Aspire Mining Limited
Annual Report 2020

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A S P I R E M I N I N G L I M I T E D Annual Report 2020 Corporate Information ASPIRE MINING LIMITED ABN 46 122 417 243 DIRECTORS SHARE REGISTRY Automic Group Level 2, 267 St Georges Terrace PERTH WA 6000 AUSTRALIA Mr Achit-Erdene Darambazar (Managing Director) Telephone: 1300 288 664 Mr David Paull (Non-Executive Chairman) Mr Boldbaatar Bat-Amgalan (Non-Executive Director) SOLICITORS Mr Neil Lithgow (Non-Executive Director) Corrs Chambers Wesgarth Lawyers Ms Hannah Badenach (Non-Executive Director) Level 6, Brookfield Place Tower 2 COMPANY SECRETARY Mr Philip Rundell REGISTERED OFFICE Mezzanine Level 190 St Georges Terrace, PERTH WA 6000 AUSTRALIA Telephone: +61 8 9287 4555 123 St Georges Terrace PERTH WA 6000 AUSTRALIA BANKERS National Australia Bank Level 1, 1238 Hay Street WEST PERTH WA 6005 AUSTRALIA AUDITORS Email: info@aspiremininglimited.com HLB MANN JUDD (WA Partnership) PRINCIPAL PLACE OF BUSINESS AUSTRALIA Mezzanine Level 190 St Georges Terrace, PERTH WA 6000 MONGOLIA Chingeltei District, 1st Khoroo Baga Toiruu-17 JJ Tower, 9th Floor ULAANBAATAR 15170 Level 4, 130 Stirling Street PERTH WA 6000 AUSTRALIA KPMG #602, Blue Sky Tower, Peace Avenue 17, 1 Khoroo Sukhbaatar District ULAANBAATAR 14240 MONGOLIA SECURITIES EXCHANGE LISTING AKM WEBSITE www.aspiremininglimited.com Table of Contents OPERATIONAL OVERVIEW Chairman’s Letter Operational Review Coal Projects Community Relations Rail Infrastructure Investment Corporate ii iv vi xvi xxii xxiii FINANCIAL & SHAREHOLDER REPORTING Corporate information Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report Additional Shareholder Information 1 2 16 17 18 19 20 21 51 52 56 ASPIRE MINING LIMITED ANNUAL REPORT 2020 | Chairman’s Letter Dear Shareholders a transformational During the year just passed your Company completed transaction aimed squarely at building a solid foundation for the future development of the 100% owned Ovoot Coking Coal Project, for the benefit of shareholders and the local communities in which we will operate. The equity markets have opened for listed companies with Mongolian resource projects in 2019/20. Your company led the charge with the A$33.5 million placement to major shareholder Mr Tserenpuntsag. This placement was more than just about raising funds to provide a strengthened and substantive balance sheet. The placement was also part of a strategy for the Company to present as a more Mongolian aligned company and to ameliorate the local negative reactions to foreign investment. The substantial investment from Mr Tserenpuntsag was accompanied by commitments to provide future equity support and debt loans or guarantees of up to $100 million. A ringing endorsement of your Company and its projects by a very successful and well respected Mongolian business identity. With the backing of Mr Tserenpuntsag, the Company is well positioned to fund the valuable Ovoot Early Development Project. However momentum has been slowed by the COVID-19 pandemic and the Mongolian Government’s successful response. This has impacted on the Company’s ability to host community consultation meetings which are necessary to complete the permits and approvals processes. While we have been on standby, the Company has been engaging directly with local community leadership, negotiating a joint community development plan and identifying opportunities to partner with local businesses to ensure that the benefits of resource development at Ovoot are spread far and wide. The coking coal market itself has been negatively impacted by industrial shut downs in the global steel industry. China’s steel industry recovered ahead of most driven by Government stimulus, while other large consumers such as Japan and India are rebuilding. As governments continue to provide economic support to the post COVID recovery, coking coal demand is predicted to improve along with prices in 2021. Aspire intends to make the Ovoot Coking Coal Project a first world development that will provide high quality, well paying jobs, community benefits and use current technologies to ensure efficiency and mitigate environmental impacts. The Company is focusing on efficient coal beneficiation technology that will be powered by renewables. Trucking of washed coal product to the Mongolian rail network will focus on high efficiency trucking technology which limits emissions and other wastes along sealed roads to avoid the dust issues on unsealed roads seen in the south of the Country. Aspire intends to make the Ovoot Coking Coal Project a first world development that will provide high quality, well paying jobs, community benefits and use current technologies to ensure efficiency and mitigate environmental impacts. I am proud of the community initiatives developed over the year through our Community Relations team listening to the pressing needs of the local community. We have built heated bathrooms for the regional boarding school, started a joint vocational training scheme with the local technical college and funded health days where medical clinicians go into the herder communities to provide medical help. Our commitments to buy locally has seen a focus on capacity building where we can assist. We have also developed a plan to grow livestock fodder locally to support local herders rather than reliance on expensive imports. On behalf of shareholders, I wish to thank our staff and management team, particularly the dedicated Community Relations teams in the field who have been pivotal in building local understanding and support. David Paull Chairman Top: The Company co-operated with UNICEF, sponsoring artists to paint at five locations, calling for inclusive society in “Rainbow Cover” project in Murun Soum, Khuvsgul Airmag. Middle & Bottom: Pupils at Murun Soum, Khuvsgul Airmag, in front of paintings called “You are Unique” and “Hear Me”. ii CHAIRMAN’S LETTER iii ASPIRE MINING LIMITED ANNUAL REPORT 2020 | Operational Overview Listed on the Australian Stock Exchange, Aspire Mining Limited (ASX : AKM, Aspire or the Company) is a metallurgical coal resource development and infrastructure company with all of its assets in Mongolia. STRATEGY The Company’s strategy is to create wealth for shareholders through the discovery and development of metallurgical coal deposits. There are only limited areas around the world where coal suitable for use to make coke for steel making are formed and make up just a small fraction of coal deposits found globally. In 2010 the Company identified that Mongolia had both the right geological environment to host large coking coal deposits and the proximity to China, the world’s largest market for coking coal. Since then the Company has discovered the world class Ovoot Coking Coal Project and acquired the nearby Nuurstei Coking Coal Project. iv iv OPERATIONAL OVERVIEW v Above: Ovoot Coking Coal Project Mongolia has both the right geological environment to host large coking coal deposits and the proximity to China, the world’s largest market for coking coal. ASPIRE MINING LIMITED ANNUAL REPORT 2020 | Coal Projects OVOOT COKING COAL PROJECT (100%) The Ovoot Coking Coal Project (Ovoot or Ovoot Project) is a world class coking coal discovery in Northern Mongolia. In March 2019 the Company announced the results of a Pre-Feasibility Study (“PFS”) for the Ovoot Early Development Project (“OEDP”) which aims to produce up to 4 million tonnes per annum of a washed “fat” coking coal. Fat coking coal is valuable in the Chinese and Russian steel industries due to its excellent blend carrying characteristics and the ability to improve coke quality when blending with lower quality coking coals. The OEDP involves mining a relatively low ash, low strip ratio and high yielding “fat” coking coal from a starter pit that sits within a larger 255Mt Ovoot JORC Reserve1 (“Ovoot Project Reserve”) envelope which assumes a rail link is eventually built between the mine and Ovoot. In November 2019, the OEDP PFS Extended Case was updated2 with the current mining contractor quoted rates which reduced C1 cash costs per tonne of product from the previously advised US$83/t to US$76/t for coal delivered to the China/Mongolia border. Logistics costs were essentially reconfirmed. In August 2012, the Company received a mining license granting a minimum 30 year tenure over the deposit. A summary of the outcomes of the updated PFS relative to the initial study are on the next page in Table 1: The OEDP is based on trucking washed coal from the mine site to the nearest rail head at Erdenet, approximately 560 kms to the east away. From there coal can be railed to end customers in China and Russia. 1 The Ovoot Project Reserve is defined as the 255 Mt Coal Reserve Estimate announced on 31 January 2014. 2 Refer to ASX Announcement 11 November 2019. The Company confirms that at this time it is not aware of any new information or data that materially affects the information included in the announcements, and that all material assumptions underpinning the estimates continue to apply and have not materially changed. On completion, the OEDP Definitive Feasibility Study will identify any new information, data or change to material assumptions used in the OEDP Pre-Feasibility Study. Table 1: Physical and Operating Cost Assumptions Physicals Waste Mined (M Bcm) Strip Ratio (Bcm/tcoal) (incl. pre-strip) Coal Mined (Mt) Average Yield (10% moisture) Coal sold (net of 2% loss) (Mt) Life of Mine Operating Costs Mining ($/t) Trucking ($/t) Rail + Border Charges ($/t) C1 Cash Costs ($/t) Total Cash Costs ($/t) Average Annual PFS Extended Case Updated PFS Extended Case 19.7 4.6 4.0 253.6 253.6 4.7 53.8 86% 45.2 4.7 53.8 85% 44.7 12.5 years 12.5 years 33 32 18 83 102 26 32 18 76 97 In order to bring the washed “fat” coking coal to market, an onsite Coal Handling and Preparation Plant will need to be constructed along with supporting infrastructure at both the mine site and the Erdenet Rail Terminal. The mine capital expenditure is made up of: Table 2: Summary Mine Capital Item (US$) CHPP Plant Onsite infrastructure Offsite terminals and blending facility Mine Processing and Infrastructure Waste Pre-stripping Total Mine Capital PFS Extended Case Updated PFS Extended Case 37 10 16 63 47 110 37 10 16 63 31 94 vi OPERATIONAL OVERVIEW vii ASPIRE MINING LIMITED ANNUAL REPORT 2020 | The OEDP will transform Aspire into a significant pure play coking coal producer positioned in the second quartile of the global cost curve. Completion of the Definitive Feasibility Study has been delayed due to delays in being able to hold local community public meetings as required by regulations because of COVID-19 restrictions put in place by the Mongolian Government. Mining and process engineering designs for the OEDP PFS have been developed to support capital and operating estimates to an accuracy of ±25% and ±15% respectively. Key assumptions that the PFS is based on are outlined in the Company’s full statement released to the ASX on 11 November 2019. Aspire has concluded it has a reasonable basis for providing the forward- looking statements in this report. For the purposes of this Ovoot PFS, a flat price of US$150/t Delivered at Place to the Erlian border for Ovoot “fat” coking coal has been used based on a detailed Chinese “fat” coking coal market report completed by Fenwei Energy Information Services Ltd (Fenwei) in December 2018. The impact of the Covid-19 pandemic has caused disruptions to economies globally and the steel industry in particular. Seaborne prices for coking coal have fallen substantially over 2020 although there has been improvement in late September 2020. The shutdown of the Indian steel industry caused significant dislocation in the seaborne market although the rapid return to work in China supported their domestic coking coal miners. The market expectation is that governments will be investing heavily in infrastructure which will be supportive of steel prices and volumes into 2021. Note in Figure 1 below, the relative stability of Chinese domestic pricing versus the volatility seen in seaborne markets. The OEDP PFS confirms that significant coking coal production can be achieved from Ovoot in a low capital intensity manner to unlock attractive economics that are not dependent on the construction of the Ovoot to Erdenet railway. The OEDP will transform Aspire into a significant pure play coking coal producer positioned in the second quartile of the global cost curve. Figure 1: Seaborne Australian HCC FOB versus Chinese Domestic Pricing. Source: sxcoal.com, UBS, Metal Bulletin Above: Ovoot Coking Coal Project viii OPERATIONAL OVERVIEW ix ASPIRE MINING LIMITED ANNUAL REPORT 2020 | ERDENET TO OVOOT HAUL ROAD In order to deliver the planned coking coal volumes to the rail terminal at Erdenet identified in the OEDP PFS, a special purpose road is to be built between Ovoot and Erdenet. A scoping study was completed in 20193 using Mongolian road consulting engineers, RCSC LLC, that reviewed a number of alternative routes including following the planned Mogoin Gol to Erdenet rail path. The favoured option is a special purpose public road with a distance of 560km that links several soum centres in Khuvsgul with the town of Murun, the capital of Khuvsgul, through to the rail head at Erdenet. The Mogoin Gol to Erdenet road alignment was studied by the Khuvsgul airmag government and has now been included in its February 2020 Road Development Plan to 2030 (see Figure 2). The approval allows for community engagement with each of the soums along the path to gain final Ministry approval for the alignment and completion of the definitive engineering study. The road will be sealed with a cost effective sealant used in a number of cold climate applications to suppress dust and is approved for use in Mongolia. Simulations have been conducted looking to optimize design gradients with truck and trailer combinations. The scoping level engineering study cost of road construction before contingencies prepared in 2019 is made up as follows: Table 3: Haul Road Capital Costs Road Bridges and culverts Total US$m 130 35 165 Note: The above capital costs are estimated to an accuracy of ±25%. The above costs are at scoping study level and will be updated once final alignment approval and detailed design and geotechnical data have been received. NUURSTEI COKING COAL PROJECT (90%) The Company completed the acquisition of the corporate entities that held the remaining 45% interest in the project in July 2017 for US$1 million, increasing the Company’s total interest in the Nuurstei Project to 90%. In October 2017, a Mining License was issued over the deposit. Existing near surface Indicated resources of 4.8 Mt and Inferred resources of 8 Mt could potentially enable a modest mining operation washing the relatively high ash raw coal down to a 10% ash product. Coke Oven test work in 2018 on an indicative sample of Nuurstei Coking Coal showed outstanding results. Further drilling and other engineering work is required in order to complete early stage feasibility work at Nuurstei. However, this work has been deferred while negotiations with the local community continued but was overtaken and replaced in 2019 by the change in strategy to development the more advanced and far larger scale Ovoot Early Development Project. No substantive work was conducted on this Project during the year. Figure 2: Approved 560 km road alignment: Mogoin Gol - Ovoot - Murun - Erdenet. 3 Refer to ASX Announcement 11 November 2019. The Company confirms that at this time it is not aware of any new information or data that materially affects the information included in the announcements, and that all material assumptions underpinning the estimates continue to apply and have not materially changed. On completion, the OEDP Definitive Feasibility Study will identify any new information, data or change to material assumptions used in the OEDP Pre-Feasibility Study. Above: Otta Seal Construction (2007) and finished road. x x OPERATIONAL OVERVIEW xi ASPIRE MINING LIMITED ANNUAL REPORT 2020 | JORC RESERVES & RESOURCES Table 4: JORC Reserves and Resources Deposit Probable Reserves Measured Indicated Measured + Indicated Inferred Resources Ovoot Open Pit(2) 247.0 197.0 Ovoot Underground(2) Nuurstei(3) Total 8.0 - - - 255.0 197.0 46.9 25.4 4.8 77.1 243.9 25.4 4.8 274.1 9.2 2.6 8.1 19.9 Notes: 1. Ovoot’s Resource and Reserve estimates have been estimated by independent third parties (Xstract Mining Consultants Pty Ltd) and are reported in accordance to the JORC 2012 Code. 2. For full JORC 2012 disclosure in relation to the Ovoot project JORC 2012 Coal Resources and Reserves, refer the Company’s Quarterly Report for the period ended 31 December 2013, which is available to view on the Company’s website and the ASX Announcements platform. The Company is not aware of any new information or data that materially affects the information included in this December 2013 Quarterly Report. All material assumptions and technical parameters underpinning the estimates in the December 2013 Quarterly Report continue to apply and have not materially changed. 3. Nuurstei’s Resource and Reserve estimates have been estimated by independent third parties (McElroy Byran Geological Services) and are reported in accordance to the JORC 2012 Code. 4. The JORC Code (2012) compliant Ore Reserves and JORC compliant Mineral Resources for the Nuurstei Coking Coal Project is reported in the Company’s ASX Announcement dated 13 April 2016 which is available to view on the Company’s website and the ASX Announcements platform. The Company is not aware of any new information or data that materially affects the information included in the 13 April 2016 announcement. All material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed. Competent Persons Statement: Ovoot Coking Coal Project Competent Persons Statement Nuurstei Coking Coal Project The information in this report that relates to Reporting of Coal Resources at Nuurstei Project, is based on information compiled under the supervision of, and reviewed by, the Competent Person, Mr Parbury, who is a full time employee of McElroy Bryan Geological Services, is a Member of the Australasian Institute of Mining and Metallurgy (Member #101430) and who has no conflict of interest with Aspire Mining Limited. The reporting of Coal Resources for 13580X presented in this report has been carried out in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’, The JORC Code 2012 Edition prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). Mr Parbury has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 JORC Code. Mr Parbury consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. In accordance with the Australian Securities Exchange requirements, the technical information contained in this an- nouncement in relation to the JORC Code (2012) Compliant Coal Reserves and JORC Compliant Coal Resource for the Ovoot Coking Coal Project in Mongolia has been reviewed by Mr Ian De Klerk and Mr Kevin John Irving of Xstract Min- ing Consultants Pty Ltd. The Coal Resources at Ovoot Project documented in this release are stated in accordance to the JORC Code, 2012. They are based on information compiled and reviewed by Mr. Ian de Klerk who is a Member of the Australasian Institute of Mining and Metallurgy (Member #301019) and is a full time employee of Xstract Mining Consultants Pty Ltd. He has more than 20 years’ experience in the evaluation of coal deposits and the estimation of coal resources. Mr. de Klerk has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2012. Neither Mr. de Klerk nor Xstract have any material interest or entitlement, direct or indirect, in the securities of Aspire Mining Limited or any companies associated with Aspire Mining Limited. Fees for work undertaken are on a time and materials basis. Mr. de Klerk consents to the inclusion of the Coal Resources based on his information in the form and context in which it appears. The Coal Reserves at Ovoot Project documented in this release are stated in accordance with the guidelines set out in the JORC Code, 2012. They are based on information compiled and reviewed by Mr. Kevin Irving who is a Fellow of the Australasian Institute of Mining and Metallurgy (Member #223116) and is a full time employee of Xstract Mining Consultants Pty Ltd. He has more than 35 years’ experience in the mining of coal deposits and the estimation of Coal Reserves and the assessment of Modifying Factors. Mr. Irving has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2012. Neither Mr. Irving nor Xstract have any material interest or entitlement, direct or indirect, in the securities of Aspire Mining Limited or any companies associated with Aspire Mining Limited. Fees for work undertaken are on a time and materials basis. Mr. Irving consents to the inclusion of the Coal Reserves based on his information in the form and context in which it appears x xii OPERATIONAL OVERVIEW xiii ASPIRE MINING LIMITED ANNUAL REPORT 2020 | OVOOT EARLY DEVELOPMENT PROJECT (OEDP) FMS LLC converted the existing Ovoot Resource Model to Surpac and assumed 5% dilution in the re-blocking exercise for Whittle re-optimisations. FMS then conducted an optimisation based on trucking product to the rail at Erdenet (as opposed to the assumptions and economics of a rail connection from Ovoot to Erdenet) and restricting maximum production to 4 million tonnes per annum being the current available rail capacity from Erdenet to markets. The pit selections produce a steady 4 Mtpa of saleable coal. The OEDP Reserves for the OEDP have been confirmed as: Table 5: OEDP Reserves Category Probable Ore Reserve Ore Open Pit OEDP Probable Ore Reserve Open Pit OEDP Plus OEDP Extension Coal Reserve (adb) ROM Mt Coal Reserve Total Moisture 2.0% arb ROM Mt ROM Coal (adb) Ash Content % ROM Coal (adb) CSN% 36.8 53.8 37.6 54.9 17.2 18.0 7.9 8.5 Table 6: OEDP Marketable Reserves Marketable Coal Reserve Total Moisture 10% arb Mt Product Specification adb Ash Content % Product Specification adb CSN% 32.2 46.2 10.5 10.5 8.5 8.5 Category Probable Product Reserve Ore Open Pit OEDP Probable Product Reserve Open Pit OEDP Plus OEDP Extension Notes: 1. The technical information and competent persons statements for the OEDP Reserves are reported in the Company’s ASX announcements dated 28 February and 1 March 2019 which are available to view on the Company’s website & the ASX Announcements Platform. 2. The Company confirms that at this time it is not aware of any new information or data that materially affects the information included in the announcements, and that all material assumptions underpinning the estimates continue to apply and have not materially changed. On completion, the OEDP Definitive Feasibility Study will identify any new information, data or change to material assumptions used in the OEDP Pre-Feasibility Study. Competent Persons Statement: Ovoot Early Development Project The OEDP Reserves in this release are stated in accordance with the JORC Code, 2012. They are based on information compiled and reviewed by Mr Julien Lawrence who is a Member of the Australasian Institute of Mining and Metallurgy (Member #209746) and is a full-time employee of FMS LLC. He has more than 20 years’ experience in the evaluation of coal deposits and the estimation of coal resources. Mr Lawrence has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2012. Mr Lawrence has no material interest or entitlement, direct or indirect, in the securities of Aspire Mining Ltd or any companies associated with Aspire Mining Ltd. Fees for work undertaken are on a time and materials basis. Mr Lawrence consents to the inclusions of the OEDP Reserves based on his information in the form and context in which it appears. xiv OPERATIONAL OVERVIEW xv xv ASPIRE MINING LIMITED ANNUAL REPORT 2020 | Community Relations:  Building our Social License to Operate The Company has been engaged through the year in providing information and educating stakeholders on the Ovoot Early Development Project (OEDP) on the environmental, social and governance impacts of this project development. Aspire Mining Limited is seeking to establish The Ovoot Coking Coal Project as a new medium scale open pit metallurgical coal mine in Northern Mongolia. Aspire believes that in order to become a successful, long-term operator in the mining sector in Mongolia, it is crucial to openly and transparently engage and educate the local communities in which it operates and demonstrate the sharing of benefits that a project of this scale can offer the local communities. In 2019 the Company signed a Voluntary Code of Practice for Responsible Mining along with a number of other leading Mongolian Miners in order to promote openness, transparency and sustainable development in the Mongolian mining sector. Further, the Company supports the Ten Principles of the United Nations Global Compact on human rights, labour, environment and anti- corruption. We are committed to making the UN Global Compact and its principles part of the strategy, culture and day to day operations of the Company advancing the UN’s Sustainable Development Goals. First and second row: In cooperation with the Mongolian Council for Sustainable Development and Social Responsibility, the Company organised a training on “Sustainable Development Reporting” for journalists in Khuvsgul Aimag. Third and fourth row: With the investment of “Khurgaitai Khairkhan” LLC, modern heated bathrooms were built for students at a regional boarding school in Tsetserleg Soum. xvi COMMUNITY RELATIONS xvii Above: The Company has conducted numerous family visitations across the local community in the vicinity of the planned Ovoot Coking Coal Project. The Sustainable Development Officer has met with local people and introduced the Company’s activities. ASPIRE MINING LIMITED ANNUAL REPORT 2020 | A COMMITMENT TO THE ENVIRONMENT Aspire is committed to developing its metallurgical coal assets in accordance with the United Nations “Equator Principles”. These are 10 overriding principles that cover environmental management, stakeholder engagement, transparency and accountability. The environmental base line studies, operational management plans and rehabilitation strategy are intended to meet both Mongolian environmental laws and where applicable adopt the higher standards required to meet Equator Principles. In the selection process for the Coal Handling and Preparation Plant (CHPP) the net amount of water consumption, post water recovery will be a key determinant of technology selection. As part of this process the Company will undertake annual independent environmental audits once production commences, with the results made available to provide accountability and transparency. Above: Aerial view of Tsetserleg Soum; Khuvsgul Aimag. PROVIDE A POSITIVE INFLUENCE TO LOCAL COMMUNITIES The Ovoot Early Development Project (OEDP) is located in Tsetserleg Soum within the Khuvsgul Airmag of Mongolia. The following chart shows the estimation of taxes and fees payable to the Soum, Airmag and the State over the first 10 years of the OEDP. The Tsetserleg Soum has a population of approximately 5,000 people with the majority of the population engaged with animal husbandry and government employment. Unemployment is over 20% and there has been progressive depopulation over 20 years as the particularly younger and mobile workers seek employment elsewhere. last There is currently an unsealed road which connects Tsetserleg to the Khuvsgul capital of Murun some 230 kilometres away and from there, access to the capital of Ulaanbaatar is achieved on a sealed road. The total special purpose road length contemplated in the OEDP is 560 kilometres with an estimated cost of approximately US$165m. The State budget has no funding set aside for building the connecting roads from Tseserleg to Murun which is where the OEDP can step in and specifically fund infrastructure such as this road. This will bring the soums around the OEDP closer to the rest of the Mongolian communities, improving access, commerce and safety. The leveraging of resource development to fund infrastructure is a key part of Mongolia’s Resource Development Policy. The OEDP development will provide over 200 high paying jobs in Tsetserleg and a significant boost in local government incomes. There is also a further 250 jobs in driving and servicing the road maintenance required to move the 4 million tonnes per annum from the Ovoot site to Erdenet which will cross 3 airmags and 14 soums targeted to provide employment. fleet and trucking the above the annual To put administrative budget for the Tsetserleg Soum is US$250,000. in context, Prior to mine development the Company will enter into a “Community Cooperation Agreement” (CCA) which will outline the Company’s priorities in relation to social investment in the Soum. The Company has already jointly funded with the Khuvsgul airmag the 28 bed Tsetserleg Soum medical centre and has provided financial assistance and distributes to sustain livestock numbers in affected areas in winter. feed USD 73.7 million USD 33.1 million 4% 8% 88% USD 767.3 million State Budget AIMAG Budget SOUM Budget Figure 3: Breakdown of taxes and fees to be paid (USD). xviii COMMUNITY RELATIONS xix ASPIRE MINING LIMITED ANNUAL REPORT 2020 | GOVERNANCE In June 2019, the Company signed on to a Voluntary Code of Practice on Responsible Mining, along with other leading Mongolian Mining Companies. The Code of Practice was developed by the Ministry of Mining and Heavy Industry and the Mongolian National Mining Association. The stated objective of the Code of Practice is to promote, introduce and pursue good standards of responsible mining in Mongolian mining sector and cooperate towards sustainable development of the sector. The Code places a high emphasis on transparency and accountability, much of which the Company already maintains due to its observance of ASX Listing Rules, as well as environmental protections. The Company maintains Board approved policies in relation to: ▲ An Anti Corruption Policy ▲ A Human Resource Policy that sets out measures to ensure anti-discrimination based on sex, race or religion. ▲ An Occupational Health and Safety Policy and risk assessment. relating In order to support governance, the Board of Directors has established a number of sub committees technical, to remuneration and audit & risk. These have been populated based on existing governance best practice and recommended by ASX guidelines to ensure separation of duties, accountability and Board oversight independent of management. finance, Above: Students of the Northern Miner Program, partaking in Operator Training for heavy machinery. Further, the Company’s procurement policies will be targeted at : ▲ Building diversification into local industries ▲ Building capacity ▲ Spreading the economic growth benefits of the OEDP into the wider community with an emphasis on reducing social and economic inequalities. The additional direct support, over and above the increased budget revenues will be determined in the final negotiation of the CCA. labour The Mongolian laws require a 95% Mongolian participation rate. The Company’s goal is to exceed this minimum however to do this it will need capacity building in the local labour market. The Company has already partnered with the Erdenet Technical Institute School to provide a range of vocational courses. The first intake in 2019 were trained in heavy earthmoving equipment with participants sourced locally. The Company’s employment policies will promote targeting gender equality, competitive pay, local candidates and building capacity gaps where needed. xx COMMUNITY RELATIONS xxi Right: Donation of protective equipment against the COVID-19 virus to the Khuvsgul Health Centre. ASPIRE MINING LIMITED ANNUAL REPORT 2020 | Rail Infrastructure Investment Aspire currently owns an 80% interest in Northern Railways LLC (NR), the Mongolian registered company that holds the Rail Concession to build the 547 kilometre long Erdenet to Ovoot Railway which is part of the Northern Rail Corridor, a new rail connection between China and Russia through Mongolia. The Concession Agreement with the Mongolian Government is to build, operate then transfer the railway to Government after 30 years. In this Concession, NR is supported by a consortium of experienced rail and bridge engineering and construction groups including China Gezhouba Group Corporation and China Railways Construction Corp Bureau 20 Group. In 2018 China Gezhouba Group funded and completed a feasibility study for the rail route which was lodged with the Mongolian rail authorities. In February 2020, NR received an extension from the Mongolian Government’s National Development Authority to the time period to meet the conditions precedent within the Concession Agreement by 18 months through to September 2021. Further development of the Rail project is dependent on the operator of the central rail line in Mongolia, Ulaanbaatar Railways JSC (UBTZ), providing a guarantee of future rail capacity for NR along the main line of 10 million tonnes per annum. Corporate While there were continued delays on the project development front, there was significant corporate developments as the Company sought to increase local community project and funding support through a shareholder approved placement to major Mongolian shareholder, Mr Tserenpuntsag. The placement was completed at 2.1 cents per share, a 27.7% premium to the 30 day moving average price, prior to the announcement of the transaction and saw Mr Tserenpuntsag’s investment in the Company increase from 27.5% to 51% with a $33.5 million investment. There was also $2.75 million raised with the exercise of 15.3 million options in December 2019 with Mr Tserenpuntsag converting all of his options which saw his ownership of the Company grow to 52.5% . Along with other existing Mongolian shareholders, the Company is now clearly majority Mongolian owned yet listed on ASX, a unique combination which may establish future models for Australian/ Mongolian resource company collaborations. The transaction with Mr Tserenpuntsag also offered other benefits. He has made a commitment to provide loans and/or guarantees for an amount of up to $100 million and to support future equity raisings to fund the Ovoot Early Development Project on a pro rata basis. Post the shareholder approved placement Mr Achit Darambazar moved from being a Non- Executive Director to Managing Director and CEO, with the Chairman, David Paull stepping down from executive duties. for issued capital of Post the placement in December 2019 the ten Company also undertook a one consolidation of the Company to bring the number of shares listed on Australian Stock Exchange Limited back within the norms for a resource development company of Aspire’s size and stage of development. the At 30 June 2020 the Company had cash of $40.7 million and no debt. The organization was restructured to reduce overhead expenditure while we await for the necessary permits and approvals needed to advance the Ovoot Coking Coal Project. CASH $40.7 million DEBT nil as of 30 June 2020 Above: Erdernet coal train xxii ASPIRE MINING LIMITED ANNUAL REPORT 2020 | RAIL INFRASRUCTURE INVESTMENT xxiii ASPIRE MINING LIMITED ANNUAL REPORT 2020 | Aspire Mining Limited THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK Aspire Mining Limited ABN 46 122 417 243 Annual Financial Report 30 June 2020 Contents Aspire Mining Limited Page - 1 - Aspire Mining Limited CORPORATE INFORMATION ................................................................................................................. 1 CORPORATE INFORMATION DIRECTORS’ REPORT ............................................................................................................................ 2 AUDITOR’S INDEPENDENCE DECLARATION ..................................................................................... 16 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .. 17 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................. 18 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................. 19 CONSOLIDATED STATEMENT OF CASH FLOWS .............................................................................. 20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ........................................................... 21 DIRECTORS’ DECLARATION ................................................................................................................ 51 INDEPENDENT AUDITOR’S REPORT .................................................................................................. 52 Solicitors Corrs Chambers Westgarth Lawyers Brookfield Place Tower 2 123 St Georges Terrace PERTH WA 6000 Bankers National Australia Bank Level 1, 1238 Hay Street WEST PERTH WA 6005 Auditors HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street PERTH WA 6000 KPMG #602, Blue Sky Tower, Peace Avenue 17, 1 Khoroo Sukhbaatar District ULAANBAATAR 14240 MONGOLIA Securities Exchange Listing AKM Website www.aspiremininglimited.com ABN 46 122 417 243 Directors Mr Achit-Erdene Darambazar (Managing Director) Mr David Paull (Non-Executive Chairman) Mr Boldbaatar Bat-Amgalan (Non-Executive Director) Mr Neil Lithgow (Non-Executive Director) Ms Hannah Badenach (Non-Executive Director) Company secretary Mr Philip Rundell Registered office Mezzanine Level 190 St Georges Terrace, PERTH WA, 6000 AUSTRALIA Telephone: Email: info@aspiremininglimited.com (08) 9287 4555 Principal place of business AUSTRALIA Mezzanine Level 190 St Georges Terrace, PERTH WA 6000 MONGOLIA Chingeltei District, 1st Khoroo Baga Toiruu-17 JJ Tower, 9th Floor ULAANBAATAR 15170 Share Register Automic Group Level 2, 267 St Georges Terrace PERTH WA 6000 AUSTRALIA Telephone: 1300 288 664 - 2 - - 3 - Aspire Mining Limited Aspire Mining Limited DIRECTORS’ REPORT DIRECTORS’ REPORT (continued) Names, qualifications, experience and special responsibilities (continued) Your Directors submit the annual financial report of the Group consisting of Aspire Mining Limited (“Aspire” or “Company”) and the entities it controlled during the financial year ended 30 June 2020. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: Mr Boldbaatar Bat-Amgalan Non-Executive Director Directors The names of Directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Mr Achit-Erdene Darambazar Managing Director Mr David Paull Non-Executive Chairman from 15 March 2020, previously Executive Chairman Mr Boldbaatar Bat-Amgalan Non-Executive Director from 15 December 2019, previously Executive Director Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore Mr Gan-Ochir Zunduisuren Executive Director (resigned 5 December 2019) Non-Executive Director Non-Executive Director Non-Executive Director (resigned 5 December 2019) Names, qualifications, experience and special responsibilities Mr Achit-Erdene Darambazar Executive Director Mr Achit-Erdene Darambazar was appointed Executive Director on 7 December 2018 and Managing Director on 5 December 2019. He is financial adviser to Mr Tserenpuntsag and President and CEO of Mongolian International Capital Corporation LLC (MICC), a leading Mongolian investment banking firm and the first investment advisory, stock underwriting and brokerage firm in Mongolia. He acted as lead advisor for the first bond offerings on the local stock exchange by major Mongolian companies, MCS and Gobi Corporation. He has also advised on a number of high profile transactions in Mongolia, including the privatisation of the Trade and Development Bank of Mongolia and Agricultural Bank. Mr. Darambazar has completed a Masters degree in International Relations from Columbia University and holds a Bachelors degree from Middlebury College. He has held no listed public company directorships in the last three years. Mr David Paull Non-Executive Chairman Qualifications: B.Com, FSIA, MBA (Cornell) Mr Boldbaatar Bat-Amgalan has had senior roles in public relations and publishing and was previously a director of Erdenet Mining Company. He also previously held senior roles in the Government of Mongolia, including the State Secretary for the Ministry of Foreign Affairs, and Chairman of the Communication Regulatory Commission. Mr Bat-Amgalan has had no listed public company directorships in the last three years. Mr Neil Lithgow Non-Executive Director Qualifications : MSc, F.Fin, M.AusIMM Mr Lithgow is a geologist by profession with over 27 years’ experience in mineral exploration, economics and mining feasibility studies, covering base metals, coal, iron ore and gold. He is also a member of the Australian Institute of Mining and Metallurgy. Mr Lithgow has previously worked for Aquila Resources Limited and Eagle Mining Corporation NL and is currently a Non-Executive Director of Australian Silica Quartz Group Ltd (previously Bauxite Resources Limited, appointed on the 15 May 2006). Mr Lithgow has had no other listed public company directorships in the last three years. Ms Hannah Badenach Non-Executive Director Qualifications: BA, LLB (Hons) Ms Badenach is currently Executive Director Mongolia & Base Metals at Noble Resources Limited. Ms Badenach is a lawyer, having practiced law for several years in Asia, including two years in Mongolia, starting in 2004 with Lynch & Mahoney. Ms Badenach has experience in management and development within Mongolia. Ms Badenach was Managing Director of QGX Mongol LLC from 2006, where Ms Badenach was responsible for the general management of the company until it was sold in 2008. Ms Badenach holds a Bachelor of Laws (Hons) and a Bachelor of Arts from the University of Tasmania. Ms Badenach was a Director of ASX listed and Mongolian focussed explorer, Xanadu Mines Limited from the 4 October 2011 to 1 November 2019. Ms Badenach has had no other listed public company directorships in the last three years. Mr Paull has over 28 years’ experience in resource business development and industrial minerals marketing. He was appointed Managing Director on 1 July 2010, after being involved in the recapitalisation of the Company and redirection to targeting Mongolian coking coal assets. Mr Alexander Passmore Non-Executive Director (resigned 5 December 2019) Qualifications: B.Sc(Hons) ASIA MAusIMM Mr Paull was appointed as Executive Director of the Company on 12 February 2010. With the retirement of the Non-Executive Chairman in March 2018, Mr Paull became the Executive Chairman. With the appointment of Mr Achit-Erdene Darambazar on 5 December 2019, Mr Paull transitioned to Non-Executive Chairman and Non-Executive Director on the 15 March 2020. Mr Paull has had no other ASX listed public company directorships in the last three years. Mr Passmore is a qualified geologist with a strong financial and technical background in the resource sector. Alexander has a diverse background having held technical roles in the industry and then senior positions in both the institutional debt financing and equity capital market arenas. Mr Passmore has a Bachelor of Science Degree with first class honours in Geology. Mr Passmore was a director of Equator Resources Ltd from September 2016 to July 2017. He was appointed Managing Director of Cockatoo Island NL in October 2016 and Rox Resources Limited on 30 April 2019. DIRECTORS’ REPORT (continued) Names, qualifications, experience and special responsibilities (continued) DIRECTORS’ REPORT (continued) - 4 - - 5 - Aspire Mining Limited Aspire Mining Limited Mr Gan-Ochir Zunduisuren Non-Executive Director (resigned 5 December 2019) Qualifications: B.Eng, MSGF (Stern) Mr Zunduisuren has over 15 years of experience in the resource sector including underground zinc mining, gold mining and mining business development in Mongolia and Canada. Mr Zunduisuren is Executive Director and co-founder of Altai Gold LLC, a mineral resource focused investment company, and was a key part of the syndicate that made the Ovoot Coking Coal project discovery. Mr Zunduisuren has a Degree in Mining Engineering from the Mongolian University of Science and Technology and a MSc in Global Finance from NYU Stern School of Business and HKUST. Company Secretary Mr Philip Rundell Company Secretary Qualifications: Dip BS (Accounting) CA Mr Rundell has had over 25 years’ experience as a Partner and Director of Coopers & Lybrand and Ferrier Hodgson, respectively, specialising in company reconstructions and corporate recovery. Mr Rundell has provided management accounting and company secretarial services over the last 10 years to a number of listed companies. Interests in the Shares and Options of the Company and Related Bodies Corporate As at the date of this report, the relevant interests of the current Directors in shares, options and rights of the Company are as follows: Directors Mr Achit-Erdene Darambazar Mr David Paull1 Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Number of fully paid ordinary shares Number of options over ordinary shares Number of performance rights over ordinary shares - 2,705,280 - 23,727,851 1,095,392 - - - - - - 916,666 - 725,000 361,666 1. Mr David Paull is a Director of Kingsland Corporate Pty Ltd (formerly 2R’s Pty Ltd) which is a beneficial owner of 2,073,680 ordinary shares and 916,666 performance rights. Mr David Paull is also a Director and shareholder of Paulkiner Pty Ltd, which is a beneficial owner of 631,600 ordinary shares. There were no options granted to Directors of the Company during or since the end of the financial year as part of their remuneration. There are no unpaid amounts on the shares issued. At the date of this report, there are no unissued ordinary shares of the Company under option. Performance rights on issue are as follows: Type Performance rights Expiry Date 30 June 2021 Exercise Price - Number of Rights 2,294,998 Dividends No dividends have been paid or declared since the start of the financial year and the Directors do not recommend the payment of a dividend in respect of the financial year. Principal Activities The principal activity of the Group during the year was the completion of the Ovoot Early Development Project (OEDP) Pre-Feasibility Study, progression for the approvals, completion of studies, and funding towards the development of the OEDP. Review of Operations Aspire is focused on the exploration and eventual development of metallurgical coal assets in Mongolia. Aspire owns: (a) a 100% interest in the large scale, world class Ovoot Coking Coal Project; and (b) a 90% interest in the Nuurstei Coking Coal Project. In December 2019, the Company entered into a Subscription Agreement and other agreements with Mr. Tserenpuntsag Tserendamba for Mr Tserenpuntsag to invest an additional $36.3 million in the Company by way of placement for $33.5 million and $2.8 million by exercise of options to further fund the implementation of the OEDP. At the Company’s Annual General Meeting held on 29 November 2019, shareholders approved the transactions with Mr. Tserenpuntsag. The proceeds of $A36.3 million before costs, together with existing cash reserves, will fully fund the Company to complete feasibility studies for the mine and road components of the OEDP to support a planned project financing and decision to mine in the second half of calender 2020. The OEDP involves mining a low ash and high yielding coal from a starter pit that sits within the previously defined Ovoot orebody and road transportation of the coal to the Erdenet rail connection. The designed production rate at Ovoot under the OEDP will be matched in the medium to long term to forecast logistics capacities which are limited by existing Mongolian rail capacity to a maximum of 4Mtpa. However, a phased development plan to initially produce lower tonnages is under assessment with a number of studies to be completed to determine feasibility. Progress has been affected by the COVID-10 pandemic with required community approvals and agreements delayed with bans on public meetings. Aspire’s Mongolian rail infrastructure subsidiary, Northern Railways LLC, holds a Concession Agreement from the Mongolian Government to build and operate 549km of rail from the town of Erdenet to the Ovoot Coking Coal Project in northern Mongolia. The Erdenet to Ovoot Railway is the optimum means to transport the coal from the Ovoot Coking Coal Project and Nuurstei Coking Coal Project. Construction of the railway is dependent on achieving a number of conditions precedent including land access agreements and funding. If and when commissioned, the Ovoot to Erdenet rail line is expected to support up to 10Mtpa of high quality washed coking coal from Ovoot on a low cost, long term basis. - 6 - - 7 - Aspire Mining Limited Aspire Mining Limited DIRECTORS’ REPORT (continued) Review of Operations (continued) In February 2020 the Mongolian Government extended the period in which to satisfy the Concession Agreement conditions precedent for a further 18 months to September 2021. Review of financial conditions At balance date, the Group had $40,712,949 (2019: $11,136,142) in cash assets. This balance will be sufficient to meet required community relations activities, approvals, permits and evaluation activities to advance towards development of the OEDP. Further raisings or other means of funding will be required for the capital infrastructure requirements for full development of the OEDP and the associated haul road. Operating results for the year The Group reported an operating loss after tax of $5,488,200 for the year ended 30 June 2020 (2019: Loss $6,200,307). Significant changes in the state of affairs Since the previous Annual Financial Report and during the financial year there has been no significant change in the state of affairs of the Group. Significant events after balance date There has not been any material matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. Likely developments and expected results The Group will continue with activities towards meeting its objective of developing the OEDP into production at the earliest opportunity. Risk management The Board is responsible for ensuring that risks are identified on a timely basis and that activities are aligned with the risks identified by the Board. The Group believes that it is crucial for all Board members to be a part of this process and as such the Board has not established a separate risk management committee. The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These include the Board approval of strategic plans which includes initiatives designed to meet stakeholder needs and expectations and to manage business risk, and the implementation of Board approved operating plans and budgets and Board monitoring of progress against these budgets. Corporate governance Details of the Company’s Corporate Governance policies are contained within the Corporate Governance Plan adopted by the Board. The Corporate Governance Statement for the year ended 30 June 2019 can be found on the Company’s website at www.aspiremininglimited.com. The Corporate Governance Statement for the year ended 30 June 2020 will be available on the Company’s website and the ASX announcements platform following lodgement with the Company’s Annual Report in October 2020. DIRECTORS’ REPORT (continued) Environmental legislation The Company is subject to significant environmental and monitoring requirements in respect of its natural resources exploration activities. The Directors are not aware of any material breaches of these requirements during the year. Indemnification and insurance of Directors and officers The Company has agreed to indemnify all the Directors and officers of the Group for any liabilities to another person (other than the Group or related bodies corporate) that may arise from their position as Directors or officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year the Company paid a premium in respect of a contract insuring the Directors and Officers of the Company and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. Remuneration Report (audited) This report outlines the remuneration arrangements in place for the Key Management Personnel of the Company and its controlled entities for the financial year ended 30 June 2020, as follows: Mr Achit-Erdene Darambazar Executive Director Mr David Paull Non-Executive Chairman from 15 March 2020, previously Executive Chairman Mr Boldbaatar Bat-Amgalan Non-Executive Director from 15 December 2019, previously Executive Director Non-Executive Director Mr Neil Lithgow Non-Executive Director Ms Hannah Badenach Mr Alexander Passmore Non-Executive Director – resigned 5 December 2019 Mr Gan-Ochir Zunduisurn Non-Executive Director – resigned 5 December 2019 Mr Samuel Bowles Chief Operating Officer – appointed 16 March 2020 Remuneration philosophy The performance of the Group depends upon the quality of the Directors and executives. The philosophy of the Group in determining remuneration levels is to: 1. set competitive remuneration packages to attract and retain high calibre executive; 2. link executive rewards to shareholder value creation; and 3. establish appropriate performance hurdles for variable executive remuneration. In considering the Group’s performance and returns on shareholder wealth, the Board has regard to the following indicators of performance in respect of the current financial year and the previous four financial years: 2020 $ 2019 $ 2018 $ Revenue 425,330 325,741 216,309 2017 $ 4,133 2016 $ 30,210 Net loss after tax (5,488,200) (6,200,307) (6,980,272) (4,883,119) (2,312,480) Basic loss per share Share price at year-end (0.0126)1 0.081 (0.020) (0.035) (0.052) (0.025) 0.16 0.22 0.18 0.25 1 Post a securities consolidation completed on 5 December 2019. 2019 and prior years restated assuming 1:10 consolidation applied. DIRECTORS’ REPORT (continued) Remuneration Report (audited) DIRECTORS’ REPORT (continued) Remuneration Report (audited) (continued) - 8 - - 9 - Aspire Mining Limited Aspire Mining Limited Remuneration committee The Remuneration Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the Director and the senior management team. A Remuneration Committee was reformed in September 2018 and its current members are Messrs David Paull and Neil Lithgow and Ms Hannah Badenach. The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors and senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Remuneration structure In accordance with best practice Corporate Governance, the structure of Non-Executive Directors and executive remuneration is separate and distinct. Non-Executive Director Remuneration The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. The latest determination was at the General Meeting held on 19 August 2011 when shareholders approved an aggregate remuneration for Non-Executive Directors of up to $600,000 per year. If and when applicable, the Board may consider advice from external consultants as well as the fees paid to Non-Executive Directors of comparable companies when undertaking the annual remuneration review process. Each Director is entitled to receive a fee for being a Director of the Company. The remuneration to a Non- Executive Director has been set at $60,000 per annum. This level of remuneration was reviewed and agreed by the Board following recommendations from the Remuneration Committee. The remuneration of Non-Executive Directors for the year ended 30 June 2020 is detailed in the Remuneration of Key Management Personnel section of this report in Table 1. Following shareholder approvals, performance rights have been issued to Non-Executive Directors or their nominees. Following the 2017 Annual General Meeting, 101,800,000 performance rights were issued to the Non- Executive Directors to vest in six tranches on achievement of milestones based on share price performance and development of the Group’s assets. The performance rights were valued at the share price at the grant date of 1.2 cents per share. On 13 July 2018, 16,966,667 ordinary shares were issued to Non-Executive Directors on exercise of performance rights vested on achievement of a share price milestone. At the Company’s Annual General Meeting held on 29 November 2019, shareholders approved a 1 for 10 securities consolidation. The consolidation was completed on 5 December 2019. Post-consolidation, there were 8,483,333 performance rights on issue to Non-Executive Directors, of which 7,396,668 lapsed without vesting during the year. The remaining 1,086,666 performance rights on issue to the Non-Executive Directors will vest if the 30-day VWAP of the Company’s Shares as traded on ASX is equal to or greater than A$0.40 by 30 June 2021. Senior manager and executive Director Remuneration Remuneration consists of fixed remuneration and performance rights (as determined from time to time). Fixed Remuneration Fixed remuneration is reviewed periodically by the Remuneration Committee or the Board. The process consists of a review of relevant comparative remuneration in the market and internally and where appropriate, external advice on policies and practices. The Committee and the Board has access to external, independent advice where necessary. Fixed remuneration is paid in the form of cash payments. The fixed remuneration component of the Group and the Company executive is detailed in Table 1. During the period, Messrs David Paull and Gan-Ochir Zunduisuren stepped down from executive positions in the Company. Post the 1 for 10 securities consolidation completed on 5 December 2019 there were 4,533,224 performance rights on issue to Mr David Paull (Executive Director at the time), of which 3,666,668 subsequently expired without vesting, leaving 916,666 on issue at balance date. Employment Contracts The Company had a Consultancy Agreement with Kingsland Corporate Pty Ltd (formerly 2R’s Pty Ltd), a company associated with Mr David Paull (Agreement), from 1 July 2010. Under the Agreement, as varied, Mr Paull was engaged by the Company to provide services to the Group in the capacity of Managing Director and Executive Chairman. The Consultancy Agreement continued until terminated when Mr Paull transitioned to Non-Executive Chairman in March 2020 following the December 2019 Placement by Mr Tserenpuntsag Tserendamba and the promotion of Mr Achit-Erdene Darambazar to Managing Director. The Kingsland Corporate Pty Ltd Services Agreement contained standard termination provisions under which the Group made a payment to Kingsland Corporate Pty Ltd in lieu of termination of the Consultancy Agreement with Kingsland Corporate Pty Ltd. Kingsland Corporate Pty Ltd is now remunerated at A$70,000 per annum for providing the services of Mr David Paull as Non-Executive Chairman. Any additional services are recoverable at a commercial hourly rate. Mr Achit-Erdene Darambazar is engaged as the Managing Director pursuant to an Executive Services Agreement (AD ESA) with the Company that sets out his duties, responsibilities and obligations. The AD ESA has a 2 year term from 2 December 2019, unless extended for a further two years by notice by the Company or one year by notice by the executive; or terminated by either party on 3 months-notice or other causes (breach of duty, incapacity and insolvency). The initial annual remuneration is US$180,000 per annum with an annual review by the Company for any annual increase or performance-based bonus. Mr Achit-Erdene Darambazar is entitled to US$120,000 if and when the Company secures loan facilities to fund production commencement by December 2021 and 3 million performance rights to be issued within the term of engagement (subject to shareholder approval). Mr Neil Lithgow, Ms Hannah Badenach and Mr Boldbaatar Bat-Amgalan have non-executive director engagement letters that set out their duties and responsibilities and the causes for termination (breach of duty, incapacity and insolvency) or resignation of their appointments. The current remuneration to non-executive directors is A$60,000 per annum. Messrs Lithgow and Bat-Amalgan receive that remuneration. Ms Hannah Badenach does not receive any remuneration as it is against the policy of her employer and substantial shareholder of the Company, Noble Resources International Pte Ltd. Mr Boldbaatar Bat-Amgalan had an Executive Services Agreement from 1 July 2018 to 15 December 2019 within which he was engaged as an Executive Director. During this term Mr Bat-Amgalan was initially remunerated at US$90,000 per annum. However, following a Remuneration Committee Board remuneration review and recommendation, Mr Boldbaatar Bat-Amgalan was remunerated at US$135,000 per annum until he voluntarily requested his role reduce to a non-executive role from 15 December 2019. From 15 December 2019 he is remunerated at A$60,000 per annum. - 10 - - 11 - Aspire Mining Limited Aspire Mining Limited DIRECTORS’ REPORT (continued) Remuneration Report (audited) (continued) Employment Contracts (continued) Mr Samuel Bowles is engaged as the Chief Operating Officer pursuant to an Executive Services Agreement (SB ESA) with the Company and an employer Company subsidiary that sets out his duties, responsibilities and obligations. The SB ESA has a 2 year term commencing on 16 March 2020, unless extended for a further two years by notice by the Company or one year by notice by the executive; or terminated by either party on 3 months-notice or other causes (breach of duty, incapacity and insolvency. The initial annual remuneration of Mr Bowles is US$300,000 per annum with an annual review by the Company for any annual increase or performance-based bonus. Mr Bowles is entitled to 1.6 million performance rights to be issued within the term of engagement (subject to Board approval). The totals of remuneration paid to key management personnel of the company during the year are as follows and detailed in Table 1: Short-term employee benefits Post-employment benefits Share-based payments $ 1,074,555 5,205 160,422 1,240,182 Share based payments is the gross accounting value of performance rights brought to account in accordance with accounting standards. DIRECTORS’ REPORT (continued) Remuneration Report (audited) (continued) Remuneration of Key Management Personnel Table 1: Key management personnel remuneration Year ended 30 June 2020 Short term employee benefits Post- employment benefits Other Salary & fees $ Mr Achit-Erdene Darambazar 169,581 379,792 Mr David Paull1 117,197 Mr Boldbaatar Bat-Amgalan 54,795 Mr Neil Lithgow - Ms Hannah Badenach 25,000 Mr Alexander Passmore2 213,802 Mr Gan-Ochir Zunduisuren 114,388 Mr Samuel Bowles Total 1,074,555 Superannuation $ - - - 5,205 - - - - 5,205 Share based payments - options $ - - - - - - - - - Performance rights $ - 73,405 - 58,056 28,961 - - - 160,422 Total $ 169,581 453,197 117,197 118,056 28,961 25,000 213,802 114,388 1,240,182 Performance Related % - 16 - 49 100 - - - 13 The shares, options and performance rights held by key management personnel in the year ended 30 June 2020 are detailed in Tables 2 to 4. Year ended 30 June 2019 Options During the year ended 30 June 2020, all options that were part of Key Management Personnel remuneration were consolidated on 5 December 2020, on a 1:10 basis. The options expired without being exercised on the 11 December 2019. Performance rights During the year ended 30 June 2020, all performance rights that were part of Key Management Personnel remuneration were consolidated on 5 December 2020 on a 1:10 basis. Of the post-consolidation 13,066,668 performance rights, 8,013,336 performance rights expired without vesting on the 30 June 2020 and 3,050,000 performance rights were forfeited and cancelled on the resignation of a Director. The remaining 1,086,666 performance rights will vest if the 30-day VWAP of the Company’s Shares as traded on ASX is equal to or greater than A$0.40 by 30 June 2021. The objective of the performance rights is to provide the Company with a remuneration mechanism to motivate and reward the performance of directors, employees and qualifying contractors in achieving specified performance milestones within a specified performance period. Short term employee benefits Post- employment benefits Other Salary & fees Performance rights Performance related Total Superannuation % $ - - 20 - - - 66 2,603 100 - - - 21 - 22 2,603 1 Paid or issued to Kingsland Corporate Pty Ltd (formerly 2R’s Pty Ltd), a company associated with Mr David Paull. Mr Achit-Erdene Darambazar Mr David Paull1 Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore2 Mr Gan-Ochir Zunduisuren Total $ - 73,204 368,704 - 102,637 87,898 28,882 - 114,000 48,714 226,704 208,698 928,825 $ - 295,500 102,637 27,397 - 42,000 177,990 645,524 57,898 28,882 $ - Share based payments - options $ - - - - - 72,000 - 72,000 2 Paid to Horizon Advisors Pty Ltd, a company associated with Mr Alexander Passmore. - 12 - - 13 - Aspire Mining Limited Aspire Mining Limited DIRECTORS’ REPORT (continued) Remuneration Report (audited) (continued) Key Management Personnel Equity Holdings Table 2: Fully Paid Ordinary Shares Balance at beginning of year/on appointment Share consolidation 1 for 10 Purchased On exercise of options or performance rights Balance on retirement Balance at end of year 2020 Mr Achit-Erdene Darambazar Mr David Paull1 Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore Mr Gan-Ochir Zunduisuren Mr Samuel Bowles Total - 26,052,791 - 237,278,501 13,890,476 - 47,392,203 - 324,613,971 - (23,447,511) - (213,550,650) (12,501,428) - (42,652,983) - (292,152,572) - 100,000 - - - - - - 100,000 - - - - - - - - - - - - - - - (4,739,220) - (4,739,220) - 2,705,280 - 23,727,851 1,389,048 - - - 27,822,179 2019 Mr Achit-Erdene Darambazar Mr David Paull1 Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore Mr Gan-Ochir Zunduisuren Total - 16,486,124 - 220,028,501 9,083,333 - 41,292,203 286,890,161 - - - - - - - - - - - - 1,190,476 - - 1,190,476 - 9,566,667 - 17,250,000 3,616,667 - 6,100,000 36,533,334 - - - - - - - - - 26,052,791 - 237,278,501 13,890,476 - 47,392,203 324,613,971 1 In 2019 and 2020 David Paull was a Director of Red Island Resources Limited, a public unlisted company which is the beneficial owner of 8,350,000 ordinary shares pre-securities consolidation (2019: 8,350,000 ordinary shares). However, from 2 August 2019 he no longer had a notifiable interest. DIRECTORS’ REPORT (continued) Remuneration Report (audited) (continued) Key Management Personnel Equity Holdings Table 3 - Performance rights exercisable at no consideration on achievement of tenure or other performance milestones Balance at beginning of year/on appointment Share consolidation 1 for 10 - 45,833,333 - 36,250,000 (41,249,999) (32,625,000) 18,083,333 (16,274,999) - - 30,500,000 - 130,666,666 (27,450,000) - (117,599,998) - 55,000,000 - 43,500,000 21,700,000 - 36,600,000 156,800,000 - - - - - - - - 2020 Mr Achit-Erdene Darambazar Mr David Paull Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore Mr Gan-Ochir Zunduisuren Mr Samuel Bowles Total 2019 Mr Achit-Erdene Darambazar Mr David Paull Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore Mr Gan-Ochir Zunduisuren Total Granted Exercised Expired Forfeited on retirement Balance at end of year - - - - - - - - - - - - - - - - - - - - - - - - - - - (3,666,668) - (2,900,000) (1,446,668) - - - - - - - - - (3,050,000) - - 916,666 - 725,000 361,666 - - - (8,013,336) (3,050,000) 2,003,332 - (9,166,667) - (7,250,000) (3,616,667) - (6,100,000) (26,133,334) - - - - - - - - - - - - - - - - - 45,833,333 - 36,250,000 18,083,333 - 30,500,000 130,666,666 Table 4 – Options exercisable at 18 cents on or before 11 December 2019 Balance at beginning of year/on appointment Share Consolidation 1 for 10 - 1,145,833 - 6,354,167 2,083,334 12,000,000 - - - (1,031,249) - (5,718,750) (1,875,000) (10,800,000) - - 2020 Mr Achit-Erdene Darambazar Mr David Paull Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alex Passmore Mr Gan-Ochir Zunduisuren Mr Samuel Bowles Total 21,583,334 (19,424,999) Issued as remuneration Exercised Expired Balance on retirement Balance at end of year - - - - - - - - - - - - (114,584) - - - (635,417) (208,334) - - - - - - - - - - - (1,200,000) - - - (958,335) (1,200,000) - - - - - - - - - - 14 - Aspire Mining Limited DIRECTORS’ REPORT (continued) Remuneration Report (audited) (continued) Table 4 – Options exercisable at 18 cents on or before 11 December 2019 (continued) Balance at beginning of year Share Consolidation 1 for 10 Issued as remuneration Exercised Expired Balance on appt/ (retirement) Balance at end of year 2019 Mr Achit-Erdene Darambazar Mr David Paull Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alex Passmore Mr Gan-Ochir Zunduisuren 1,145,833 6,354,167 2,083,334 - - - - Total 9,583,334 - - - - - - - - - - - - - 12,000,000 - 12,000,000 - - - - - - - - - - - - - - - - - - - - - - - - - 1,145,833 - 6,354,167 2,083,334 12,000,000 - 21,583,334 Related Party Transactions MICC LLC, a Company related to Executive Director, Mr Achit-Erdene Darambazar, was paid financial advisory fees of A$55,000 and an equity financing fee of A$418,923 (US$284,750). As at 30 June 2020, there were no unpaid Directors’ fees payable (2019: $111,486). End of Remuneration Report Directors’ Meetings The number of meetings of Directors held during the year and those attended by each Director were as follows: Table 5 – Attendance at Director Meetings Director Mr Achit-Erdene Darambazar Mr David Paull Mr Boldbaatar Bat-Amgalan Mr Neil Lithgow Ms Hannah Badenach Mr Alexander Passmore Mr Gan-Ochir Zunduisuren Director Meetings Attended Eligible to Attend 9 11 11 11 8 6 7 11 11 11 11 11 7 7 Proceedings on behalf of the Company No person has applied to the court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the court under Section 237. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020 - 17 - Aspire Mining Limited Other income Employee benefits expense Exploration and evaluation expenditure impaired Contract mining Foreign exchange (loss)/gain Interest expense Share based payments Other expenses Loss before income tax expense Income tax expense Net loss for the year Other comprehensive income Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Other comprehensive loss for the year net of tax Total comprehensive loss Loss attributable to: Owners of the parent Non-controlling interests Total comprehensive loss attributable to: Owners of the parent Non-controlling interests Note 2(a) 10 2020 $ 425,330 (1,035,322) (1,233,218) - (84,124) (13,759) (169,480) 2(b) (3,366,119) 3 (5,476,692) (11,508) (5,488,200) 2019 $ 325,741 (1,343,522) (7,924) (1,053,330) 225,738 (164,841) (344,088) (3,818,472) (6,180,698) (19,609) (6,200,307) (878,620) (977,576) (878,620) (6,366,820) (977,576) (7,177,883) 15 (5,440,715) (47,485) (5,488,200) (6,299,960) 15 (66,860) (6,366,820) (6,042,258) (158,049) (6,200,307) (6,933,549) (244,334) (7,177,883) Basic loss per share (cents per share) 4 (1.26) (2.01) The accompanying notes form part of these financial statements. - 16 - AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Aspire Mining Limited for the year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of 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 29 September 2020 B G McVeigh Partner - 18 - Aspire Mining Limited d e t i m L i i i g n n M e r i p s A CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-Current Assets Deferred exploration and evaluation expenditure Property plant and equipment Intangible assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Financial liabilities Total Current Liabilities Non-Current Liabilities Financial liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Note 8 9 10 12 13 11 14 14 2020 $ 2019 $ 40,712,949 11,136,142 802,360 504,291 41,515,309 11,640,433 36,470,102 37,461,876 304,309 171,113 477,056 112,618 36,945,524 38,051,550 78,460,833 49,691,983 162,116 11,588 173,704 58,904 58,904 309,632 12,068 321,700 73,411 73,411 232,608 395,111 78,228,225 49,296,872 6 7 7 150,026,408 114,897,715 (7,017,569) (5,191,712) (64,267,695) (59,963,072) - 9 1 - Equity attributable to owners of the parent 78,741,144 49,742,931 Non-controlling interests Total Equity 15 (512,919) (446,059) 78,228,225 49,296,872 The accompanying notes form part of these financial statements. y t i u q e l a t o T - n o N g n i l l o r t n o c s t s e r e t n i l e b a t u b i r t t A f o s r e n w o o t t n e r a p e h t n o i t u b i r t n o C d e s a b e r a h S e v r e s e r e v r e s e r s t n e m y a p y c n e r r u c n g e r o F i e v r e s e r n o i t a s n a r t l l d e t a u m u c c A s e s s o l d e u s s I l a t i p a c I Y T U Q E N I S E G N A H C F O T N E M E T A T S D E T A D L O S N O C I 0 2 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F $ $ $ $ $ $ $ $ 9 4 8 , 6 4 7 , 0 4 ) 5 2 7 , 1 0 2 ( 4 7 5 , 8 4 9 , 0 4 2 0 3 , 5 0 8 , 1 1 3 5 , 0 5 2 , 1 ) 5 7 5 , 3 7 2 , 7 ( ) 4 1 8 , 0 2 9 , 3 5 ( 0 3 1 , 7 8 0 , 9 9 ) 6 7 5 , 7 7 9 ( ) 5 8 2 , 6 8 ( ) 1 9 2 , 1 9 8 ( ) 7 0 3 , 0 0 2 , 6 ( ) 9 4 0 , 8 5 1 ( ) 8 5 2 , 2 4 0 , 6 ( ) 3 8 8 , 7 7 1 , 7 ( ) 4 3 3 , 4 4 2 ( ) 9 4 5 , 3 3 9 , 6 ( 8 6 1 , 3 7 2 - ) 0 8 0 , 1 ( 0 0 0 , 2 7 8 1 8 , 3 8 3 , 5 1 - - - - - 8 6 1 , 3 7 2 - ) 0 8 0 , 1 ( 0 0 0 , 2 7 8 1 8 , 3 8 3 , 5 1 - - - - - - - - - - - - 8 6 1 , 3 7 2 ) 7 6 7 , 6 2 4 ( ) 0 8 0 , 1 ( 0 0 0 , 2 7 - ) 1 9 2 , 1 9 8 ( ) 1 9 2 , 1 9 8 ( - ) 8 5 2 , 2 4 0 , 6 ( ) 8 5 2 , 2 4 0 , 6 ( - - - - - - - - - - - - - - - - 7 6 7 , 6 2 4 8 1 8 , 3 8 3 , 5 1 2 7 8 , 6 9 2 , 9 4 ) 9 5 0 , 6 4 4 ( 1 3 9 , 2 4 7 , 9 4 2 0 3 , 5 0 8 , 1 2 5 8 , 7 6 1 , 1 ) 6 6 8 , 4 6 1 , 8 ( ) 2 7 0 , 3 6 9 , 9 5 ( 5 1 7 , 7 9 8 , 4 1 1 ) 0 2 6 , 8 7 8 ( ) 5 7 3 , 9 1 ( ) 5 4 2 , 9 5 8 ( ) 0 0 2 , 8 8 4 , 5 ( ) 5 8 4 , 7 4 ( ) 5 1 7 , 0 4 4 , 5 ( ) 0 2 8 , 6 6 3 , 6 ( ) 0 6 8 , 6 6 ( ) 0 6 9 , 9 9 2 , 6 ( - - 0 8 4 , 9 6 1 3 9 6 , 8 2 1 , 5 3 - - - - - - 0 8 4 , 9 6 1 3 9 6 , 8 2 1 , 5 3 - - - - - - - - - - - ) 7 7 8 , 0 6 7 ( ) 5 1 2 , 5 7 3 ( 0 8 4 , 9 6 1 - - - - - ) 5 4 2 , 9 5 8 ( ) 5 4 2 , 9 5 8 ( - ) 5 1 7 , 0 4 4 , 5 ( ) 5 1 7 , 0 4 4 , 5 ( - - 7 7 8 , 0 6 7 5 1 2 , 5 7 3 - - - 3 9 6 , 8 2 1 , 5 3 t s o c f o t e n s e u s s i s e r a h S - - - t n u o c c a o t t h g u o r b s t h g i r e c n a m r o f r e P d e r i p x e s t h g i r e c n a m r o f r e P d e r i p x e s n o i t p O t n u o c c a o t t h g u o r b e u a v l s t h g i r e c n a m r o f r e P i d e s c r e x e d n a d e t s e v s t h g i r e c n a m r o f r e P d e r i p x e s t h g i r e c n a m r o f r e P s t n e m y a p d e s a b e r a h S 9 1 0 2 e n u J 0 3 t a e c n a l a B s s o l i e v s n e h e r p m o c r e h t O s s o l i e v s n e h e r p m o c l a t o T r a e y e h t r o f s s o L 8 1 0 2 e n u J 0 3 t a e c n a l a B r a e y e h t r o f s s o L s s o l i e v s n e h e r p m o c r e h t O s s o l i e v s n e h e r p m o c l a t o T s t s o c f o t e n s e u s s i e r a h S 5 2 2 , 8 2 2 , 8 7 ) 9 1 9 , 2 1 5 ( 4 4 1 , 1 4 7 , 8 7 2 0 3 , 5 0 8 , 1 0 4 2 , 1 0 2 ) 1 1 1 , 4 2 0 , 9 ( ) 5 9 6 , 7 6 2 , 4 6 ( 8 0 4 , 6 2 0 , 0 5 1 0 2 0 2 e n u J 0 3 t a e c n a l a B s t n e m e t a t s l i a c n a n i f e s e h t f o t r a p m r o f i t s e o n g n y n a p m o c c a e h T - 20 - - 21 - Aspire Mining Limited Aspire Mining Limited CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020 Cash flows from operating activities Interest received Payments to suppliers and employees Income tax paid Interest and borrowing costs paid Note 2020 $ 2019 $ 426,889 302,288 (4,077,285) (6,178,022) (11,508) (13,759) (19,609) (186,253) Net cash used in operating activities 8 (3,675,663) (6,081,596) Cash flows from investing activities Payments for exploration and evaluation expenditure (1,409,894) (1,900,672) Purchase of non-current assets Receipts from sale of non-current assets Net cash used in investing activities Cash flows from financing activities Proceeds from issue of securities Payments for capital raising costs Repayment of borrowings (217,313) (391,772) 19,089 27,171 (1,608,118) (2,265,273) 36,284,541 12,679,330 (1,155,849) 14 (14,987) (684,218) (13,316) Net cash provided by financing activities 35,113,705 11,981,796 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate fluctuations on cash held 29,829,924 11,136,142 (253,117) 3,634,927 7,488,401 12,814 Cash and cash equivalents at the end of the year 8 40,712,949 11,136,142 The accompanying notes from part of these financial statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (a) (b) (c) Basis of Preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations and complies with other requirements of the law. The financial report has also been prepared on a historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. The financial report is presented in Australian dollars. The Company is a listed public Company, incorporated in Australia and operating in Mongolia. The principal activity of the Group during the year was the progression for the approvals, completion of studies, and funding towards the development of the Ovoot Early Development Project (OEDP). Going concern The 30 June 2020 financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and the realisation of assets and discharge of its liabilities as and when they fall due, in the ordinary course of business. Adoption of new and revised standards Standards and Interpretations applicable 30 June 2020 In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and apart from adopting AASB16, therefore, no material change is necessary to Group accounting policies. Standards and interpretations in issue not yet adopted The Directors have also reviewed all Standards and Interpretations in issue not yet adopted for the period 30 June 2020. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations in issue no yet adopted on the Company. Change in Accounting Policy AASB 16 Leases supersedes AASB 117 Leases. The Group has adopted AASB 16 from 1 July 2019 which has resulted in changes in the classification, measurement and recognition of leases. The changes result in almost all leases where the Group is the lessee being recognised on the Statement of Financial Position and removes the former distinction between ‘operating’ and ‘finance’ leases. The new standard requires recognition of a right-of-use asses (the leased item) and a financial liability (to pay rentals). The exceptions are short-term leases and leases of low value assets. The Group has adopted AASB 16 using the modified retrospective approach under which the reclassifications of the adjustments arising from the new leasing rules are recognised in the opening Condensed Statement of Financial Position on 1 July 2019. Under this approach, there is no initial impact on accumulated losses, and comparatives have not been restated. The Group leases various premises, plant and equipment. Prior to 1 July 2019, leases were classified as operating leases. Payments made under operating leases were charged to profit and loss on a straight-line basis over the period of the lease. From 1 July 2019, where the Company is the lessee, the Group recognises a right-of-use asset and a corresponding liability at the date which the lease asset is available for use by the Group (i.e. commencement date). Each lease payment is allocated between the liability and the finance cost. - 22 - - 23 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Adoption of new and revised standards (continued) The finance cost is charged to profit or loss over the lease period so as to produce a consistent period rate of interest on the remaining balance of the liability for each period. The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date, discounted using the rate implied in the lease. If this rate is not readily determinable, the Group uses its incremental borrowing rate. (d) Statement of Compliance Lease payments included in the initial measurement if the lease liability consist of: • Fixed lease payments less any lease incentives receivable; • Variable lease payments that depend on an index or rate, initially measured using the index or (e) rate at commencement date; • Any amounts expected to be payable by the Group under residual value guarantees; • The exercise price of purchase options, if the Group is reasonably certain to exercise the options; and • Termination penalties of the lease term reflects the exercise of an option to terminate the lease. Extension options are included in a number of property leases across the Group. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if, at commencement date, it is reasonably certain that the options will be exercised. Subsequent to initial recognition, the lease liability is measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The lease liability is remeasured (with a corresponding adjustment to the right-of-use asset) whenever there is a change in the lease term (including assessments relating to extension and termination options), lease payments due to changes in an index or rate, or expected payments under guaranteed residual values. Right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before commencement date, less any lease incentives received and any initial direct costs. These right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. Where the terms of lease require the Group to restore the underlying asset, or the Group has an obligation to dismantle and remove a leased asset, the provision is recognised and measured in accordance with AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset. Right-of-use assets are depreciated on a straight-line basis over the term of the lease (or the useful life of the leased asset if this is shorter). Depreciation starts on commencement date of the lease. Where leases have a term of less than 12 months or relate to low value assets, the group has applied the optional exemptions to not capitalise these leases and instead account for the lease expense on a straight-line basis over the lease term. The leases of the Group all have terms less than 12 months, therefore are exempt from AASB16 and there is no material impact from adopting this standard. The financial report was authorised for issue on 29 September 2020. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Basis of Consolidation The consolidated financial statements comprise the financial statements of Aspire Mining Limited (“Company” or “Parent”) and its subsidiaries as at 30 June each year (the “Group”). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing when the Group controls another entity. Business combinations have been accounted for using the acquisition method of accounting (refer Note 1(o)). Unrealised gains or transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (f) Critical accounting judgements and key sources of estimation uncertainty The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Share-based payment transactions: The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model for unlisted options and the market traded price for listed options and performance rights that are bought to account, having regard to the terms and conditions upon which the instruments are granted. - 24 - - 25 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Critical accounting judgements and key sources of estimation uncertainty (continued) (j) Trade and other receivables (continued) Exploration and evaluation costs carried forward The Group’s accounting policy for exploration and evaluation expenditure is set out at Note 1(w). The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of the expectation that exploration costs incurred can be recouped through the successful development of the area (unless activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves). The estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under the policy, it is concluded that the expenditure incurred is unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount will be impaired or written off through the statement of profit or loss and other comprehensive income. The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery; for example, when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. The amount of the impairment loss is recognised in the statement of profit or loss and other comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss and other comprehensive income. (g) Segment Reporting (k) Derecognition of financial assets and financial liabilities Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Aspire Mining Limited. (h) Revenue Recognition Revenue is recognised to the extent that control of the goods or service has passed and it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. (i) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (j) Trade and other receivables Trade receivables are measured on initial recognition at fair value. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days. The Group measures the loss allowance for trade and other receivables at an amount equal to lifetime expected credit loss. The expected credit losses on trade and other receivables are estimated with reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtor, general economic conditions of the industry in which the debtor operates and an assessment of both the current and the forecast direction of conditions at the reporting date. (i) Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is derecognised when: • • • the rights to receive cash flows from the asset have expired; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or the Group has transferred its rights to receive cash flows from the asset and either: (a) (b) has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash- settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. (ii) Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. - 26 - - 27 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Foreign currency translation (m) Income tax (continued) The functional and presentation currency of Aspire Mining Limited is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The functional currency of the Mongolian incorporated subsidiaries, Khurgatai Khairkhan LLC, Northern Railways LLC, Ovoot Coal Mining LLC, Chilchig Gol LLC, Ekhgoviin Chuluu LLC and Black Rock LLC is Mongolian Tugriks (MNT), Ovoot Coking Coal Pte Ltd, Northern Railways Pte Ltd Northern Railways Holdings LLC and Northern Mongolian Railways Limited is USD. As at the balance date the assets and liabilities of the subsidiaries are translated into the presentation currency of Aspire Mining Limited at the rate of exchange ruling at the balance date and its statement of profit or loss and other comprehensive income is translated at the average exchange rate for the year. The exchange differences arising on the translation are taken directly to the foreign currency translation reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. (m) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (n) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included. • The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (o) Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or business under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. - 28 - - 29 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (o) Business combinations (continued) (q) Trade and other payables Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. (p) Impairment of assets The Group assesses at each reporting 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. 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. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each balance date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Trade payables and other payables are carried at amortised costs 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 Company becomes obliged to make future payments in respect of the purchase of these goods and services. (r) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the three (3) year estimated useful life of the assets. The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. (i) 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 be close to its fair value. Impairment exists when the carrying value of an asset or cash-generating units 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 income statement in the cost of sales line item. (ii) Derecognition and disposal An item of property, 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. (s) 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. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive Income net of any reimbursement. 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 a borrowing cost. - 30 - - 31 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (t) Share-based payment transactions (v) Earnings per share (continued) The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. In valuing equity-settled transactions, account is taken of any performance conditions, and conditions linked to the price of the shares of Aspire Mining Limited (market conditions) if applicable. The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired, and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The statement of profit or loss and other comprehensive income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. Cash settled transactions: The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black and Scholes model for unlisted options and the market traded price for listed options and performance rights that are bought to account, having regard to the terms and conditions upon which the instruments are granted. This fair value is expensed over the period until vesting with recognition of a corresponding liability. The liability is re-measured to fair value at each balance date up to and including the settlement date with changes in fair value recognised in profit or loss. result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (w) Exploration and evaluation 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: i) ii) at least one of the following conditions is also met: the rights to tenure of the area of interest are current; and (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant 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. 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. (u) Issued capital (x) Parent entity financial information Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (v) Earnings per share Basic earnings per share is calculated as net profit or loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit or loss attributable to members of the parent, adjusted for: costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would The financial information for the parent entity, Aspire Mining Limited, disclosed in Note 24 has been prepared on the same basis as the consolidated financial statements, other than investments in subsidiaries are accounted for at cost. - 32 - - 33 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 3: INCOME TAX (continued) The Group also has an unrecorded deferred tax asset of $345,745 (2019: $345,745) in respect to capital losses arising in Australia. The recovery of the carried forward tax losses is subject to the applicable Group companies continuing to satisfy the continuity of ownership test or the similar business test or other tax legislation requirements or limitations. NOTE 4: EARNINGS PER SHARE Basic loss per share: 2020 Cents per share 2019 Cents per share (1.26) (2.01) The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows: Earnings used in calculation of basic loss per share: Loss attributable to owners of the parent Weighted average number of ordinary shares for the purpose of basic loss per share (5,440,715) (6,042,258) 433,448,136 300,632,131 The 2019 loss per share has been restated for the 1 for 10 securities consolidation completed on 5 December 2019. As losses have been incurred to date, no dilutive earning loss per share has been disclosed. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 2: REVENUES AND EXPENSES (a) Revenue Interest income (b) Other Expenses Accounting and audit fees Amortisation and depreciation expense Community relations Company secretarial Consultants Corporate costs Directors’ fees Insurance Legal fees Office and administration costs Share registry and listing expenses Media, promotion and investor relations Short term lease rent and outgoings Travel expenses Other NOTE 3: INCOME TAX Income tax recognised in profit or loss The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in the financial statements as follows: Accounting loss before tax Income tax benefit calculated at 30% Accrued expenses Other non-deductible expenses Deductions available over more than one year Exploration and tenement expenses Income tax benefit not brought to account Income tax (benefit)/expense Made up of: Income tax expense on Mongolian operations Income tax expense 2020 $ 425,330 425,330 176,770 297,782 139,458 161,453 209,663 289,250 965,372 170,126 62,218 118,255 81,542 168,878 181,377 216,739 127,236 3,366,119 2020 $ (5,476,692) (1,643,008) 473 392,709 (41,103) 369,966 932,471 11,508 11,508 11,508 2019 $ 325,741 325,741 160,780 160,590 340,125 154,321 258,604 557,040 633,677 131,560 364,490 67,202 75,572 252,333 131,939 307,360 222,879 3,818,472 2019 $ (6,180,698) (1,854,209) 8,175 688,356 (108,876) 2,377 1,283,786 19,609 19,609 19,609 The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in this tax rate since the previous reporting period. The Group has an unrecorded deferred tax asset of $6,321,138 (2019: $5,705,739) in respect to tax losses arising in Australia and $207,313 (2019: $1,786,589) in respect to tax losses arising in Mongolia, the tax benefit of which has not been brought to account and are available subject to confirmation of the continuity of ownership test or the same business test. The Group has an unrecorded deferred tax asset of $30,922 (2019: $72,025) relating to share issue and other costs, and deferred tax liabilities of $1,931,565 (2019: $1,858,080) relating to capitalised exploration and evaluation expenditure arising in Australia for which an offsetting deferred tax asset has been recognised. - 34 - - 35 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 5: SEGMENT INFORMATION NOTE 6: ISSUED CAPITAL Year ended 30 June 2020 Total segment revenue Segment net operating loss after tax Interest revenue Depreciation and amortisation Exploration and evaluation expenditure incurred Continuing operations Mongolia $ Australia $ Singapore $ Total $ 310,247 115,083 - 425,330 (1,870,918) (3,582,814) (34,468) (5,488,200) 310,247 - 115,083 297,782 - 1,233,218 - - - 425,330 297,782 1,233,218 Segment assets 36,186,821 42,264,347 9,665 78,460,833 Segment liabilities Capital expenditure during the year (61,637) (170,971) - (1,604,710) - - (232,608) (1,604,710) Year ended 30 June 2019 Total segment revenue Segment net operating loss after tax Interest revenue Depreciation and amortisation Exploration and evaluation expenditure incurred Continuing operations Mongolia $ Australia $ Singapore $ Total $ 122,047 203,694 - 325,741 (2,763,744) (3,247,389) (189,174) (6,200,307) 122,047 - - 203,694 160,590 7,924 - - - 325,741 160,590 7,924 Segment assets 9,262,900 40,423,217 5,866 49,691,983 Segment liabilities Capital expenditure during the year (291,321) (103,790) - (3,069,560) - - (395,111) (3,069,560) Ordinary shares Issued and fully paid Less share issue costs Movements in ordinary shares on issue At 1 July 2018 Shares issued at 1.25 cents on 17 July 2018 on exercise of vested performance rights Shares issued at 2.5 cents on 15 August 2018 on exercise of unlisted options Shares issued at 1.8 cents on 24 September 2018 on exercise of listed options Shares issued at 2.1 cents on 6 December 2018 pursuant to debt and interest for equity agreement Shares issued at 2.1 cents on 6 December 2018 pursuant to placement with a substantial shareholder Shares issued at 2.1 cents on 6 December 2018 to subscribers to the additional placement Shares issued at 1.8 cents on 19 March 2019 on exercise of listed options Share issue costs At 30 June 2019 At 1 July 2019 Shares issued at 1.8 cents on 29 November 2019 on exercise of options Shares issued at 2.1 cents on 3 December 2019 pursuant to the Placement with a substantial shareholder Shares issued at 1.8 cents on 4 December 2019 on exercise of options Securities consolidation 1 for 10 on 5 December 2019 Shares issued at 18 cents on 11 December 2019 to a substantial shareholder on exercise of options Shares issued at 18 cents on 11 December 2019 on exercise of options Share issue costs At 30 June 2020 2020 $ 2019 $ 157,999,366 121,714,824 (7,972,958) (6,817,109) 150,026,408 114,897,715 No. 2,529,223,526 $ 99,087,130 34,216,671 426,767 44,527,250 1,113,181 53,400 961 161,366,954 3,388,706 476,190,476 10,000,000 80,952,381 10,417 - 1,700,000 188 (819,218) 3,326,541,075 114,897,715 3,326,541,075 114,897,715 1,788 99,334 1,595,900,000 214,499 (4,430,478,995) 33,513,900 3,861 - 15,333,012 28,060 - 2,759,942 5,051 (1,155,849) 507,636,985 150,026,408 - 36 - - 37 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 7: ACCUMULATED LOSSES AND RESERVES NOTE 7: ACCUMULATED LOSSES AND RESERVES (continued) Accumulated losses Movements in accumulated losses are as follows: Balance at beginning of financial year 2020 $ 2019 $ (59,963,072) (53,920,814) Net loss for the year attributable to owners of the parent (5,440,715) (6,042,258) Transfer on expiry of options/performance rights Balance at end of financial year 1,136,092 - (64,267,695) (59,963,072) Reserves Contribution Reserve Foreign currency translation reserve Share based payments reserve Total $ $ $ $ Options The following table illustrates the number (No.) and weighted average exercise prices of and movements in share options issued during the year: Outstanding at the beginning of the year Granted during the year Exercised during the year (pre-consolidation) 2020 No. 2019 No. 2020 Weighted average exercise price 700,722,235 0.018 875,879,502 - - 12,000,000 2019 Weighted average exercise price 0.019 0.018 (313,833) 0.018 (44,591,067) 0.025 At 30 June 2018 1,805,302 (7,273,575) 1,250,531 (4,217,742) Share Consolidation (1:10) (630,367,523) Currency translation differences Issue of performance rights Performance rights vested Performance rights expired Issue of options as remuneration - - - - - (891,291) - (891,291) - - - - 273,168 273,168 (426,767) (426,767) (1,080) 72,000 (1,080) 72,000 At 30 June 2019 1,805,302 (8,164,866) 1,167,852 (5,191,712) At 30 June 2019 1,805,302 (8,164,866) 1,167,852 (5,191,712) Currency translation differences Options expired Performance rights expired Performance rights to account - - - - (859,245) - (859,245) - - - (760,877) (760,877) (375,215) (375,215) 169,480 169,480 At 30 June 2020 1,805,302 (9,024,111) 201,240 (7,017,569) Nature and purpose of reserves Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. Share based payments reserve The share based payments reserve is used to record the value of equity instruments issued to Directors, employees and qualifying contractors as part of their remuneration. Contribution Reserve The contribution reserve is used to record the value which arises as a result of transactions with non-controlling interests that do not result in a loss of control. Exercised during the year (post-consolidation) Expired during the year Outstanding at the end of the year Exercisable at the end of the year (15,361,072) (54,679,807) - - - 0.18 0.18 - - - - (142,566,200) 700,722,235 700,722,235 - - 0.025 0.018 0.018 On 5 December 2019, all options outstanding were consolidated on a 1:10 basis. All remaining options expired on 11 December 2019 and as such there were no options on issue as at 30 June 2020 (30 June 2019: 700,722,235). Performance rights The value of the performance rights is based on the number of performance rights granted multiplied by the prevailing share price at the date of the grant of the performance rights. The number of performance rights issued and the prevailing share price are known variables. The vesting requirements applicable to the issued performance rights are based on achievement of operational and strategic milestones. The value of the performance rights is taken to the Share Based Payments Reserve progressively over the period the performance rights are expected to vest. The cumulative expense that will be recorded will equate to the performance rights that ultimately vest. The number of performance rights unexercised at 30 June 2020 are: Outstanding at the beginning of the year Granted during the year Share Consolidation 1:10 – 5 December 2019 Vested and shares issued during the year Forfeited/Expired during the year Outstanding at the end of the year 2020 No. 161,083,330 - (137,474,993) 2019 No. 245,300,000 - - - (34,216,671) (21,313,339) (49,999,999) 2,294,998 161,083,330 - 38 - - 39 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 7: ACCUMULATED LOSSES AND RESERVES (continued) Nature and purpose of reserves (continued) Performance rights (continued) Following from shareholder approval given at the 2017 Annual General Meeting held on 26 November 2017, 55,000,000 performance rights were issued to the nominee of David Paull, 101,800,000 performance rights were issued to Non-Executive Directors or their nominees, and 48,500,000 performance rights were issued to employees and qualified contractors on 8 May 2018. The performance milestones attaching to the performance rights were strategic. During the 2019 financial year, one of the six tranches vested and 34,216,671 ordinary shares issued on exercise on 13 July 2018 as the 30 day VWAP of the Company’s Shares as traded on ASX was equal to or greater than A$0.02 by 30 June 2019. 49,999,999 performance rights were cancelled on termination of employment. This left an opening balance for the 2020 financial year of 161,083,330 performance rights outstanding. At the Company’s Annual General Meeting held on 29 November 2019, shareholders approved a 1 for 10 securities consolidation. The consolidation was completed on 5 December 2019. During the year: • 3,055,003 performance rights lapsed and were cancelled as the milestone of 80% or more of the Listed Options were not exercised on or before 11 December 2019. • Two tranches (total 6,110,004 performance rights) with production and profitability milestones did not vest on or before 31 December 2019 and were cancelled. • 3,055,001 performance rights lapsed and were cancelled as the milestone of a 30 day VWAP of the Company’s shares as traded on ASX at equal to or greater than A$0.30 by 30 June 2020 did not occur. • 9,093,331 performance rights were forfeited and cancelled on termination of employment. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank and on hand Short term deposits 2020 $ 730,004 39,982,945 40,712,949 2019 $ 4,546,272 6,589,870 11,136,142 Cash at bank earns interest at floating rates based on daily bank deposit rates. All cash was available for use and no restrictions were placed on the use of it at any time during the period, other than a short term deposit of $10,000 (2019: $10,000) is on deposit as cash backed security against a business use credit card limit and office rental. Reconciliation of loss for the year to net cash flows from operating activities Loss for the year Change in net assets and liabilities: Change in trade and other receivables Changes in trade and other payables Profit on sale of property, plant and equipment Amortisation and depreciation expense Share based payments Interest expense settled by issue of shares Exploration expenditure impairment Foreign exchange (gain)/loss Net cash used in operating activities 2020 $ 2019 $ (5,488,200) (6,200,307) (289,735) 315,441 2,227 297,782 169,480 - 1,233,218 84,124 (3,675,663) 2020 $ 17,035 445,648 23,424 316,253 802,360 358,224 (603,137) (27,171) 160,590 344,088 103,931 7,924 (225,738) (6,081,596) 2019 $ 41,468 333,235 24,983 104,605 504,291 The remaining 2,294,998 performance rights will vest if the 30-day VWAP of the Company’s Shares as traded on ASX is equal to or greater than A$0.04 by 30 June 2021. NOTE 9: CURRENT TRADE AND OTHER RECEIVABLES The performance rights are valued at the share price on grant date, being 1.2 cents for each of the performance rights issued to the Directors and 1.4 cents for each of the performance rights issued to the employees and contractors. GST recoverable Prepayments Interest receivable Other receivables - 40 - - 41 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 10: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE Costs carried forward in respect of: Exploration and evaluation phase – at cost Balance at beginning of year Expenditure incurred, net of cost recoveries Impairment of exploration and evaluation expenditure Foreign exchange loss Total exploration and evaluation expenditure Total expenditure incurred and carried forward in respect of specific projects - Ovoot Coking Coal Project Nuurstei Coking Coal Project Total exploration and evaluation expenditure 2020 $ 2019 $ 37,461,876 35,609,772 1,374,197 (1,233,218) 2,578,993 (7,924) (1,132,753) (718,965) 36,470,102 37,461,876 35,433,775 36,235,803 1,036,327 1,226,073 36,470,102 37,461,876 Exploration expenditure incurred on the Ovoot Coking Coal Project and Nuurstei Coking Coal Project mining licences has been carried forward as that expenditure is expected to be recouped through successful development and exploration of the areas of interest, or alternatively, by sale. Exploration expenditure incurred on areas of interest other than mining licences has been impaired or written off as recoupment by development or sale is not expected. In the period, expenditure incurred on exploration license XV-014510 was written-off following a post-balance date Company Board decision to relinquish the license based on a technical geological recommendation. As Northern Railways LLC does not currently have in place the funding to build and operate the railway, the Group has impaired the evaluation expenditure incurred. NOTE 11: TRADE AND OTHER PAYABLES (CURRENT) Trade payables Accrued expenses Employee entitlements Corporate credit card Trade payables and accrued expenses are normally settled on 30 day terms. 2020 $ 130,592 25,000 5,925 599 2019 $ 241,282 45,205 15,425 7,720 162,116 309,632 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 12: PROPERTY, PLANT AND EQUIPMENT Leasehold Improvements Plant & Equipment $ $ Furniture & Fittings $ Office Equipment Motor Vehicles Total $ $ $ 134,291 13,199 - 102,880 - - 53,789 20,061 (7,380) 57,499 128,597 - 29,248 (8,870) (12,633) 477,056 62,508 (28,883) (18,549) (52,678) (28,668) (32,159) (64,415) (196,469) (5,044) 123,897 (1,157) 49,045 (1,249) 36,553 (1,421) 40,534 (1,032) 54,280 (9,903) 304,309 1,291,603 (987,294) 304,309 155,686 - 79,402 62,738 16 68,710 21,253 13,051 55,654 154,682 269,408 341,784 (17,280) (36,915) (14,551) (10,502) (45,986) (125,234) (4,115) (2,345) (386) (704) (1,352) (8,902) 134,291 102,880 53,789 57,499 128,597 477,056 1,393,115 (916,059) 477,056 Year ended 30 June 2020 Carrying value at 1 July 2019 Additions Disposals Depreciation charge for the year Exchange rate movement Carrying value at 30 June 2020 30 June 2020 Cost Accumulated depreciation Net carrying amount Year ended 30 June 2019 Carrying value at 1 July 2018 Additions Depreciation charge for the year Exchange rate movement Carrying value at 30 June 2019 30 June 2019 Cost Accumulated depreciation Net carrying amount The carrying value of motor vehicles held under a finance loan agreement at 30 June 2020 is $54,280 (2019: $115,430). The motor vehicle is pledged as security for the finance loan liability. - 42 - - 43 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 13: INTANGIBLE ASSET NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 Exploration Software NOTE 15: NON-CONTROLLING INTERESTS AND CONTRIBUTION RESERVE Carrying value at beginning of year Additions Disposals Amortisation for the year Exchange rate movement At end of year At 30 June Cost Accumulated amortisation Net carrying amount NOTE 14: FINANCIAL LIABILITIES Finance loan liability Current liability Non-current liability Balance at beginning of period Addition in the period Payments Balance at end of period 2020 $ 112,618 168,005 (16) (101,313) (8,181) 171,113 307,782 (136,669) 171,113 2020 $ 70,492 70,492 11,588 58,904 70,492 $ 85,479 - (14,987) 70,492 2019 $ - 148,783 - (35,356) (809) 112,618 147,976 (35,358) 112,618 2019 $ 85,479 85,479 12,068 73,411 85,479 $ - 98,795 (13,316) 85,479 In August 2018, the Company’s Mongolian subsidiary, Khurgatai Khairkhan LLC, entered into a loan agreement for two motor vehicles for use by the Ulanbaatar office. The loan is for 180million MNT ($98,795) with monthly principal instalments of 1.875 million MNT per month (approx. $1,040 pm) and interest at 15.6% pa over the 96 month term. There is a 10% non-controlling interest in the Coalridge Limited group entity that holds the Nuurstei Coking Coal mining and exploration licenses. There is also a 20% non-controlling interest in Northern Rail Holdings Limited. During 2018, the Group disposed of a 10% interest in NRML to the Noble Group to bring Noble’s interests in NRML to 20% in exchange for a US$1.4 million reduction of the long-term facility payable to Noble. In 2018, the gain on divestment of the shares held by the Company in NRIPL of $1,805,302 was reclassified to a contribution reserve on consolidation. Non-controlling interest summary Balance at 30 June 2018 Loss allocated to non-controlling interest Other comprehensive loss allocated to non-controlling interest Balance at 30 June 2019 Loss allocated to non-controlling interest Other comprehensive loss allocated to non-controlling interest Balance at 30 June 2020 Coalridge Limited $ (68,942) (10,398) (9,039) (88,379) (18,034) (10,611) (117,024) Northern Rail Holdings Limited $ (132,783) Total $ (201,725) (147,651) (158,049) (77,246) (357,680) (86,285) (446,059) (29,451) (47,485) (8,764) (395,895) (19,375) (512,919) Current Assets Non-Current Assets Total Assets Current Liabilities Non-Current Liabilities Total Liabilities Net Assets Coalridge Limited 30 June 2020 30,811 1,038,718 1,069,529 (17,403) - (17,403) 1,052,126 30 June 2019 13,734 1,230,554 1,244,288 (9,477) - (9,477) 1,234,811 Northern Railway Holdings Limited 30 June 2020 10,210 - 10,210 (13,737) - (13,737) (3,527) 30 June 2019 60,485 - 60,485 - - 60,485 Revenue Loss for the year Total comprehensive loss for the year (180,333) (286,442) (103,981) (194,363) - (147,256) (191,077) 3 (742,573) (1,124,484) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 - 44 - - 45 - Aspire Mining Limited Aspire Mining Limited NOTE 16: FINANCIAL INSTRUMENTS The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern. The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. None of the Group’s entities are subject to externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and general administrative outgoings. Working capital, cash and cash equivalents and capital requirements are reviewed by the Board on a regular basis. Financial assets: Receivables Cash and cash equivalents Financial liabilities: Trade and other creditors Borrowings 2020 $ 356,712 40,712,949 41,069,661 162,116 70,492 232,608 2019 $ 171,056 11,136,142 11,307,198 309,632 85,479 395,111 The following table details the expected maturities for the Group’s non-derivative financial assets. These have been drawn up based on contractual maturities of the financial assets except where the Group anticipates that the cash flow will occur in a different period. Weighted average effective interest rate Less than 1 month 1 – 3 Months 3 months – 1 year 1 – 5 years 5+ years % $ $ $ $ $ 2020 Non-interest bearing Variable interest rate instruments Fixed interest rate instruments 2019 Non-interest bearing Variable interest rate instruments Fixed interest rate instruments 0.50 1.25 0.50 2.66 390,541 696,175 - - - - - 34,903,456 1,086,716 34,903,456 5,079,489 5,079,489 263,798 4,453,531 - - - - - 4,717,329 6,579,870 6,579,870 10,000 10,000 - - - - - - - - - - - - - - - - NOTE 16: FINANCIAL INSTRUMENTS (continued) The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities. These are based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Weighted average effective interest rate Less than 1 month 1 – 3 Months 3 months – 1 year 1 – 5 years 5+ years 2020 Non-interest bearing Variable interest rate instruments Fixed interest rate instruments 2019 Non-interest bearing Variable interest rate instruments Fixed interest rate instruments % - - 15.6 - - 15.6 $ $ $ $ $ 162,116 - - 162,116 309,634 - - 309,634 - - - - - - - - - - - - - - - - - - - - 11,588 11,588 58,903 58,903 - - - - 12,068 12,068 73,411 73,411 NOTE 17: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group has exposure to the following risks from the use of financial instruments: • Credit risk • Liquidity risk • Interest rate risk • Foreign currency risk • Market risk This note presents the information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk. The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees policies for managing each of these risks as summarised below. The Group’s principal financial instruments comprise cash and short-term deposits. The main purpose of the financial instruments is to earn the maximum amount of interest at a low risk to the Group. The Group also has other financial instruments such as receivables and creditors which arise directly from its operations. For the years ended 30 June 2020 and 2019, it has been the Group’s policy not to trade in financial instruments. Credit risk management (a) Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses publicly available financial information. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 - 46 - - 47 - Aspire Mining Limited Aspire Mining Limited NOTE 17: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) NOTE 17: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually. Foreign currency sensitivity analysis The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. (b) Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group did not have any undrawn facilities at balance date (2019: $NIL). (c) Interest rate risk management The Group is exposed to interest rate risk as the Group deposits the bulk of the Group’s cash reserves in term deposits with the National Australia Bank (“NAB”). The risk is managed by the Group by maintaining an appropriate mix between short term and medium-term deposits. The Group’s exposures to interest rate on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. Interest rate sensitivity At 30 June 2020, the effect on loss and equity as a result of changes in the interest rate, with all other variable remaining constant would be as follows: Change in Loss Increase in interest rate by 1% Decrease in interest rate by 1% Change in Equity Increase in interest rate by 1% Decrease in interest rate by 1% 2020 $ 6,947 (6,947) 2019 $ 44,535 (44,535) 6,947 (6,947) 44,535 (44,535) (d) Foreign currency risk management The Group undertakes certain transactions denominated in foreign currencies hence exposures to exchange rate fluctuations arise. The Group does not manage these exposures with foreign currency derivative products. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows: US Dollars Mongolian Tugriks Liabilities 2020 $ - 162,668 2019 $ - 103,670 Assets 2020 $ 2019 $ 39,937,178 40,953 4,028,639 1,907,147 The Group is exposed to US Dollar (USD) and Mongolian Tugrik currency fluctuations. The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represent management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in profit and equity where the Australian Dollar weakens against the respective currency. For a strengthening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and equity and the balances below would be negative. 10% Increase 2020 $ 2019 $ Profit/(loss) and equity – US dollar exposure 3,644,708 366,240 Profit/(loss) and equity – Mongolian Tugrik 11,142 164,209 10% Decrease $ $ Profit/(loss) and equity – US dollar exposure (4,454,643) (447,627) Profit/(loss) and equity – Mongolian Tugrik (13,618) (200,700) (e) Market risk management Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or value of the holdings of financial instruments. The Group is exposed to movements in market interest rates on short term deposits. The Group does not have short-term or long-term debt with variable interest rates, and therefore this risk is minimal. The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have acceptable credit ratings. The carrying value of the financial assets and liabilities in the financial statements approximates their fair value. - 48 - - 49 - Aspire Mining Limited Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 18: COMMITMENTS Remuneration Commitments The Group has entered into remuneration commitments with all the Directors and other key management personnel of the Group which were in effect throughout the financial year. The Group also employs consultants who are contracted under standard consultancy rates. Exploration Commitments The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest in. Outstanding exploration commitments are as follows: Within a year Later than one year but not later than five years Motor Vehicle Loan Commitment 2020 $ 22,421 67,263 2019 $ 27,953 128,700 During the year, the Group entered into a loan agreement to purchase two motor vehicles. Within a year Later than one year but not later than five years More than 5 years Total liability Less unexpired interest Present value Represented by: Current liability Non-current liability: 2020 $ 21,759 68,972 13,700 104,431 (33,939) 70,492 11,588 58,904 70,492 2019 $ 24,578 79,366 29,400 133,344 (47,865) 85,479 12,068 73,411 85,479 Investment Consideration Commitments Pursuant to the initial acquisition from Xanadu Limited of the 50% interest in Coalridge Limited that owns 90% interest in the Nuurstei Coking Coal Project (Nuurstei Project), 5 million shares in Aspire are to be issued to Xanadu in the event that 30 million tonnes of JORC compliant resources are identified in the Nuurstei Project area. NOTE 19: DIVIDENDS The Directors of the Group have not declared any dividend for the year ended 30 June 2020. NOTE 20: CONTINGENT LIABILITIES There are no contingent liabilities at 30 June 2020. NOTE 21: EVENTS SUBSEQUENT TO REPORTING DATE There has not been any material matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial periods. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 22: DIRECTORS AND EXECUTIVE DISCLOSURES The totals of remuneration paid to key management personnel of the company during the year are as follows: Short-term employee benefits Post-employment benefits Share-based payments 2020 $ 1,074,555 5,205 160,422 1,240,182 2019 $ 645,524 2,603 280,698 928,825 Share based payments is the gross accounting value of performance rights and options brought to account in accordance with accounting standards. Related Party Transactions As at 30 June 2020, there were no unpaid Directors’ Fees payable (2019: $111,486). NOTE 23: AUDITOR’S REMUNERATION The auditor of Aspire Mining Limited is HLB Mann Judd. Amounts received or due and receivable by HLB Mann Judd for: An audit or review of the financial reports Other services 2020 $ 49,700 - 49,700 The auditor of Khurgatai Khairkhan LLC, its direct subsidiaries and Northern Railways LLC is KPMG. 2019 $ 49,000 3,744 52,744 2019 $ 46,359 - 46,359 Amounts received or due and receivable by KPMG: An audit or review of the financial reports Other services NOTE 24: PARENT ENTITY DISCLOSURES Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity 2020 $ 75,548 - 75,548 2020 $ 36,186,822 6,438,548 42,625,370 61,636 - 61,636 42,563,734 150,026,408 201,240 (107,663,914) 42,563,734 # Options purchased as part of the purchases of the non-renounceable rights issue at $0.08 *1. 20,000 options held in the Name of Russell Lynton Brown. 2. 4,020,000 options held in the name of Husif Nominees Pty Ltd ; Mr Lynton-Brown is a Director and controlling shareholder. 2019 $ 9,262,900 6,193,600 15,456,500 291,320 - 291,320 15,165,180 114,897,715 1,167,852 (100,900,387) 15,165,180 - 50 - Aspire Mining Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020 NOTE 24: PARENT ENTITY DISCLOSURES (continued) Financial performance Operating loss for the year Total comprehensive loss Year ended 30 June 2020 $ (7,889,619) (7,889,619) Year ended 30 June 2019 $ (11,175,235) (11,175,235) Parent Company Capital Commitments and Contingent Liabilities The parent entity currently has no capital commitments for the acquisition of property, plant and equipment. See Note 18 for obligations of Aspire to issue securities. NOTE 25: SUBSIDIARIES The consolidated financial statements include the financial statements of Aspire Mining Limited and its below subsidiaries. % Equity Owned Investment Subsidiary Name Khurgatai Khairkhan LLC Ovoot Coal Mining LLC Chilchig Gol LLC Ovoot Coking Coal Pte Ltd Northern Railways LLC Northern Railways Holdings LLC Northern Railways Pte Ltd Northern Mongolian Railways Limited Coalridge Limited Ekhgoviin Chuluu LLC Black Rock LLC Country of incorporation Mongolia Mongolia Mongolia Singapore Mongolia Mongolia Singapore British Virgin Islands British Virgin Islands Mongolia Mongolia 2020 100% 100% 100% 100% 80% 80% 80% 80% 100% 100% 90% 2020 - - - 2019 2019 - 100% - 100% - 100% 100% $9,428,158 $9,428,158 - $136,230 $1 $97,408 100% $1,541,390 $1,541,390 - 100% - 90% - $136,230 $1 $97,408 80% 80% 80% 80% - - Aspire Mining Limited is the ultimate Australian parent entity and ultimate parent of the Group. Transactions between these parties involved the provision of funding for operations. As at 30 June 2020 and before impairment, amounts of $58,861,726 (2019: $52,920,821), $20,907,766 (2019: $20,890,902), $138,409 (2019: $138,409), $1,286,160 (2019: $1,274,439), $18,736 (2019: $14,617) and $450,279 (2019: $395,185) were owed by Khurgatai Khairkhan LLC, Ovoot Coking Coal Pte Ltd, Northern Railway Holdings LLC, Northern Railways Pte Ltd, Northern Mongolian Railways Limited and Ekhgoviin Chuluu LLC to the parent entity, respectively. The loans have been impaired. - 52 - INDEPENDENT AUDITOR’S REPORT To the members of Aspire Mining Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Aspire Mining Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year then ended; and 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. 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. We have determined the matters described below to be the key audit matters to be communicated in our report.- 53 - Key Audit Matter How our audit addressed the key audit matter Deferred exploration and evaluation expenditure (Note 10 in the annual financial report) In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group capitalises acquisition costs of rights to explore as well as subsequent exploration and evaluation expenditure and applies the cost model after recognition. Our audit focussed on the Group’s assessment of the carrying amount of the capitalised exploration and evaluation asset. We considered this to be a key audit matter because this is one of the most significant assets of the Group. There is a risk that the capitalised expenditure no longer meets the recognition criteria of the standard. In addition, we considered it necessary to assess whether facts and circumstances existed to suggest that the carrying amount of the exploration and evaluation asset may exceed its recoverable amount. Our procedures included but were not limited to the following: • We obtained an understanding of the key processes associated with management’s review of the exploration and evaluation asset carrying values; • We verified a sample of the exploration additions; • We verified the write-off of capitalised exploration expenditure; • We considered the Directors’ assessment of potential indicators of impairment; • We obtained evidence that the Group has current rights to tenure of its areas of interest; • We examined the exploration budget for the year ending 30 June 2021 and discussed with management the nature of planned ongoing activities; and • We examined the disclosures made in the financial report. 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 2020, 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. 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 - 54 - 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. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. 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. - 55 - Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Aspire Mining Limited for the year ended 30 June 2020 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HLB Mann Judd B G McVeigh Chartered Accountants Partner Perth, Western Australia 29 September 2020 - 56 - - - 57 ADDITIONAL SHAREHOLDER INFORMATION Additional information required pursuant to the ASX Listing Rules and not shown elsewhere in this report is as follows. The information is current as at 29 September 2020. 1. Substantial Shareholders There are two substantial shareholders: § Mr Terenpuntsag Tserendamba, 266,376,470 shares or 52.47% on an undiluted basis § Noble Resources International Pte Ltd, 66,401,755 shares or 13.08% on an undiluted basis There are four substantial unlisted performance rights holder: § 2Rs Pty Ltd, a company controlled by Mr David Paull, 916,666 performance rights, or 40% § Spectral Investments Pty Ltd, a company controlled by Mr Neil Lithgow, 725,000 performance rights or 32% § Hannah Badenach, 361,666 performance rights or 16% § Barkdell Services Pty Ltd, 283,333 performance rights or 12% 2. Number of holders in each class of equity securities and the voting rights attached Ordinary Shares There are 2,634 holders of ordinary shares. Each shareholder is entitled to one vote per share held. In accordance with the Company’s Constitution, on a show of hands every member present in person or by proxy or attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share held. Performance Rights There are five holders of performance rights. There are no voting rights attached to the performance rights. ADDITIONAL SHAREHOLDER INFORMATION (continued) 3. Distribution schedule of the number of holders in each class of equity security a) Fully Paid Ordinary Shares Spread of Holdings Holders 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – 763 579 272 764 256 TOTAL ON REGISTER 2,634 Units 288,768 1,588,309 2,209,074 29,660,967 473,889,867 507,636,985 b) There were no listed options on issue as at the date of this report. c) Unlisted Performance Rights that vest at various dates Spread of Holdings Holders 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – TOTAL ON REGISTER - - 1 - 4 5 4. Marketable Parcel There are 1,422 shareholders with less than a marketable parcel. 5. Twenty largest holders of each class of quoted equity security % 0.06% 0.31% 0.44% 5.84% 93.35% 100.00 % % 0.0 % 0.0 % 0.4 % 0.0 % Units - - 8,333 - 2,286,665 2,294,998 99.6 % 100.00 % The names of the twenty largest registered holders of each class of security, the number of equity security each holds and the percentage of capital each holds are as follows on the next page; ADDITIONAL SHAREHOLDER INFORMATION (continued) ADDITIONAL SHAREHOLDER INFORMATION (continued) - - 58 - - 59 Ordinary Shares Top 20 holders and percentage held Holder Name 1 Mr Tserenpuntsag Tserendamba 2 BNP Paribas Nominees Pty Ltd 3 MICC LLC(i) 4 Spectral Investments Pty Ltd 5 HSBC Custody Nominees Australia Limited 6 China Tonghai Securities Ltd 7 Custodial Services Limited 8 J P Morgan Nominees Australia Pty Ltd 9 Citicorp Nominees Pty Ltd 10 Mr Stephen Ronald Hobson 11 2R’s Pty Ltd 12 Mentok Pty Ltd 13 Mr Peter Joseph McGuire 14 Glover Superannuation Pty Ltd 15 Mrs Lynette Rita Robinson 16 Sai Holdings (WA) Pty Ltd 17 18 Mr Cho Kheen Chong & Mrs Laura Ah Chun Chong A/c> 19 Red Island Resources Ltd 20 Mr Shayan Vejdani Najafabadi Total Notes (i) Held for and on behalf of Mr. Tserenpuntsag Tserendamba Units % of Issued 6. Stock exchange on which the Company’s securities are quoted: The Company’s listed equity securities are quoted on the Australian Stock Exchange. 222,542,060 70,867,277 43,834,410 23,727,851 15,592,316 9,836,492 6,959,470 4,240,165 3,079,936 2,129,833 1,557,013 1,415,000 1,200,000 1,046,427 1,000,000 960,000 912,018 856,060 825,000 802,890 413,384,218 43.84% 13.96% 8.64% 4.67% 3.07% 1.94% 1.37% 0.84% 0.61% 0.42% 0.31% 0.28% 0.24% 0.21% 0.20% 0.19% 0.18% 0.17% 0.16% 0.16% 81.43% 7. Restricted Securities There are no restricted securities. 8. Review of Operations A review of operations is contained in the Annual Report and Directors’ Report within the Annual Financial Report. 9. Corporate Governance Statement The Corporate Governance Statement for the year ending 30 June 2020 can be found on the company’s website at http://www.aspiremininglimited.com. 10. Schedule of Tenements Mining & Exploration Licenses The licenses registered in the name of Aspire Mining Limited or its 100% owned subsidiaries are set out in the Operational Review in the Annual Report. 11. Schedule of Tenements Mining & Exploration Licenses The licenses registered in the name of the Company or one of its subsidiaries are: Tenement Ovoot MV017098 Hurimt (1) 14510X Nuurstei MV-020941 Location Mongolia Mongolia Mongolia Attributable Equity 100% 100% 90% (1) Application for relinquishment of this license has been made. THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

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