuring, in the amount of $1,991,793 (2018: $77,212), and other non-cash items outlined above. Artemis Resources Limited Annual Financial Report – June 2019 49 | P a g e Directors’ Report Operating Results and Financial Review (continued) The carrying value of exploration and development costs increased to $37,027,656 (2018: $28,761,825) reflecting a significant increase in exploration on the Company’s gold and cobalt prospects. The development expenditure has increased to $23,353,620 (2019: $11,713,066) reflecting refurbishment and repair works on the Radio Hill Plant. Net assets declined to $53,420,072 (2018: $58,610,558) reflecting the loss incurred during the year. Dividends Paid or Recommended The Directors do not recommend the payment of a dividend and no dividend has been paid or declared to the date of this Report. Directors’ Meetings The number of Directors' meetings (including committees) held during the year and the number of meetings attended by each director were as follow: Name of Director H.H. Sheikh Maktoum D. Lenigas A. Duncan-Kemp E. Mead D. Smith Board Meetings Audit Committee Meetings Remuneration Committee Meetings Attended Held Attended Held Attended Held 8 1 1 9 8 9 1 1 9 8 - 1 - 2 1 - 1 - 2 1 - 1 - 1 - - 1 - 1 - Held represents the number of meetings held during the time the director held office or was a member of the relevant committee. Indemnifying Officers In accordance with the Constitution, except as may be prohibited by the Corporations Act 2001, every officer or agent of the Company shall be indemnified out of the property of the Company against any liability incurred by him or her in his or her capacity as officer or agent of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal. During the financial year the Company paid insurance premiums of $28,750 in respect of a contract insuring the directors and officers of the Group against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The insurance premiums relate to: Artemis Resources Limited Annual Financial Report – June 2019 50 | P a g e Directors’ Report Indemnifying Officers (continued) • • Costs and expenses incurred by the relevant officers in defending legal proceedings, whether civil or criminal and whatever their outcome; and Other liabilities that may arise from their position, with the exception of conduct involving wilful breach of duty or improper use of information to gain a personal advantage. Proceedings on behalf of the Company No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceeding to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2019 has been received and can be found on page 61 of the financial report. This Report is made in accordance with a resolution of the Directors. Edward Mead Director 27 September 2019 Artemis Resources Limited Annual Financial Report – June 2019 51 | P a g e Remuneration Report Remuneration Report – Audited The remuneration report, which has been audited, outlines the key management personnel remuneration arrangements for the Company, in accordance with the requirements of the Corporations Act 2001 and its regulations. The remuneration report is set out under the following main headings: A. Principles used to determine the nature and amount of remuneration B. Details of remunerations C. Service agreements D. Share-based compensation E. Additional disclosures relating to key management personnel A. Principles used to determine the nature and amount of remuneration The Board’s policy for determining the nature and amount of remuneration for Board members and officers is as follows: • • • • • The remuneration policy, which sets the terms and conditions (where appropriate) for the executive directors and other senior staff members, was developed by the Remuneration Committee and ultimately approved by the Board; In determining competitive remuneration rates, the Remuneration Committee may seek independent advice on local and international trends among comparative companies and industries generally. The Remuneration Committee examines terms and conditions for employee incentive schemes, benefit plans and share plans. Independent advice may be obtained to confirm that executive remuneration is in line with market practice and is reasonable in the context of Australian executive reward practices. No remuneration consultants were retained by the Group during the year; The Company is a mineral exploration company, and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives, such personnel are paid market rates associated with individuals in similar positions within the same industry. Options and performance incentives may be issued particularly as the Company moves from commercialisation to a producing entity and key performance indicators such as profit and production can be used as measurements for assessing executive performance; Given the early stage of the Company’s projects it is not meaningful to track executive compensation to financial results and shareholder wealth. It is also not possible to set meaningful specific objective performance criteria for directors as this stage; All remuneration paid to directors and officers is valued at the cost to the Company and expensed. Where appropriate, shares given to directors, executives and officers are valued as the difference between the market price of those shares and the amount paid by the director or executive. Options are valued using the Black-Scholes methodology; and Artemis Resources Limited Annual Financial Report – June 2019 52 | P a g e Remuneration Report A. Principles used to determine the nature and amount of remuneration (continued) • The policy is to remunerate non-executive directors and officers at market rates for comparable companies for time, commitment and responsibilities. Given the evolving nature of the Group’s business, the Board, in consultation with independent advisors, determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Shareholders at the General Meeting held on 22 July 2019 approved an increase in the maximum aggregate amount of fees that can be paid to non-executive directors from $150,000 to $300,000 per annum. Fees for non-executive directors and officers are not linked to the performance of the Company. However, from time to time and subject to obtaining all requisite shareholder approvals, the directors and officers will be issued with securities as part of their remuneration where it is considered appropriate to do so and as a means of aligning their interests with shareholders. B. Details of remuneration (i) Details of Directors and Key Management Personnel Current Directors H.H. Sheikh Maktoum Hasher Al Maktoum – Non-Executive Chairman (appointed 26 October 2017) Edward Mead – Executive Director (appointed 31 December 2014) Daniel Smith – Non-Executive Director (appointed 5 February 2019) Former Directors David Lenigas – Executive Chairman (appointed 3 November 2016, resigned 5 February 2019) Alex Duncan-Kemp – Executive Director (appointed 3 January 2017, resigned 5 February 2019) Company Secretary Guy Robertson Key Management Personnel Wayne Bramwell – Chief Executive Officer (appointed 19 June 2019, resigned 6 May 2019) Edward Mead – General Manager Exploration Alex Duncan-Kemp – General Manager Operations (appointed 3 January 2017, resigned 5 February 2019) Except as detailed in Notes (i) – (iii) to the Remuneration Report, no Director has received or become entitled to receive, during or since the financial period, a benefit because of a contract made by the Company or a related body corporate with a Director, a firm of which a Director is a member or an entity in which a Director has a substantial financial interest. This statement excludes a benefit included in the aggregate amount of emoluments received or due and receivable by Directors and shown in Notes (i) – (iii) to the Remuneration Report, prepared in accordance with the Corporations Regulations 2001, or the fixed salary of a full time employee of the Company. Artemis Resources Limited Annual Financial Report – June 2019 53 | P a g e Remuneration Report B. Details of remuneration (continued) (ii) Remuneration of Directors and Key Management Personnel The Remuneration Committee and the Board will assess the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Remuneration of the Key Management Personnel of the Group is set out below. FY18/19 Name H.H. Sheikh Maktoum D. Lenigas1 A. Duncan-Kemp1 E. Mead D. Smith2 W. Bramwell1 G. Robertson 1 Resigned during the financial year. 2 Commenced 5 February 2019. FY17/18 Name H.H. Sheikh Maktoum D. Lenigas A. Duncan-Kemp E. Mead W. Bramwell1 G. Robertson 1 Commenced 19 June 2018. Base Salary and Fees Share Based Payments $ $ Post Employment Super- Contribution $ $ Total Performance based 120,000 675,000 - 795,000 179,464 109,379 300,000 48,335 365,873 84,000 1,207,051 485,433 148,898 148,898 - (6,393) 75,055 1,526,891 - - - - 34,758 - 34,758 664,897 258,277 448,898 48,335 394,238 159,055 2,768,700 Base Salary and Fees Share Based Payments $ $ Post Employment Super- Contribution $ $ Total Performance based 80,000 1,525,000 - 1,605,000 210,000 220,700 250,727 7,308 75,000 843,735 242,717 74,449 74,449 6,393 75,055 1,998,063 - - - 694 - 694 452,717 295,149 325,176 14,395 150,055 2,842,492 % - 51 29 17 - - 47 % - 37 13 12 - 25 (iii) Use of remuneration consultants There was no engagement of remuneration consultants in the current financial year. The Company engaged BDO Remuneration and Reward Pty Ltd (“BDO”) in FY19/20 for $9,250. There is no existing relationship with BDO and the Company and as a result, the board is satisfied that the recommendations were made free from undue influence and independent from any members of the key management personnel. 5rtemis Resources Limited Annual Financial Report – June 2019 55 | P a g e Remuneration Report C. Service agreements Component Fixed remuneration Contract duration Notice by the individual/company Termination of employment (without cause) Termination of employment (with cause) or by individual Non-executive Chairman $120,000 Ongoing Executive Director Non-executive director $300,000 Ongoing 3 months $50,000 Ongoing On termination of employment without cause unexercised options are at the discretion of the Board. Vesting of performance rights is at the discretion of the board, who may also shorten the performance period. On termination for cause unexercised options will lapse. On termination by employee unexercised options are at the discretion of the Board. On termination for cause performance rights not vested will lapse. The Chairman has a letter of appointment providing for fees of $120,000 per annum. The Chairman was awarded a sign on fee of 5,000,000 shares on appointment on 25 October 2017, 5 million shares as approved by shareholders, on 30 November 2018 and will be entitled to 5 million shares in November 2019, if approved by shareholders. D. Share-based compensation (a) Options The terms of each grant of options affecting remuneration in the previous, current or future reporting periods are as are as follows: Date option granted Expiry date Issue price of Shares Number under option 30 November 2017 19 June 20181 19 June 20181 30 June 2020 19 June 2021 19 June 2021 44 cents 27.39 cents 40 cents 6,000,000 10,000,000 5,000,000 1Following the resignation of Mr Wayne Bramwell in May 2019, all share option incentives were forfeited. Subsequent to year end shareholders approved the following share-based payments to Directors: (a) 7,500,000 unlisted options (1,500,000 in each class A to E) were issued to Doraleda Pty Ltd, an entity controlled by Mr Edward Mead. Each option will have an exercise price of $0.08 and will expire at 5.00 pm (WST) on 15 May 2022. (b) 9,000,000 unlisted options (3,000,000 in class A and E, and 1,000,000 in class B, C & D) were issued to Orwellian Pty Ltd, an entity controlled by Mr Daniel Smith. 5rtemis Resources Limited Annual Financial Report – June 2019 55 | P a g e Remuneration Report D. Share-based compensation (continued) Each option will have an exercise price of $0.08 and will expire at 5.00 pm (WST) on 15 May 2022. The performance hurdles for the options are as follows: Performance Hurdles Class A: commissioning of the Radio Hill Gekko Gravity Gold Plant for commercial processing of ore by Artemis or to toll treatment ore for third parties Class B: the Company completing a pre-feasibility study in compliance with the JORC Code (2012) in relation to its Carlow Castle Project on E47/1797 (or mining licence over part of this tenement), which supports a mine life reserve of not less than 5 years; Class C: the Company announces a JORC Code (2012) compliant mineral resource of at least 15mt (million tonnes) at 1 g/t Au (Au grams per tonne) in relation to its Carlow Castle Project Class D: the Company announces a JORC Code (2012) compliant mineral resource of at least 1moz (million ounces) of 1.5 g/t gold equivalent (Au and Cu) in relation to its Carlow Castle Project Class E: the Company being admitted to AIM and raising a minimum of $5,000,000 from the issue of equity securities in the AIM market Options granted as remuneration to Key Management Personnel in the previous, current and future reporting periods: Name D. Lenigas E. Mead Date of grant Expiry date 30 November 2017 30 June 2020 30 November 2017 30 June 2020 A. Duncan-Kemp 30 November 2017 30 June 2020 W. Bramwell1 W. Bramwell1 19 June 2018 19 June 2021 19 June 2018 19 June 2021 Number under options Grant date value 3,000,000 1,500,000 1,500,000 10,000,000 5,000,000 $381,526 $190,763 $190,763 $453,681 $189,152 1Following the resignation of Mr Wayne Bramwell in May 2019, all share option incentives were forfeited. No options over ordinary shares were granted or exercised for directors and other key management personnel as part of compensation during the year ended 30 June 2019. The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at the grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution the share price at grant date and expected price volatility of the underlying shares, the expected dividend yield and the risk-free interest rate for the term of the option. An expense of $288,982 (2018: $178,696) was recognised for the year end 30 June 2019 in relation to performance rights issued to Key Management Personnel. No options were exercised by Directors or other key management personnel during the year. 15,000,000 options were forfeited following the resignation of the CEO during the year. 5rtemis Resources Limited Annual Financial Report – June 2019 56 | P a g e Remuneration Report D. Share-based compensation (continued) (b) Performance Rights The terms of each grant of performance rights affecting remuneration in the previous, current or future reporting periods are as follows: Date of grant Value per Share Name D. Lenigas E. Mead 13 September 2017 13 September 2017 A. Duncan-Kemp 13 September 2017 G. Robertson 13 September 2017 8.6 cents 8.6 cents 8.6 cents 8.6 cents Number of performance rights 9,000,000 2,000,000 2,000,000 2,000,000 Grant date value $774,000 $172,000 $172,000 $172,000 Vesting occurs at the end of the performance period ended 30 June 2019, if the following performance conditions are met: Market-based performance conditions: • • • 33.3% of the performance rights will vest when share price exceeds 15 cents; and 33.3% of the performance rights will vest when share price exceeds 20 cents; and 33.3% of the performance rights will vest when share price exceeds 25 cents. Market based conditions have been met. Non-market based performance conditions: The vesting of the performance rights is also subject to non-market conditions including capital raising, occupational health and safety outcomes and corporate governance hurdles. The Board will determine if the performance conditions have been met before 30 September 2019. An expense of $562,909 (2018: $469,091) was recognised for the year ended 30 June 2019 in relation to these performance rights issued to Key Management Personnel. All equity dealings with Directors have been entered into with terms and conditions no more favourable than those that the entity would have adopted if dealing at arm’s length. 5rtemis Resources Limited Annual Financial Report – June 2019 57 | P a g e Remuneration Report E. Additional disclosures relating to key management personnel Shares held by Directors and Key Management Personnel FY18/19 Name H.H. Sheikh Maktoum D. Lenigas1 A. Duncan-Kemp1 E. Mead D. Smith2 W. Bramwell1 G. Robertson Balance at the beginning of the year 5,000,000 25,000,000 - 2,000,000 - - 452,999 32,452,999 ¹Resigned during financial year. 2Commenced 5 February 2019. 3Balance on resignation 5 February 2019. FY17/18 Name H.H. Sheikh Maktoum D. Lenigas A. Duncan-Kemp E. Mead W. Bramwell1 G. Robertson ¹Commenced 19 June 2018. Balance at the beginning of the year - 25,000,000 - 2,000,000 - - 27,000,000 Received as remuneration Net Change Other Balance at the end of year 5,000,000 - - 150,000 (25,000,000)3 - - - - - - - - - 5,000,000 (24,850,000) 10,150,000 - - 2,000,000 - - 452,999 12,602,999 Received as remuneration Net Change Other Balance at the end of year 5,000,000 - - - - - 5,000,000 - - - - - 452,999 452,999 5,000,000 25,000,000 - 2,000,000 - 452,999 32,452,999 5rtemis Resources Limited Annual Financial Report – June 2019 58 | P a g e Remuneration Report E. Additional disclosures relating to key management personnel (continued) Options and performance rights held by Directors and Key Management Personnel FY18/19 Name Options H.H. Sheikh Maktoum D. Lenigas1 A. Duncan-Kemp1 E. Mead D. Smith2 W. Bramwell3 G. Robertson Performance Rights H.H. Sheikh Maktoum D. Lenigas1 A. Duncan-Kemp1 E. Mead D. Smith2 W. Bramwell G. Robertson Balance at the beginning of the year Received as remuneration Net Change Other Balance at the end of year - 3,000,000 1,500,000 1,500,000 - - - - - - - - - - - - - 15,000,000 - (15,000,000) - - 3,000,000 1,500,000 1,500,000 - - - 6,000,000 15,000,000 (15,000,000) 6,000,000 - 9,000,000 2,000,000 2,000,000 - - 2,000,000 15,000,000 - - - - - - - - - - - - - - - - - 9,000,000 2,000,000 2,000,000 - - 2,000,000 15,000,000 ¹Resigned during financial year. 2Commenced 5 February 2019. 3Resigned on 6 May 2019. All share option incentives were forfeited. 5rtemis Resources Limited Annual Financial Report – June 2019 59 | P a g e Remuneration Report E. Additional disclosures relating to key management personnel (continued) FY17/18 Name Options H.H. Sheikh Maktoum D. Lenigas A. Duncan-Kemp E. Mead W. Bramwell1 G. Robertson Performance Rights H.H. Sheikh Maktoum D. Lenigas A. Duncan-Kemp E. Mead W. Bramwell1 G. Robertson ¹Commenced 19 June 2018. Balance at the beginning of the year Received as remuneration Net Change Other Balance at the end of year - - - - - - - - - - - - - - - 3,000,000 1,500,000 1,500,000 - - 6,000,000 - 9,000,000 2,000,000 2,000,000 - 2,000,000 15,000,000 - - - - - - - - - - - - - - - 3,000,000 1,500,000 1,500,000 - - 6,000,000 - 9,000,000 2,000,000 2,000,000 - 2,000,000 15,000,000 Other transactions with key management personnel Consolidated 30 June 2019 $ 30 June 2018 $ ADK Mining Services1 Doraleda Pty Ltd2 Integrated CFO Solutions3 Minerva Corporate Pty Ltd4 109,379 300,000 120,000 48,335 577,714 220,700 250,727 129,000 - 600,427 1 Director fees and consulting fees paid to ADK Mining Services Pty Ltd, a company in which Mr Alex Duncan-Kemp has an interest. 2 Director fees and consulting fees paid to Doraleda Pty Ltd, a company in which Mr Edward Mead has an interest. 3 Company secretary fees and consulting fees paid to Integrated CFO Solutions, a company in which Mr Guy Robertson has an interest. In 2019, these included fees of $36,000 (2018: $54,000) for accounting services. 4 Director fees and consulting fees paid to Minerva Corporate Pty Ltd, a company in which Mr Daniel Smith has an interest. END OF AUDITED REMUNERATION REPORT 5rtemis Resources Limited Annual Financial Report – June 2019 60 | P a g e AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Artemis Resources for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (a) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 27 September 2019 B G McVeigh Partner 61 | P a g e Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2019 Revenue Cost of sales Consolidated 30 June 2019 $ 12,127 30 June 2018 $ 18,928,727 Notes 3 11 (8,003) (174,484) Personnel costs Occupancy costs Legal fees Consultancy costs Compliance and regulatory expenses Directors’ fees Travel Marketing expenses Borrowing costs Other expenses Project and exploration expenditure write off Net fair value loss on financial instruments designated as fair value through profit or loss Share-based payments Unrealised foreign exchange gain (LOSS)/PROFIT BEFORE INCOME TAX Income tax expense/benefit (LOSS)/PROFIT FOR THE YEAR Other comprehensive income, net of tax TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR 11 23 4 (792,335) (120,032) (296,294) (687,039) (227,916) (656,728) (282,762) (358,215) (814,819) (585,477) (701,261) (310,701) (165,143) (388,056) (303,040) (310,049) (423,132) (565,772) (92,436) (642,880) (792,796) (202,445) (533,183) (316,087) (3,518,684) 222,882 (9,347,739) - (9,347,739) - (9,347,739) (2,339,999) 172,206 12,073,913 - 12,073,913 - 12,073,913 (LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE TO: Owners of the parent entity (9,347,739) 12,073,913 TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR ATTRIBUTABLE TO: Owners of the parent entity (9,347,739) 12,073,913 Basic (loss)/profit per share - cents Diluted (loss)/profit per share - cents 21 21 (1.44) (1.44) 2.22 2.02 The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes Artemis Resources Limited Annual Financial Report – June 2019 62| P a g e Consolidated Statement of Financial Position As at 30 June 2019 CURRENT ASSETS Cash and cash equivalents Other receivables Inventories Other financial assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Intangible assets Exploration and evaluation expenditure Development expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Employee benefits obligation Financial liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Accumulated losses Parent interests TOTAL EQUITY Consolidated 30 June 2019 $ Notes Restated 30 June 2018 $ 5 6 7 8 9 10 11 12 13 14 15 12 16 17 821,481 254,255 460,202 - 1,535,938 27,048,303 1,846,132 - 430,730 29,325,165 159,784 109,414 37,027,656 23,353,620 60,650,474 62,186,412 96,999 83,251 28,761,826 11,713,066 40,655,142 69,980,307 1,516,278 44,861 5,792,078 7,353,217 7,446,797 8,928 3,914,024 11,369,749 1,413,123 1,413,123 8,766,340 53,420,072 - - 11,369,749 58,610,558 81,438,336 2,571,003 (30,589,267) 53,420,072 53,420,072 79,127,087 724,999 (21,241,528) 58,610,558 58,610,558 The consolidated statement of financial position should be read in conjunction with the accompanying notes. Artemis Resources Limited Financial Report – 30 June 2019 63| P a g e Consolidated Statement of Changes in Equity As at 30 June 2019 Consolidated Balance at 1 July 2017 Profit for the year Total comprehensive income for the year Issue of shares Costs of share issue Exercise of options Transfer to share-based payments Transfer from share-based payments Balance at 30 June 2018 Issued Capital Reserves $ 39,067,554 - $ 172,000 - Accumulated (Losses)/ Profit $ (33,315,441) 12,073,913 Total Equity $ 5,924,113 12,073,913 - 12,073,913 12,073,913 41,053,281 (1,255,748) 172,000 - - - (172,000) 814,999 90,000 (90,000) - - - - - 41,053,281 (1,255,748) - 814,999 - 79,127,087 724,999 (21,241,528) 58,610,558 Consolidated Balance at 1 July 2018 Loss for the year Total comprehensive loss for the year Issue of shares Share-based payments Balance at 30 June 2019 Issued Capital $ 79,127,087 - Reserves $ 724,999 - Accumulated Losses $ (21,241,528) (9,347,739) Total Equity $ 58,610,558 (9,347,739) - - (9,347,739) (9,347,739) 2,311,249 - 81,438,336 - 1,846,004 2,571,003 - - (30,589,267) 2,311,249 1,846,004 53,420,072 The consolidated statement of changes in equity should be read in conjunction with the accompanying notes. Artemis Resources Limited Financial Report – 30 June 2019 64| P a g e Consolidated Statement of Cash Flows For the Year Ended 30 June 2019 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Financing cost NET CASH USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments Payments for exploration and evaluation Payment for development expenditure Payment for projects/prospect Purchase of plant and equipment & office equipment Proceeds from sale of plant and equipment NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Cost of share issue Exercise of options Repayment of short-term loan Proceeds from convertible note, net of costs Repayment of convertible note NET CASH PROVIDED BY FINANCING ACTIVITIES Consolidated 30 June 2019 $ 30 June 2018 $ 74,656 (4,196,221) 5,127 (478,367) (4,594,805) 415,535 (3,171,454) 160,863 (841,976) (3,437,032) 24 208,880 (10,700,937) (13,241,243) - (133,315) 6,747 (23,859,868) - - 202,485 - 5,236,354 (3,433,870) 2,004,969 25 25 25 19,516,977 (18,987,830) - (1,500,000) (182,656) - (1,153,509) 28,372,983 (1,225,748) - (60,000) 5,945,003 (1,918,894) 31,083,344 Net (decrease)/increase in cash held Cash at the beginning of the period Effects of exchange rate changes on the balance of cash held in foreign currencies CASH AT THE END OF THE YEAR (26,449,704) 27,048,303 26,492,803 329,196 222,882 226,304 5 821,481 27,048,303 The consolidated statement of cash flows is to be read in conjunction with the accompanying notes. Artemis Resources Limited Financial Report – June 2019 65| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation Standards, Australian Accounting The financial report is a general purpose financial report prepared in accordance with Australian Accounting authoritative pronouncements of the Australian Standards Board, International Financial Reporting Standards as issued by the International Accounting Standards Board and the requirements of the Corporations Act 2001. The Group is a for profit entity for financial reporting purposes under Australian Accounting Standards. Interpretations, other Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. The consolidated financial statements have been prepared on the basis of historical costs, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise stated. The financial statements are presented in Australian dollars which is Artemis Resources Limited’s functional and presentation currency. These financial statements were authorised for issue on 27 September 2019. Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: • has power over the investee; • • has the ability to its power to affect its returns. is exposed, or has rights, to variable returns from its involvement in with the investee; and The Company reassess whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. When the Company has less than a majority of the voting rights if an investee, it has the power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights are sufficient to give it power, including: • the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; Artemis Resources Limited Financial Report – June 2019 66| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) • potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholder meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Changes in the Group’s ownership interest in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in subsidiaries. Any difference between the amount paid by which the non- controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between: • The aggregate of the fair value of the consideration received and the fair value of any retained interest; and • The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by the applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. Business Combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent Artemis Resources Limited Financial Report – June 2019 67| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the consolidated statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are mandatory for the current reporting period including adopting AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers from 1 July 2018. AASB 9 Financial Instruments AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes to a number of areas including classification of financial instruments, measurement, impairment of financial assets and hedge accounting model. As the application of AASB 9 has no significant impact on the financial performance or position of the Group the information presented for 30 June 2018 has not been restated. On initial application date, borrowings have been designated as financial liabilities designated as at fair value through profit and loss. As from the initial application date further gains or losses will be recognised as net fair value movement through profit or loss. AASB 15 Revenue from contracts with customers AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenues related interpretations. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue to be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The adoption of AASB 15 does not have a significant impact on the Group as the Group does not currently have any revenue from customers, except for interest income earned through financial institutions. Artemis Resources Limited Financial Report – June 2019 69| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Future Accounting Standards or Interpretations Any new, revised or amending Accounting Standards or Interpretations that are yet to be mandatory have not been early adopted. The Directors have also reviewed all the new and revised Standards and Interpretations in issue not yet adopted for the year ended 30 June 2019. As a result of this review the Directors have determined that AASB 16 Leases has no material effect on the application in future periods. Going Concern For the year ended 30 June 2019, the Group recorded a loss of $9,347,739 (2018: Profit of $12,073,913) and had net cash outflows from operating activities of $4,126,600 (2018: $3,437,032) and has a net working capital deficit of $5,817,279 as at 30 June 2019 (2018: a net surplus of $17,955,416). The Directors believe that it is reasonably foreseeable that the Company and Group will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors: • The Group has cash at bank of $821,481 and net assets of $53,420,072 as at 30 June 2019; • The ability of the Group to scale back certain parts of their activities that are non-essential so as to conserve cash; • The Group retains the ability, if required, to wholly or in part dispose of interests in mineral exploration and development assets; and • The Company has raised approximately $2.7 million in new equity subsequent to balance date and Directors are of the view that the Company will require an additional capital raise and has the ability to raise further capital to enable the Group to meet scheduled exploration expenditure requirements and future plans on the development assets. These factors indicate a material uncertainty which may cast significant doubt as to whether the Company and Group will continue as a going concern and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report. Artemis Resources Limited Financial Report – June 2019 69| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income taxes The income tax expense (benefit) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Artemis Resources Limited Financial Report – June 2019 70| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Exploration and evaluation costs Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: the rights to tenure of the area of interest are current; and • • at least one of the following conditions is also met: ➢ the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or ➢ exploration and evaluation activities in the area of interest have not at the balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. Artemis Resources Limited Financial Report – June 2019 71| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial Instruments Recognition and initial measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and subsequent measurement All financial assets are initially measured at fair value adjusted for transaction costs (where applicable). For the purpose of subsequent measurement, all the financial assets, are classified as amortised cost. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of other receivables which is presented within other expenses. (i) Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • • they are held within a business model whose objective is to hold the financial assets to collect its contractual cash flows the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, and most other receivables fall into this category of financial instruments. Other receivables The Group makes use of a simplified approach in accounting for other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. The Group assess impairment of other receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due. Artemis Resources Limited Financial Report – June 2019 72| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. Inventories Inventories are valued at the lower of cost and net realisable value. Gold bullion, base metal concentrate, metal in circuit and ore stockpiles are physically measured or estimated and valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price (in the ordinary course of business), less estimated costs of completion and costs of selling final product. Cost is determined using the weighted average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation (if applicable). Materials and supplies are valued at the lower of cost or net realisable value. Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence. Plant and equipment Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Artemis Resources Limited Financial Report – June 2019 73| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Derecognition and disposal An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. Depreciation Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and Equipment – ranging from 2 to 20 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Impairment The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to approximate fair value. An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of profit or loss and other comprehensive income in the cost of sales line item. Intangible assets Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for on a prospective basis. Artemis Resources Limited Financial Report – June 2019 74| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impairment of intangible assets other than goodwill The Group assesses at each balance date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. Development expenditure Development expenditure represent the accumulation of all exploration, evaluation and other expenditure incurred in respect of areas of interest in which mining is in the process of commencing. When further development expenditure is incurred after the commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Restoration and rehabilitation A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each balance date. The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset. Artemis Resources Limited Financial Report – June 2019 75| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the consolidated statement of financial position. Trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. Employee leave benefits Wages, salaries, annual leave and sick leave Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Liabilities accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave not expected to be settled within 12 months of the balance date are recognised in non-current other payables in respect of employees’ services up to the balance date. They are measured as the present value of the estimated future outflows to be made by the Group. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. Artemis Resources Limited Financial Report – June 2019 76| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenue recognition Interest revenue is recognised using the effective interest method. It includes the amortisation of any discount or premium. Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred except borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale. In this case the borrowing costs are capitalised as part of the cost of such a qualifying asset. The amount of borrowing costs relating to funds borrowed generally and used for the acquisition of qualifying assets has been determined by applying a capitalisation rate to the expenditures on those assets. The capitalisation rate comprises the weighted average of borrowing costs incurred during the period. Equity settled compensation Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the consolidated statement of financial position are shown inclusive of GST. Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. Parent entity disclosures The financial information for the parent entity, Artemis Resources Limited, has been prepared on the same basis as the consolidated financial statements. Artemis Resources Limited Financial Report – June 2019 77| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 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 and in any future periods affected. Exploration and evaluation, and development expenditure carried forward The Group capitalises expenditure relating to exploration and evaluation, and development, where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. The recoverability of the carrying amount of mine development expenditure carried forward has been reviewed by the Directors. In conducting the review, the recoverable amount has been assessed by reference to the higher of “fair value less costs to sell” and “value in use”. In determining value in use, future cash flows are based on: • Estimates of ore reserves and mineral resources for which there is a high degree of confidence of economic extraction; • Estimated production and sales levels; • Estimate future commodity prices; • Future costs of production; • Future capital expenditure; and/or • Future exchange rates. Variations to expected future cash flows, and timing thereof, could result in significant changes to the impairment test results, which in turn could impact future financial results. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black-Scholes model, using the assumptions detailed in Note 23. Fair value of financial instruments Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Artemis Resources Limited Financial Report – June 2019 78| P a g e Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Provision for restoration and rehabilitation The provision for restoration and rehabilitation has been estimated based on quotes provided by third parties. The provision represents the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date. 2. SEGMENT INFORMATION AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and to assess its performance. The Group’s operating segments have been determined with reference to the monthly management accounts used by the Chief Operating Decision Maker to make decisions regarding the Group’s operations and allocation of working capital. Due to the size and nature of the Group, the Board as a whole has been determined as the Chief Operating Decision Maker. a. Description of segments The Board has determined that the Group has two reportable segments, being mineral exploration activities and development expenditure. The Board monitors the Group based on actual versus budgeted expenditure incurred by area of interest. The internal reporting framework is the most relevant to assist the Board with making decisions regard the Group and its ongoing exploration activities. Artemis Resources Limited Financial Report – June 2019 79| P a g e Notes to the Financial Statements 2. SEGMENT INFORMATION (CONTINUED) b. Segment information provided to the Board: Exploration Activities Development Activities Unallocated Total Mt Clement West Pilbara East Pilbara Radio Hill Corporate $ $ $ $ $ $ 30 June 2019 Segment revenue Segment expenses Reportable segment loss - - - - - - - - - - - - 12,127 (9,359,866) (9,347,739) 12,127 (9,359,866) (9,347,739) Reportable segment assets Reportable segment liabilities 233,159 - 36,565,459 - 229,038 - 23,353,620 1,413,123 1,805,136 7,353,217 62,186,412 8,766,340 Exploration Activities Development Activities Unallocated Total Mt Clement West Pilbara Others Radio Hill Corporate $ $ $ $ $ $ 30 June 2018 Segment revenue Segment expenses Reportable segment profit - - - - - - Reportable segment assets Reportable segment liabilities 147,442 28,614,384 - - - - - - - - - - 11,713,066 - 18,928,727 (6,854,814) 12,073,913 29,505,415 11,369,749 18,928,727 (6,854,814) 12,073,913 69,980,307 11,369,749 Artemis Resources Limited Annual Financial Report – June 2019 80| P a g e Notes to the Financial Statements 3. REVENUE Revenue Other income¹ Less: Applied as recovery of exploration costs Profit on sale of Novo shares, net of cost Sales of gold, silver and copper ore Other revenue Interest received Consolidated 30 June 2019 $ 30 June 2018 $ - - - - - 7,000 7,000 16,606,896 (1,559,575) 15,047,321 3,499,502 18,546,823 221,041 18,767,864 5,127 12,127 160,863 18,928,727 1On 15 August 2017, the Company entered into a farm in agreement with Novo Resources Corp (Novo) whereby Novo will earn a 50% interest in gold (and other minerals necessarily mined with gold) in conglomerate and/or paleoplacer style mineralisation on tenements located within 100km of the City of Karratha, on spending $2 million within two years. As part of the consideration for this agreement Artemis has received 4,000,000 Novo shares (CVE: NVO). Novo has now spent $2 million and the joint venture is live. The Novo shares were sold to Kirkland Lake Gold (TSX: KL, NYSE: KL, ASX: KLA) at a price of CAD$5.00 per share for a total purchase price of CAD$20m on 31 May 2018. 4. INCOME TAXES (a) Income tax expense Current tax Deferred tax Income tax expense Consolidated 30 June 2019 $ 30 June 2018 $ - - - - - - (b) Income tax recognised in the statement of profit or loss and other comprehensive income (Loss)/profit before tax Tax at 27.5% (2018: 27.5%) Tax effect of non-deductible expenses Exploration expenditure Timing differences not brought to account Previously unrecognised tax losses and timing differences now recouped to reduce tax expense Income tax expense Consolidated 30 June 2019 $ (9,347,739) (2,570,628) 1,116,221 129,597 1,324,810 - - 30 June 2018 $ 12,073,913 3,320,326 735,462 (3,045,162) - (1,010,626) - Artemis Resources Limited Annual Financial Report – June 2019 81 | P a g e Notes to the Financial Statements 4. INCOME TAXES (CONTINUED) (c) Deferred tax balances Deferred tax assets comprise: Tax losses carried forward Employee benefits obligation Provisions Deferred tax liabilities comprise: Capitalised exploration costs Net deferred tax asset unrecognised (d) Analysis of deferred tax assets Consolidated 30 June 2019 $ 30 June 2018 $ 5,961,631 12,337 388,609 6,362,577 4,435,552 4,435,552 1,927,025 4,636,821 2,455 - 4,639,276 4,192,726 4,192,726 446,550 No deferred tax assets have been recognised as yet, other than to offset deferred tax liabilities, as it is currently not probable that future taxable profits will be available to realise the asset. 5. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on hand and account balances with banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents included in the consolidated statement of cash flows comprise the following amounts: Cash and cash equivalents 821,481 27,048,303 Consolidated 30 June 2019 $ 30 June 2018 $ Artemis Resources Limited Annual Financial Report – June 2019 82 | P a g e Notes to the Financial Statements 6. OTHER RECEIVABLES Other receivables GST receivables Prepayments Consolidated 30 June 2019 $ 30 June 2018 $ 5,200 49,301 199,754 254,255 133,838 1,337,115 375,179 1,846,132 The value of trade and other receivables considered by the Directors to be past due or impaired is nil (2018: Nil). 7. INVENTORIES Current Gold bullion at cost 8. OTHER FINANCIAL ASSETS Current Fair Value Through Profit or Loss Shares in listed equity securities (Level 1) Consolidated 30 June 2019 $ 30 June 2018 $ 460,202 - Consolidated 30 June 2019 $ 30 June 2018 $ - 430,730 Artemis Resources Limited Annual Financial Report – June 2019 83 | P a g e Notes to the Financial Statements 9. PLANT AND EQUIPMENT Consolidated 30 June 2019 $ 30 June 2018 $ Computer equipment - at cost Less: Accumulated depreciation Total computer equipment at net book value Furniture and fittings - at cost Less: Accumulated depreciation Total furniture and equipment at net book value Motor vehicles – at cost Less: Accumulated depreciation Total motor vehicles at net book value Total plant and equipment 62,635 (8,999) 53,636 132,065 (28,867) 103,198 7,500 (4,550) 2,950 159,784 12,546 (731) 11,815 82,294 (3,110) 79,184 10,000 (4,000) 6,000 96,999 Reconciliation of movement during the year Reconciliations of the carrying amounts for each class of plant and equipment are set out below: Computer equipment: Carrying amount at the beginning of the year - Addition - Depreciation Carrying amount at the end of the year Furniture and fittings Carrying amount at the beginning of the year - Addition - Disposals - Depreciation Carrying amount at the end of the year Motor vehicles Carrying amount at the beginning of the year - Addition - Disposals - Amortisation Carrying amount at the end of the year Consolidated 30 June 2019 $ 30 June 2018 $ 11,815 50,089 (8,268) 53,636 79,184 59,055 (7,333) (27,708) 103,198 6,000 - (1,340) (1,710) 2,950 - 12,546 (731) 11,815 - 82,294 - (3,110) 79,184 - 10,000 - (4,000) 6,000 Artemis Resources Limited Annual Financial Report – June 2019 84 | P a g e Notes to the Financial Statements 10. INTANGIBLE ASSETS Consolidated 30 June 2019 $ 30 June 2018 $ Computer Software - at cost Less: Accumulated amortisation Total computer software at net book value 151,365 (41,951) 109,414 90,883 (7,632) 83,251 Reconciliation of movement during the year: Computer Software: Carrying amount at the beginning of the year - Addition - Amortisation Carrying amount at the end of the year 11. EXPLORATION AND EVALUATION EXPENDITURE Consolidated 30 June 2019 $ 30 June 2018 $ 83,251 60,481 (34,318) 109,414 - 90,883 (7,632) 83,251 Consolidated 30 June 2019 $ Restated 30 June 2018 $ Exploration and evaluation expenditure 37,027,656 28,761,826 Exploration and Evaluation Phase Costs Costs capitalised on areas of interest have been reviewed for impairment factors, such as resource prices, ability to meet expenditure going forward and potential resource downgrades. It is the Directors’ opinion that the Group has ownership or title to the areas of interest in respect of which it has capitalised expenditure and has reasonable expectations that its activities are ongoing. Reconciliation of movement during the year: Opening balance Acquisition of tenements and project interests Expenditure capitalised in current period Exploration expenditure written off Cost of product sold written off Closing balance Consolidated 30 June 2019 $ 28,761,826 - 8,975,094 (701,261) (8,003) 37,027,656 Restated 30 June 2018 $ 6,299,352 10,220,000 12,619,133 (202,445) (174,214) 28,761,826 Artemis Resources Limited Annual Financial Report – June 2019 85 | P a g e Notes to the Financial Statements 12. DEVELOPMENT EXPENDITURE Consolidated 30 June 2019 $ Restated 30 June 2018 $ Development expenditure 23,353,620 11,713,066 Reconciliation of movement during the year: Opening balance Additions1 Closing balance Consolidated 30 June 2019 $ 11,713,066 11,640,554 23,353,620 Restated 30 June 2018 $ 2,693,353 9,019,713 11,713,066 1 Additions include a provision for restoration and rehabilitation of $1,413,123 which was recognised during the year. It relates to the estimated cost of rehabilitation work to be carried out in relation to the removal of facilities, closure of sites and restoring the affected areas. The provision represents the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each reporting date. Impairment assessment The recoverable amount of the cost to date for the work in progress on the Radio Hill Processing Plant was reviewed for impairment. Following the review, the Directors have determined that the recoverable amount exceeds the carrying value and that no impairment exists. The recoverable amount estimation was based on the estimated value in use with discount rate of 8% applied to the cash flow projections and was determined at the cash-generating unit level. The cash- generating unit consists of the operating assets, which is comprised of the process plant and other property, plant and equipment associated with the project. No material items required impairment or write offs. 13. TRADE AND OTHER PAYABLES Trade and other payables 1,516,278 7,446,797 Consolidated 30 June 2019 $ 30 June 2018 $ Artemis Resources Limited Annual Financial Report – June 2019 86 | P a g e Notes to the Financial Statements 14. EMPLOYEE BENEFITS OBLIGATION Opening balance Provision for the year Benefits used or paid Closing balance 15. FINANCIAL LIABILITIES Convertible note at fair value (Level 2) Short term loan at amortised cost Reconciliation of movement during the year: Convertible note Opening balance Add: Additional convertible note Less: Conversion to equity Less: Cash repayment on convertible note Fair value movement Closing balance Short term loan Opening balance Add: Short term loan¹ Less: Cash repayment Closing balance Total Consolidated 30 June 2019 $ 8,928 123,639 (87,706) 44,861 30 June 2018 $ - 8,928 - 8,928 Consolidated 30 June 2019 $ 5,595,206 196,872 5,792,078 30 June 2018 $ 3,914,024 - 3,914,024 Consolidated 30 June 2019 $ 30 June 2018 $ 3,914,024 5,519,267 9,433,291 (783,770) (3,433,870) 379,555 5,595,206 2,265,965 5,945,303 8,211,268 (2,232,791) (1,918,894) (145,559) 3,914,024 - 196,872 - 196,872 - 60,000 (60,000) - 5,792,078 3,914,024 ¹ The short term loan is premium funding of annual insurance costs. The convertible notes issued by the Company is treated as financial liabilities designated as at fair value through profit or loss. Artemis Resources Limited Annual Financial Report – June 2019 87 | P a g e Notes to the Financial Statements 15. FINANCIAL LIABILITIES (CONTINUED) On 8 December 2017, the Company entered into a US$4,500,000 funding agreement by way of issuance of convertible notes (“first note”) at an issue price of US$1 per note. On 27 November 2018 the company took out a new convertible note in the amount of US$3,931,681, and restructured the first note in the amount of US$1,285,710. On 24 May 2019, the Company signed a variation to the funding facility (“Variation Deed”). An additional 100,000 convertible notes were issued in satisfaction of restructure fees. An amount of US$3,000,621 (2018: US$1,607,142) was repaid against the convertible notes during the year, with US$2,457,143 (2018: US$1,285,714) being repaid in cash and US$543,478 (2018: US$321,429) being converted with issuance of a total of 13,197,295 (2018: 2,710,355) shares. As at 30 June 2019, the outstanding convertible note is US$3,923,917 (30 June 2018: US$2,892,857). An amount of US$460,290 was repaid against the convertible note outstanding as at 30 June 2019 on 22 August 2019. The convertible note was valued using Monte Carlo simulation. The key inputs to the valuation are as follows: Volatility (%) Risk free rate (%) Share price at this date ($) Funding facilities pre Deed of Variation 100 1.89 0.12 • Convertible Securities: Convertible Securities of US$3,931,681 (New Convertible Securities), plus an extension of US$1,285,710, being the balance of Convertible Securities announced on 11 December 2017 (Existing Convertible Securities) (together the Convertible Securities). • Face Value and Purchase Price: US$1.00 per Convertible Security. • Implementation Fee: 5,000,000 fully paid ordinary shares in the capital of Artemis (Shares). • Commitment Fee: 5% • Interest: No interest payable on the Convertible Securities. • Maturity Date: 10 January 2020. • Conversion: Subject to the Maximum Issue (defined below), the Investor may elect to convert the Convertible Securities (other than those for which Artemis has given notice of early redemption) at either: ➢ a Fixed Conversion Price of A$0.21; or ➢ a Variable Conversion Price of the lesser of the Fixed Conversion Price and 94% of the average of the 3 lowest daily VWAP’s during the 10 trading days immediately prior to the date that notice of conversion is given by the Investor, subject to the conditions that the election to convert at the Variable Conversion Price cannot be made: Artemis Resources Limited Annual Financial Report – June 2019 88 | P a g e Notes to the Financial Statements 15. FINANCIAL LIABILITIES (CONTINUED) New Convertible Notes ➢ prior to 1 April 2019; or ➢ after 1 April 2019, with respect to more than $279,507 in April 2019, $521,739 in each of May 2019 to October 2019 and $521,740 in November 2019 or such higher amount where a prior month’s conversion capacity has not previously been used subject to an aggregate conversion up to 10 December 2019 of more than an aggregate of 70% of the total price paid for the Convertible Securities. Existing Convertible Notes ➢ prior to 1 February 2019; or ➢ in a calendar month where Artemis has given a notice of early redemption and Artemis paying the redeemed amount within the required time period. • Redemption: Artemis may at any time elect to redeem some or all of the Convertible Securities (other than those for which the Investor has given a conversion notice), provided that: ➢ notice of such redemption is given on the first trading day of a calendar month for which the 5-day VWAP for the 5 trading days immediately prior to that first trading day is less than the Fixed Conversion Price; and ➢ the number of New Convertible Securities being redeemed is at least the minimum redemption amount for that calendar month being nil in all months other than 279,507 in April 2019, 521,739 in each of May 2019 to October 2019 and 521,740 in November 2019 and the number of Existing Convertible Securities is at least the minimum redemption amount for that calendar month being nil in all months other than 521,739 in each of February 2019 and March 2019 and 242,232 in April 2019. Where Artemis elects to redeem the Convertible Securities, it must pay the Investor 112% of the face value of the redeemed Convertible Securities within 7 days of giving the redemption notice. • Maturity: On the Maturity Date, Artemis must redeem the remaining Convertible Securities by paying the Investor the total face value (US$1 per Convertible Security) outstanding. • Maximum Issue of Shares: The maximum number of Shares to be issued without shareholder approval for the New Convertible Securities is capped at 36,171,466 (Maximum Issue). Where Artemis is requested to issue Shares in excess of the Maximum Issue, the issue of such Shares is subject to shareholder approval. • Options: Artemis will issue the Investor and the arranger of the facility an aggregate of 8,571,429 options with an exercise price of A$0.21, exercisable on or before 30 November 2021. Artemis Resources Limited Annual Financial Report – June 2019 89 | P a g e Notes to the Financial Statements 15. FINANCIAL LIABILITIES (CONTINUED) • Security: The funding will be secured over the assets of Fox Radio Hill Pty Ltd whilst the face value of the Convertible Securities exceeds US$1,500,000. • Collateral: Artemis will issue 5,000,000 shares to the Riverfort Group. New salient terms of Variation Deed: • Maturity Date: 31 January 2020. • Conversion: Subject to the Maximum Issue (defined below), the Investor may elect to convert the Convertible Securities (other than those for which Artemis has given notice of early redemption) at either: ➢ a Fixed Conversion Price of A$0.08; or ➢ a Variable Conversion Price of the lesser of the Fixed Conversion Price and 94% of the average of the 3 lowest daily VWAP’s during the 10 trading days immediately prior to the date that notice of conversion is given by the Investor, subject to the conditions that the election to convert at the Variable Conversion Price cannot be made • New Convertible Notes ➢ prior to 1 October 2019 in the event that Artemis has redeemed 2,100,000 convertible notes before 30 September 2019 ➢ For an amount greater than 350,000 notes per month. • Restructure fees: As part of the restructure Artemis issued the Convertible Note investor 18,652,175 options with an exercise price of $0.08 and expiry date 31 July 2022. Artemis Resources Limited Annual Financial Report – June 2019 90 | P a g e Notes to the Financial Statements 16. SHARE CAPITAL Consolidated Consolidated 30 June 2019 30 June 2018 No. of Shares No. of Shares 30 June 2019 $ 30 June 2018 $ Issued and Paid-up Capital Ordinary shares, fully paid 661,991,065 633,293,770 81,438,336 79,127,087 Reconciliation of movement during the year: Shares $ Opening balance Shares issued to financiers as implementation fees Shares issued to financiers as collateral Shares issued to director Shares issued to advisor Shares issued on settlement of convertible note Closing balance 633,293,770 5,000,000 5,000,000 5,000,000 500,000 13,197,295 661,991,065 79,127,087 775,000 - 675,000 77,479 783,770 81,438,336 Term of Issue: Ordinary Shares Ordinary shares participate in dividends and are entitled to one vote per share at shareholders meetings. In the event of winding up the Company, ordinary shareholders rank after creditors and are entitled to any proceeds of liquidation in proportion to the number of shares held. 17. RESERVES Share based payments Options Performance rights Series 1: Consolidated Consolidated 30 June 2019 No. of options/rights 30 June 2018 No. of options/rights 38,663,462 15,000,000 37,689,858 15,000,000 30 June 2019 30 June 2018 $ $ 1,539,004 1,031,999 2,571,003 255,909 469,090 724,999 On 30 November 2018, the Group issued 8,571,429 unlisted share options to the noteholder as consideration for the new convertible loan notes. The exercise price of the options is $0.21 per share with an expiry date of 15 January 2021, which have fully vested. Artemis Resources Limited Annual Financial Report – June 2019 91 | P a g e Notes to the Financial Statements 17. RESERVES (CONTINUED) Series 2: On 24 May 2019, the Group issued 18,652,175 unlisted share options to the noteholder as consideration for restructuring the funding facility. The exercise price of the options is $0.08 per share with an expiry date of 31 July 2022, which have fully vested. The unlisted options issued during the year were valued using the Black-Scholes model. The fair value of the options granted during the year ended 30 June 2019 was determined on the date of grant using the following assumptions: Grant date Exercise price ($) Expected volatility (%) Risk-free interest rate (%) Expected life (years) Share price at this date ($) Fair value per option ($) Series 1 30 November 2018 0.21 95 2 3 0.145 0.080 Series 2 31 July 2019 0.08 100 1.13 3 0.036 0.0165 There were no additional performance rights issued during the year. For the year ended 30 June 2019, the Group has recognised $1,846,004 (2018: $724,999) of share- based payment expense in the income statement in relation to share options and performance rights issued. 18. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES The Board of Directors takes responsibility for managing financial risk exposures of the Group. The Board monitors the Group’s financial risk management policies and exposures and approves financial transactions. It also reviews the effectiveness of internal controls relating to commodity price risk, counterparty credit risk, currency risk, liquidity risk and interest rate risk. The Board meets monthly at which these matters are reviewed. The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its review includes the use of hedging derivative instruments, credit risk policies and future cash flow requirements. The Company’s principal financial instruments comprise cash, short term deposits and securities in Australian listed companies. The main purpose of the financial instruments is to earn the maximum amount of interest at a low risk to the company. The Company also has other financial instruments such as trade debtors and creditors which arise directly from its operations. Artemis Resources Limited Annual Financial Report – June 2019 92 | P a g e Notes to the Financial Statements 18. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) The main risks arising from the Company’s financial instruments are interest rate risk, credit risk, foreign exchange risk, commodity risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below: (i) Interest Rate Risk The Company’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate for each class of financial assets and financial liabilities. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the following financial assets and liabilities: FY2019 Carrying Amount Effect on profit before tax Effect on pre-tax equity +1% -1% +1% -1% Financial Assets Cash and cash equivalents1 Trade and other receivables2 821,481 18,861 4,848 18,861 4,848 54,501 - - - - 875,982 18,861 4,848 18,861 4,848 Financial liabilities Trade and other payables4 Financial Liabilities5 1,516,278 5,792,078 7,308,356 Total increase/(decrease) - - - - (10,828) (10,828) 8,033 (6,891) (6,891) (2,043) (10,828) (10,828) 8,033 (6,891) (6,891) (2,043) Artemis Resources Limited Annual Financial Report – June 2019 93 | P a g e Financial Assets Cash and cash equivalents1 Trade and other receivables2 Other financial assets3 Financial liabilities Trade and other payables4 Financial Liabilities5 Notes to the Financial Statements 18. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) (i) Interest Rate Risk (continued) FY2018 Carrying Amount Effect on profit before tax Effect on pre-tax equity +1% -1% +1% -1% 27,048,303 270,483 (270,483) 270,483 (270,483) 1,470,953 430,730 - - - - - - - - 28,949,986 270,483 (270,483) 270,483 (270,483) 7,446,797 3,914,024 11,360,821 - - - - - - - - - 270,483 - (270,483) - 270,483 - (270,483) Total increase/(decrease) 1 Cash and cash equivalents are denominated in both AUD and USD. At 30 June 2019, A$624,356 was denominated in USD (30 June 2018: A$2,892,855). 2 Trade and other receivables are denominated in AUD and are not interest bearing. 3 Other financial assets are equity securities listed on ASX and are denominated in AUD and GBP. All financial assets were liquidated in FY2019. 4 Trade and other payables at balance date are denominated mainly in AUD and are not interest bearing. 5 The convertible note has no interest coupon. Loan of $196,872 in FY2019 (2018: Nil) bears an interest rate of 4.5% per annum. (ii) Credit Risk Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Company’s maximum exposure to credit risk. Artemis Resources Limited Annual Financial Report – June 2019 94 | P a g e Notes to the Financial Statements 18. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) (iii) Foreign Exchange Risk The Company had the following United States dollar denominated assets and liabilities at year end. Consolidated 30 June 2019 US$ 30 June 2018 US$ Cash Cash and cash equivalents Borrowings Convertible Loan Note Facility1 1 The convertible note holder holds 5,000,000 (2018: 4,000,000) shares as collateral against this liability 3,923,917 437,861 1,866,360 2,892,855 The following tables demonstrate the sensitivity to a reasonably possible change in USD exchange rate, with other variables held constant. Net impact of strengthening/(weakening) of AUD on USD assets/liabilities outlined above Change in USD rate Effect on profit before tax Effect on pre- tax equity FY2019 FY2018 (iv) Commodity Risk +5% -5% +5% -5% 248,542 (248,542) 77,158 (77,158) 248,542 (248,542) 77,158 (77,158) The Company is affected by the price volatility of certain commodities especially changes in the price of gold in the market. The following table shows the effect of price changes in gold, with other variables held constant. FY2019 FY2018 Change in year- end price Effect on profit before tax Effect on pre- tax equity +3% -3% +3% -3% 13,806 (13,806) - - 13,806 (13,806) - - Artemis Resources Limited Annual Financial Report – June 2019 95 | P a g e Notes to the Financial Statements 18. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) (v) Liquidity Risk The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, convertible notes and finance leases. Cash flows from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that banking facilities will roll forward. The following tables below reflect an undiscounted contractual maturity analysis for financial liabilities. FY2019 Within 1 year 1 to 5 years Over 5 years Total Financial liabilities due for payment Trade and other payables Financial Liabilities Total contractual outflows Cash and cash equivalents Trade and other receivables Total anticipated inflows Net outflow on financial instruments 1,516,278 5,792,078 7,308,356 821,481 54,501 875,982 (6,432,374) - - - - - - - - - - - - - - 1,516,278 5,792,078 7,308,356 821,481 54,501 875,982 (6,432,374) FY2018 Within 1 year 1 to 5 years Over 5 years Total Financial liabilities due for payment Trade and other payables Financial Liabilities Total contractual outflows Cash and cash equivalents Trade and other receivables Financial assets Total anticipated inflows Net inflow on financial instruments 7,446,797 3,914,024 11,360,821 27,048,303 1,470,953 430,730 28,949,986 17,589,165 - - - - - - - - - - - - - - - - 7,446,797 3,914,024 11,360,821 27,048,303 1,470,953 430,730 28,949,986 17,589,165 Artemis Resources Limited Annual Financial Report – June 2019 96 | P a g e Notes to the Financial Statements 18. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES (CONTINUED) Management and the Board monitor the Group’s liquidity reserve on the basis of expected cash flow. The information that is prepared by senior management and reviewed by the Board includes: (i) Annual cash flow budgets; (ii) Monthly rolling cash flow forecasts. (vi) Net Fair Value The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in Note 1. 19. COMMITMENT FOR EXPENDITURE The Group currently has commitments for expenditure at 30 June 2019 on its Australian exploration tenements as follows: Not later than 12 months Between 12 months and 5 years Greater than 5 years Consolidated 30 June 2019 $ 30 June 2018 $ 2,326,211 5,726,334 4,202,758 12,255,303 2,644,580 6,212,995 4,622,701 13,540,276 The Company evaluates its tenements and exploration programme on an annual basis and may elect not to renew tenement licences if it deems appropriate. Artemis Resources Limited Annual Financial Report – June 2019 97 | P a g e Notes to the Financial Statements 20. RELATED PARTY DISCLOSURES (a) Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s Key Management Personnel for the year ended 30 June 2019. Key Management Personnel for the year ended 30 June 2019 comprised the Directors, the Chief Executive Officer, General Manager Exploration and the General Manager Operations. (b) The total remuneration paid to Key Management Personnel of the Company and the Group during the year are as follows: Short term employee benefits Share based payment Superannuation Consolidated 30 June 2019 $ 30 June 2018 $ 1,207,051 1,526,891 34,758 2,768,700 843,735 1,998,063 694 2,842,492 (c) Remuneration options and performance rights: As at 30 June 2019, the outstanding options and performance rights that were granted in previous and current reporting periods comprised of 15,000,000 options and 6,000,000 performance rights. The 15,000,000 options for the Chief Executive Officer were forfeited following his resignation on 6 May 2019. Further details are contained in Note 23 to the financial statements. (d) Share and option holdings: All equity dealings with directors have been entered into with terms and conditions no more favourable than those that the entity would have adopted if dealing at arm’s length. (e) Related party transactions ADK Mining Services1 Doraleda Pty Ltd2 Integrated CFO Solutions3 Minerva Corporate Pty Ltd4 Consolidated 30 June 2019 $ 30 June 2018 $ 109,379 300,000 120,000 48,335 577,714 220,700 250,727 129,000 - 600,427 1 Director fees and consulting fees paid to ADK Mining Services Pty Ltd, a company in which Mr Alex Duncan-Kemp has an interest. 2 Director fees and consulting fees paid to Doraleda Pty Ltd, a company in which Mr Edward Mead has an interest. 3 Company secretary fees and consulting fees paid to Integrated CFO Solutions, a company in which Mr Guy Robertson has an interest. In 2019, these included fees of $36,000 (2018: $54,000) for accounting services. 4 Director fees and consulting fees paid to Minerva Corporate Pty Ltd, a company in which Mr Daniel Smith has an interest. Artemis Resources Limited Annual Financial Report – June 2019 98 | P a g e Notes to the Financial Statements 21. EARNINGS PER SHARE The calculation of basic earnings and diluted earnings per share at 30 June 2019 was based on the loss attributable to shareholders of the parent company of $9,347,739 (2018: Profit $12,073,913): Basic (loss)/earnings per share Diluted (loss)/earnings per share Weighted average number of ordinary shares: Used in calculating basic earnings per ordinary share Dilutive potential ordinary shares Used in calculating diluted earnings per share 22. AUDITOR’S REMUNERATION Auditor of parent entity Audit fees – HLB Mann Judd Audit fees – Hall Chadwick 23. SHARE-BASED PAYMENT Consolidated 30 June 2019 $ (1.44) (1.44) 30 June 2018 $ 2.22 2.02 No of Shares No of Shares 649,035,055 - 649,035,055 544,638,771 52,688,858 597,327,629 Consolidated 30 June 2019 $ 30 June 2018 $ 40,000 269 40,269 - 36,528 36,528 Goods or services received or acquired in a share-based payment transaction are recognised as an increase in equity if the goods or services were received in an equity-settled share-based payment transaction or as a liability if the goods and services were acquired in a cash settled share-based payment transaction. For equity-settled share-based transactions, goods or services received are measured directly at the fair value of the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services is determined indirectly by reference to the fair value of the equity instrument granted. Transactions with employees and others providing similar services are measured by reference to the fair value at grant date of the equity instrument granted. Options issued to Key Management Personnel during the year are outlined in the remuneration report. Artemis Resources Limited Annual Financial Report – June 2019 99 | P a g e Notes to the Financial Statements 23. SHARE-BASED PAYMENT (CONTINUED) The following share-based payment arrangements were in place during the prior and current financial year: Instruments Date granted Expiry date Options Options Options Options Performance Rights 30 November 2017 31 January 2018 30 November 2018 24 May 2019 8 November 2017 30 June 2020 31 January 2021 15 January 2021 31 July 2022 30 September 2019 Movement in share-based arrangements on issue (a) Options Balance at beginning of year Options granted during the year Options forfeited/lapsed during the year Options exercised during the year Balance at end of year Exercise price No. of instruments Fair value at grant date 0.44 6,000,000 0.45 5,439,858 0.21 8,571,429 0.03 0.01 0.08 0.08 18,652,175 0.02 NIL 15,000,000 0.09 Number of instruments 30 June 2019 30 June 2018 37,689,858 27,223,604 (26,250,000) - 38,663,462 101,002,903 41,689,858 (309,913) (104,692,990) 37,689,858 Options exercisable at end of year 38,663,462 37,689,858 (b) Performance rights Number of instruments 30 June 2019 30 June 2018 Balance at beginning of year Performance rights granted during the year Balance at end of year 15,000,000 - 15,000,000 - 15,000,000 15,000,000 Artemis Resources Limited Annual Financial Report – June 2019 100 | P a g e Notes to the Financial Statements 23. SHARE BASED PAYMENT (CONTINUED) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the year: Sign on fee for director, issued as shares Options – directors Options - chief executive officer Performance rights – directors Performance rights – employees Options – convertible note holder Options – other consultants Consolidated 30 June 2019 $ 675,000 295,375 (6,393) 487,854 75,055 1,991,793 - 3,518,684 30 June 2018 $ 1,525,000 172,302 6,393 406,546 62,545 77,212 90,001 2,339,999 24. RECONCILIATION OF NET CASH USED IN OPERATING ACTIVITIES TO LOSS AFTER INCOME TAX (Loss)/Profit after income tax Depreciation Exploration and project expenditure written off Share based payments Finance costs, non cash Provision for diminution on value of investments Net fair value loss on financial instruments designated as fair value through profit or loss Unrealised foreign exchange gain Non-cash fee received on entering Novo Resources Corp. joint venture Loss/(profit) on sale of investments Changes in current assets and liabilities during the financial period: Decrease/(increase) in receivables Increase in inventories Increase in trade and other payables Net cash outflow from operating activities Consolidated 30 June 2019 $ (9,347,739) 40,892 701,261 3,518,684 336,452 - 541,720 (222,882) 30 June 2018 $ 12,073,913 10,406 202,445 2,339,999 - 316,087 - (172,206) - (15,037,990) 70,150 (3,552,995) 168,995 (460,202) 57,864 (4,594,805) (288,406) - 671,715 (3,437,032) Artemis Resources Limited Annual Financial Report – June 2019 101 | P a g e Notes to the Financial Statements 25. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES FY2019 Consolidated Opening balance Net cash from financing activities Non-cash restructuring fees issued to convertible loan notes holders Equity conversion Changes in fair value Other changes Closing balance Convertible loan note $ 3,914,024 1,605,608 145,180 (783,770) 379,555 334,609 5,595,206 Short term loan $ - 196,876 - - - - 196,876 FY2018 Consolidated Opening balance Net cash from/(used in) financing activities Equity conversion Changes in fair value Closing balance 26. RESTATEMENT OF COMPARATIVE FIGURES Convertible loan note $ 2,265,965 4,026,409 (2,232,791) (145,559) 3,914,024 Short term loan $ 60,000 (60,000) - - - The Group recognised an error in its classification of development expenditure during the year. Previously, the development expenditure was classified as exploration expenditure. The impact on the comparative balances are as follows: Previously reported: Exploration, evaluation and development expenditure Plant and equipment After reclassification: Exploration and evaluation expenditure Development expenditure Plant and equipment Consolidated 30 June 2018 $ 30 June 2017 $ 40,474,892 - 40,474,892 7,839,090 1,161,615 9,000,705 28,761,826 11,713,066 - 40,474,892 6,299,352 2,693,353 8,000 9,000,705 Artemis Resources Limited Annual Financial Report – June 2019 102 | P a g e Notes to the Financial Statements 27. PARENT ENTITY DISCLOSURE (a) Financial position Total current assets Total Non-Current Assets Total Assets Total current liabilities Total Liabilities Net Assets Equity Share capital Reserves Accumulated Losses (b) Commitments Exploration commitments Not later than 12 months Between 12 months and 5 years 30 June 2019 $ 30 June 2018 $ 1,524,772 15,823,288 17,348,060 7,166,151 7,166,151 28,471,293 36,635,439 65,106,732 6,496,174 6,496,174 10,181,909 58,610,558 81,438,336 2,571,003 (73,827,430) 10,181,909 79,127,087 724,999 (21,241,528) 58,610,558 255,055 47,870 302,925 81,900 68,250 150,150 Artemis Resources Limited Annual Financial Report – June 2019 103 | P a g e Notes to the Financial Statements 28. SUBSIDIARIES Country of Incorporation Ownership % 30 June 2019 30 June 2018 Parent Entity: Artemis Resources Limited Subsidiaries: Fox Radio Hill Pty Limited Karratha Metals Limited KML No 2 Pty Limited Armada Mining Pty Limited Shearzone Mining Pty Limited Western Metals Pty Limited1 Elysian Resources Pty Limited Hard Rock Resources Pty Limited Artemis Graphite Pty Ltd Artemis Management Services Pty Ltd Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia - 100 100 100 100 100 80 100 100 100 100 1 The assets, liabilities and the profit or loss of the non-controlling interest is immaterial Consolidated - 100 100 100 100 100 80 100 100 100 100 The parent entity with the Group is Artemis Resources Limited which is the ultimate parent entity in Australia. Transactions with subsidiaries Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation. 29. FINANCIAL INSTRUMENTS The Directors consider that the carrying amounts of current receivables and current payables (except for Note 15. Financial liabilities) are a reasonable approximation of their fair values. 30. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS There are no contingent liabilities or contingent assets since the last annual reporting period. Artemis Resources Limited Annual Financial Report – June 2019 104 | P a g e Notes to the Financial Statements 31. EVENTS SUBSEQUENT TO 30 JUNE 2019 On 31 July 2019, a total of 87,338,535 shares were issued under a Share Purchase Plan at a price of $0.031 per share, raising $2,707,500 before costs. The Company also issued 16,500,000 options to Directors (Exercise price: $0.08; Expiry date: 15 May 2022), 18,652,175 options to financiers (Exercise price: $0.08; Expiry date: 31 July 2022), 10,000,000 options to underwriters (Exercise price: $0.08; Expiry date: 31 July 2022) and 10,000,000 options to advisor (Exercise price: $0.08; Expiry date: 31 July 2022). On 16 July 2019, the Company signed binding agreement to acquire 100% of Rincon Resources Ltd, which holds rights to three highly prospective Au-Cu projects in Western Australia. The Company has paid a non-refundable exclusivity fee of $75,000. The Company will also issue a fully paid ordinary shares with a total value of $2.7m which is conditional upon the completion of due diligence by the Company. Upon completion of this transaction, Mr Zeffron Reeves will be appointed as a Non-Executive director of the Company. Other than as outlined above there are no currently no matters or circumstances that have arisen since the end of the financial year that have significantly affected or may significantly affect the operations the Group, the results of those operations, or the state of affairs of the Group in the future financial years. Artemis Resources Limited Annual Financial Report – June 2019 105 | P a g e Directors’ Declaration 1. In the opinion of the Directors of Artemis Resources Limited: a. the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including: i. giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year then ended; and ii. complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements. b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. c. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019. This declaration is signed in accordance with a resolution of the Board of Directors. Edward Mead Executive Director 27 September 2019 Artemis Resources Limited Interim Financial Report – June 2019 106 | P a g e INDEPENDENT AUDITOR’S REPORT To the members of Artemis Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Artemis Resources Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1 in the financial report, which indicates that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. 107 | P a g e Key Audit Matter How our audit addressed the key audit matter Capitalised Exploration and Evaluation Expenditure Refer to Note 11. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group capitalises exploration and evaluation expenditure and as at 30 June 2019 had a deferred exploration and evaluation expenditure balance of $37,027,656. the users’ understanding of Exploration and evaluation expenditure was determined to be a key audit matter as it is important to financial statements as a whole and was an area which involved the most audit effort and communication with those charged with governance. the Our procedures included but were not limited to: - Obtained an understanding of the key processes with management’s review of the carrying value of exploration and evaluation expenditure; associated - Considered the Directors’ assessment of potential indicators of impairment in addition own assessment; to making our - Obtained evidence that the Group has current rights to tenure of its areas of interest; - Considered the nature and extent of planned ongoing activities; - Substantiated a sample of expenditure supporting agreeing to by documentation; and Carrying Value of Development Expenditure Refer to Note 12. The Group has development expenditure of $23,523,620 in relation to construction of the Radio Hill Gold Recovery Circuit Processing Facility for the Carlow Castle Project. The company concluded there were impairment indicators and an impairment assessment was conducted under AASB 136 Impairment of Assets at balance date. This involved a comparison of the recoverable amount of the Carlow Castle Project assets with their carrying amounts in the financial statements. The evaluation of the recoverable amount of these assets is considered a key audit matter as it was based upon a model which required significant judgement in verifying the key assumptions supporting the expected discounted future cash flows of the Carlow Castle Project. In addition, our audit focussed on the Group’s assessment of the carrying amount of the development expenditure as this is one of the most significant assets of the Group. - Examined the disclosures made in the annual report. Our procedures included but were not limited to: - Obtained an understanding of the process associated with the preparation of the model to assess the recoverable amount of the Carlow Castle Project; - Critically evaluated management’s methodology in the model and the basis for key assumptions; - Performed sensitivity analysis around the key inputs in the model that either individually or collectively would be required for assets to be impaired and considered the likelihood of such movement in those key assumptions; - Considered whether the assets comprising the Radio Hill cash- generating unit had been correctly allocated; - Considered the appropriateness of the discount rate used in the model; - Substantiated a sample of expenditure incurred during the year by agreeing to supporting documentation; and - Examined the disclosures made in the financial report. 108 | P a g e Valuation of Convertible Notes Refer to Note 15. The Group restructured its existing funding agreement and entered into a second funding agreement with the Riverfort Group during the year. The fair value of the convertible notes at 30 June 2019 was $5,595,206. The valuation of the convertible notes is considered a key audit matter due to the complexity of accounting for the variations on the convertible notes and subsequent fair value measurement. The convertible notes are also the Group’s largest current liability. Provision for Mine Rehabilitation Refer to Note 12. The carrying value of the Group’s provision for restoration and rehabilitation at balance date is $1,413,123. The provision for restoration and rehabilitation is a key audit matter due to the significant judgement involved in estimating costs which are planned to be incurred in future years and the related timing of incurring those costs. Our procedures included but were not limited to: - Reviewed financing variations arrangements. the the arrangement both the new the and financing independent expert - Obtained terms of on valuation of the convertible notes. - Considered whether the transaction costs incurred for restructuring the convertible notes have been accounted for correctly under AASB 9 Financial Instruments. - Considered whether the change in the fair value of the convertible notes had been accounted for correctly under AASB 9 Financial Instruments. the competence Our procedures included but were not limited to: - Assessed and objectivity of management personnel who prepared the costing estimates. - Critically challenged the key estimates and assumptions made in the costing report and performed sensitivity analyses. - Assessed the expected timing of the restoration and rehabilitation costs in the respective life of mine model. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. 109 | P a g e In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - - - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. - We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 110 | P a g e Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Artemis Resources Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards HLB Mann Judd Chartered Accountants Perth, Western Australia 27 September 2019 B G McVeigh Partner 111 | P a g e ASX Additional Information Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report. The information was prepared based on share registry processed up to 25 September 2019. Distribution of shareholders The distribution of shareholdings as at 25 September 2019 was: Spread of Holdings 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 + over Totals Holders Securities % of Issued Capital 183 871 658 1,845 703 4,260 57,967 2,732,579 5,341,962 72,804,631 668,442,461 749,379,600 0.01% 0.36% 0.71% 9.72% 89.20% 100.00% The number of shareholders who hold less than a marketable parcel is 1736. Substantial shareholders The names of the substantial shareholders in the Company, the number of equity securities to which each substantial holder’s associates have a relevant interest, as disclosed in substantial holding notices given to the Company are: Holders Name No of shares % of Issued Capital Exchange Minerals Limited 47,614,711 6.35% Artemis Resources Limited Interim Financial Report – June 2019 112 | P a g e ASX Additional Information  Top twenty (20) largest holders ordinary share  Top holders grouped report Artemis Resources Limited Security class: ARV - ORDINARY FULLY PAID SHARES As at date: Display top: 25-Sep-2019 20 Position 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 16 16 17 18 19 20 Holder Name HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED EXCHANGE MINERALS LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NATIONAL NOMINEES LIMITED BATTLE MOUNTAIN PTY LIMITED BNP PARIBAS NOMINEES PTY LTD CYGNUS 1 NOMINEES PTY LTD SORRENTO RESOURCES PTY LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED DEUTSCHE BALATON AKTIENGESELLSCHAFT BNP PARIBAS NOMS PTY LTD MR JAY EVAN DALE HUGHES INKESE PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 D & K CORPS INVESTMENTS PTY LTD MR STEPHEN SEGAL & MRS CAROL SEGAL MR JAY HUGHES & MRS LINDA HUGHES RIUOHAURAKI LIMITED DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT LUCO PROPERTY GROUP PTY LTD CURIOUS CAPITAL GROUP PTY LTD Total Total issued capital - selected security class(es) Holding 70,102,587 68,206,131 47,614,711 38,801,538 24,500,000 23,523,647 21,061,347 17,039,557 15,750,000 14,010,529 12,500,000 9,199,873 8,000,000 7,250,000 5,692,528 5,000,000 5,000,000 % IC 9.35% 9.10% 6.35% 5.18% 3.27% 3.14% 2.81% 2.27% 2.10% 1.87% 1.67% 1.23% 1.07% 0.97% 0.76% 0.67% 0.67% 5,000,000 0.67% 3,665,870 2,750,000 2,720,248 2,500,000 0.49% 0.37% 0.36% 0.33% 409,888,566 749,379,600 54.70% 100.00% Artemis Resources Limited Annual Financial Report – June 2019     113 | P a g e                             ASX Additional Information Unquoted securities Number 13,000,000 Holders 3 +Class Director employee rights expiry 30 September 2019. 2,000,000 6,000,000 5,439,858 8,571,429 3,923,913 1 3 1 1 2 Employee performance rights expiry 30 September 2019. Unlisted options exercisable at 44 cents on or before 30 June 2020. Unlisted options exercisable at 45.38 cents on or before 31 January 2021. Unlisted options exercisable at 21 cents on or before 30 November 2021. Convertible notes with a maturity date of 31 January 2020 which are convertible into a maximum of 36,171,466 fully paid ordinary shares on the terms announced on 15 January 2019, as amended by announcement dated 24 May 2019. Includes additional 100,000 convertible notes issued as a restructure fee. 16,500,000 2 Unlisted Director Options exercisable at 8 cents and expiry date 15 May 2022 18,652,175 2 Convertible noteholder options exercisable to 8 cents a share and expiry 31 July 2022 20,000,000 2 Advisor options exercisable at 8 cents a share and expiry date 31 July 2022 Artemis Resources Limited Annual Financial Report – June 2019 114 | P a g e 

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