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2023 ReportAuKing Mining Limited ABN 29 070 859 522 ASX Code: AKN ANNUAL FINANCIAL REPORT For the year ended 31 December 2023 AuKing Mining Limited 2023 Annual Report Corporate Directory AuKing Mining Limited Board of Directors Mr Asimwe Kabunga (Executive Chair) Mr Peter Tighe (Non-Executive Director) Mr Shizhou Yin (Non-Executive Director) Mr Park Wei (Non-Executive Director) Chief Executive Officer Mr Paul Williams Company Secretary Mr Paul Marshall Head Office and Registered Office Suite 2208, Level 22 127 Creek Street Brisbane QLD 4000 Telephone: 07 3535 1208 Email: admin@aukingmining.com Website: www.aukingmining.com Auditors BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane QLD 4000 Telephone: 07 3237 5999 Website: www.bdo.com.au Share Registry Link Market Services Limited Level 21 10 Eagle Street Brisbane QLD 4000 Telephone: 1300 554 474 Facsimile: 02 9287 0303 Website: www.linkmarketservices.com.au Stock Exchange Listing Australian Securities Exchange ASX Code: AKN Australian Business Number 29 070 859 522 Page 2 AuKing Mining Limited 2023 Annual Report CONTENTS Directors’ Report Review of Operations Directors and Officers Financial Results Future Developments, Prospects, Strategies and Business Risks Remuneration Report Auditor's Independence Declaration Additional Stock Exchange Information Annual Financial Report Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report 4 14 16 18 20 29 30 32 33 34 35 36 55 59 Page 3 AuKing Mining Limited 2023 Annual Report REVIEW OF OPERATIONS Koongie Park Project Western Australia, Australia Ownership 100% (subject to 1% net smelter royalty) Total JORC Resources: Sandiego/Onedin - 8.9 million tonnes @ 1.01% Cu, 3.67% Zn, 0.16g/t Au, 32g/t Ag, 0.77% Pb and Emull -12.2 million tonnes @ 0.27% Cu, 0.38% Zn, 0.09% Pb and 4.9g/t Ag Sandiego Scoping Study On 1 June 2023 AuKing announced the results of a Scoping Study designed to assess the development of an open-pit and underground mining operation at the Sandiego deposit. The Scoping Study confirmed the potential for a financially robust, globally competitive copper/zinc project in north-east Western Australia, including nearby deposits owned by Cazaly Resources Ltd (ASX:CAZ). Mineralisation is proposed to be sourced from four open pit mines (Sandiego, Mt Angelo North, Onedin and a later-staged operation at the low-grade Bommie) and an underground mine at Sandiego – all to be processed from a central facility at Sandiego. Figure 1. Location of Koongie Park Scoping Study deposits Features of the Study outcomes included: • Life-of-Mine (LOM) of 11 years with an estimated total production of 110kt Cu, 38kt Zn and 355koz Ag • Processing nameplate capacity is 750ktpa of run-of-mine (ROM) ore • Strong project economics and financial returns including: o Pre-production Capex of A$134M, with an estimated 2.45 years payback period o Robust pre-tax NPV8 of approximately A$176.9M and 39.7% IRR o Life of Mine EBITDA of A$443.8M with an average operating cashflow of A$40.3M per annum. Page 4 AuKing Mining Limited 2023 Annual Report Further Acquisition of Joint Venture Interests Under the terms of the Earn-in and Joint Venture Agreement dated 8 February 2021, upon the participating interest of Astral Resources (AAR) in the Koongie Park Joint Venture diluting below 10%, AAR is deemed to have withdrawn from the KPJV and the remaining participating interest converts to a net smelter return royalty. As a result of further sole funding of project expenditure by AuKing during the year, AAR’s participating interest was deemed to have diluted below 10% with effect from 30 June 2023 and AuKing moved to the 100% participating interest at the same time. AAR retains the right to explore for and develop gold and other precious metals within the Koongie Park project area, including platinum group elements. These rights do not apply to the mining licences on which the Onedin and Sandiego deposits are situated. Sandiego North Soil Sampling Early in 2023, the Company completed a soil sampling program over the Sandiego North area to follow up on mineralisation identified in and around the waterbore drill hole (ASWB001) which is situated 700m north of the Sandiego deposit. The purpose of the soil program was to identify any geochemical continuity between Sandiego and Sandiego North. Figure 2 below shows the sample locations that were targeting the area between the main Sandiego deposit and Sandiego North – with the Sandiego mining study including a possible open pit mine, the ability to identify further open- pittable resources at Sandiego North becomes quite significant. From the assay results received during the year (and as illustrated in Figure 2) there is a clear Cu geochemical trend from ASWB001 back towards the main Sandiego deposit to the south-west. Samples were taken on a nominal 50m x 20m spacing for a total of approx. 330 samples in total. The results from this program clearly demonstrate the need for several drill holes to test the extent of potential copper mineralisation across this very prospective zone. Figure 2 – AuKing’s Sandiego North soil sampling area Page 5 AuKing Mining Limited 2023 Annual Report Onedin Metallurgical Testwork A proposal to carry out a pre-feasibility study to establish a suitable metallurgical testwork program at Onedin was received during the year, but further work on such a program was deferred pending availability of additional funding sources for such activity. Tanzania Ownership Uranium and Copper projects 100% In January 2023, AuKing announced completion of the acquisition of its 100% interest in six projects in Tanzania (Ref ASX Release 31 January 2023). Four of the projects are prospective for uranium (Manyoni, Mkuju, Itigi and Magaga) and the other two are prospective for copper (Mpanda and Karema). Mkuju is the priority focus of exploration activities in Tanzania. Figure 3 - Locations of Tanzanian uranium and copper projects Mkuju Exploration Program On 30 August 2023 AuKing announced that exploration activities had commenced at the high priority Mkuju uranium project in southern Tanzania. Mkuju is situated immediately to the south-east of the world class Nyota uranium project that was the primary focus of exploration and development feasibility studies by then ASX-listed Mantra Resources Limited (MRU). Not long after completion of feasibility studies for Nyota in early 2011, MRU announced a A$1.16Bn takeover offer from the Russian group ARMZ. The takeover was finalised in mid-2011. MRU completed a high-resolution helicopter-borne radiometric survey over the entire Mkuju River Project area in mid- 2007 which resulted in the identification of several uranium anomalies requiring field evaluation. Geological mapping, ground radiometrics and trenching were completed on various target areas. Although preliminary in nature, the field observations were positive with visible uranium mineralisation being recorded in trenches at a number of the targets. The historical MRU mapping identified sub-horizontal beds of medium to coarse grained sandstones, interbedded, multiple layers of claystone and a distinctive stratigraphic marker horizon consisting of petrified wood fragments and tree trunks. The mapping confirmed the radiometric anomalism to be associated with two linear structural corridors and associated, second order north-west orientated jointing and faulting. Secondary uranium mineralisation is associated with the claystone and wood bearing gritstone horizons, with enrichment along the preferred structural zones. The location of the potential ‘remobilised’ uranium and testing of high-grade zones will be the focus of AuKing’s drilling activities. Page 6 AuKing Mining Limited 2023 Annual Report Soil and rock chip sampling at Mkuju A detailed summary of results achieved from the Stage 1 soil sampling and rock chip exploration program at Mkuju is set out in ASX Releases dated 16 October and 20 November 2023 respectively) and include the following highlights: • A total of 66 sample results included pXRF results of: 499ppm U3O8 from rock chip sample MKGS001 481ppm U3O8 from rock chip sample MKGS006 6,213ppm U3O8 from rock chip sample MKGS021 652ppm U3O8 from rock chip sample MKGS056 1,344ppm U3O8 from rock chip sample MKGS056 549ppm U3O8 from rock chip sample MKGS057 • As illustrated below, the results from this program demonstrate a close correlation with the radiometric survey undertaken by Mantra Resources Limited in 2007 – thereby leaving open a significant prospective area for future drilling activities. Figure 4 – Mkuju Soil and Rock Chip Sample Locations and Results Page 7 AuKing Mining Limited 2023 Annual Report Auger drilling at Mkuju A summary of the auger drilling results achieved from the Stage 1 exploration program at Mkuju are highlighted below and also set out in full in Annexure A of ASX release dated 29 December 2023: Hole ID MKAU23_011 MKAU23_014 MKAU23_018 MKAU23_020 Incl. MKAU23_035 MKAU23_042 MKAU23_045 Incl. From (m) 10 0 2 0 0 7 6 0 0 To (m) 11 1 6 4 1 9 7 2 1 Width 1 1 4 4 1 2 1 2 1 Grade (U ppm) 38 159 48 598 1896 110 51 169 283 Table 1 – Mkuju highlighted auger drilling results A number of observations need to be made in relation to the auger drilling program: • • • • • • Overall, the auger drilling program comprised 55 holes for a total of 547m drilled, with the deepest hole being 18m and an average hole depth of 10m; AuKing’s planned drilling for the auger rig was to achieve depths of 30m per hole and that based on historical drilling in the area (including at Nyota), uranium mineralization was expected to be observed if these drilling depths were achieved; However, as noted previously, the auger drilling rig has experienced several mechanical faults and other problems since arriving to site in August 2023 and these issues have prevented the 30m target depth being achieved for any drill hole; AuKing’s exploration team believes this is the major reason why most of the auger holes did not identify uranium mineralisation – the holes were simply not deep enough; the auger rig has now been removed from site and is undergoing a major overhaul in Dar es Salaam. Whether it returns to the Mkuju site will be a matter for AuKing to consider as it would appear to make more sense for future drilling to be undertaken by way of air core/RC drilling rig; and Despite the ongoing mechanical problems, AuKing has still been able (in some of the drill holes) to identify significant uranium mineralization, including over to the eastern part of the Mkuju licence area. As has been the case with the reported rock chip and soil sample results, these auger drill results provide further correlation with the historical radiometric survey. More importantly, the results provide a strong basis for the next stage of proposed drilling at Mkuju which is planned for the first half of 2024, as soon as access is permissible after the wet season has concluded. Diamond drilling at Mkuju AuKing sought to mobilise the track-mounted diamond drilling rig in early November 2023 in an attempt to carry out a few quick drill holes to a depth of approximately 100m in order to test uranium mineralisation at certain priority target holes. Unfortunately, the rig arrived at site in mid-November and then had several days tramming (on its own tracks) to the first drill hole location. Mechanical breakdowns then occurred over the next few weeks with the rig and then final set-up delays meant that drilling did not commence on the first proposed hole until the week before Christmas. A total of 52m of diamond drilling was completed before the crew departed site for the Christmas/New Year vacation period. Rainfall has continued over this period and the prospect of further diamond drilling at this time is very unlikely. The delays experienced with the diamond rig were frustrating and unfortunate and point to a greater likelihood that a track-mounted air core/RC drilling rig will be utilized for the planned future drilling at Mkuju. Initial Itigi Drilling Program Between May and July 2023 AuKing completed a total of 1,060.5m of air core (AC) drilling at the Itigi project (to the west of Manyoni in central Tanzania). This drilling was completed across 72 holes, to depths up to 15m where bedrock was encountered. Assay results received by AuKing’s exploration team were largely consistent with the initial XRF field measurements of the drilling samples. Although there were anomalous U3O8 readings across several drill holes (including up to a maximum reading of 304ppm U3O8), AuKing’s drilling at Itigi was unable to replicate the historically-reported results in this area. As a consequence (and largely due to the expanded focus on Mkuju to the south) it is likely that AuKing will abandon it licence holdings at Itigi. Page 8 AuKing Mining Limited 2023 Annual Report Revocation of Manyoni Licences On 27 February 2023 AuKing advised of a decision by the Tanzanian Mining Commission to revoke two of the Company’s PL holdings at Manyoni – PLs 12193 and 12194. As a result of this decision AuKing filed an appeal to the Tanzanian Minister of Mining under the relevant provisions of the Mining Act. A response to that appeal is still pending. Throughout the course of the year AuKing continued to liaise with representatives of the Ministry and also the Mining Commission, hopeful of a positive outcome from the discussions. Expansion of Mkuju Area In November 2023, AuKing secured the grant of three new prospecting licences (PLs) to the east of the existing Mkuju project areas, covering a highly prospective area of approximately 345 sq kms. As demonstrated in Figure 5 below, all three PL areas cover radiometric “highs” that appear to be of similar quality to the world class Nyota uranium deposit to the immediate north-east. Figure 5 – New Mkuju Licence Areas Page 9 AuKing Mining Limited 2023 Annual Report Corporate Activities Capital Raising During the March Quarter the Company completed a share placement to certain professional investors of 21,260,000 shares at 10c each to raise $2,126,000 (less issue costs). The 10c issue price represented a 69% premium to the prevailing share price on ASX. A further 10,630,000 free attaching options exercisable at 20c on or before 30 September 2025 were issued as part of the placement. The issue of these shares and options had previously been approved by AuKing shareholders at the 16 December 2022 extraordinary general meeting. In November 2023, the Company completed a share placement to sophisticated and professional investors to raise $1.05 million (before costs) through the issue of 26,250,000 shares at an issue price of $0.04 each (Placement Shares). An additional series of free-attaching options (Placement Options) was issued with the Placement Shares on a 1:2 basis exercisable at 10c on or before 31 December 2025. Mr Asimwe Kabunga, the Board Chairman and major shareholder, agreed to participate in the Placement to the extent of a further $200,000, taking the total funds raised (excluding costs) to $1.25 million. Board Changes During the course of 2023, certain changes occurred to the AuKing Board of Directors as follows: • Ms Anna Nahajski-Staples retired as a director and co-Chairman in early April; • Mr Ian Hodkinson retired as a director in early April; and • Mr Zuliang (Park) Wei was appointed as an additional director in early June. Lapse of AKNO Options On 30 June 2023, the existing ASX-listed AKNO options lapsed without any of them being exercised. There was a total of 42,871,380 of these AKNO options. Competent Persons’ Statements The information relating to Exploration Results as outlined above is extracted from previous ASX announcements made by the Company. These reports are available to view on the Company’s website www.aukingmining.com. This report was issued in accordance with the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements. Annual Mineral Resource Statement In accordance with ASX Listing Rule 5.21, the Company reviews and reports its Mineral Resources at least annually. The date of reporting is 31 December each year, to coincide with the Company’s end of financial year balance date. If there are any material changes to its Mineral Resources over the course of the year, the Company is required to promptly report these changes. The Company has not reported any changes to its Mineral Resources during the 2023 calendar year. The current reported JORC 2012 resource estimate for the Koongie Park project (Sandiego and Onedin) is 8.9Mt @ 1.01% Cu, 3.67% Zn, 0.16g/t Au, 32g/t Ag and 0.77% Pb, details of which are set out below: Page 10 AuKing Mining Limited 2023 Annual Report Onedin Mineral Resource Estimate and Metal Tonnes Zone Classification Cu Dominant Zn Dominant Indicated Inferred Indicated Inferred Resource Total and Grades Zone Classification Cu Dominant Zn Dominant Indicated Inferred Indicated Inferred Tonnes (Mt) 1.5 - 3.3 - 4.8 Tonnes (Mt) 1.5 - 3.3 Copper (%) 1.1 - 0.5 - 0.7 Copper (tonnes) 16,500 - 16,500 Zinc (%) 0.6 - 4.3 - 3.2 Zinc (tonnes) 9,000 - 141,900 - - - Gold (g/t) 0.2 - 0.1 - 0.1 Gold (oz) 9,600 - 10,600 - Total Metal Tonnes 33,000 150,900 20,200 Silver (g/t) 47 - 34 - 38 Silver (Moz) 2.27 - 3.61 - 5.88 Lead (%) 1.2 - 1.0 - 1.1 Lead (tonnes) 18,000 - 33,000 - 51,000 Note: (1) Reported tonnes and grade are rounded (2) Reporting cut-off grades of 0.4% Cu and 1% Zn have been applied to the Onedin deposit Sandiego Mineral Resource Estimate and Metal Tonnes Cu Dominant Zn Dominant Classification Indicated Inferred Sub Total Indicated Inferred Sub Total Resource Total and Grades Classification Cu Dominant Zn Dominant Indicated Inferred Sub Total Indicated Inferred Sub Total Total Metal Tonnes Tonnes (Mt) 1.7 0.3 2.0 2.0 0.1 2.1 4.1 Tonnes (Mt) 1.7 0.3 2.0 2.0 0.1 2.1 Copper (%) 2.3 1.6 2.2 0.6 0.2 0.6 1.4 Copper (tonnes) 39,100 4,800 43,900 12,000 Zinc (%) 0.8 3.0 1.1 7.3 6.1 7.3 4.3 Zinc (tonnes) 13,600 9,000 22,600 146,000 200 6,100 12,200 56,100 152,100 174,700 Gold (g/t) 0.3 0.2 0.3 0.1 0.1 0.1 0.2 Gold (oz) 16,400 1,900 18,300 6,400 300 6,700 25,000 Silver (g/t) 18 5 16 35 10 34 25 Silver (Moz) 0.98 0.05 1.03 2.25 0.03 2.28 3.31 Lead (%) 0.2 0.0 0.1 0.7 0.1 0.7 0.4 Lead (tonnes) 3,400 0 3,400 14,000 100 14,100 17,500 Note: (1) Reported tonnes and grade are rounded (2) Reporting cut-off grades of 0.8% Cu and 3% Zn have been applied to the Sandiego deposit The information in this report that relates to Mineral Resources at the Koongie Park Project (Sandiego and Onedin) is based on information compiled by Mr David Williams who is a member of the Australian Institute of Geoscientists. Mr Williams is a Principal Consultant Geologist (Brisbane) of CSA Global and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Williams consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The current reported JORC 2012 resource estimate for the Koongie Park project (Emull) is 12.2Mt @ 0.27% Cu, 0.38% Zn, 0.09% Pb, and 4.9g/t Ag, details of which are set out below: Page 11 AuKing Mining Limited 2023 Annual Report Emull Mineral Resource Estimate and Metal Tonnes December 2022 Mineral Resource Estimate (0.15% Cu Cut-off) Tonnage Mt 0.26 0.34 1.8 2.4 Tonnage Mt 0.04 0.05 9.7 9.8 Tonnage Mt 0.29 0.39 11.5 12.2 Indicated Mineral Resource Pb % 0.16 0.17 0.14 0.14 Ag g/t 5.4 7.0 6.6 6.6 Cu t 700 1,000 5,600 7,300 Inferred Mineral Resource Pb % 0.05 0.04 0.08 0.08 Ag g/t 3.1 3.4 4.6 4.5 Cu t 100 100 25,200 25,400 Total Mineral Resource Pb % 0.14 0.15 0.09 0.09 Ag g/t 5.2 6.6 4.9 4.9 Cu t 800 1,100 30,800 32,700 Zn t 1,800 2,300 10,400 14,500 Zn t 100 100 32,300 32,500 Zn t 1,900 2,400 42,700 47,000 Zn % 0.72 0.68 0.57 0.60 Zn % 0.23 0.18 0.33 0.33 Zn % 0.66 0.61 0.37 0.38 Cu % 0.28 0.29 0.31 0.30 Cu % 0.24 0.25 0.26 0.26 Cu % 0.28 0.28 0.27 0.27 Pb t 400 600 2,400 3,400 Pb t 7,400 7,400 Pb t 400 600 9,800 10,800 Ag koz 50 80 390 510 Ag koz 10 1,420 1,430 Ag koz 50 80 1,810 1,940 Type Oxide Transitional Fresh Total Type Oxide Transitional Fresh Total Type Oxide Transitional Fresh Total The information in this Report that relates to the Mineral Resource Estimate for Emull is based on information compiled by Mr Shaun Searle who is a Member of the Australasian Institute of Geoscientists. Mr Searle is an employee of Ashmore Advisory Pty Ltd and independent consultant to AuKing Mining Limited. Mr Searle has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Searle consents to the inclusion in this report of the matters based on this information in the form and context in which it appears. In completing the review for the period ended 31 December 2023, the historical resource factors were reviewed and found to be relevant and current. The Koongie Park project has not been converted to an active operation yet and hence no material resource depletion has occurred for the review period. Material Changes and Resource Statement Comparison The 2012 JORC resource at Koongie Park (Sandiego and Onedin) and the maiden Emull resource (as shown above) are the current versions of the Mineral Resource estimates. The information in this Annual Report that relates to Mineral Resources was prepared and first disclosed under the JORC Code 2012 Edition. The Company is not aware of any new information or data that materially affects the information as previously released and all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. Governance Arrangements and Internal Controls AuKing has ensured that the Mineral Resources quoted are subject to good governance arrangements and internal controls. The Mineral Resources reported have been generated by suitably qualified personnel who are experienced in best practices in modelling and estimation methods, and AuKing has also undertaken reviews of the quality and suitability of the underlying information used to determine the resource estimate. Page 12 AuKing Mining Limited 2023 Annual Report Annual Review Competent Persons Statement The information in this Annual Report that relates to the mineral resources and ore reserves statement as a whole has been reviewed and approved by Mr Chris Bittar who is a member of the Australasian Institute of Mining and Metallurgy. Mr Bittar is an employee of AuKing Mining Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Bittar consents to the inclusion in this Report of the matters based on his information in the form and context in which it appears. Page 13 AuKing Mining Limited 2023 Annual Report DIRECTORS AND OFFICERS The following persons were directors of AuKing Mining Limited (‘AKN’ or ‘the Company’) during the whole of the financial period and up to the date of this report, unless stated: Current Directors Mr Asimwe Kabunga Executive Co-Chair, BSc (Mathematics and Physics) (Appointed 19 October 2022) Asimwe Kabunga is a Tanzanian born Australian entrepreneur with multiple interests in mining and IT businesses around the world. Mr Kabunga has extensive experience in the mining industry, logistics, land access, tenure negotiation and acquisition, as well as a developer of technology businesses. Mr Kabunga has been instrumental in establishing the Tanzania Community of Western Australia Inc., and served as its first President. Mr Kabunga was also a founding member of Rafiki Surgical Missions and Safina Foundation, both NGOs dedicated to helping children in Tanzania. Mr Kabunga has been a director of the following ASX listed companies in the prior 3 years: Lindian Resources Limited (appointed June 2017) Resource Mining Corporation (appointed May 2022) Volt Resources Limited (appointed August 2017) Mr Peter Tighe (Appointed 9 June 2021) Non-Executive Director Mr Tighe started his working career in the family-owned JH Leavy & Co business, which is one of the longest established fruit and vegetable wholesaling businesses in the Brisbane Markets at Rocklea and has been trading since the late 1800s. As the owner and managing director of JH Leavy & Co, Mr Tighe expanded the company along with highly respected farms and packhouses that have been pleased to supply the company with top quality fruit and vegetables for wholesale/export for over 40 years. JH Leavy & Co is considered one of the most successful businesses operating within the Brisbane Markets. Mr Tighe has been a director of Brisbane Markets Limited (BML) since 1999. BML is the owner of the Brisbane Markets® site and is responsible for its ongoing management and development of its $350m asset portfolio. As the proprietor of the site, BML has over 250 leases in place including selling floors, industrial warehousing, retail stores and commercial offices. BML acknowledges its role as an economic hub of Queensland, facilitating the trade of $1.5 billion worth of fresh produce annually, supporting local and regional businesses of the horticulture industry. As a Board member Mr Tighe has held roles in various sub-committees which include Chairman of Safety and Tenant Advisory Committee, BML Strategy Investment Committee, and Legal and Compliance Committee. In 2016 the JH Leavy & Co business was sold but Mr Tighe has continued as the CEO of Global Fresh Australia, trading as JH Leavy & Co, to ensure a successful transition of ownership. He has not been a Director of any other Australian listed company in the last three years. Mr ShiZhou Yin (Appointed 9 June 2021) Non-Executive Director Mr. Yin is a Chinese national without any foreign permanent residence, holds a Master of Professional Accounting degree and is a Chinese Certified Public Accountant and a Senior Accountant. From September 1994 to September 2010, Mr. Yin served successively as Accountant of Beijing No. 2 Water Pipe Factory, Audit Manager and Audit Partner of Yuehua Certified Public Accountants Firm, and Senior Partner of Zhongrui Yuehua Certified Public Accountants Co., Ltd. From October 2010 to May 2011, Mr Yin served as Chief Financial Officer of JCHX Mining Management Co., Ltd. From May 2011 to April 2017, Mr Yin served as Chief Financial Officer and Secretary of the Board of Directors of JCHX Mining Management Co., LTD (Shanghai Stock Exchange Code: 603979). From April 2017 Mr Yin has been Vice President, Chief Financial Officer and Secretary of the Board of JCHX Group Co., Ltd. Mr. Yin has been the chairman of the Board of Supervisors of JCHX Mining Management Co., Ltd (Shanghai Stock Exchange Code: 603979) since May 2017. Mr Yin has been an Independent Director of: Page 14 AuKing Mining Limited 2023 Annual Report Beijing Century Real Technology Co.,Ltd. (Shenzhen Stock Exchange Code: 300150) since September 2018; Beijing Yiqiao Shenzhou Technology Co., LTD. (which is to be listed on Growth Enterprise Market (“GEM”) of Shenzhen Stock Exchange) since March 2020; and previously, from October 2009 to March 2015, Dalian East New Energy Development Co., Ltd. (Shenzhen Stock Exchange Code: 300125). He has not been a Director of any other Australian listed company in the last three years. Mr Park (Zuliang) Wei (Appointed 5 June 2023) Non-Executive Director, BA Park Wei is a Chinese born Australian entrepreneur with multiple interests in property, mining and finance businesses around the world. Mr Wei is currently the Chairman of a fund manager, PAN Australia Fund Management Pty Ltd (PAFM) and the founder of Top Pacific Group, which was established in 1994 and diversified into property development, construction, real estate sales, building and strata management. He developed extensive residential property projects with total turnover of more than $3 billion. In 2019, Mr Wei took over PAFM (formerly Boill Fund Management Pty Ltd, a wholesale fund manager) to be main shareholder and Managing Director. Mr Wei has successfully invested in a number of equity investment projects in China and Australia, achieving good returns. Mr Wei also helped JAT fundraise $15 million to acquire the Australian dairy company ANMA. He has not been a Director of any other Australian listed company in the last three years. Interests in the shares and options of the Company As at the date of this report, the interests of the Directors in the shares and options of AuKing Mining Limited are shown in the table below: Director Ordinary Shares Options Asimwe Kabunga 41,000,000 20,500,000 Peter Tighe ShiZhou Yin * Park Wei 2,816,889 9,425,092 9,000,000 500,000 500,000 2,000,000 * Shares are held by Bienitial International Industrial Co Ltd. Mr Yin has the capacity to control the voting of the shares held by Bienitial International Industrial Co Ltd. Former Directors Ms Anna Nahajski-Staples (Resigned 6 April 2023) Non-Executive Co-Chair, BA Bus, F Fin, ACIS, GAICD Ms Nahajski-Staples is an investment banker, public company director and manager, with nearly 30 years’ experience (15 years in mining) representing over half a billion dollars in global transactions. Mr Ian Hodkinson (Resigned 6 April 2023) Non-Executive Director Mr Hodkinson is a Registered Professional Geoscientist (RPGeo) in the fields of Mining and Mineral Exploration with over 40 years of experience in exploration, metalliferous mining and project development, in both Africa and Australia. Mr Hodkinson has a bachelor’s degree in Geology and Geography from the University of London and a Master of Science in Mineral Exploration and Mining Geology from the University of Leicester in the UK. He is a long-standing member of the Australian Institute of Geoscientists (AIG) and the Society for Geology Applied to Mineral Deposits (SGA). Page 15 AuKing Mining Limited 2023 Annual Report COMPANY SECRETARY Mr Paul Marshall was the Secretary of AuKing Mining Limited throughout the period and until the date of this report. Paul Marshall Company Secretary and Chief Financial Officer, LLB, ACA Paul Marshall is a Chartered Accountant. He holds a Bachelor of Law degree, and a post Graduate Diploma in Accounting and Finance. He has 30 years professional experience having worked for Ernst and Young for ten years, and subsequently twenty years spent in commercial roles as Company Secretary and CFO for a number of listed and unlisted companies mainly in the resources sector. He has extensive experience in all aspects of company financial reporting, corporate regulatory and governance areas, business acquisition and disposal due diligence, capital raising and company listings and company secretarial responsibilities. PRINCIPAL ACTIVITIES The principal activity of the Company and its controlled entities (‘Consolidated Entity’) during the period was mineral exploration. There were no significant changes in the nature of the Consolidated Entity’s principal activity during the period. DIVIDENDS PAID OR RECOMMENDED There were no dividends paid or recommended during the period (2022: $nil). FINANCIAL RESULTS Capital structure Shares and Options on issue at 31 December 2023 At 31 December 2023 the Company had 230,353,707 ordinary shares and 83,325,000 options on issue. Shares and Options issued after year end On 14 February 2024, following shareholder approval, AKN issued 5,000,000 ordinary shares (at $0.04 per share) and 2,500,000 free-attaching options exercisable at 10c on or before 31 December 2025 to an entity associated with Asimwe Kabunga. Treasury policy The Consolidated Entity does not have a formally established treasury function. The Board is responsible for managing the Consolidated Entity’s currency risks and finance facilities. The Consolidated Entity does not currently undertake hedging of any kind. Liquidity, funding and going concern As at 31 December 2023 the Consolidated Entity had cash reserves of $396,308 and net current assets of $49,942. For the year ended 31 December 2023 the Consolidated entity incurred a loss of $12,626,360 (including $9,305,708 of exploration expenditure that was expensed under the Consolidated Entity’s accounting policy disclosed in Note 7), incurred operating cash outflows of $3,647,914 (including $1,603,478 of exploration expenditure that was expensed under the Consolidated Entity’s accounting policy disclosed in Note 7) and had investing cash outflows of $509,572. As disclosed in Note 20 the Consolidated Entity also has obligations to expend minimum amounts on exploration in tenement areas. Currently the exploration expenditure obligations for the 12 months ending 31 December 2024 to maintain its current tenement areas are $1,595,339. Subsequent to year end the Consolidated Entity raised an additional $200,000 through a share placement with a director after this was approved by shareholders at the 16 January 2024 EGM. On 26 March 2024 the Consolidated Entity also entered into a short term loan funding agreement with a private investor for $250,000. Under the loan terms the interest rate is 7% per month and is repayable in 3 months. Additional short term funding arrangements are currently being finalised by the Consolidated Entity to obtain up to $1,000,000 in funding. The Consolidated Entity requires further capital to fund future exploration activity and meet other necessary corporate expenditure. Page 16 AuKing Mining Limited 2023 Annual Report The ability of the Consolidated Entity to continue as a going concern is dependent upon securing funding in the form of a capital raise, loan or other form of financing within the next month. This is in addition to amounts already raised subsequent to balance date. These funds are required to continue planned exploration and meet the Consolidated Entity’s working capital requirements. The Consolidated Entity’s ability to continue as a going concern is also dependent upon one or more of the following: 1. 2. 3. the ability of the Company to raise additional capital in the future; the ability of the Consolidated Entity to obtain short term funding within the next month to meet immediate funding requirements; and the successful exploration and subsequent exploitation of the Consolidated Entity’s tenements. These conditions give rise to material uncertainty which may cast significant doubt over the Consolidated Entity’s ability to continue as a going concern. Whilst acknowledging these uncertainties, the directors have concluded that the going concern basis of preparation is appropriate due to the following reasons: 1. As noted above management is in discussions with certain parties to provide funding including discussions to obtain further short-term funding of up to $1,000,000; 2. Management is considering the issue of a convertible note and/or obtaining loan funding from a Director or third 3. 4. party; To date the Consolidated Entity has funded its activities through issuance of equity securities, and it is expected that the Consolidated Entity will be able to fund its future activities through further issuances of equity securities; and The directors believe there is sufficient cash available for the Consolidated Entity to continue operating based on the Company’s cash flow forecast. Should the Consolidated Entity be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. Operating Results Revenue As an exploration company, AuKing Mining Limited does not generate any recurring income. Expenses The Consolidated Entity’s main expenses compared to the prior period are as follows: Employment and consultancy expenses Depreciation expense Costs related to the Tanzania transaction Exploration expenditure - Tanzania Impairment – exploration and evaluation assets Other expenses Total expenses during the year 2023 $ 1,254,336 47,404 1,039,119 9,305,708 38,332 979,793 12,664,692 2022 $ 1,073,750 38,939 89,208 - - 1,143,326 2,345,223 On 30 January 2023 AKN completed the purchase of various prospective uranium and copper licences in Tanzania. The purchase price was discharged by AKN through the issue of 60,000,000 ordinary shares and 30,000,000 options exercisable at $0.20 on or before 30 September 2025. The value of this consideration was $7,702,230. This consideration, along with additional exploration expenditure conducted in Tanzania during the year ($1,603,478) has been expensed as incurred, with AKN adopting this accounting policy for areas of interest in environments where there is heightened sovereignty and other risks compared to Australia. AKN also incurred transaction costs to acquire the Tanzania licences of $1,039,119 of which $992,410 related to options and shares issued to Vert Capital, as part consideration for introduction of these project interests to and assistance in securing the acquisition. Remaining costs (employment and other expenses) remained consistent with the prior period. Page 17 AuKing Mining Limited 2023 Annual Report SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS During the year AKN completed an agreement to acquire of a substantial portfolio or tenures in Tanzania that are prospective for uranium and copper development opportunities. AuKing acquired all of the issued shares in Australian- incorporated 92 U Pty Ltd (92 U). 92 U is the legal and beneficial owner of all the shares in two Tanzanian companies – 92 U Tanzania Limited and Monaco Copper Limited. These entities in turn, own various Prospecting Licences (PL) and PL applications. Consideration for the acquisition was 60,000,000 AKN ordinary shares and 30,000,000 options exercisable at $0.20 on or before 30 September 2025. The acquisition was completed on 31 January 2023. OPTIONS As at the date of this report there were 85,825,000 options on issue: Tranche Expiry Date Exercise Price 1 January 2023 Movements Issued Exercised Tranche 1 30 Jun 2023 Tranche 2 30 Jun 2023 Tranche 3 31 May 2025 Tranche 4 31 May 2025 Tranche 5 31 May 2025 Tranche 6 30 Sep 2025 Tranche 7 30 Sep 2025 Tranche 8 30 Sep 2025 Tranche 9 30 Sep 2025 Tranche 10 30 Sep 2025 Tranche 11 30 Sep 2025 Tranche 12 31 Dec 2025 Tranche 13 31 Dec 2025 0.25 0.25 0.17 0.11 0.17 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.10 28,871,380 14,000,000 2,500,000 2,700,000 1,000,000 6,870,000 - - - - - - - - - - - - - 30,000,000 10,000,000 10,630,000 2,000,000 5,000,000 13,125,000 2,500,000 55,491,380 73,255,000 - - - - - - - - - - - - - - Lapsed/ Expired At Reporting Date (28,871,380) (14,000,000) - - - - 2,500,000 2,700,000 (500,000) 500,000 - - - - - - - - 6,870,000 30,000,000 10,000,000 10,630,000 2,000,000 5,000,000 13,125,000 2,500,000 (43,371,380) 83,325,000 Option holders did not have any rights to participate in any issues of shares or other interests of the Company or any other entity. No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate. FUTURE DEVELOPMENTS, PROSPECTS, STRATEGIES AND BUSINESS RISKS AuKing intends to take an aggressive approach towards its exploration and business activities during the course of 2024, featuring the following: Koongie Park Identify suitable funding structures to pursue further drilling and related exploration across the tenure package, but with an initial focus on the region to the north of the existing Sandiego deposit; and Establish sufficient funding to proceed with further metallurgical testwork at the Onedin deposit, largely in accordance with the prefeasibility study program that has already been identified for this activity. Tanzania Mkuju – proceed with an extensive Stage 2 drilling program with a view to identifying uranium mineralisation and the basis for initial mineral resource estimation work; Manyoni – take all reasonable and necessary steps to re-secure the two licences that were previously revoked by the Mining Commission and then carry out planned drilling to update the current resource estimate to 2012 JORC standards and carry out further metallurgical testwork on these resources; and Page 18 AuKing Mining Limited 2023 Annual Report Mpanda/Karema – initial site surveying and mapping, soil sampling, review of available historic data, and (where possible) shallow auger drilling. In addition, AKN intends continue identifying project opportunities from both within the existing AuKing tenure portfolio and other new projects as and when they arise. Material Business Risks Exploration and Evaluation Risks The future value of the Company will depend on its ability to find and develop sufficient resources that are economically recoverable within the Koongie Park and Tanzanian tenure portfolios. Mineral exploration and development is inherently highly speculative and involves a significant degree of risk. There is no guarantee that economic mineralisation will be found, and if found, that it will be economic to extract these resources or that there will be commercial opportunities available to monetise these resources. The circumstances in which a mineral deposit becomes or remains commercially viable depends on a number of factors. These include the particular attributes of the deposits, such as size, grade, metallurgy, strip ratios and proximity to infrastructure as well as external factors such as supply and demand. This, along with other factors such as maintaining title to tenements and consents, successful design construction, commissioning and operating of projects and processing facilities may result in projects not being developed, or operations becoming unprofitable. Furthermore, while the Company has confidence in the future prospects of the tenements, should those tenements not prove profitable and the Company is unable to secure new exploration areas and resources, there could be a material adverse effect on the Company’s prospects and its future success. Tenure Risks The Company’s future exploration and development activities are dependent upon the grant, or as the case may be, the maintenance of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitations. The maintaining of tenements, obtaining renewals, or getting tenements granted, often depends on AKN being successful in obtaining the required statutory approvals for its proposed activities and that the licences, concessions, leases, permits or consents it holds will be renewed as and when required. Even though the Company intends to commit significant exploration expenditure there is risk associated with the Company’s ongoing ability to retain the portfolio in its current form. Furthermore, no assurance that tenement renewals will be given as a matter of course and there is no assurance that new conditions will not be imposed in connection with any renewal. Access Risks There are various restrictions operating to exclude, limit or impose conditions upon the Company’s ability to conduct activities on parts of the tenements that the Company will hold an interest in. These restrictions include: • • • • exclusions from pursuing exploration activities on certain areas of Commonwealth land; requirements arising from Native Title legislation and claims; requirements arising from state legislation relating to heritage, culture and objects; or access procedures and compensation requirements in relation to privately held land. As such, there is a risk one or more of these access issues may prevent or delay the Company from implementing its intended activities which may thereby adversely affect the Company’s prospects. ENVIRONMENTAL ISSUES In the conduct of exploration activities at Koongie Park and in Tanzania, the Company is subject to compliance with various environmental and traditional owner cultural heritage regulations. The Company is not aware of any circumstances where a breach of these obligations may have occurred. On 17 November 2021, the Company announced that it had adopted the World Economic Forum’s “Environment, Social and Governance” (“ESG”) framework and instructed management to set up an impact measurement plan for each sustainability area. These areas include governance, anti-corruption practices, ethical behaviour, health and safety, GHG emissions, land use, ecological sensitivity, water consumption, diversity and inclusion, pay equality and economic contribution. To ensure that AKN can measure, monitor, and report on its ESG progress, the Company has engaged impact monitoring technology platform Socialsuite to streamline the outcomes measurement and ongoing ESG reporting process. These reports will appear quarterly in the Company’s future Quarterly Activities Reports to ASX. Page 19 AuKing Mining Limited 2023 Annual Report REMUNERATION REPORT (AUDITED) This report details the nature and amount of remuneration for Directors and Key Management Personnel of the Company. Remuneration Policy The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, motivate and retain highly skilled Directors and Executives. Remuneration Committee The Board does not have a Remuneration and Nomination Committee. The full Board is responsible for determining and reviewing compensation arrangements for the Directors and the Executive team. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost for the Company. Remuneration structure It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and Executive team by remunerating Directors and other Key Management Personnel fairly and appropriately with reference to relevant employment market conditions for similar companies. To assist in achieving this objective, the Board considers the nature and amount of Directors’ and Officers’ emoluments alongside the Company’s operational performance, specifically considering their success in: the identification of prospective tenements; subsequent design and execution of exploration programs; negotiating joint venture arrangements on terms favourable to the Company; investigating other potential acquisition opportunities and negotiating the completion of those acquisitions; expanding the level of mineral resources under the control of the company; carrying out exploration programs in a timely and cost effective manner; and liaising with stockbrokers, investment banks and market participants generally. The expected outcomes of the remuneration structure are the retention and motivation of key Executives, the attraction of quality management to the Company and performance incentives which allow Executives to share the rewards of the success of the Company. In accordance with best practice corporate governance, the structure of Non-Executive Director remuneration and Executive Officers and Senior Management remuneration is separate and distinct. Non-Executive Director Remuneration The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. The Constitution of AuKing Mining Limited and the ASX Listing Rules specify that the Non-Executive Directors are entitled to remuneration as determined by the Company in the Annual General Meeting to be apportioned among them in such manner as the Directors agree and, in default of agreement, equally. The maximum aggregate remuneration currently approved by shareholders for non-executive Directors’ fees is for a total of $250,000 per annum. If a Non-Executive Director performs extra services, which in the opinion of the Directors are outside the scope of the ordinary duties of the Director, the Company may remunerate that Director by payment of a fixed sum determined by the Directors in addition to or instead of the remuneration referred to above. Non-Executive Directors are entitled to be paid travel and other expenses properly incurred by them in attending Director's or General Meetings of the Company or otherwise in connection with the business of the Company. Executive remuneration The Company aims to reward Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: reward Executives for company and individual performance against targets set by reference to appropriate benchmarks; align the interests of Executives with those of shareholders; link reward with the strategic goals and performance of the Company; and ensure total remuneration is competitive by market standards. Page 20 AuKing Mining Limited 2023 Annual Report The remuneration of Executives may from time to time be fixed by the Board. As noted above, the Board’s policy is to align Executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering long-term incentives. The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Board, and the process consists of a review of both the Company’s operational performance and individual performance, relevant comparative remuneration in the market and where appropriate, external advice provided by executive remuneration consultants. In relation to the payment of bonuses, options and other incentive payments, discretion is exercised by the Board, having regard to the overall performance of the Company and the performance of the individual. Employment contracts Non-Executive Co-Chair Arrangements The Company entered a service arrangement with Ms Anna Nahajski-Staples as Non-Executive Co-Chair of the Company commencing from 1 October 2022. The key terms of the arrangement during the financial year were: Ongoing contract – no fixed term; Fee of $50,000 per annum plus statutory superannuation; 1,000,000 director incentive options exercisable at $0.17 on or before 31 May 2025; No retirement benefits Executive Chair Arrangements The Company entered a service arrangement with Mr Asimwe Kabunga as Executive Chair of the Company commencing from 19 October 2022. The key terms of the arrangement during the financial year were: Ongoing contract – no fixed term; Fee of $240,000 per annum, reduced to $15,000 per month until completion of the Tanzanian transaction; 3 month notice period; No retirement benefits Non-Executive Director Arrangements The Company has entered service arrangements with Mr Peter Tighe, Mr Ian Hodkinson and Mr ShiZhou Yin as Non- Executive Directors of the Company commencing from 9 June 2021. The service agreement with Mr Park Wei has the same terms commencing from 5 June 2023. The key terms of the arrangement are: Ongoing contract – no fixed term; Fee of $35,000 per annum No retirement benefits Non-Executive Director Consulting Arrangement The Company entered into a consultancy agreement dated 16 February 2021 with Cornubian Resources Pty Ltd, an entity associated with the Ian Hodkinson. The agreement provides that Cornubian will procure the services of Mr Hodkinson, on a as-needed basis, in the role of Senior Geological Consultant of the Company. Chief Executive Officer The Company entered into an executive services agreement with Paul Williams to serve as Chief Executive Officer of the Company. Mr Williams’ appointment in the role of Chief Executive Officer commenced on 9 June 2021. The agreement provides that Mr Williams will be paid an annual remuneration (inclusive of statutory superannuation) of $300,000. The agreement may be terminated by the Company immediately with cause (e.g. serious misconduct, breach of the agreement, criminal offence or bankruptcy) and by 6 months’ notice (without cause). Mr Williams may terminate the agreement by 3 months’ notice in writing. Page 21 AuKing Mining Limited 2023 Annual Report Company Secretary and CFO The Company Secretary and CFO, Mr Paul Marshall, is engaged on an on-going consultancy style agreement for the provision of services as company secretary and chief financial officer at a rate of $52,000 per annum. Services are invoiced monthly based on services provided. The contract provides for a three-month notice period. (a) Details of Directors and other Key Management Personnel Directors Asimwe Kabunga Peter Tighe ShiZhou Yin Park Wei Former Directors Executive Chair (appointed 19 October 2022) Non-Executive Director (appointed 9 June 2021) Non-Executive Director (appointed 9 June 2021) Non-Executive Director (appointed 5 June 2023) Anna Nahajski-Staples Ian Hodkinson Non-Executive Co-Chair (resigned 6 April 2023) Non-Executive Director (resigned 6 April 2023) Key Management Personnel Paul Williams Paul Marshall CEO Company Secretary and CFO (b) Remuneration of Directors and other Key Management Personnel Short Term Post-Employment Share-based Payments Salary & Fees Consulting Fees Other Superan- nuation Retirement benefits Options Total Performance Related % % consisting of equity December 2023 Directors A Kabunga P Tighe S Yin P Wei 235,000 35,000 35,000 19,931 Former Directors A Nahajski-Staples 25,000 I Hodkinson 9,042 Key Management Personnel P Williams P Marshall 273,602 52,000 684,866 - - - - - - - - - - - - - - - - - - - - - - 2,625 - 26,398 - 29,023 - - - - - - - - - - 235,000 12,418 47,418 12,418 47,418 - 19,931 - 26% 26% - 10,328 37,953 12,418 21,460 27% 58% 13,359 313,359 6,680 58,680 67,621 781,219 4% 11% - 26% 26% - 27% 58% 4% 11% Page 22 AuKing Mining Limited 2023 Annual Report December 2022 Directors A Kabunga 36,429 A Nahajski-Staples 12,500 P Tighe 35,000 - - - I Hodkinson 35,000 42,525 S Yin 35,000 Former Directors M Elliott 50,000 Key Management Personnel P Williams P Marshall 273,710 52,000 - - - - 529,639 42,525 Short Term Post-Employment Share-based Payments Salary & Fees Consulting Fees Other Superan- nuation Retirement benefits Options Total Performance Related % % consisting of equity - - - - - - - - - - 1,313 - - - - 26,290 - 27,603 - - - - - - - - - - 36,429 10,272 24,085 14,682 49,682 14,682 92,207 14,682 49,682 - 43% 30% 16% 30% - 43% 30% 16% 30% 54,200 104,200 52% 52% 13,581 313,581 6,790 58,790 4% 12% 4% 12% 128,889 728,656 (c) Shares issued on exercise of remuneration options or performance shares There were no shares issued on the exercise of compensation options or performance shares during the period. Page 23 AuKing Mining Limited 2023 Annual Report (d) Director and Key Management Personnel Equity Holdings Director/Key Management Personnel shareholdings (number of shares) December 2023 Directors Asimwe Kabunga1 Peter Tighe ShiZhou Yin 2 Park Wei Former Directors Anna Nahajski-Staples Ian Hodkinson Key Management Personnel Paul Williams Paul Marshall Opening Balance Recognised on Appointment Purchased Tanzania Acquisition Sold Derecognised on Resignation Closing Balance Placement 16 Jan 2024 1 Balance Report Date - 2,816,889 9,425,092 - - - - 9,000,000 128,205 - 1,667,981 287,170 - - - - 14,325,337 9,000,000 - - - - - - - - - 36,000,000 - - - - - - - 36,000,000 - - - - - - - - - - - - - (128,205) - - - 36,000,000 5,000,000 41,000,000 2,816,889 9,425,092 9,000,000 - - 1,667,981 287,170 - - - - - - - 2,816,889 9,425,092 9,000,000 - - 1,667,981 287,170 (128,205) 59,197,132 5,000,000 64,197,132 Notes 1 2 As part of the share placement, on 14 February 2024, following shareholder approval, AKN issued 5,000,000 ordinary shares (at $0.04 per share) to an entity associated with Asimwe Kabunga. 9,425,092 shares are held by Bienitial International Industrial Co Ltd. ShiZhou Yin discloses these shares in his capacity a representative of Bienitial International Industrial Co Ltd. Page 24 AuKing Mining Limited 2023 Annual Report Director/Key Management Personnel options (number of options) December 2023 Tranche Opening Balance Tanzania Acquisition Recognised on Appointment Derecognised on Resignation Forfeited Balance 31 Dec 2023 Issued 16 Jan 2024 1 Balance Report Date Vested and exercisable Directors Asimwe Kabunga Peter Tighe ShiZhou Yin Park Wei Former Directors Anna Nahajski-Staples Ian Hodkinson Key Management Personnel Paul Williams Paul Marshall 7,12 3 3 10 5 3 4 4 - 18,000,000 500,000 500,000 - 1,000,000 500,000 600,000 300,000 - - - - - - - - - - - - - - - 2,000,000 - - - - (500,000) (500,000) (500,000) - - - - - 18,000,000 2,500,000 20,500,000 20,500,000 500,000 500,000 2,000,000 - - 600,000 300,000 - - - - - - - 500,000 500,000 500,000 500,000 2,000,000 2,000,000 - - - - 600,000 300,000 600,000 300,000 3,400,000 18,000,000 2,000,000 (1,000,000) (500,000) 21,900,000 2,500,000 24,400,000 24,400,000 1 As part of the share placement, on 14 February 2024, following shareholder approval, AKN issued 2,500,000 free-attaching options exercisable at 10c on or before 31 December 2025 to an entity associated with Asimwe Kabunga. Tranche 3 options were issued to the Directors under the Employee Share and Option Plan. The options have an exercise price $0.17, an expiry date of 31 May 2025 and a 1-year service vesting condition. These options have vested and are exercisable. Tranche 4 options were issued to employees under the Employee Share and Option Plan. The options have an exercise price $0.11, and expiry date of 31 May 2025 and a 1-year service vesting condition. These options have vested and are exercisable. Tranche 5 options were issued to a Director under the Employee Share and Option Plan. The options have an exercise price $0.17 and a 1-year service vesting condition. Tranche 5 options were issued on 16 December 2022. 500,000 Tranche 5 options were forfeited on resignation. The remaining options have vested and are exercisable. Tranche 7 options were issued as part consideration to the vendors of the uranium and copper licences in Tanzania. The options are exercisable at $0.20 on or before 30 September 2025. Tranche 10 options were issued to Bonacare Pty Ltd (an entity related to Park Wei) in consideration for investor relations services. The 2,000,000 options have an exercise price of $0.20 and an expiration date of 30 September 2025. There are no vesting conditions. Tranche 12 options were issued to shareholders as part of share placement in January 2024. The 2,500,000 options have an exercise price of $0.10, no vesting conditions and an expiration date of 31 December 2025. Page 25 AuKing Mining Limited 2023 Annual Report (e) Additional Information The factors that are considered to affect shareholder return since over the last 5 financial periods are summarised below: Measures Share price at end of financial period 1 December 2023 $ 0.047 December 2022 $ 0.096 December 2021 $ 0.135 December 2020 $ 0.002 December 2019 $ 0.002 Market capitalisation at end of financial period ($M) 10.82 11.31 10.16 1.87 1.87 Loss for the financial period 12,664,692 2,345,223 1,762,610 1,427,002 1,142,555 Director and Key Management Personnel remuneration 781,219 728,656 606,296 561,120 561,120 1 AKN shares were suspended from the ASX official quotation from 30 September 2019 to 15 June 2021. The share price for 31 December 2020 and 31 December 2019 represents the last trade price before suspension. During 2021, AKN shares were subject to a 200:1 share consolidation. Given that the remuneration is commercially reasonable, the link between remuneration, Company performance and shareholder wealth generation is tenuous, particularly in the exploration and development stage of a minerals company. Share prices are subject to the influence of international metal prices and market sentiment towards the sector and increases or decreases may occur independently of executive performance or remuneration. The Company may issue options to provide an incentive for directors and key management personnel which, it is believed, is in line with industry standards and practice and is also believed to align the interests of directors and key management personnel with those of the Company’s shareholders. End of Remuneration Report Page 26 AuKing Mining Limited 2023 Annual Report INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR Each Director and the Secretary of the Company has the right of access to all relevant information. The Company has insured all of the Directors of AuKing Mining Limited. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act does not require disclosure of the information in these circumstances. To the extent permitted by law, the Company has agreed to indemnify its auditors, BDO, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify BDO during or since the financial year. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purposes of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the period. AFTER BALANCE DATE EVENTS On 16 January 2024, following shareholder approval, AKN issued 5,000,000 ordinary shares (at $0.04 per share) and 2,500,000 free-attaching options exercisable at 10c on or before 31 December 2025 to an entity associated with Asimwe Kabunga. DIRECTORS’ MEETINGS The number of meetings of Directors (including meetings of committees of directors) held during the period and the number of meetings attended by each Director was as follows: Asimwe Kabunga Peter Tighe ShiZhou Yin Park Wei Anna Nahajski-Staples Ian Hodkinson Directors’ Meetings A 9 8 9 4 3 3 B 9 9 9 4 3 3 A – Number of meetings attended B – Number of meetings held during the time the director held office during the period NON-AUDIT SERVICES The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. Details of the amounts paid or payable to the auditor (BDO Audit Pty Ltd and its associated entities) for non-audit services provided during the year are set out below. The Board of Directors has considered the position is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: all non-audit services have been reviewed by the board of directors to ensure they do not impact the impartiality and objectivity of the auditor none of the services undermines the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. During the year, the $26,778 were paid or payable for taxation services provided by the auditor of the parent entity, its related practices and non-related audit firms. Page 27 AuKing Mining Limited 2023 Annual Report AUDITOR’S INDEPENDENCE DECLARATION The Auditor’s Independence Declaration forms part of the Directors’ Report. Signed in accordance with a resolution of the directors. Director 28 March 2024 Page 28 AuKing Mining Limited 2023 Annual Report AUDITOR'S INDEPENDENCE DECLARATION Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY T R MANN TO THE DIRECTORS OF AUKING MINING LIMITED As lead auditor of AuKing Mining Limited for the year ended 31 December 2023, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of AuKing Mining Limited and the entities it controlled during the period. T R Mann Director BDO Audit Pty Ltd Brisbane, 28 March 2024 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Page 29 AuKing Mining Limited 2023 Annual Report ADDITIONAL STOCK EXCHANGE INFORMATION Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows. The information is current as at 4 March 2024. (a) Distribution of equity securities – AKN Ordinary Fully Paid Shares Range 100,001 and Over 10,001 to 100,000 5,001 to 10,000 1,001 to 5,000 1 to 1,000 Total Unmarketable Parcels Securities 215,001,216 18,578,961 1,495,167 260,726 17,637 235,353,707 3,240,617 No. of holders 229 453 179 69 163 1,093 517 (b) Twenty largest holders – AKN Ordinary Fully Paid Shares Rank Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 KABUNGA HOLDINGS PTY LTD VEN CAPITAL PTY LTD MR PAVLE TOMASEVIC BIENTIAL INTERNATIONAL INDUSTRIAL CO LTD ROPA INVESTMENTS (GIBRALTAR) LIMITED MR HASHIMU MUSEDEM MILLANGA MS PHAROTH SAN & MR KADEN SAN MS LETICIA KOKUTENGENEZA KABUNGA MR PRISIN PRIVER MOSHI M & K KORKIDAS PTY LTD SCINTILLA STRATEGIC INVESTMENTS LIMITED MR PETER GERARD TIGHE & MRS PATRICIA JOAN TIGHE ANGKOR IMPERIAL RESOURCES PTY LTD DC & PC HOLDINGS PTY LTD FFKM PTY LTD N&M GREENHALGH NOMINEES PTY LTD MR BRIAN LAURENCE EIBISCH BEARAY PTY LTD MS PHAROTH SAN 168 SC WEALTH INVESTMENT PTY LTD No. Shares 41,000,000 24,680,000 10,400,000 9,245,092 7,600,000 7,425,000 5,318,706 4,581,000 4,252,578 4,042,143 3,400,000 2,816,889 2,800,000 2,700,000 2,500,000 2,222,224 2,100,000 1,785,715 1,773,681 1,533,202 142,176,230 93,177,477 % 91.35 7.89 0.64 0.11 0.01 100.00 1.38 % 17.42% 10.49% 4.42% 3.93% 3.23% 3.15% 2.26% 1.95% 1.81% 1.72% 1.44% 1.20% 1.19% 1.15% 1.06% 0.94% 0.89% 0.76% 0.75% 0.65% 60.41% 39.59% 235,353,707 100.00% (c) Voting Rights All fully paid ordinary shares carry one vote per share without restriction. (d) Substantial Shareholders The Company has received the following substantial shareholder notices as at 4 March 2024: • • Kabunga Holdings Pty Ltd holds an interest in 36,000,000 shares (17.42%) Ven Capital Pty Ltd holds an interest in 24,680,000 (10.49%) (e) Unquoted Securities There are the following unquoted securities as at 4 March 2024. Each option is convertible into one fully paid ordinary share. Option Class Expiry Date Exercise Price Number of Options Holder above 20% Director incentive options 31 May 2025 Employee incentive options 31 May 2025 Unlisted Sept 2025 options 30 Sep 2025 Unlisted Dec 2025 options 31 Dec 2025 $0.17 $0.11 $0.20 $0.10 3,000,000 2,700,000 64,500,000 15,625,000 N/A N/A Kabunga Holdings PL holds 18,000,000 (27.9%) of the options on issue - Page 30 AuKing Mining Limited 2023 Annual Report (f) Interests in Exploration Tenements The Company holds the following tenement interests as at the date of this Report: Project/Location Tenement Reference Current Holder AKN % Interest Comment WESTERN AUSTRALIA Koongie Park, Halls Creek E80/ 4389 Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 4766 Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 4960 Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 5076 Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 5087 Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 5127 Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 5263 Koongie Park Pty Ltd Koongie Park, Halls Creek M80/ 276 (Sandiego) Koongie Park Pty Ltd Koongie Park, Halls Creek M80/ 277 (Onedin) Koongie Park Pty Ltd Koongie Park, Halls Creek E80/ 5707 Koongie Park Pty Ltd Koongie Park, Halls Creek P80/ 1878 Koongie Park Pty Ltd Koongie Park, Halls Creek P80/ 1879 Koongie Park Pty Ltd Koongie Park, Halls Creek P80/ 1880 Koongie Park Pty Ltd Koongie Park, Halls Creek P80/ 1881 Koongie Park Pty Ltd Koongie Park, Halls Creek P80/ 1882 Koongie Park Pty Ltd Kununurra Region E80/ 5794 (Bow River) Auking Mining Limited TANZANIA Manyoni Manyoni Manyoni Manyoni Manyoni Manyoni Itigi Mkuju Mkuju Mkuju Mkuju Mkuju Mkuju Mkuju Mkuju Mkuju Mkuju Karema Notes: PL12188 PL12190 PL12191 PL12193 PL12194 PL12323 PL12352 PL12184 PL12185 PL12186 PL12187 PL12189 PL12192 PL12485 PL12606 PL12607 PL12608 PL12179 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd 92U Tanzania Ltd Monaco Copper Ltd Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 1 and 2 Refer Note 3 Refer Note 3 Refer Note 4 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 1. 2. 3. AKN has a 100% interest in these tenures, subject to a 1% NSR royalty in favour of former JV partner (Astral Resources NL). Koongie Park Pty Ltd is a now wholly owned subsidiary of Auking Mining Limited as part of the JV ownership change. These licences have been revoked by the Tanzanian Mining Commission and the matter is currently the subject of appeal to the Minister of Mines. 4. This licence is in the process of being surrendered. Page 31 AuKing Mining Limited 2023 Annual Report Consolidated Statement of Comprehensive Income For the year ended 31 December 2023 Employment and consultancy expenses Depreciation expense Costs related to the Tanzania transaction Exploration expenditure - Tanzania Impairment – exploration and evaluation assets Other expenses Loss before income tax Note 2023 $ 2022 $ 5 8 7 4 (1,254,336) (1,073,750) (47,404) (1,039,119) (9,305,708) (38,332) (979,793) (12,664,692) (38,939) (89,208) - - (1,143,326) (2,345,223) Income tax expense 15 - - Loss after income tax (12,664,692) (2,345,223) Other comprehensive income/(loss) Foreign currency translation differences for foreign operations Income tax Other comprehensive income for the year, net of tax 22,954 - 22,954 - - - Total comprehensive loss (12,641,738) (2,345,223) Earnings per share Basic and diluted loss per share Cents Cents 14 (6.40) (2.44) The Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements. Page 32 AuKing Mining Limited 2023 Annual Report Consolidated Balance Sheet As at 31 December 2023 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other receivables Exploration and evaluation assets Plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Employee benefit provisions TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Accumulated losses TOTAL EQUITY Note December 2023 $ December 2022 $ 3 6 7 8 9 10 11 13 396,308 31,219 - 1,656,292 93,042 45,503 427,527 1,794,837 3,185 8,770,769 163,574 8,937,528 3,185 8,318,408 165,473 8,487,066 9,365,055 10,281,903 198,499 179,086 377,585 290,593 126,714 417,307 377,585 417,307 8,987,470 9,864,596 23,303,355 2,246,640 (16,562,525) 8,987,470 13,592,798 379,631 (4,107,833) 9,864,596 The Consolidated Balance Sheet should be read in conjunction with the Notes to the Consolidated Financial Statements Page 33 AuKing Mining Limited 2023 Annual Report Consolidated Statement of Changes in Equity For the year ended 31 December 2023 Consolidated Entity Share Capital $ Reserves $ Accumulated Losses $ Total Equity $ Balance at 1 January 2022 8,721,436 140,000 (1,762,610) 7,098,826 Transactions with owners in their capacity as owners Issue of share capital Share issue costs Share based payments Comprehensive income Loss after income tax Other comprehensive income 5,415,468 (544,106) - 4,871,362 - - 239,631 239,631 - - - - 5,415,468 (544,106) 239,631 5,110,993 - - - - - - (2,345,223) (2,345,223) - - (2,345,223) (2,345,223) Balance at 31 December 2022 13,592,798 379,631 (4,107,833) 9,864,596 Balance at 1 January 2023 13,592,798 379,631 (4,107,833) 9,864,596 Transactions with owners in their capacity as owners Issue of share capital Share issue costs Share based payments Transfer expired options Comprehensive income Loss after income tax Other comprehensive income 10,001,000 (290,443) - - - - 2,054,055 (210,000) - - - 10,001,000 (290,443) 2,054,055 210,000 - 9,710,557 1,844,055 210,000 11,764,612 - - - - (12,664,692) (12,664,692) 22,954 22,954 - 22,954 (12,664,692) (12,641,738) Balance at 31 December 2023 23,303,355 2,246,640 (16,562,525) 8,987,470 The Consolidated Balance Sheet should be read in conjunction with the Notes to the Consolidated Financial Statements Page 34 AuKing Mining Limited 2023 Annual Report Consolidated Cash Flow Statement For the year ended 31 December 2023 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Payments for Tanzania transactions costs Payments for other Koongie Park transactions costs Interest received Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Proceeds from the sale of plant and equipment Payments for security deposits Payments for exploration and evaluation assets Receipts from government grants Net cash provided by/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Cost associated with the issue of shares Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Net foreign exchange differences Note 2023 $ 2022 $ (2,025,057) (1,758,353) (46,709) (1,603,478) 330 (89,208) - - (3,674,914) (1,847,561) - - - (765,635) 256,063 (509,572) 3,176,000 (251,043) 2,924,957 (1,259,529) 1,656,292 (455) (88,372) 16,000 (715) (4,354,503) 556,912 (3,870,678) 5,365,968 (491,513) 4,874,445 (843,784) 2,500,076 - 8 8 7 7 11 11 Cash and cash equivalents at the end of the period 396,308 1,656,292 The Consolidated Cash Flow Statement should be read in conjunction with the Notes to the Consolidated Financial Statements. Page 35 AuKing Mining Limited 2023 Annual Report NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Introduction This financial report covers the Consolidated Entity of AuKing Mining Limited (the “Company”) and its controlled entities (together referred to as the “Consolidated Entity”). AuKing Mining Limited is a listed public company, incorporated and domiciled in Australia. The Consolidated Entity is a for-profit entity for the purpose of preparing the financial statements. Operations and principal activities The principal activity of the Consolidated Entity is mineral exploration. Currency The financial report is presented in Australian dollars, which is the functional currency of the Company, and is rounded to the nearest one dollar. Authorisation of financial report The financial report was authorised for issue on 28 March 2024. Comparative figures When required by accounting standards comparative figures have been adjusted to conform to changes in presentation for the current financial period. Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, and the Corporations Act 2001. Compliance with IFRS The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB). Historical cost convention The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. Critical accounting estimates and judgements The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Consolidated Entity’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in the notes below. Accounting policies (a) Going Concern As at 31 December 2023 the Consolidated Entity had cash reserves of $396,308 and net current assets of $49,942. For the year ended 31 December 2023 the Consolidated entity incurred a loss of $12,626,360 (including $9,305,708 of exploration expenditure that was expensed under the Consolidated Entity’s accounting policy disclosed in Note 7), incurred operating cash outflows of $3,647,914 (including $1,603,478 of exploration expenditure that was expensed under the Consolidated Entity’s accounting policy disclosed in Note 7) and had investing cash outflows of $509,572. As disclosed in Note 20 the Consolidated Entity also has obligations to expend minimum amounts on exploration in tenement areas. Currently the exploration expenditure obligations for the 12 months ending 31 December 2024 to maintain its current tenement areas are $1,595,339. Subsequent to year end the Consolidated Entity raised an additional $200,000 through a share placement with a director after this was approved by shareholders at the 16 January 2024 EGM. On 26 March 2024 the Consolidated Entity also entered into a short term loan funding agreement with a private investor for $250,000. Under the loan terms the interest rate is 7% per month and is repayable in 3 months. Additional short term funding arrangements are currently being finalised by the Consolidated Entity to obtain up to $1,000,000 in funding. The Consolidated Entity requires further capital to fund future exploration activity and meet other necessary corporate expenditure. The ability of the Consolidated Entity to continue as a going concern is dependent upon securing funding in the form of a capital raise, loan or other form of financing within the next month. This is in addition to amounts already raised subsequent to balance date. These funds are required to continue planned exploration and meet the Consolidated Entity’s working capital requirements. Page 36 AuKing Mining Limited 2023 Annual Report NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Consolidated Entity’s ability to continue as a going concern is also dependent upon one or more of the following: 1. 2. 3. the ability of the Company to raise additional capital in the future; the ability of the Consolidated Entity to obtain short term funding within the next month to meet immediate funding requirements; and the successful exploration and subsequent exploitation of the Consolidated Entity’s tenements. These conditions give rise to material uncertainty which may cast significant doubt over the Consolidated Entity’s ability to continue as a going concern. Whilst acknowledging these uncertainties, the directors have concluded that the going concern basis of preparation is appropriate due to the following reasons: 1. As noted above management is in discussions with certain parties to provide funding including discussions to obtain further short-term funding of up to $1,000,000; 2. Management is considering the issue of a convertible note and/or obtaining loan funding from a Director or third party; To date the Consolidated Entity has funded its activities through issuance of equity securities, and it is expected that 3. the Consolidated Entity will be able to fund its future activities through further issuances of equity securities; and The directors believe there is sufficient cash available for the Consolidated Entity to continue operating based on the Company’s cash flow forecast. 4. Should the Consolidated Entity be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. This financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities and appropriate disclosures that may be necessary should the Consolidated Entity be unable to continue as a going concern. (b) New Accounting Standards and Interpretations The accounting policies adopted are consistent with those of the previous financial year. Several other amendments and interpretations applied for the first time during the year but these changes did not have an impact on the Consolidated Entity’s financial statements and hence, have not been disclosed. The Consolidated Entity has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. (c) New Standards and Interpretations Not Yet Adopted Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods. The Consolidated Entity has decided against early adoption of these standards. The Consolidated Entity’s assessment of the impact of these new standards and interpretations is that they are not expected to have a material impact on the Group's financial assets or financial position, financial performance or disclosure. Page 37 AuKing Mining Limited 2023 Annual Report NOTE 2 ACQUISITION OF 92U PTY LTD Consideration On 30 January 2023 AKN completed the purchase of various prospective uranium and copper licences in Tanzania. The purchase price was discharged by AKN through the issue of 60,000,000 ordinary shares and 30,000,000 options exercisable at $0.20 on or before 30 September 2025. The transaction was accounted for as an asset acquisition. 60,000,000 AKN shares 1 30,000,000 AKN options 2 Total consideration 6,300,000 1,402,230 7,702,230 1 60,000,000 AKN shares were issued on 30 January 2023 on which AKN shares had a closing price of $0.105 per share. 2 30,000,000 AKN options were issued on 30 January 2023. The value of the options were calculated using the following assumptions: Grant date Exercise price Share price at grant date 30 January 2023 $0.20 $0.105 Expiry date 30 September 2025 Life of the instruments Share price volatility Expected dividends Risk free interest rate Pricing model Fair value per instrument Assets and Liabilities Acquired 2.7 years 96.2% Nil 3.18% Binomial $0.0467 The value of consideration has been attributed to the uranium and copper licences acquired. In line with the accounting policy (refer Note 7), this amount has been expensed in full through the Statement of Comprehensive Income. There were no other assets or liabilities acquired. Net Cash Outflow There was no impact on cash as a result of the acquisition. Acquisition costs Costs related to the acquisition of 92U Pty Ltd were; 5,000,000 AKN shares issued as advisory fees to Vert Capital 1 10,000,000 AKN options as advisory fees to Vert Capital 2 Other transactions costs Total acquisition costs 525,000 467,410 46,709 1,039,119 1 5,000,000 AKN shares were issued on 30 January 2023 on which AKN shares had a closing price of $0.105 per share. 2 10,000,000 AKN options were issued on 30 January 2023. The value of the options were calculated using the following assumptions: Page 38 AuKing Mining Limited 2023 Annual Report NOTE 2 ACQUISITION OF 92U PTY LTD (continued) Grant date Exercise price Share price at grant date 30 January 2023 $0.20 $0.105 Expiry date 30 September 2025 Life of the instruments Share price volatility Expected dividends Risk free interest rate Pricing model Fair value per instrument 2.7 years 96.2% Nil 3.18% Binomial $0.0467 NOTE 3 CASH AND CASH FLOW INFORMATION Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of financing and investing activities, which are disclosed as operating cash flows. December 2023 December 2022 $ $ Reconciliation of cash flows used in operations with loss after income tax Loss after income tax (12,664,692) (2,345,223) Non-cash items in loss after income tax Depreciation Share based payments – Tanzania acquisition consideration and other consultants Share based payments – employee and director options Impairment – exploration and evaluation assets Gain on sale of plant and equipment Movements in assets and liabilities Other receivables Other assets Trade payables and accruals Provisions Cash flow from operations Reconciliation of cash 47,404 8,731,956 107,699 38,332 - 61,823 - (49,808) 52,372 38,939 - 169,631 - (754) 132,685 (45,504) 147,614 55,051 (3,674,914) (1,847,561) Cash at the end of the financial period as shown in the cash flow statement is reconciled to items in the balance sheet as follows: Cash on hand and at bank Cash on deposit 385,551 10,757 396,308 1,645,865 10,427 1,656,292 Page 39 AuKing Mining Limited 2023 Annual Report NOTE 3 CASH AND CASH FLOW INFORMATION (continued) Reconciliation of cash and non-cash movements in share capital for the year (refer to Note 11 for further details) December 2023 December 2022 $ $ Opening balance at 1 January 13,592,798 8,721,436 Cash movements in share capital Shares issued – cash settled Share issue expenses – cash settled Non-cash movements in share capital Shares issued – Tanzania transaction Share issue expenses – trade creditors Share issue expenses – equity settled Closing balance Non-cash movements in investing activities 3,176,000 (251,043) 5,365,968 (491,513) 6,825,000 - (39,400) - 66,907 (70,000) 23,303,355 13,592,798 Exploration and evaluation assets amounts included in trade and other creditors at 31 December 2023 were $1,736 (2022: $20,616). Exploration and evaluation assets were impaired by $38,322 during the year (2022: $Nil). NOTE 4 OTHER EXPENSES Corporate compliance and insurance expenses Administration expenses Investor relation and capital market advisory expenses Telecom and IT expenses Project generation expenses NOTE 5 EMPLOYEE EXPENSES Employee wages and director fees Superannuation Share based payments – employee and director options Other employment expenses NOTE 6 TRADE & OTHER RECEIVABLES 333,429 330,476 197,193 42,777 75,918 979,793 418,897 311,909 359,919 52,601 - 1,143,326 1,004,017 96,523 145,015 8,781 761,674 102,472 169,631 39,973 1,254,336 1,073,750 GST receivable 31,219 93,042 Page 40 AuKing Mining Limited 2023 Annual Report NOTE 7 EXPLORATION AND EVALUATION Koongie Park Project Amounts recognised in the Consolidated Balance Sheet Opening balance Exploration expenditure during the period Impairment of exploration and evaluation assets Government grants relating to exploration December 2023 December 2022 $ $ 8,318,408 746,756 (38,332) (256,063) 8,770,769 4,865,744 4,009,575 - (556,911) 8,318,408 Accounting Policy - Koongie Park Project Exploration costs are capitalised only when the Consolidated Entity has either a granted tenement in its name or an interest through a earn-in and joint venture arrangement. Costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or sale of the respective area of interest or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing. Under the terms of the Earn-in and Joint Venture Agreement dated 8 February 2021 (JVA), upon the participating interest of Astral Resources (AAR) in the Koongie Park Joint Venture (KPJV) diluting below 10%, AAR is deemed to have withdrawn from the JVA and the remaining participating interest converts to a net smelter return royalty. AAR’s participating interest was deemed to have diluted below 10% with effect from 30 June 2023 and AKN moved to the 100% participating interest at the same time. AAR retains the right to explore for and develop gold and other precious metals within the Koongie Park project area, including platinum group elements. These rights do not apply to the mining licences on which the Onedin and Sandiego deposits are situated. Tanzania Projects Amounts recognised in the Consolidated Statement of Comprehensive Income Acquisition of Tanzania projects- refer to note 2 Exploration expenditure during the period 7,702,230 1,603,478 9,305,708 - - - Accounting Policy – Tanzania Projects Exploration costs, including the costs to initially acquire the various prospective uranium and copper licences (refer Note 2) are expensed when incurred. The Consolidated Entity has adopted this accounting policy for areas of interest in environments where there is heightened sovereignty and other risks compared to Australia. NOTE 8 PLANT AND EQUIPMENT Field equipment at cost Accumulated depreciation Motor vehicles at cost Accumulated depreciation Office equipment at cost Accumulated depreciation 54,108 (10,067) 44,041 145,126 (51,921) 93,205 61,890 (35,562) 26,328 8,603 (878) 7,725 145,126 (28,704) 116,422 61,890 (20,564) 41,326 Total plant and equipment 163,574 165,473 Page 41 AuKing Mining Limited 2023 Annual Report NOTE 8 PLANT AND EQUIPMENT (continued) Movements during the year December 2023 Opening balance Additions Disposals Depreciation Closing balance December 2022 Opening balance Additions Disposals Depreciation Closing balance Field Equipment 7,725 Motor Vehicles 116,422 Office Equipment 41,326 45,505 - (9,189) 44,041 Field Equipment 21,427 3,336 (15,246) (1,792) 7,725 - - (23,217) 93,205 Motor Vehicles 61,328 77,436 - (22,342) 116,422 - - (14,998) 26,328 Office Equipment 48,531 7,600 - (14,805) 41,326 Total 165,473 45,505 - (47,404) 163,574 Total 131,286 88,372 (15,246) (38,939) 165,473 Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal assessment of recoverable amount is made when impairment indicators are present. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. The depreciable amount of all fixed assets is depreciated on a diminishing value basis over the asset’s useful life to the Consolidated Entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. Class of Fixed Asset Field equipment Motor vehicles Office equipment Depreciation Rates 10% - 20% 20% 20% - 25% NOTE 9 TRADE & OTHER PAYABLES Trade payables Other payables and accrued expenses Accrued wages and fees payable to Directors NOTE 10 EMPLOYEE BENEFITS PROVISIONS CURRENT Employee benefits December 2023 December 2022 $ $ 21,424 141,947 35,128 198,499 55,272 220,321 15,000 290,593 179,086 126,714 Page 42 AuKing Mining Limited 2023 Annual Report NOTE 11 SHARE CAPITAL December 2023 December 2022 $ $ Fully paid ordinary shares 23,303,355 13,592,798 Ordinary Shares At the beginning of the period 13,592,798 8,721,436 117,843,707 75,289,651 2023 $ 2022 $ 2023 Number 2022 Number Shares issued to vendors of 92U Pty Ltd 1 Shares issued to transaction advisors 2 Share placement March 2023 3 Share placement November 2023 4 6,300,000 525,000 2,126,000 1,050,000 - - - - 60,000,000 5,000,000 21,260,000 26,250,000 Share placement March 2022 5 Share placement May 2022 6 Rights issue May 2022 7 Share placement June 2022 8 Share placement October 2022 9 - - - - - 49,500 2,635,138 376,830 980,000 1,374,000 Share issue expenses (290,443) (544,106) - - - - - - - - - - 300,000 18,822,412 2,691,644 7,000,000 13,740,000 - At reporting date 23,303,355 13,592,798 230,353,707 117,843,707 Notes 1. 2. 3. 4. 5. 6. 7. 8. 9. 60,000,000 shares issued to vendors of 92U Pty Ltd at $0.105 per share as part consideration for the acquisition of 92U Pty Ltd – refer Note 2. 5,000,000 shares issued to Vert Capital as part consideration for advisory fees on the 92U Pty Ltd transaction – refer Note 2. 21,260,000 shares issued through a share placement at $0.10 per share. 26,250,000 shares issued through a share placement at $0.04 per share. 300,000 shares issued to Vert Capital in March 2022 in relation to the November 2021 placement. 18,822,412 shares issued through a share placement at $0.14 per share. 2,691,644 shares issued through a rights issue at $0.14 per share. 7,000,000 shares issued through a share placement at $0.14 per share. 13,740,000 shares issued through a share placement at $0.10 per share. Page 43 AuKing Mining Limited 2023 Annual Report NOTE 11 SHARE CAPITAL (continued) Options Tranche Expiry Date Exercise Price 31 Dec 2022 Movements Issued Exercised Tranche 1 30 Jun 2023 Tranche 2 30 Jun 2023 Tranche 3 31 May 2025 Tranche 4 31 May 2025 Tranche 5 31 May 2025 Tranche 6 30 Sep 2025 Tranche 7 30 Sep 2025 Tranche 8 30 Sep 2025 Tranche 9 30 Sep 2025 Tranche 10 30 Sep 2025 Tranche 11 30 Sep 2025 Tranche 12 31 Dec 2025 0.25 0.25 0.17 0.11 0.17 0.20 0.20 0.20 0.20 0.20 0.20 0.20 28,871,380 14,000,000 2,500,000 2,700,000 1,000,000 6,870,000 - - - - - - - - - - - - 30,000,000 10,000,000 10,630,000 2,000,000 5,000,000 13,125,000 55,491,380 70,755,000 - - - - - - - - - - - - - Lapsed/ Expired 31 Dec 2023 (28,871,380) (14,000,000) - - - - 2,500,000 2,700,000 (500,000) 500,000 - - - - - - - 6,870,000 30,000,000 10,000,000 10,630,000 2,000,000 5,000,000 13,125,000 (43,371,380) 83,325,000 Tranche 1 options were issued to shareholders as part of previous capital raises. The options lapsed during the period. Tranche 2 options were issued to the lead manager previous capital raises. The options lapsed during the period. Tranche 3 options were issued to the Directors under the Employee Share and Option Plan. The options have an exercise price $0.17 and a 1 year service vesting condition. Tranche 4 options were issued to employees under the Employee Share and Option Plan. The options have an exercise price $0.11 and a 1 year service vesting condition. Tranche 5 options were issued to a Director under the Employee Share and Option Plan. The options have an exercise price $0.17 and a 1 year service vesting condition. Tranche 5 options were issued on 16 December 2022. 500,000 Tranche 5 options were forfeited on resignation. Tranche 6 options were issued to shareholders as part of the October 2022 share placement The options have an exercise price of $0.20 and no vesting conditions. Tranche 7 options were issued as part consideration to the vendors of the uranium and copper licences in Tanzania. The 30,000,000 options are exercisable at $0.20 on or before 30 September 2025. Tranche 8 options were issued to Vert Capital Pty Ltd as part consideration for introduction of these project interests to and assistance in securing the acquisition. The 10,000,000 options are exercisable at $0.20 on or before 30 September 2025. Tranche 9 options were issued to shareholders as part of share placement in March 2023. The 10,630,000 options have an exercise price of $0.20, no vesting conditions and an expiration date of 30 September 2025. Tranche 10 options were issued to Bonacare Pty Ltd in consideration for investor relations services. The 2,000,000 options have an exercise price of $0.20 and an expiration date of 30 September 2025. Tranche 11 options were issued to options were issued to Vert Capital Pty Ltd as part consideration for capital raising services. The 5,000,000 options are exercisable at $0.20 on or before 30 September 2025. Tranche 12 options were issued to shareholders as part of the November 2023 share placement The options have an exercise price of $0.10 and no vesting conditions. NOTE 12 DIVIDENDS & FRANKING CREDITS There were no dividends paid or recommended during the period. There are no franking credits available to the shareholders of the Company. Page 44 AuKing Mining Limited 2023 Annual Report NOTE 13 RESERVES Share based payment reserve Foreign currency translation reserve December 2023 December 2022 $ $ 2,223,686 22,954 2,246,640 379,631 - 379,631 The foreign currency translation reserve records exchange rate differences arising from the translation of the financial statements of foreign subsidiaries. The share based payment reserve is used to record the value of share based payments provide to employees and consultants for capital raising services. Share based payment reserve movements during the year Opening balance Director and employee options Consultant options (refer note 18) Options issued to the vendors of 92U Pty Ltd (refer note 2) Transfer of expired options to accumulated losses 379,631 107,699 544,126 1,402,230 (210,000) 2,223,686 140,000 169,631 70,000 - - 379,631 NOTE 14 EARNINGS PER SHARE The Consolidated Entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Total losses used to calculate basic and dilutive EPS (12,664,692) (2,345,223) 2023 Number 2022 Number Weighted average number of ordinary shares outstanding during the period 197,745,543 96,232,257 Weighted average number of dilutive options outstanding Weighted average number of ordinary shares outstanding during the period used in calculating EPS and dilutive EPS - - 197,745,543 96,232,257 Basic and diluted loss per share - cents (6.40) (2.44) At 31 December 2023, there were 83,325,000 (2022: 55,491,380) options outstanding which could potentially dilute basic earnings per share in the future. Because there is a loss from operations, these would have an anti-dilutive effect and therefore diluted earnings per share is the same as the basic earnings per share. Refer to Note 23 for issuance of ordinary shares after balance sheet date. These issuances would have changed significantly the number of ordinary shares outstanding at the end of the reporting period if occurred before the end of the reporting period. Page 45 AuKing Mining Limited 2023 Annual Report NOTE 15 INCOME TAX Income tax expense The income tax expense for the period comprises current income tax expense and deferred tax expense. Current income tax expense charged to profit or loss is the tax payable on taxable income. A reconciliation of income tax expense/(benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Consolidated Entity’s effective income tax rate for the periods ended 31 December 2023 and 31 December 2022 is as follows: December 2023 December 2022 $ $ Accounting loss before income tax (12,664,360) (2,345,223) Tax at the Australian tax rate of 30.0% (2022: 30.0%) Non-deductible/(assessable) items Deferred tax assets not brought to account Income tax expense Current tax liabilities (3,799,408) 2,976,848 822,560 - (703,567) 80,196 623,371 - Current tax liabilities are measured at the amounts expected to be paid to the relevant taxation authority. The Consolidated Entity did not have any current tax liabilities at 31 December 2023 (2022: Nil). Deferred tax balances Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the period as well as unused tax losses. Unrecognised temporary differences and tax losses Tax losses Recognised temporary differences and tax losses Deferred tax assets and liabilities are attributable to the following: Provisions Exploration and evaluation assets Deferred tax attributed to temporary differences not recognised Tax losses carried forward Net deferred tax liability/(asset) December 2023 December 2022 $ $ 43,287,996 39,866,437 53,726 (2,631,231) 2,577,505 - - 38,015 (2,495,522) 2,457,508 - - Page 46 AuKing Mining Limited 2023 Annual Report NOTE 16 RELATED PARTY AND KEY MANAGEMENT PERSONNEL Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Key management personnel compensation Key management personnel comprise directors and other persons having authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity. Summary Short-term employee benefits Post-employment benefits Share-based payments December 2023 December 2022 $ $ 684,575 29,023 67,621 781,219 572,164 27,603 128,889 728,656 Detailed remuneration disclosures are provided in the remuneration report on pages 20 to 26. Amounts owed to Key Management Personnel $35,128 is owed to Key Management Personnel for unpaid remuneration (December 2022: $15,000). These amounts were at call and did not bear interest. Other related party transactions On 30 January 2023 AKN acquired various prospective uranium and copper licences in Tanzania through the acquisition of 92U Pty Ltd (refer Note 2). Kabunga Holdings Pty Ltd, an entity associated with AKN’s Chairman Asimwe Kabunga, held a 60% interest of 92U Pty Ltd. In consideration for Kabunga Holdings Pty Ltd interest in 92U Pty Ltd, it was issued 36,000,000 AKN shares and 18,000,000 options exercisable at $0.20 on or before 30 September 2025. The value of the consideration for the transaction was: 36,000,000 AKN shares with a value of $0.105 per share 18,000,000 AKN options with a value of $0.0467 per option Total consideration NOTE 17 FINANCIAL RISK MANAGEMENT 3,780,000 840,600 4,620,600 The Consolidated Entity's financial instruments consist mainly of deposits with banks and accounts receivable and payable. The main risk arising from the financial instruments is foreign exchange risk. There have been no substantive changes in the Consolidated Entity's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. The Board has overall responsibility for the determination of the Consolidated Entity's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for day to day management of these risks to the Chief Executive Officer and the Chief Financial Officer. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Consolidated Entity's competitiveness and flexibility. Further details regarding these policies are set out below: Page 47 AuKing Mining Limited 2023 Annual Report NOTE 17 FINANCIAL RISK MANAGEMENT (continued) (a) Credit Risk Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Consolidated Entity incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to the Consolidated Entity. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements. There is no collateral held as security at 31 December 2023. Credit risk is reviewed regularly by the Board. It arises from deposits with financial institutions. The Consolidated Entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Consolidated Entity. The credit quality of cash and cash equivalents is considered strong. The counterparty to these financial assets are large financial institutions with strong credit ratings. (b) Liquidity risk Liquidity risk is the risk that the Consolidated Entity may encounter difficulties raising funds to meet financial obligations as they fall due. Liquidity risk is reviewed regularly by the Board. The Consolidated Entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash resources are maintained. The Consolidated Entity did not have any financing facilities available at balance date. Refer to Note 1 “Going Concern” for details on the Consolidated Entity’s current financial position, funding arrangements and its ability to meet its future obligations. (c) Market Risk Market risk arises from the use of interest bearing, tradeable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The Consolidated Entity does not have any material exposure to market risk. (d) Capital Risk Management When managing capital, the director’s objective is to ensure the entity continues as a going concern and to maintain a structure that ensures the lowest cost of capital available and to ensure adequate capital is available for exploration and evaluation of tenements. In order to maintain or adjust the capital structure, the Consolidated Entity may seek to issue new shares. The Consolidated Entity has no minimum capital requirements. Refer to Note 1 “Going Concern” for details on the Consolidated Entity’s current financial position, funding arrangements and its ability to meet its future obligations. (e) Net Fair Values The net fair values of financial assets and liabilities approximate their carrying value. The aggregate net fair values and carrying amounts of financial assets and liabilities are disclosed in the balance sheet and in the notes to the financial statements. Page 48 AuKing Mining Limited 2023 Annual Report NOTE 18 SHARE BASED PAYMENTS Tanzania Acquisition December 2023 Tranche Grant Date Expiry Date Tranche 7 30 Jan 2023 30 Sep 2025 Tranche 8 30 Jan 2023 30 Sep 2025 Weighted average exercise price Exercise Price Balance at start of year Granted Exercised Lapsed Balance at end of year Vested and exercisable at end of year $0.20 $0.20 - - - - 30,000,000 10,000,000 - $0.20 - - - - - - - - 30,000,000 30,000,000 10,000,000 10,000,000 - $0.20 - - On 30 January 2023 AKN completed the purchase of various prospective uranium and copper licences in Tanzania. The purchase price was discharged by AKN through the issue of 60,000,000 ordinary shares and 30,000,000 options exercisable at $0.20 on or before 30 September 2025. 60,000,000 AKN shares 1 30,000,000 AKN options 2 Total consideration 6,300,000 1,402,230 7,702,230 AKN also incurred transaction costs to acquire the Tanzania licences of which $992,410 related to options and shares issued to Vert Capital, as part consideration for introduction of these project interests to and assistance in securing the acquisition. 5,000,000 AKN shares issued as advisory fees to Vert Capital 1 10,000,000 AKN options as advisory fees to Vert Capital 2 Share based acquisition costs 525,000 467,410 992,410 1 AKN shares were issued on 30 January 2023 on which AKN shares had a closing price of $0.105 per share. 2 AKN options were issued on 30 January 2023. The value of the options were calculated using the following assumptions: Grant date Exercise price Share price at grant date 30 January 2023 $0.20 $0.105 Expiry date 30 September 2025 Life of the instruments Share price volatility Expected dividends Risk free interest rate Pricing model Fair value per instrument 2.7 years 96.2% Nil 3.18% Binomial $0.0467 The weighted average remaining contractual life of Tanzania acquistion share options outstanding at the end of the year was 1.75 years. Consultant Options December 2023 Tranche Grant Date Expiry Date Tranche 10 21 Mar 2023 30 Sep 2025 Tranche 11 17 Nov 2023 30 Sep 2025 $0.20 $0.20 - - 2,000,000 5,000,000 Tranche 2 14 Mar 2022 30 June 2023 $0.25 4,000,000 Tranche 2 27 Jun 2022 30 June 2023 $0.25 10,000,000 - - Weighted average exercise price 14,000,000 17,000,000 $0.25 $0.20 Exercise Price Balance at start of year Granted Exercised Lapsed Balance at end of year Vested and exercisable at end of year - - - - - - - - 2,000,000 2,000,000 5,000,000 5,000,000 (4,000,000) (10,000,000) - - - - (14,000,000) 17,000,000 17,000,000 $0.25 $0.20 $0.20 Page 49 AuKing Mining Limited 2023 Annual Report NOTE 18 SHARE BASED PAYMENTS (continued) The weighted average remaining contractual life of consultant options outstanding at the end of the year was 1.75 years. 2023 Consulting Fees (Tranche 10) Options were issued to Bonacare Pty Ltd in consideration for investor relations services. The 2,000,000 options have an exercise price of $0.20 and an expiration date of 30 September 2025. The value of the options were calculated using the following assumptions: Grant date Exercise price Share price at grant date 21 March 2023 $0.20 $0.059 Expiry date 30 September 2025 Life of the instruments Share price volatility Expected dividends Risk free interest rate Pricing model Fair value per instrument 2.5 years 98.5% Nil 2.86% Binomial $0.0187 November 2023 Placement (Tranche 11) As part of the November 2023 share placement, the Company agreed to issue to the lead manager, Vert Capital Pty Ltd, 5,000,000 options at an exercise price of $0.20 on or before 30 September 2025. The value of the options were calculated using the following assumptions: Grant date Exercise price Share price at grant date 17 November 2023 $0.20 $0.049 Expiry date 30 September 2025 Life of the instruments Share price volatility Expected dividends Risk free interest rate Pricing model Fair value per instrument 1.9 years 92.0% Nil 4.16% Binomial $0.0079 November 2021 Placement (Tranche 2) As part of the November 2021 share placement, the Company agreed to issue to the lead manager, Vert Capital Pty Ltd, 4,000,000 options exercisable at 25c on or before 30 June 2023. The options were issued in March 2022 following shareholder approval and have now expired. June 2022 Placement (Tranche 2) As part of the June 2022 share placement, the Company issued to the lead manager, Vert Capital Pty Ltd, 10,000,000 options exercisable at 25c on or before 30 June 2023. The options have now expired. Page 50 AuKing Mining Limited 2023 Annual Report NOTE 18 SHARE BASED PAYMENTS (continued) Director and Employee Options The Company has granted options over ordinary shares to employees (including directors) in recognition of services provided to the Company. The options were granted for nil consideration and are not quoted on the ASX. Options granted under the plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share. December 2022 Tranche Tranche 3 Grant Date Expiry Date 30 Jun 2022 31 May 2025 Tranche 4 30 Jun 2022 31 May 2025 Exercise Price Balance at start of year $0.17 $0.11 2,500,000 2,700,000 Tranche 5 16 Dec 2022 31 May 2025 $0.17 1,000,000 Weighted average exercise price 6,200,000 $0.144 Granted Exercised Lapsed Balance at end of year Vested and exercisable at end of year - - - - - - - - - - - - 2,500,000 2,500,000 2,700,000 2,700,000 (500,000) 500,000 500,000 (500,000) 5,700,000 5,700,000 $0.17 $0.142 $0.142 The weighted average remaining contractual life of director and employee share options outstanding at the end of the year was 1.4 years. Fair value of options granted The assessed fair value at the date of grant of options issued is determined using an option pricing model that takes into account the exercise price, the underlying share price at the time of issue, the term of the option, the underlying share’s expected volatility, expected dividends and the risk free interest rate for the expected life of the instrument. The value of the options was calculated using the inputs shown below: Inputs into pricing model Directors June 2022 Employees June 2022 Directors December 2022 Mutually agreed terms Grant date Exercise price Vesting conditions Share price at grant date Life of the options Underlying share price volatility Expected dividends Risk free interest rate Pricing model Fair value per option 31 May 2022 31 May 2022 $0.17 30 June 2022 30 June 2022 $0.11 Ongoing employment until 30 June 2023 Ongoing employment until 30 June 2023 $0.100 3.00 years 103% Nil 2.86% Binomial $0.0542 $0.080 2.92 years 100% Nil 3.16% Binomial $0.0449 1 October 2022 16 December 2022 $0.17 Ongoing employment until 1 October 2023 1 $0.093 2.67 years 99% Nil 3.14% Binomial $0.0412 1 The Board exercised its discretion to vest in full 1,000,000 options granted to Anna Nahajski-Staples upon her resignation. Total expenses arising from employee share-based payment transactions recognised during the period as part of employment benefit expenses were as follows: December 2023 December 2022 $ $ Share based payments – employee and director options 107,699 169,631 Page 51 AuKing Mining Limited 2023 Annual Report NOTE 19 SEGMENT REPORTING Reportable Segments The Consolidated Entity has identified its operating segment based on internal reports that are reviewed and used by the executive team in assessing performance and determining the allocation of resources. The Consolidated Entity does not yet have any products or services from which it derives an income. Management currently identifies the Consolidated Entity as having only two reportable segments, being: • Exploration for minerals in Australia at the Koongie Park project; and • Exploration for minerals in Tanzania. The following is an analysis of the Consolidated Entity’s revenue and results by reportable operating segment for the period under review. Tanzania Australia Unallocated Consolidated Year Ended 31 December 2023 $ Expenses: Tanzania acquisition expenses Tanzania exploration expenses Other operating expenses Segment result Income tax Net Loss Non-cash and other significant items: Depreciation Share based payments Tanzania acquisition expenses Tanzania exploration expenses Assets: Segment assets Liabilities: Segment liabilities Segment acquisitions: Plant and equipment Exploration expenditure Details of non-current assets: Other receivables Exploration and evaluation assets Plant and equipment Year Ended 31 December 2022 (1,039,119) (9,305,708) (112,254) (233,119) (1,936,160) $ - - $ - - $ (1,039,119) (9,305,708) (2,281,533) (12,626,360) (10,457,081) (233,119) (1,936,160) (12,626,360) - - - 1,039,119 9,305,708 - - - (12,626,360) 25,976 - 21,428 145,015 47,404 145,015 1,039,119 9,305,708 114,792 8,931,277 357,318 9,403,387 21,849 51,398 304,338 377,585 - - - - - 44,504 746,755 - - 44,504 746,755 - 3,185 8,809,101 142,294 21,280 3,185 8,809,101 163,574 In the prior period, the Consolidated Entity only had one reportable segment, being exploration for minerals in Australia. The prior period financial results from this segment are equivalent to the financial statements of the consolidated entity. All assets were located in Australia. Page 52 AuKing Mining Limited 2023 Annual Report NOTE 20 COMMITMENTS Future exploration The Consolidated Entity has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Consolidated Entity. Exploration obligations to be undertaken – Koongie Park: Payable within one year Payable between one year and five years Payable after five years Exploration obligations to be undertaken – Tanzania: Payable within one year Payable between one year and five years Payable after five years December 2023 December 2022 $ $ 365,420 1,082,040 273,000 1,720,460 1,229,919 2,459,838 - 3,689,757 525,420 1,438,860 273,000 2,237,280 - - - - To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Company has the option to negotiate new terms or relinquish the tenements or to meet expenditure requirements by joint venture or farm in agreements. The Consolidated Entity currently does not have any other obligations to expend minimum amounts on either operating leases or exploration in tenement areas. NOTE 21 CONTINGENT LIABILITIES AND CONTINGENT ASSETS There are no contingent liabilities or contingent assets at 31 December 2023 (31 December 2022: Nil). NOTE 22 AUDITORS’ REMUNERATION Remuneration paid for: - Auditing and reviewing the financial report Other services - Tax compliance December 2023 December 2022 $ $ 62,495 62,495 30,054 30,054 NOTE 23 EVENTS AFTER BALANCE SHEET DATE On 16 January 2024, following shareholder approval, AKN issued 5,000,000 ordinary shares (at $0.04 per share) and 2,500,000 free-attaching options exercisable at 10c on or before 31 December 2025 to an entity associated with Asimwe Kabunga. Page 53 AuKing Mining Limited 2023 Annual Report NOTE 24 PARENT ENTITY INFORMATION The Parent Entity of the Consolidated Entity is AuKing Mining Limited. Parent Entity Financial Information Current assets Non-current assets Total assets Current liabilities Total liabilities Net assets Share capital Reserves Accumulated losses Total equity Loss after income tax Other comprehensive income Total comprehensive loss Controlled Entities of the Parent Entity AKN (Koongie Park) Pty Ltd Koongie Park Pty Ltd 92 U Pty Ltd 92 U Tanzania Limited Monaco Copper Limited December 2023 December 2022 $ $ 408,969 8,882,839 9,291,808 304,338 304,338 1,663,839 8,435,637 10,099,475 336,964 336,964 8,987,470 9,762,511 23,303,355 2,223,686 (16,539,571) 8,987,470 13,592,798 379,631 (4,209,918) 9,762,511 (12,539,653) (2,584,076) - - (12,539,653) (2,584,076) 2023 Interest % 100% 2022 Interest % 100% Country of Incorporation Australia 100% 100% 100% 100% - - - - Australia Australia Tanzania Tanzania Commitments, Contingencies and Guarantees of the Parent Entity The Parent Entity has no commitments, contingent assets, contingent liabilities or guarantees at balance date. Page 54 AuKing Mining Limited 2023 Annual Report DIRECTORS' DECLARATION In the Directors opinion: (a) the attached consolidated financial statements and notes that are set out on pages 32 to 54 and the remuneration report set out on pages 20 to 26 in the Directors’ Report are in accordance with the Corporations Act 2001 and other mandatory professional reporting requirements, including: (i) (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2023 and of its performance for the financial period ended on that date. (b) (c) the financial statements also comply with International Financial Reporting Standards as disclosed in Note 1 to the consolidated financial statements; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of directors. Director 28 March 2024 Page 55 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia INDEPENDENT AUDITOR'S REPORT To the members of AuKing Mining Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of AuKing Mining Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated balance sheet as at 31 December 2023, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to the financial report, including material accounting policy information and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 31 December 2023 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Page 56 Material uncertainty related to going concern We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this matter. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Carrying value of exploration and evaluation assets Key audit matter How the matter was addressed in our audit The Group carries exploration and evaluation assets in accordance with the Group’s accounting policy for exploration and evaluation assets as set out in Note 7. The recoverability of exploration and evaluation asset is a key audit matter due to the significance of the total balance as a proportion of total assets and the level of procedures undertaken to evaluate management’s application of the requirements of AASB 6 Exploration for and Evaluation of Mineral Resources (‘AASB 6’) in light of any indicators of impairment that may be present. Our procedures included: • Obtaining evidence that the Group has valid rights to explore in the areas represented by the capitalised exploration and evaluation expenditure by obtaining supporting documentation such as licence agreements and also considering whether the Group maintains the tenements in good standing. • Making enquiries of management with • respect to the status of ongoing exploration programs in the respective areas of interest. Enquiring of management, reviewing ASX announcements and reviewing directors' minutes to ensure that the Group had not decided to discontinue activities in any applicable areas of interest and to assess whether there are any other facts or circumstances that existed to indicate impairment testing was required. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Page 57 Accounting for Acquisition of 92U Pty Ltd Key audit matter How the matter was addressed in our audit During the period The Group acquired 92U Pty Ltd. Refer to note 2 of the financial report. The accounting treatment for this acquisition was a key audit matter due to the significance of the total balance recorded as an exploration expense through the consolidated statement of comprehensive income, and the level of procedures undertaken to evaluate management’s assessment of the acquisition. Our procedures included, but were not limited to: • • • • • • Obtaining an understanding of the transaction, including an assessment of whether the transaction constituted an asset or business acquisition. Reviewing the sale and purchase agreement to understand key terms and conditions. Assessing management’s determination of the fair value of consideration paid and agreeing the consideration to supporting documentation. Assessing the allocation of the purchase price to the net assets which have been acquired. Assessing managements adoption of an accounting policy to expense exploration expenditure relating to the relevant tenements acquired. Assessing the adequacy of the related disclosures in Note 2 of the financial report. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 31 December 2023, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and 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. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Page 58 In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 20 to 26 of the directors’ report for the year ended 31 December 2023. In our opinion, the Remuneration Report of AuKing Mining Limited, for the year ended 31 December 2023, 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. BDO Audit Pty Ltd T R Mann Director Brisbane, 28 March 2024 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Page 59
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