Austral Gold Limited
Annual Report 2023

Plain-text annual report

MEDIA RELEASE Austral Gold Limited 28 March 2024 Austral Gold Files 2023 Annual Report Established gold producer Austral Gold Limited (Austral or the Company) (ASX: AGD; TSX-V: AGLD; OTCQB: AGLDF) is pleased to announce that it has filed its Annual Report for the year ended 31 December 2023 (“FY23”). The complete Report is available under the Company’s profile at www.asx.com.au, www.sedar.com, https://www.otcmarkets.com, and on the Company’s website at www.australgold.com/. About Austral Gold Austral Gold is a growing gold and silver mining producer building a portfolio of quality assets in the Americas. Austral continues to lay the foundation for its growth strategy by advancing its attractive portfolio of producing and exploration assets. For more information, please visit the Company’s website at www.australgold.com. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Release approved by the Chief Executive Officer of Austral Gold, Stabro Kasaneva. For more information, please contact: Jose Bordogna Chief Financial Officer Phone: +61 466 892 307 jose.bordogna@australgold.com Austral Gold Limited ABN 30 075 860 472 ASX: AGD TSXV: AGLD Level 5 126 Phillip St, Sydney NSW 2000 | T +61 2 9380 7233 | F +61 2 9251 7455 | info@australgold.com | www.australgold.com Forward Looking Statements Statements in this news release that are not historical facts are forward-looking statements. Forward- looking statements are statements that are not historical, and consist primarily of projections - statements regarding future plans, expectations and developments. Words such as "expects", "intends", "plans", "may", "could", “potential”, "should", "anticipates", "likely", "believes" and words of similar import tend to identify forward-looking statements. Forward-looking statements in this news release include Austral continues to lay the foundation for its growth strategy by advancing its attractive portfolio of producing and exploration assets. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets especially in light of the effects of the novel coronavirus, uncertainty in the measurement of mineral reserves and resource estimates, Austral’s ability to attract and retain qualified personnel and management, potential labour unrest, reclamation and closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company’s control, the availability of capital to fund all of the Company’s projects and other risks and uncertainties identified under the heading “Risk Factors” in the Company’s continuous disclosure documents filed on the ASX and on SEDAR. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Austral cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management’s assumptions may prove to be incorrect. Austral’s forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements. 2 Unique Value Proposition for Gold Production, Exploration and Investments in the Americas 2023Annual Report for the year ended 31 December 2023 www.australgold.com TABLE OF CONTENTS Corporate Directory Value Proposition Chair’s Letter Key Principles Mineral Reserves and Resources Review of Activities Directors’ Report Financial Statements Directors’ Declaration Auditor’s Independence Declaration Independent Auditor’s Report Additional Information 4 6 10 12 18 24 34 68 106 108 110 118 Austral Gold Limited 3 Annual Report 2023 CORPORATE DIRECTORY AUDITORS KPMG www.kpmg.com.au LISTED Australian Securities Exchange ASX: AGD TSX Venture Exchange TSXV: AGLD OTC Bulletin Board OTCQB: AGLDF PLACE OF INCORPORATION: Western Australia KEY MANAGEMENT Stabro Kasaneva Chief Executive Officer and Executive Director Rodrigo Ramirez Vice President of Operations Jose Bordogna Chief Financial Officer Raul Guerra* Former Vice President of Exploration DIRECTORS Eduardo Elsztain Chair & Non-Executive Director Wayne Hubert** Former Chair & Executive Director Saul Zang Non-Executive Director Pablo Vergara del Carril Non-Executive Director Stabro Kasaneva Chief Executive Officer and Executive Director Robert Trzebski Independent Non-Executive Director Ben Jarvis Independent Non-Executive Director COMPANY SECRETARY Chelsea Sheridan Automic Group REGISTERED OFFICE Level 5 126 Phillip Street Sydney NSW 2000 Tel: +61 2 9380 7233 Email: info@australgold.com Web: www.australgold.com OTHER OFFICES Santiago, Chile Lo Fontecilla 201 of. 334 Santiago, Chile Tel: +56 (2) 2374 8560 Buenos Aires, Argentina Bolivar 108 Buenos Aires (1066) Argentina Tel: +54 (11) 4323 7500 Fax: +54 (11) 4323 7591 Vancouver, Canada 170-422 Richards Street Vancouver, BC V6B 2Z4 Tel: +1 604 868 9639 SHARE REGISTRIES Computershare Investor Services Australia GPO Box 2975 Melbourne VIC 3001 Tel: 1300 850 505 (within Australia) Tel: +61 3 9415 5000 (outside Australia) Computershare Investor Services Canada 510 Burrard Street, 2nd Floor Vancouver, BC V6C 3B9 Tel: +1 604 661 9400 Fax: +1 604 661 9549 *resigned effective 31 January 2023 **retired effective 30 May 2023 Austral Gold Limited 4 Annual Report 2023 Austral Gold Limited 5 Annual Report 2023 VALUE PROPOSITION GOLD PRODUCTION Profitable operations delivering positive cash flow since 2012. Installed production capacity with two agitation and heap leaching plants in Argentina and Chile. GOLD EXPLORATION Targeting high and low sulfidation epithermal gold and silver deposits in a high-quality land portfolio. Strategically located in well-known gold mineral endowments in the Americas. MINING INVESTMENTS Expanding exposure through equity investments in public and private mining companies. Seeking strategic alliances with other mining companies to leverage and accelerate growth. Austral Gold Limited 6 Annual Report 2023 Unique Exposure to Gold Production, Exploration, and Investments in the Americas Austral Gold Limited 7 Annual Report 2023 MINING PORTFOLIO Located in rich mineral endowments South America PALEOCENE BELT, CHILE Guanaco/Amancaya Mines 100% Ownership Production | Exploration MIOCENE BELT, ARGENTINA Pampa Metals 3% Ownership Piuquenes Project DESEADO MASSIF, ARGENTINA Sierra Blanca Project 51% Ownership Exploration TRIASSIC CHOIYOI BELT, ARGENTINA Casposo-Manantiales 100% Ownership Care & Maintenance | Exploration INDIO BELT, ARGENTINA Jagüelito Project 50% Option Exploration DESEADO MASSIF, ARGENTINA Unico Silver 17% Ownership Cerro Leon Project Operations Exploration Equity investments Austral Gold Limited 8 Annual Report 2023 United States WALKER LINE, UTAH Rawhide Mine 25% Ownership Restructuring* CARLIN TREND, NEVADA Ensign Minerals 12% Ownership Exploration Equity investments * On 20 December 2023 (the “ Petition Date “) Rawhide Mining LLC filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Austral Gold Limited 9 Annual Report 2023 LETTER FROM NON-EXECUTIVE CHAIR Austral Gold Limited 10 Annual Report 2023 ON BEHALF OF THE BOARD OF DIRECTORS OF AUSTRAL GOLD LIMITED (“AUSTRAL” OR THE “COMPANY”), I AM PLEASED TO PRESENT OUR ANNUAL REPORT FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2023 (“FY23”). Outlook for FY24: Looking ahead to FY24, we project total produc- tion of 26,000 to 28,000 GEOs, with approximately 80% to be sourced from the Heaps Project. Our operational plan involves inte- grating agitation leaching and heap leaching processes, utilising material from the Heaps, as well as remaining ore and stocks from our Amancaya and Guanaco mines. Our technical team anticipates improved profitability margins and enhanced cash flow generation, with projected average Cash Costs (C1) ranging from US$1,300- US$1,450 per GEO, and All-in-Sustaining Costs (AISC) in the range US$1,300-US$2,283 and an annual average of US$1,533 per GEO. We expect that 2024 production, combined with favorable gold and silver prices, will improve our liquidity ratios by increasing internal cash generation and gradually reducing the Company’s debt to our supportive lenders and vendors. The decrease in projected AISC primarily results from expected lower sustaining capital expen- diture needs, as production is forecast to be primarily sourced from the Heaps Project rather than the underground mines. The fundamental strength of gold and silver prices, supported by expectations of a decrease in interest rates and sustained government deficit spending, remain positive factors for our business in 2024 and the long term. We are proud that 2024 will be our 14th consecutive year of production at Guanaco, which commenced in late 2010. During this period, we have produced over half a million gold ounces. As we look ahead to the next year, our primary focus will continue to be on production and exploiting additional value-added opportuni- ties. Specifically, we are committed to restarting operations at the Casposo-Manantiales mine complex in Argentina. Our dedicated technical team is diligently exploring various scenarios to drive this initiative forward. Finally, we express our gratitude to our shareholders for their unwavering support, our employees, contractors, communities, and Board members for their contributions throughout the year. We also acknowledge the retirement of former Executive Chair, Wayne Hubert, in FY23, and commend him for his significant and lasting impact on the Company. Yours sincerely, EDUARDO ELSZTAIN Non-Executive Chair This report outlines our efforts to generate value for stakeholders and highlights advancements in our three strategic pillars: Produc- tion, Exploration, and Equity Investments. Our commitment to the well-being of our employees and communities, coupled with the promotion of the highest health, safety, and environmental standards underpins all our activities. In FY23, we continued to make significant capital investments in our flagship project, Guanaco/Amancaya in Chile. We transitioned to the new Heap Reprocessing Project (the Heaps Project), and conducted drilling campaigns at our key assets in Argentina. These assets include: the Casposo/Manantiales Mine Complex and the advanced exploration project, Jaguelito, where we have an option to acquire 50%. These actions reflect our commitment to advancing our value proposition of maintaining sustainable mining operations to support exploration activities and organic growth. The completion of the Heaps Project construction, despite delays communicated to our stakeholders over the past 12 months, marks a crucial milestone, confirming the extended life of the project until 2033(1). Production: During FY23, Guanaco/Amancaya delivered total production of 24,879 gold-equivalent ounces (GEOs) at an adjusted gross profit of US$6,557 thousand and a 13.7% margin (excluding depreciation and amortization). Production was lower than our initial 2023 guidance of 34,000-38,000 GEOs as we initially projected the Heaps Project to contribute 7,000 to 9,000 GEOs during the second half of 2023, but 2023 production from the Heaps Project was 496 GEOs, primarily due to operational issues, including technical challenges in the implementation and ramp-up of operations. The Company is actively addressing these issues and expects to resolve them in early 2024. Exploration: On the exploration front, we successfully completed two drilling campaigns, covering a total of over 8,000 meters between Casposo/Manantiales and Jaguelito in the province of San Juan, Argentina. These campaigns yielded positive results, opening further opportunities for continued exploration in these areas. Specifically, we are working towards obtaining a new inde- pendent Mineral Resource Estimate (MRE) for the Casposo/ Manantiales project as part of our strategic plan to restart opera- tions there. Equity Investments: In FY23, our Equity Investments pillar also played a crucial role in the sale of SCRN Properties Ltd, owner of the Pingüino Project, to ASX Listed Unico Silver Limited (“Unico”). Total consideration for this strategic transaction was approximately US$10 million, comprising US$5 million in cash, shares, and options of Unico. As a result of in this sale, we hold a ~17% interest as of 31 December 2023, allowing us to benefit from any potential increase in the value of Unico Silver. Addition- ally, we retained options to buy back a 2% NSR Royalties over the Project. (1) see notes to mineral resources & ore reserves statement on page 23 Austral Gold Limited 11 Annual Report 2023 KEY PRINCIPLES Austral Gold Limited 12 Annual Report 2023 Be socially and environmentally responsible and strive to reduce safety risks and operating costs Be the preferred partner for commu- nities, governments and companies to operate and explore precious metal proj- ects in the Americas MAXIMISE VALUE CREATION FOR STAKEHOLDERS Austral Gold Limited 13 Annual Report 2023 PATHWAY TO AN ESTABLISHED GOLD PRODUCER + 10 Years | + 500,000 gold ounces produced CONSISTENT JOURNEY DELIVERING PRODUCTION 600,000 500,000 400,000 300,000 200,000 100,000 Acquired Guanaco Project Started Open Pit and Heap Leaching Operations at Guanaco Acquired Amancaya Project Development of Guanaco Project Started UG Mining at Guanaco 2008 2009 2010 2011 2012 2013 2014 2015 Austral Gold Limited 14 Annual Report 2023 * See notes to the mineral resources & ore reserves statement on page 22 Constructed Agitation Leaching Plant at the Guanaco-Amancaya Cluster Placed Casposo on Care & Maintenance Acquired Casposo Mine and re-started operations Launched Drilling Program at Casposo-Manantiales with the strategic objective to restart operations Completed Construction of the Heap Reprocessing project at Guanaco- Amancaya Started Mining at Amancaya Acquired Exploration Rights of Manantiales Property adjacent to Casposo Extended Gua- naco-Amancaya LOM to 2033 (10 Years) * 2016 2017 2018 2019 2020 2021 2022 2023 Austral Gold Limited 15 Annual Report 2023 CASH FLOW FROM OPERATIONS INVESTED IN GROWTH STRONG M&A TRACK-RECORD 2013 2014 2016 2017 2019 15% Private Placement in Goldrock Mines 20% Private Placement in Argentex Mining Acquisition of Amancaya Project from Yamana Gold Acquisition of U/G mining contractor Purchase of Kinross NPI Royalty on Guanaco Acquisition of remaining interest in Casposo Mine 22% Private Placement in Rawhide mine (Nevada, US) 51% Acquisition of Casposo Mine from Troy Resources Friendly takeover of Argentex Mining Secondary listing of Austral on the TSXV Sold interest in Goldrock Mines Acquisition of two Projects from Revelo Resources (stock transaction) Additional 19% Acquisition of Casposo Mine Austral Gold Limited 16 Annual Report 2023 2020 2021 2022 2023 Earn-in Agreement to acquire up to 100% of the Sierra Blanca project adjacent to Pinguino Friendly takeover of Revelo Resources (stock and cash transaction) ~20% Private Placement in Ensign Minerals (Utah, US) Agreement to enter into a JV with Mexplort to explore projects in the Indio Belt (San Juan province, Argentina) plus an earn-in agree- ment to acquire 50% of the Jaguelito Project Completed the sale of SCRN Properties (owner of Pingui- no) to ASX listed Unico Silver Limited for approx. US$10M comprising cash, shares and options Austral Gold Limited 17 Annual Report 2023 MINERAL RESERVES AND RESOURCES Austral Gold Limited 18 Annual Report 2023 TABLE 1: SUMMARY OF MINERAL RESERVES 31 December 2023 Tonnes Grade Contained Metal Classification (000 t) (g/t Au) (g/t Ag) (000 oz Au) (000 oz Ag) Guanaco and Amancaya Mines Underground Proven Probable P + P Open Pit Proven Probable P + P Heap Proven Probable P + P Total Proven Total Probable Total P + P See notes to Mineral Reserves on page 22. 2 3 5 - 1,607 1,607 10,082 - 10,082 10,084 1,611 11,694 2.81 4.26 3.74 Inesperada - 1.05 1.05 Heap Reprocessing Project 0.67 - 0.67 Total 0.67 1.06 0.72 5.32 8.34 7.27 - 14.39 14.39 3.15 - 3.15 3.15 14.38 4.70 0 0 0 - 54 54 217 - 217 217 55 272 0 1 1 - 744 744 1,022 - 1,022 1,022 745 1,767 Austral Gold Limited 19 Annual Report 2023 TABLE 2: SUMMARY OF MINERAL RESOURCES 31 December 2023 Tonnes Grade Contained Metal Classification (000 t) (g/t Au) (g/t Ag) (000 oz Au) (000 oz Ag) Guanaco and Amancaya Mines Underground Measured Indicated M + I Inferred Open Pit Measured Indicated M + I Inferred Heap Measured Indicated M + I Inferred Total Measured Total Indicated Total M + I Total Inferred See notes to Mineral Resources on page 22. 586 947 1,533 350 - 1,682 1,682 74 11,259 - 11,259 1,907 11,845 2,630 14,474 2,331 2.66 2.60 2.62 4.15 Insperada - 1.05 1.05 0.91 Heap Reprocessing Project 0.67 - 0.67 0.55 Total 0.77 1.61 0.92 1.10 12.69 17.06 15.39 8.25 - 14.38 14.38 12.40 3.09 - 3.09 2.64 3.56 15.35 5.70 3.79 50 79 129 47 - 57 57 2 242 - 242 34 292 136 428 82 239 520 759 93 - 778 778 30 1,118 - 1,118 162 1,357 1,298 2,655 284 Austral Gold Limited 20 Annual Report 2023 TABLE 3: SUMMARY OF MINERAL RESERVES 31 December 2022 Tonnes Grade Contained Metal Classification (000 t) (g/t Au) (g/t Ag) (000 oz Au) (000 oz Ag) Guanaco and Amancaya Mines Underground Proven Probable P + P Open Pit Proven Probable P + P Heap Proven Probable P + P Total Proven Total Probable Total P + P See notes to Mineral Reserves on page 22. 32 116 148 - 1,607 1,607 10,189 - 10,189 10,221 1,723 11,945 5.81 5.84 5.83 Inesperada - 1.05 1.05 Heap Reprocessing Project 0.68 - 0.68 Total 0.69 1.37 0.79 14.42 16.94 16.40 - 14.39 14.39 3.16 - 3.16 3.20 14.56 4.84 6 22 28 - 54 54 221 - 221 227 76 303 15 63 78 - 744 744 1,037 - 1,037 1,052 807 1,859 Austral Gold Limited 21 Annual Report 2023 TABLE 4: SUMMARY OF MINERAL RESOURCES 31 December 2022 Classification Underground Measured Indicated M + I Inferred Open Pit Measured Indicated M + I Inferred Heap Measured Indicated M + I Inferred Total Measured Total Indicated Total M + I Total Inferred Tonnes (000 t) 594 1,009 1,604 402 - 1,682 1,682 74 11,366 - 11,366 1,907 11,961 2,692 14,652 2,383 Grade Contained Metal (g/t Au) (g/t Ag) (000 oz Au) (000 oz Ag) Guanaco and Amancaya Mines 2.77 3.12 2.99 4.20 Insperada - 1.05 1.05 0.91 Heap Reprocessing Project 0.67 - 0.67 0.55 Total 0.78 1.82 0.97 1.18 13.00 17.98 16.14 8.51 - 14.38 14.38 12.40 3.10 - 3.10 2.64 3.59 15.73 5.82 3.93 53 101 154 54 - 57 57 2 246 - 246 34 299 158 457 90 248 584 832 110 - 778 778 30 1,133 - 1,133 162 1,381 1,362 2,743 301 Notes to Mineral Reserves: 1. Mineral Reserves follow CIM (2014) definitions and are compliant with the JORC Code. Mineral Reserves are reported on a 100% ownership basis and estimated at the 2. following cut-off grades: • Amancaya: break-even cut-off grade of 3.04 g/t AuEq, and marginal cut-off grades of 2.37 g/t AuEq and 1.37 g/t AuEq for SLS stopes and drifts respectively. • Inesperada - pit discard cut-off grade of 0.40 g/t Au. • Heap Leach Pads - Marginal cut-off grades for Heap Reprocessing have been estimated as 0.20 g/t Au and 0.15 g/t Au for Heaps I and Heap II respectively, and at zero cut-off for Heaps III. 3. 4. Mineral Reserves are estimated using an average long term gold price of US$1,700/oz and silver price of US$22/oz. Amancaya AuEq was calculated as AuEq = Au + 0.0110 x Ag, based on prices of US$1,700/oz Au and US$22/oz Ag and recoveries of Au and Ag of 93% and 79%, respectively. 5. The following parameters were used for the Amancaya Mineral Reserve estimate: • A minimum mining width of 1.5 m was used for SLS stopes and 3.5 m for drifts. • Stope dilution: 0.5 m in the hanging wall and 0.5 m in the footwall (1.0 m total). • Drift dilution: 0.25 m in each of the side walls (0.5 m total). 6. Metallurgical recovery is 93% for gold and 79% for silver. 7. Bulk density is 2.5 t/m3. 8. The following parameters were used for the Inesperada Mineral Reserve estimate: • Dilution and mining recovery factors of 0% and 100% respectively were applied. • Metallurgical recovery is 80% for gold. • Bulk density is 2.44 t/m3. The following parameters were used for the Mineral Reserve estimate for the Guanaco Heaps: • Heap Leach Pad I: maximum of 5% dilution. The average dilution over the LOM is 9. 3.5%. Dilution grades are 0.18 g/t Au and 1.50 g/t Ag. • Heap Leach Pad II: maximum of 5% dilution. The average dilution over the LOM is 2.5%. Dilution grades are 0.13 g/t Au and 1.40 g/t Ag. • Heap Leach Pad III: All internal dilution within the heap limits was included. Notes to Mineral Resources: 1. Mineral Resources followed CIM (2014) definitions and are compliant with the JORC Code. 2. Mineral Resources are reported on a 100% ownership basis. 3. Mineral Resources are inclusive of Mineral Reserves. 4. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. 5. Mineral Resources are estimated at the following cut-off grades: • Amancaya and Guanaco underground Mineral Resources: 2.90 g/t AuEq and 1.50 g/t AuEq, respectively. • Inesperada open pit Mineral Resources: 0.38 g/t Au. • Heap Leach Pads Mineral Resources: zero cut-off grade – the entire volume is included. 6. Mineral Resources at Guanaco and Amancaya are estimated using a long-term gold price of US$1,750/oz and a silver price of US$22/oz. Mineral Resources at Inesperada and Heap Leach Pads are estimated using a long-term gold price of US$1,750/oz. 7. Gold equivalency (AuEq) was calculated as follows: • Guanaco: AuEq = Au + 0.0106 x Ag based on a gold and silver price of $1,750/ oz and $22/oz respectively and recoveries of gold and silver of 95% and 80%, respectively. • Guanaco: AuEq = Au + 0.0106 x Ag based on a gold and silver price of $1,750/ oz and $22/oz respectively and recoveries of gold and silver of 95% and 80%, respectively. • Amancaya: AuEq = Au + 0.0107 x Ag based on a gold and silver price of $1,750/oz and $22/oz respectively and recoveries of gold and silver of 93% and 79%, respectively. 8. 9. Metallurgical recoveries are 93% for gold and 79% for silver for Amancaya, 95% for gold and 80% for silver for Guanaco, 80% for gold for Inesperada, and 54%, 70%, and 46% for gold for Heaps I, II, and II, respectively. A minimum mining width of 1.5 m is used for resource underground shapes for the Amancaya and Guanaco mines. 10. Metallurgical recoveries for Heaps I, II, and II are 54%, 70%, and 46% for gold 10. Bulk densities are 2.5 t/m3 for Amancaya and Guanaco, 2.44 t/m3 for Inesperada, respectively. 11. Bulk density is 1.77 t/m3 for Heap I, 1.50 t/m3 for Heap II, and 1.70 t/m3 for Heap III. 12. Numbers may not add due to rounding. and 1.77 t/m3 for Heap I, 1.50 t/m3 for Heap II, and 1.70 t/m3 for Heap III, respectively. 11. Numbers may not add due to rounding. Austral Gold Limited 22 Annual Report 2023 NOTES TO THE MINERAL RESOURCES & ORE RESERVES STATEMENT Guanaco and Amancaya Mines The SLR Qualified Persons (QPs) for the Amancaya and Guanaco Reserve and Resource Estimates include: Stephan R. Blaho, MBA, P.Eng., SLR Principal Mining Engineer, Orlando Rojas, MAIG, SLR Associate Principal Geologist, Rodrigo Barra, MAIG, SLR Associ- ate Principal Geologist, Varun Bhundhoo, ing., SLR Project Mining Engineer, Andrew P. Hampton, M.Sc., P.Eng., SLR Principal Metal- lurgist, and Luis Vasquez, M.Sc., P.Eng, SLR Senior Environmental Consultant and Hydrotechnical Engineer. The Mineral Resources and Reserves are classified and reported in accordance with CIM (2014) definitions as incorporated in NI 43-101, as well as JORC 2012, within the Guanaco and Amancaya Gold Project, Region II, Chile, dated 25 March, 2022, with an effective date of 31 Decem- ber 2021. The Company confirms that the form and context in which the CP’s findings are presented have not been materially modified from the original market announcement, except for the depletion of mineral resources in 2022 and 2023. The Company ensures that the Ore Reserves and Mineral Resource Estimates are subject to appropri- ate levels of governance and internal controls. Governance of the Company’s Ore Reserves and Mineral Resources development and the estimation process is a key responsibility of the Executive Management of the Company. The Chief Executive Officer of the Company oversees the review and technical evaluations of the Ore Reserves and Mineral Resource estimates. Competent Persons Statements The information in the report to which this statement is attached that relates to the depletion of Mineral Resources is based upon information compiled by Constantino Mendiz, a Competent Person (CP 497) who is a registered member of the Comision Calificadora de Competencias en Recursos y Reservas Mineras. Constantino Mendiz is a consultant of the company and has sufficient experi- ence that is relevant to the type of deposit and the mining meth- ods of exploitation under consideration and to the activity being under- taken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Explora- tion Results, Mineral Resources and Ore Reserves’. Constantino Mendiz consents to the inclusion in the report of matters based on his information in the form and context in which it appears. The information in the report to which this statement is attached that relates to Ore Reserves is based upon information is based on work supervised, or compiled on behalf of Robert Trzebski, a Non-Executive Director of the Company. Dr. Trzebski, holds a degree in Geology, PhD in Geophysics and is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) who qualifies as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Robert Trzebski consents to the inclusion in the report of matters based on his information in the form and context in which it appears. Austral Gold Limited 23 Annual Report 2023 REVIEW OF ACTIVITIES Austral Gold Limited 24 Annual Report 2023 REVIEW OF RESULTS For the Year Ended 31 December 2023 The following report on the review of results for the year ended 31 December 2023 (“FY23”) and 2022 (“FY22”) together with the consoli- dated financial report of Austral Gold Limited (the Company) and its subsidiaries, (referred to hereafter as the Group) PRINCIPAL ACTIVITIES Achieved production of 24,879 gold equivalent ounces at the Group’s Guanaco/ Amancaya mine complex Completed construction and started production at the Heap Reprocessing project that is expected to provide production to 2033 (commenced Q4 2023) Reported final assay results from the 6,585 meter drilling campaign at Casposo-Manantiales, supporting the Company’s strategic objective to restart mining operations Actively pursued new discoveries with exploration activity undertaken at the Company’s high-quality land portfolio including over 4,000 meters of drilling at the Jaguelito Project in Argentina Completed the sale of SCRN Properties, owner of the Pinguino advanced exploration project to ASX listed Unico Silver Limited (“Unico”) for total consideration of approximately US$10 million Executed a definitive agreement with TSXV listed Colossus Resources to sell Austral’s Chilean Calvario and Mirador copper projects, to become their largest shareholder with a 19.9% interest Secured related party loans of approximately US$4.3 million in principal from the Company’s major shareholder and a Company under his control Mr. Eduardo Elsztain was appointed as the new non-Executive Chair of the Company after Mr. Wayne Hubert retired as a director at the Group’s 2023 AGM There were no other significant changes in our principal activities during the year. All resolutions were passed at the Company’s 30 May 2023 Annual General Meeting. Austral Gold Limited 25 Annual Report 2023 SAFETY AND ENVIRONMENTAL PROTECTION Safety and environmental protection are core values of the Company. The implementation of best practice safety standards along with a sound risk management program are key priorities for Austral Gold. SAFETY During the year ended 31 December 2023, there were six lost-time accidents (LTA’s) and 12 nil-lost-time accidents (NLTA) involving employees of Guanaco/Amancaya and third party contractors. COMMUNITY ACTIVITIES Austral Gold has an extensive history of being a committed neigh- bor to the communities in which it operates. Our support to the communities surrounding our projects in Chile focuses mainly on education programs as we believe that through education it is possible to improve citizens socio- economic conditions and contribute to the youth population and the overall community. ENVIRONMENTAL The environmental monitoring program implemented for the Guanaco Amancaya Operation includes meteorology, air qual- ity, water quality, flora and fauna, and archaeology. Air quality is monitored at two locations in Guanaco and one in Amancaya. Meteorological parameters are collected at one air quality station in Guanaco and the air quality station in Amancaya. There is also a meteorological station in Guanaco. independent from the air qual- ity monitoring system. Monitoring of flora and fauna is conducted in Punta del Viento, Las Mulas and Pastos Largos approximately 30 km east of Guanaco. The results of the environmental monitoring campaigns are regu- larly submitted electronically to the Environmental Superinten- dency (“SMA”) through the system set up in the SMA’s website to upload the information. In addition, the monitoring results are submitted to other government agencies such as the General Water Directorate. The Guanaco Amancaya Operation is in an arid area with infrequent surface runoff resulting from precipitation. There is no discharge of water to the environment from the Guanaco site. The process plant, the heap leach pads and the tailing storage facility (“TSF”) are operated as zero discharge facilities. The heap leach pads are operated as closed circuits. The freshwater supply to be used for industrial processes is required to offset evaporation losses. The water collected from the surface water and wells is conveyed to Guanaco by gravity through HDPE pipes. Currently the water supply for Guanaco is mostly groundwater pumped from two main wells. There are two additional small wells (for a total of four) that provide small volumes of water. The water collected from the wells is a small fraction of the total freshwater supply. Flow monitoring is conducted at three locations in the area where freshwater is taken from the natural ponds/creeks resulting from spring water, which encompasses three sectors: Punta del Viento, Las Mulas and Pastos Largos. Flow monitoring is also conducted at the groundwater supply wells. Water quality monitoring is conducted at five groundwater monitoring wells located down- stream of the heap leach pads and the tailing storage facility. There is no discharge of water to the environment from the Amancaya site. Freshwater is required only for road irrigation (dust suppres- sion) and domestic consumption. Currently the freshwater supply is obtained by pumping water from one groundwater well and conveying it by gravity through HDPE pipes. Flow monitoring is conducted at the water supply well. Water quality monitoring is conducted at four groundwater monitoring wells located down- stream of the Amancaya site. Water for domestic use is treated in potable treatment plants installed at both Guanaco and Amancaya. Sanitary wastewater is sent to sewage treatment plants and the treated effluent is used for road irrigation and operation of drilling equipment for exploration activities. The Casposo/Manantiales Mine Complex’s Environmental Impact Assessment (EIA) was submitted in 2007, reviewed by a multi- disciplinary commission, and approved in 2009. Casposo received the ISO 14001 certification for its Environmental Management Plan in 2012. Austral Gold Limited 26 Annual Report 2023 Austral Gold Limited 27 Annual Report 2023 REVIEW OF RESULTS OF OPERATIONS A summary of key operating results for FY23 and FY22 are set out in the following tables for comparative purposes. KEY OPERATIONAL INDICATORS Guanaco/Amancaya Operations Mined Ore (t) Processed (t) Plant Grade Underground (g/t Au) Plant Grade Heap (g/t Au) Plant Grade Underground (g/t Ag) Plant Grade Heap (g/t Ag) Gold recovery rate (%) Silver recovery rate (%) Gold produced (Oz) Silver produced (Oz) Gold-Equivalent produced (Oz) (1) C1 Cash Cost of Production (US$/AuEq Oz)(2) All-in Sustaining Cost (US$/Au Oz)(3) Realised gold price (US$/Au Oz) Realised silver price (US$/Ag Oz) Gold Equivalent sales volume Year ended 31 December 2023 239,356 343,835 2.79 1.47 8.83 3.74 92.76 76.32 24,012 72,620 24,879 1,645 2,004 1,942 23 24,578 2022 219,525 283,720 3.71 1.19 13.36 35.26 93.72 80.75 26,507 96,541 27,686 1,370 1,765(4) 1,798 22 27,648 (1) (AuEq) ratio is calculated at: 83.8:1 Ag:Au for FY23 and 81.9:1 Ag:Au for FY22 (2) The cash cost (C1) includes: Mine, Plant, On-Site G&A, Smelting, Refining, and Royalties (excludes Corporate G&A). It is the cost of production per gold equivalent ounce. (3) The All-in Sustaining Cost (AISC) includes: C1, Sustaining Capex, Brownfield Exploration, and Mine Closure Amortisation (4) Reported as US$1,735 in the 2022 annual report Austral Gold Limited 28 Annual Report 2023 Cash Costs of Production (C1) refer to the direct expenses incurred during the production of gold. These costs are typically reported on a per-ounce basis while All in Sustaining costs (AISC) provides a comprehensive view of the total costs included with gold production and includes cash costs plus sustaining costs to maintain ongoing mining operations. Cash Costs of Production (C1) and All-in Sustaining Cost (AISC) Expressed in US$ per GEO Year ended 31 December 2023 2022 Mining Plant Geology, engineering, and laboratory Onsite general and administration Smelting and refining Royalties and taxes Inventory movement Other Cash Cost (C1) Reclamation & Remediation amortisation Sustaining capital expenditure Other administration costs Financial leases All in Sustaining costs (AISC) (1) Reported as US$1,735 in the Group’s 2022 annual report 700 557 123 240 27 48 (52) 2 571 414 105 209 19 39 11 2 1,645 1,370 1 218 56 84 4 234 41 116 2,004 1,765(1) Austral Gold Limited 29 Annual Report 2023 KEY FINANCIAL RESULTS Thousands of US$ Revenue Gross profit Gross profit % Adjusted gross profit (excluding depreciation and amortisation) Adjusted gross profit % (excluding depreciation and amortisation) Adjusted earnings Adjusted earnings per share (basic and fully diluted) Loss before income tax Loss attributed to shareholders Loss attributed to non-controlling interests Loss per share (Basic) Loss earnings per share (diluted) Comprehensive loss Year ended 31 December 2023 47,729 546 1.1% 6,557 13.7% 4,192 0.007c (7,951) (7,229) (14) (1.18)c (1.18)c (7,242) 2022 49,710 2,566 5.2% 10,237 20.6% 2,807 0.005c (9,581) (8,257) (9) (1.35)c (1.35)c (8,283) Note: Adjusted earnings and basic adjusted earnings per share are non-IFRS measures that the Company considers to better reflect normalized earnings as it eliminates items that in management’s judgment are subject to volatility as a result of factors which are unrelated to operations in the period, and readers are cautioned that Adjusted earnings may not be comparable to similar measures presented by other companies. Further, readers are cautioned that Adjusted Earnings should not replace profit or loss or cash flows from operating, investing and financing activities (as determined in accordance with IFRS), as an indicator of the Company’s performance. ADJUSTED EARNINGS Thousands of US$ Loss before tax Depreciation and amortisation(1) Other (income)(2) Gain on sale of subsidiary Gain on sale of financial assets and revaluation of Ensign securities Equipment rental Other(3) Other expenses(4) Impairment loss exploration and evaluation assets Care and maintenance Loss on fair value of financial assets Rawhide financial option and due diligence expenses Other Finance income(5) Interest income Other Finance costs(6) Interest expense Present value adjustment to mine closure provision Present value adjustment to GST/VAT receivable Share of loss of associates Adjusted Earnings (1) Includes US$37 thousand (2022: US$107 thousand) of depreciation and amortisation included in Other expenses (note 8) (2) Note 7 to the financial statements (3) Reconciles with note 7 to the financial statements (4) Note 8 to the financial statements (5) Note 10 to the financial statements (6) Note 11 to the financial statements (7) Reported as US$2,204 in the 2022 annual report Year ended 31 December 2023 (7,951) 6,048 (1,964) (1,033) (222) (634) 3,981 2,415 992 617 519 (140) (174) 1,395 138 145 60 4,192 2022 (9,581) 7,778 - - (298) (1,395) 926 2,068 968 - 589 (4) - 660 420 - 676 2,807(7) Austral Gold Limited 30 Annual Report 2023 Thousands of US$ Cash & cash equivalents Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net current liabilities Current loans and borrowings Non-current loans and borrowings Current lease liabilities Non-current lease liabilities Combined debt (borrowings and financial leases) Combined net debt (net of cash & cash equivalents) Current ratio (1) Total liabilities to net assets (1) Current Assets divided by Current Liabilities Year ended 31 December 2023 1,039 17,135 87,149 40,820 21,891 41,573 (23,685) 13,540 2,568 1,169 1,143 18,420 17,381 0.42 1.51 2022 926 22,305 75,012 29,820 18,682 48,815 (7,515) 7,382 1,264 1,925 911 11,482 10,556 0.75 0.99 OPERATING AND FINANCIAL RESULTS OF THE GROUP During FY23, the Group realised a loss before and after income tax of US$7,951 thousand (FY22: $9,581 thousand) and US$7,243 thousand (FY22:US$8,266 thousand), respectively. Revenues at existing operations totaled US$47,729 thousand (FY22: $49,710 thousand) with gross profit (including depreciation and amor- tization) of US$546 thousand (1.1% margin) in FY23 compared to US$2,566 thousand (5.2% margin) in FY22. Gross profit margin (excluding depreciation and amortization) was 13.7% in FY23 compared to 20.6% in FY22. The decrease in gross profit during FY23 from FY22 was mainly driven by (i) a decrease in sales of gold equivalent ounces (GEOs) (24,578 GEOs vs 27,648 GEOs in FY22), and (ii) an increase in the cost of production, partially offset by an increase in the average sales price realised and lower depreciation and amortisation. The Group’s results during FY23 were also impacted by the following: i. Decrease in FY23 administration costs by US$2,259 thousand to US$6,145 thousand (FY22:US$8,404 thousand) mainly due to decreases in staff costs, consulting and professional fees and business, property and other taxes. ii. Increase in other income by US$2,160 thousand to US$3,853 thousand (FY22: US$1,693 thousand) primarily driven by a US$1,964 thousand gain resulting from the sale of SCRN Properties Ltd., whose major asset was the Pinguino project. The sale was made to ASX listed Unico Silver Limited (“Unico”). Additionally, there was a US$1,012 thousand gain due to the revaluation of Ensign securities. In FY23, the Group accounted for the investment as a financial asset instead of an equity investment, reflecting a change in circumstances during the year. iii. Increase in other expenses by US$3,917 thousand to US$8,889 thousand (FY22: US$4,972 thousand) mainly due to the following: a. A non-cash US$3,981 thousand impairment on exploration and evaluation assets (2022: US$926 thousand), primarily due to the impairment of the Morros Blancos project from the option agreement with CSE listed Pampa Metals Corporation and the implementation of a rationalisation plan to reduce non-core exploration areas in Chile. b. Rawhide option agreement and due diligence expenses of US$617 thousand. The takeover option were not exercised. c. Other costs of US$397 thousand as the Group decided to terminate the agreement with the Amancaya UG contractor effective 31 January 2024. iv. Increase in finance income by US$2,288 thousand to US$4,422 thousand (FY22: US$2,134 thousand) primarily due to a US$1,978 thousand increase in foreign exchange gains to US$4,108 thousand (FY22: US$2,130 thousand) on the increase in the value of the US dollar versus the Argentine and Chilean currencies during FY23. v. Decrease in finance costs by US$244 thousand to US$1,678 thousand (FY22: US$1,922 thousand) was primarily due to a loss from foreign exchange of US$842 thousand incurred in FY22. This loss was partially offset by a US$764 thousand increase in interest expense to US$1,216 thousand. The interest expense rose due to an increase in the average interest rate from 6.9% to 9.6% on higher borrowings in FY23. The cost of production (“C1”) per GEO increased to US$1,645 for the year ended December 2023 from US$1,370 for the year ended December 2022 while the all-in sustaining cost (“AISC”) per GEO increased to US$2,004 for the year ended December 2023 from US$1,765 for the year ended December 2022. The increase in the cost of production were mainly due to lower average grades, higher tonnes processed, and an increase in the cost of supplies due to inflation. Austral Gold Limited 31 Annual Report 2023 HEAP REPROCESSING PROJECT During the year, the Company started and completed construction of the Heap Reprocessing Project (“Project” or “Heaps”). Produc- tion began gradually during Q4 2023, contributing a total of 485 gold ounces and 923 silver ounces (or 496 GEOs). Production from the Project was less than budgeted due to operational issues primarily caused by (i) structural damage in the multi-slope screen (a.k.a. banana screen), (ii) implementation delays in Heap 4’s irrigation systems, (iii) electrical devices failures at the crushing circuit, and (iv) reduced kinetic results and prolonged initial recovery rates. FINANCIAL POSITION The Group held cash and cash equivalents of US$1,039 thousand at 31 December 2023 (2022: US$926 thousand) or US$2,581 thousand (2022: US$2,593 thousand) when combined with the fair value of 742 unsold and unrefined gold equivalent ounces in inventory of US$1,542 thousand (2022: 918 unrefined gold equivalent ounces with a fair value of US$1,667 thousand). Cash and cash equivalents at 31 December 2023 is net of a US$222 thousand bank overdraft and includes US$591 thousand of cash advanced from a private placement of convertible notes which closed the first tranche on 15 February 2024. The second tranche of US$409 thousand, which had a deadline of 15 March 2024 was not completed. Trade and other receivables (current and non-current) increased by US$157 thousand to US$3,483 thousand at 31 December 2023 (31 December 2022:US$3,326 thousand). The increase was mainly due to the discounted value of two remaining installments totaling US$1,631 thousand (undiscounted US$1,750 thousand) due from Unico over the next two years on the sale of SCRN Properties Ltd. on 1 March 2023. Additionally, GST/VAT receivable decreased mainly due to the impact of the decrease in the value of the Argentinean peso on GST/ VAT receivable in the country. Inventories increased by US$753 thousand to US$9,699 thousand at 31 December 2023 (31 December 2022: US$8,946 thousand) mainly due to an increase in ore stockpiles by year end from both Guanaco and Amancaya mines. Other financial assets (current and non-current) increased by US$5,444 thousand to US$6,085 thousand at 31 at December 2023 (31 Decem- ber 2022:US$641 thousand) mainly due to Unico shares and options acquired by the Group from the sale of SCRN Properties Ltd. Half of these shares were released from escrow on 1 March 2024 and the remainder are to be released from escrow on 1 March 2025. Addition- ally, an increase of US$1,012 thousand relates to the remeasuring of the Group’s investment in Ensign at fair value as disclosed in note 18 to the financial statements. Property, plant and equipment increased by US$7,359 thousand to US$49,616 thousand at 31 December 2023 (31 December 2022: US$42,257 thousand) primarily due to sustaining capital expenditures and construction activities at the new Heap Reprocessing Project. Prepaid income taxes (current and non-current) decreased by US$1,343 thousand to US$209 thousand (31 December 2022: US$1,552 thousand) mainly due to the refund of US$994 thousand in Chilean taxes during the year. Current trade and other payables increased by US$7,431 thousand to US$23,121 thousand at 31 December 2023 (31 December 2022: US$15,690 thousand). The main reasons for the increase were the lower than forecasted production, mainly due to a delay in ramp- ing up production at the Heap Reprocessing Project. Non-current trade and other payables were US$3 thousand at 31 December 2023 (31 December 2022: US$1,013 thousand). At 31 December 2023, the Group had net current liabilities of US$23,685 thousand (31 December 2022: US$7,515 thou- sand). The increase from 31 December 2022 was mainly due to a decrease in gross profit on sales that led to lower cash genera- tion and an increase in trade and other payables and short-term borrowings. The Group expects its net current liability position to improve in FY24 mainly due to an increase in production at higher margins as most of the production is forecasted from the Heaps. Combined net financial debt (borrowings and lease liabilities net of cash & cash equivalents) increased by US$6,825 thousand to US$17,381 thousand at 31 December 2023 (31 December 2022: US$10,556 thousand). Financial debt totaled US$18,420 thousand at 31 December 2023, of which US$14,709 thousand (representing 80% of total financial debt) was categorised as short-term. The short-term financial debt includes related party loans, renewable pre-export facilities, lease liabilities and the short-term portion, of two 3-year bank loans. During January and February 2024, the Group renewed US$2,500 thousand in pre-export facilities. Net assets decreased by US$7,242 thousand from 31 December 2022 to US$41,573 thousand at 31 December 2023 (31 December 2022: US$48,815 thousand) following the net loss of the year. CASH FLOW Net cash provided from operating activities before and after changes in working capital were US$2,475 thousand and US$7,927 thousand during FY23 (FY22:US$2,571 thousand and US$10,953 thousand). The decrease was primarily due to lower gross profit margins, partially offset by working capital changes in FY23 as explained above. Net cash used in investing activities totaled US$12,425 thousand during FY23 (FY22:US$11,595 thousand) mainly due to the following: • Investments of US$11,283 thousand in FY23 were primarily used for additions to plant, property and equipment includ- ing US$5,633 thousand on the Heap Reprocessing Project (FY22:US$6,434 thousand); • Exploration and evaluation activities of US$4,614 thousand (FY22:US$5,790 thousand) of which US$2,943 thousand was incurred on the Jaguelito project and US$917 thousand was incurred at the Casposo-Manantiales district. • Partially offset by US$3,250 thousand received from Unico through the sale of SCRN Properties Ltd. which constitutes the first two cash installments from a total of US$5,000 thousand, in addition to the shares and warrants received as disclosed above. Net cash of US$4,611 thousand received from financing activities during FY23 compared to US$778 thousand used in financing activities in FY22 primarily due to the following: • Net cash of US$4,020 thousand received from the net receipt of, loans, borrowings, interest and financial leases including US$4,550 thousand of loans from related parties (FY22: net repayments of US$778 thousand);US$591 thousand received from the US$1 million convertible note financing announced on 10 October 2023. As the financing has not closed as of 31 December 2023, US$591 thousand was recorded as a current liability. The financing was partially closed as explained above. Austral Gold Limited 32 Annual Report 2023 LIQUIDITY Guidance 2024 revised production guidance indi- cates that 26,000-28,000 GEOs is fore- cast to be sourced primarily from the Heap Reprocessing Project (“Heaps”). Addition- ally, Q1 2024 production is forcast to be between 4,500 and 5,000 GEOs, with higher production in each successive quar- ter. The Group plans to continue integrating the agitation leaching and heap leaching processes and utilise material from the Heaps and the remaining ore and stocks from the Amancaya and Guanaco mines. 2024 Cash costs are estimated to be between US$1,250-US$2,101 per GEO with all in sustaining costs (AISC) in the range US$1,300-US$2,283 and an annual average of US$1,533 per GEO. Access to capital The Group has a strong shareholder group and solid banking relationships that demonstrated their financial support in 2023. The Group expects both groups to continue providing financial support. Austral Gold Limited 33 Annual Report 2023 DIRECTORS’ REPORT Austral Gold Limited 34 Annual Report 2023 The Company’s Board believes that a highly credentialed Board, with diverse backgrounds, skills and perspectives, will be effective in supporting and enabling delivery of strong gover- nance for the Company and creating value for the Company’s shareholders. The Board brings a broad mix of experience and skills to the Company including in the areas of corporate governance, legal, geological expertise and financial management. Austral Gold Limited 35 Annual Report 2023 THE DIRECTORS EDUARDO ELSZTAIN Chairman Mr. Eduardo Elsztain is chairman of IRSA Inversiones y Representaciones S.A. (NYSE:IRS), one of Argentina’s larg- est and most diversified real estate companies, with shop- ping centers, premium office buildings, five-star hotels and residential developments. He also serves as Chairman of Cresud (NASDAQ:CRESY, BASE: CRES) and BrasilAgro (NYSE:LND), leading Latin American agricultural companies that own directly and indirectly almost 1M HA of farmland. Mr. Elsztain is Chairman of Banco Hipotecario S.A. (BASE:BHIP); and of BACS, Argentinean leading bank specialized in providing innovative financial solutions to local companies. He is also member of the World Economic Forum, the Council of the Americas, the Group of 50 and Argentina’s Business Association (AEA). He is President of Fundacion IRSA, which promotes education among children and young people; President of TAGLIT — Birthright Argentina; Co-Founder of Endeavor Argentina; and Vice- President of the World Jewish Congress. Mr. Elsztain has not held any other Directorships with Austra- lian or Canadian listed companies in the last three years. Director since 29 June 2007 Appointed Chair 2011 until August 2020 when he became Vice Chair. Re-appointed Chair 30 May 2023 Austral Gold Limited 36 Annual Report 2023 STABRO KASANEVA Executive Director, Chief Executive Officer SAUL ZANG Non-Executive Director Mr. Zang obtained a law degree from Universidad de Buenos Aires. He is a founding member of the law firm Zang, Bergel & Viñes. Mr. Zang is an adviser and Member of the Board of Direc- tors of the Buenos Aires Stock Exchange and provides legal advice to national and international companies. Mr. Zang currently holds: i. Vice-Chairmanships on the Boards of IRSA (NYSE: IRS, BASE: IRSA), and Cresud (NASDAQ: CRESY, BASE: CRES) ii. Directorships with Banco Hipotecario (BASE: BHIP), Brasil Agro (NYSE: LND, BVMF:AGRO3), among others. Mr. Zang has not held any other Directorships with Australian or Canadian listed companies in the last three years. Director since 7 Jun 2007 Mr. Kasaneva is a Geologist with a degree from the Universidad Católica del Norte, Chile and has over 30 years of experience in production geology, exploration and management of precious metal mining operations. Since Mr. Kasaneva joined Austral Gold in 2009, he has been instrumental in transforming the Company by consolidating the operations of the Guanaco Mine in Chile, restarting opera- tions at the Casposo Mine in Argentina as well as identifying a number of opportunities that represent the growth potential for Austral Gold. Throughout his career as a geologist, he worked on exploration and production gaining vast experience in grade control, QA/ QC, modeling and geological resources estimation. Mr. Kasaneva led Business Development Departments for several years evaluating a number of mining business oppor- tunities in South America, Central America and North America. He has held the roles of General Manager of Mining Operations, Vice-President of Operations and COO. Mr. Kasaneva is a Director of Ensign Minerals Inc. (private company). Mr. Kasaneva has not held any Directorships with Australian or Canadian listed companies in the last three years. Director since 7 Oct 2009 Appointed COO until appointment as Chief Executive Officer August 2016 Austral Gold Limited 37 Annual Report 2023 THE DIRECTORS BEN JARVIS Non-Executive Director, Member of the Audit Committee PABLO VERGARA DEL CARRIL Non-Executive Director, Member of the Audit Committee Mr. Jarvis is the Managing Director of Six Degrees Investor Relations, an Australian advisory firm that provides investor relations services to a broad range of companies listed on the Australian Securities Exchange. Mr. Jarvis was educated at the University of Adelaide where he majored in Politics. Mr. Jarvis is a non-executive director of Aguia Resources Limited (ASX:AGR) and Freehill Mining Limited (ASX:FHS) and he was a non-executive director of QX Resources Limited (ASX:QXR) until his resignation effective 27 October 2023. Mr. Jarvis has not held any other Directorships with Australian or Canadian listed companies in the last three years. Director since 2 Jun 2011 Mr. Vergara del Carril is a lawyer and is professor of Post- graduate Degrees for Capital Markets, Corporate Law and Business Law at the Argentine Catholic University. He is a member of the International Bar Association, the American Bar Association and the AMCHAM, among other legal and business organisations. He is a founding Board member of the Australian- Argentinean Chamber of Commerce. He is a Board member of the Argentine Chamber of Corporations and also an officer of its Legal Committee. He is recognised as a leading lawyer in Corporate, Real Estate, M&A, Banking & Finance and Real Estate Law by international publications such as Chamber & Partners, Legal 500, International Financial Law Review, Latin Lawyer and Best Lawyer. He is a Director of Banco Hipotecario SA. (BASE: BHIP), Nuevas Fronteras (owner of the Intercontinental Hotel in Buenos Aires), and Emprendimiento Recoleta SA (owner of the Buenos Aires Design Shopping Centre), among other companies. Mr. Vergara del Carril is also a Director of Guanaco Mining Company Limited and Guanaco Capital Holding Corp. Mr. Vergara del Carril has not held any other Directorships with Australian or Canadian listed companies in the last three years. Director since 18 May 2006 Austral Gold Limited 38 Annual Report 2023 ROBERT TRZEBSKI Non-Executive Director, Chairman of the Audit Committee Dr. Trzebski holds a degree in Geology, PhD in Geophys- ics, Masters in Project Management and has over 30 years of professional experience in mineral exploration, project management and mining services. He is currently the Director International Business of Aust- mine Ltd. As a fellow of the Australian Institute of Mining and Metallurgy, Dr. Trzebski also acts as the Competent Person (CP) for the Company’s announcements. Dr. Trzebski is a non-executive director of Lake Resources NL (ASX: LKE; OTC: LLKKF). Dr. Trzebski has not held any other Directorships with Austra- lian or Canadian listed companies in the last three years. Director since 10 Apr 2007 Austral Gold Limited 39 Annual Report 2023 SENIOR MANAGEMENT RODRIGO RAMIREZ Vice President of Operations JOSÉ BORDOGNA Chief Financial Officer CHELSEA SHERIDAN Automic Group, Company Secretary Mr. Ramirez holds a Mining Engineering degree from the University of Chile. He has been involved with the Company since it was founded, to recommission the Guanaco mine in 2010. Mr. Ramirez has led mining and engineering activi- ties since then, as well as all reviews and analysis of the Company’s growth activities. Mr. Ramirez led the design and construction of the Company’s agita- tion leach plant at Guanaco and assumed the role of VP of Operations in 2018. Prior to joining Austral, Mr. Ramirez held senior operational, planning and execution roles at Antofagasta PLC and at Meridian Gold’s world class El Peñon mine acquired by Yamana Gold. Chief Operating Officer since June 2018 and Vice President of Technical Services from 7 August 2017 to June 2018 Mr. Bordogna joined Austral Gold in 2013 as Controller and was promoted to CFO in 2016. Since then, he has overseen all corporate finance and accounting activi- ties, including equity and direct investments in mining related assets, listing the company on the TSX-V, amongst others. Mr. Bordogna is a Certified Public Accountant and holds a Global Executive MBA (IE Business School) and a Master of International Business (The University of Sydney). He is also CFA Candidate Level 3. Prior to joining Austral Gold, he worked for the International Finance Corporation (IFC) and Deloitte in Latin America. He has over 15 years’ experience in corporate finance, M&A, investment banking and accounting roles. Mr. Bordogna is a non-executive director of Unico Silver Limited (ASX: USL) Chief Financial Officer from August 2016 until his resignation on 28 February 2022 and his reappointment effective 1 May 2022 Ms. Chelsea Sheridan is a named Company Secretary at Automic who manages a portfolio of ASX listed companies, across a wide range of indus- tries. Chelsea has a diploma in Business Administration, and an affiliate of the Governance Institute of Australia (GIA). Corporate secretary since 31 August 2022 Austral Gold Limited 40 Annual Report 2023 DIRECTORS’ MEETINGS The number of Directors’ meetings (including meetings of Commit- tees of Directors) and number of meetings attended by each of the Directors of the Company during the financial year were Directors’ meetings Audit Committee meetings Director Pablo Vergara del Carril Robert Trzebski Wayne Hubert Eduardo Elsztain Saul Zang Stabro Kasaneva Ben Jarvis A 3 3 2 3 3 3 3 B 3 3 2 3 3 3 3 A 3 3 N/A N/A N/A N/A 3 B 3 3 N/A N/A N/A N/A 3 A: Number of meetings attended B: Number of meetings held during the time the Director held office during the financial year INDEMNITY AND INSURANCE OF AUDITOR • The Company has not, during or since the end of the finan- cial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. • During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. REMUNERATION REPORT (AUDITED) Remuneration Policy The full Board of Austral Gold is responsible for determining remu- neration policies in respect of executives and Key Management Personnel (KMP). The Company has a Remuneration Policy that aims to ensure the remuneration packages of Directors and senior executives properly reflect the person’s duties, responsibilities and level of performance, as well as ensuring that remuneration is competitive in attracting, retaining and motivating people of the highest quality. The level of remuneration is based on market rates and is not directly linked to the market value of the shares of Austral Gold. SHARES AND OPTIONS At the date of this report there are no options over the Company’s ordinary shares. At the most recent Annual General Meeting of the Company held on 30 May 2023, 83.93% of votes cast at the meeting were in favour of the adoption of the Remuneration Report. During or since the end of the financial year, the Company has not granted options over its ordinary shares. INDEMNITY AND INSURANCE OF OFFICERS Under a deed of access, indemnity and insurance, the Company indemnifies each person who is a Director, secretary or officer of Austral Gold Limited against: • any liability (other than for legal costs) incurred by a Director, secretary or officer in his or her capacity as an officer of the Company or of a subsidiary of the Company; and • reasonable legal costs incurred in defending an action for a liability incurred or allegedly incurred by a secretary in his or her capacity as an officer of the Company or of a subsidiary of the Company. The above indemnities: • apply only to the extent the Company is permitted by law to indemnify a Director, officer or secretary; • are subject to the Company’s constitution and the prohibitions in section 199A of the Corporations Act; and • apply only to the extent and for the amount that a Director, secretary or officer is not otherwise entitled to be indemnified and is not actually indemnified by another person (including a related body corporate or an insurer). Remuneration information for KMP is reported in US Dollars (US$). All contractual arrangements for non-executive Directors and the Chairman are denominated in US Dollars. The contractual arrangements for the Senior Executive KMP, are denominated in the local currency of the jurisdiction in which the Senior Executive KMP are employed. The level of remuneration for non-executive Directors is consid- ered with regard to the practices of other public companies and the aggregate amount of fees paid to non-executive Directors approved by shareholders. The executive directors do not receive fees for being a director. Total compensation for all non-executive directors, last voted on by shareholders at the 2020 AGM, is not to exceed US$400,000 per annum. The director fee for the Chair is US$100,000 per annum. Director fees for other non-executive directors are US$50,000 per annum. Non-executive directors do not receive performance-related compensation and are not provided with retirement benefits except for statutory superannuation for Australian KMP, including directors. Total KMP remuneration was US$1,616,011 in FY23 (US$2,444,080 in FY22). Senior Executives KMP have not received any cash bonus performance payments which they are entitled to for FY23 and FY22, except for the VP of Exploration who resigned in 2022 effective 31 January 2023. These bonus payments will not be made until after the CEO and Board have seen an improvement in the Company’s financial situation. Austral Gold Limited 41 Annual Report 2023 The Key Management Personnel (KMP) during or since the end of the financial year were: The Directors of the Group: • Eduardo Elsztain Non-Executive Chair • Wayne Hubert Executive Chair (retired effective 30 May 2023) • Saul Zang Non-Executive Director • Pablo Vergara de Carril Non-Executive Director • Robert Trzebski Non-Executive Director • Ben Jarvis Non-Executive Director • Stabro Kasaneva Chief Executive Officer and Director Other Executive KMP of the Group: • Rodrigo Ramirez Vice President of Operations • José Bordogna Chief Financial Officer • Raul Guerra Vice-President of Exploration (resigned effective 31 January 2023) Remuneration of KMP The Group has employment agreements with all executive KMP in accordance with the laws in the jurisdiction in which the KMP is employed. Remuneration of executive KMP is made up of a fixed component and a variable (‘at risk’) component. Performance is assessed by the Board of Directors and CEO accordingly against financial and non-financial indicators including production, safety, cost of production, sustaining capital investments, new business and value accretive investments amongst others. The award of the variable component is fully discretionary as detailed in the `Contractual Arrangement with Senior Executive KMP in the “31 December 2023” table. Link Between Remuneration and Performance The Group aims to align its executive remuneration to its strategic and business objectives and the creation of shareholder value. The table below shows the measures of the Group’s financial performance over the last 5 financial years as required by the Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to each KMP. Consequently, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded. 12 months ended 31 December 2019 12 months ended 30 June 2020 12 months ended 31 December 2021 12 months ended 31 December 2022 12 months ended 31 December 2023 Sales Revenue (US$’000) Profit/(loss) before tax (US$’000) Basic EPS (US cents per share) Diluted EPS (US cents per share) Share price (cents AUD/CDN) Dividend (AUD per share) 102,209 9,508 0.97 0.93 88,223 14,335 1.36 1.34 64,390 49,710 47,729 (4,686) (9,581) (7,951) (1.20) (1.35) (1.18) (1.20) (1.35) (1.18) 9.0/8.5 21.0/22.0 8.5/8.0 3.9/3.5 2.9/3.0 – 0.009 0.008 - - Details of Remuneration Details of the nature and amount of each major element of the remuneration of each Director of the Group and each of the Senior Executive KMP of the Group during the financial year were: Austral Gold Limited 42 Annual Report 2023 Twelve month period ended 31 December 2023 Primary Post-employment Share-based Total Cash and accrued Salary and Fees US$ Accrued Cash Bonus US$1 Non- monetary benefits US$4 Super- annuation US$ Retirement/ Termination benefits US$ Equity settled Shares US$ Options US$ US$ Directors Non-executive directors - - 4,298 - - - - 4,853 4,853 - 4,298 9,706 Executive Director - - - - - - - - - - - - - 71,762 E Elsztain 100,000 S Zang R Trzebski B Jarvis 50,000 45,147 45,147 P Vergara del Carril 50,000 Total non- executive director remuneration 290,294 W Hubert - - - - - - - - S Kasaneva 387,500 93,001 7,656 Total Director remuneration 677,794 93,001 11,954 9,706 Other Key Executives R. Ramirez 311,281 75,197 3,889 R. Guerra3 34,002 11,859 623 - - J. Bordogna 220,971 57,784 18,512 17,676 - Total other executive remuneration Total director and executive officer remuneration 566,254 144,840 23,024 17,676 71,762 1,244,048 237,841 34,978 27,382 71,762 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,000 50,000 54,298 50,000 50,000 304,298 - 488,157 792,455 390,367 118,246 314,943 823,556 1,616,011 1 The 2023 accrued cash bonuses were paid only to the VP of Exploration as part of his resignation agreement. No accrued cash bonus was paid to the other Senior Executive KMP as of the date of this report. 2 All salaries are paid in local currency and converted to USD by average FX — only for the purpose of preparing this table. 3 Mr. Guerra resigned effective 31 January 2023. Per his settlement agreement, Mr. Guerra received his 2022 bonus, a 2023 bonus of US$11,859, an exit bonus of US$71,762 and US$10,081 of vacation owed. The amount was paid in six equal monthly installments in Chilean pesos commencing February 2023 and ending July 2023. 4 Non-monetary benefits include annual leave, health and benefit premiums, professional membership dues and parking. Austral Gold Limited 43 Annual Report 2023 Twelve-month period ended 31 December 2022 Primary Post-employment Share-based Total Cash and accrued Salary and Fees US$ Accrued Cash Bonus US$1 Non- monetary benefits US$ Superannuation US$ Retirement/ Termination benefits US$ Equity settled Shares US$ Options US$ US$ E Elsztain 100,000 S Zang R Trzebski B Jarvis 50,000 45,347 45,347 P Vergara del Carril 50,000 Total non- executive director remuneration 290,694 W Hubert 144,000 - - - - - - - Directors Non-executive directors 293 293 4,352 - - - - 4,653 4,653 - 4,938 9,306 Executive Director - - - S Kasaneva 337,750 352,236 26,911 Total Director remuneration 772,444 352,236 31,849 9,306 Other Key Executives R. Ramirez 273,503 284,350 8,104 R Guerra3 245,038 127,005 14,884 - - J Bordogna4 181,159 130,080 1,945 12,177 Total other executive remuneration Total director and executive officer remuneration 699,700 541,435 24,933 12,177 1,472,144 893,671 56,782 21,483 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 100,293 50,293 54,352 50,000 50,000 304,938 144,000 716,897 1,165,835 565,957 386,927 - 325,361 1,278,245 - 2,444,080 1 The 2022 accrued cash bonus was only paid to the VP of Exploration as part of his resignation agreement in 2023. No accrued cash bonus was paid to the rest of the Senior Executive KMP as of the date of this report. 2 All salaries are paid in local currency and converted to USD by average FX — only for the purpose of preparing this table. 3 Mr. Guerra resigned effective 31 January 2023. Per his settlement agreement, Mr. Guerra is to receive his 2022 bonus, a 2023 bonus of US$11,859, an exit bonus of US$71,762 and US$10,081 of vacation owed. The amount is to be paid in six equal monthly installments in Chilean pesos commencing February 2023 and ending July 2023 net of assets purchased of US3,108. 4 Mr. Bordogna resigned effective 28 February 2022 and was re-hired effective 1 May 2022. During the period between Mr. Bordogna’s resignation and his employment contract, Mr. Bordogna received US$8,000 in consulting fees which are included in the above remuneration. Austral Gold Limited 44 Annual Report 2023 Contractual Arrangement with Executive KMP during 2023 The table below represents the target remuneration mix for group executives in the current year. The variable remuneration is provided at target levels. Name Term of Agreement and notice period Notice Period by Either Party Base salary Bonus performance Bonus performance conditions Termination payments Stabro Kasaneva Chief Executive Officer Rodrigo Ramirez VP of Operations Jose Bordogna Chief Financial Officer Wayne Hubert Executive Chair Open 1 month Base salary is paid in Chilean pesos with no FX adjustment clause 0% to 100% of salary Open 1 month Base salary is paid in Chilean pesos with no FX adjustment clause 0% to 100% of salary Open 1 month Base salary is paid in Australian dollars with no FX adjustment clause 0% to 100% of salary At the discretion of the Board based on Group results and individual performance At the discretion of the Chief Executive Officer based on Group results and individual performance At the discretion of the Chief Executive Officer based on Group results and individual performance One month salary per year of employment One month salary per year of employment One month salary per year of employment Open Not defined Consulting fees of US$12,000 per month* None N/A None • Upon his retirement on 30 May 2023, Mr. Hubert advised that he would not take any fees for 2023. Relative Proportion of Fixed vs Variable Remuneration Expense The following table shows the relative proportions of executive remuneration that are linked to performance and those that are fixed, based on the amounts disclosed as statutory remuneration expense in the tables above. Name Stabro Kasaneva Rodrigo Ramirez Raul Guerra Jose Bordogna Fixed remuneration At risk — short-term incentive At risk — long-term incentive December 2023 December 2022 December 2023 December 2022 December 2023 December 2022 81% 81% 29% 82% Executive Directors 19% Executive Officers 19% 71% 18% 47% 48% 63% 54% 53% 52% 37% 46% 0% 0% N/A 0% 0% 0% 0% 0% Equity Holdings The movement during the financial year in the number of ordinary shares in the Company held, directly, indirectly or beneficially by each key management person, including their related parties, is as follows: Balance at 1 January 2023 Granted as remuneration Market purchases Wayne Hubert Eduardo Elsztain Saul Zang Pablo Vergara Robert Trzebski Ben Jarvis Stabro Kasaneva Raul Guerra Rodrigo Ramirez Jose Bordogna Total 2,545,500 461,294,560 1,640,763 68,119 - 250,000 7,881,230 801,000 279,514 126,495 474,887,181 - - - - - - - - - - - Number of ordinary shares at time of retirement/ resignation 2,545,500 801,000 - - Balance at 31 December 2023 N/A 461,294,560 1,640,763 68,119 - 600,000 7,881,230 N/A 279,514 126,495 - - - - - 350,000 - - - - 350,000 3,346,500 471,890,681 Austral Gold Limited 45 Annual Report 2023 Other transactions with KMP Chief Executive Officer Stabro Kasaneva is related to Ensign as he is a board member of Ensign. Mr. Kasaneva holds nil shares of Ensign and 150,000 stock options. • Increase profitability margins to strengthen the Company’s cash flow generation and reduction of debt, and • Conduct the required activities to restart a profitable mining operation at the Casposo-Manantiales mine complex Zang, Bergel & Viñes Abogados is a related party since one non- executive Director, Pablo Vergara del Carril has significant influ- ence over this law firm based in Buenos Aires, Argentina. Fees charged and expenses to reimbursement to the Group for the year ended 31 December 2023 amounted to US$80,922 (2022: US$79,219). IRSA Inversiones y Representaciones S.A. and Consultores Asset Management S.A. are related parties as they are controlled by Non- executive Director and Chair, Eduardo Elsztain. During the year ended 31 December 2023 a total of US$61,975 was charged to the Company (2022: US$72,303) in regard to IT services support, HR services, software licenses, building/office expenses and other fees. As disclosed in note 28 to the financial statements, during 2023, Inversiones Financieras Del Sur SA, the Company’s major share- holder controlled by Board Chair Eduardo Elsztain, provided loans totaling US$2,555,000, Eduardo Elsztain provided loans totaling US$1,700,000 and director Saul Zang provided loans totaling US$300,000. This concludes the remuneration report, which has been audited. Principal activities The principal activities of the Group during FY23 were: • Production of 24,879 gold equivalent ounces at the Group’s Guanaco/ Amancaya mine complex; • Completed construction of the Heap Reprocessing project that is expected to provide production to 2033 (commenced Q4 2023) • Reported final assay results from the 6,585 meter drilling campaign at Casposo-Manantiales, supporting the Company objective to commence mining operations • Actively pursued new discoveries with exploration activ- ity undertaken at the Company’s high-quality land portfolio including over 4,000 meters of drilling at the Jaguelito Project in Argentina • Completed the sale of SCRN Properties, owner of the Pingüino advanced exploration project to ASX listed Unico Silver Limited (“Unico”) for total consideration of approximately US$10 million • Executed a definitive agreement with TSXV listed Colossus Resources to sell Austral’s Chilean Calvario and Mirador copper projects, to become their largest shareholder with a 19.9% interest • Secured related party loans totaling approximately US$4.3 million in principal from the Company’s major shareholder and a Company under his control • Mr. Eduardo Elsztain was appointed as the new non-Executive Chair of the Company after Mr. Wayne Hubert retired as a direc- tor at the Group’s AGM. • There were no other significant changes in our principal activi- ties during the year. Objectives The group’s objectives for 2024 are to: • Meet or exceed our production forecast of 26,000-28,000 gold equivalent ounces Events subsequent to reporting date On 1 March 2024, the Group executed a loan agreement for up to US$2,200,000 from a company related to two of its directors and the Company received US$1,000,000 on 5 March 2024. In addition, the loan maturity dates of the loans held by Inversio- nes Financieras del Sur S.A., Eduardo Elsztain and Saul Zang aggregating principal of US$4,555 thousands were extended to 30 September 2024 (note 28). On 15 February 2024, the Company issued 919,158 non-trans- ferable unsecured convertible notes valued at US$591 thousand immediately following the execution by the investor and the Company of an amendment agreement to allow for closing the private placement in two tranches. There will be no further tranches under the agreement as the second tranche was not closed by the due date of 15 March 2024 (note 25.2). During January and February 2024, a total of US$2,500 thou- sand in pre-export facilities were renewed with Santander Bank for an additional 6 months at an average interest rate of 9.36% per annum as three 6-month pre-export facilities were renewed as follows: US$1,000 thousand at 9.12%, US$500 thousand at 9.32%, and US$500 thousand at 9.75% and US$500 thousand at 9.60% (note 28). Likely developments The Group will continue to pursue its objectives for 2024. Environmental The Group’s operations are subject to environmental regulation in the areas where it operates, Chile and Argentina. The Group is committed to achieving a high standard of environ- mental performance. The environmental monitoring program implemented for the Guanaco Amancaya Operation includes meteorology, air quality, water quality, flora and fauna archaeology. Air quality is monitored at two locations in Guanaco and one in Amancaya. Meteorological parameters are collected at one air quality station in Guanaco and the air quality station in Amancaya. There is also a meteorological station in Guanaco independent from the air quality monitoring system. Monitoring of flora and fauna is conducted in Punta del Viento, Las Mulas and Pastos Largos approximately 30 km east of Guanaco. Auditors KPMG continues in office as auditors in accordance with the requirements of the Corporations Act 2001. Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the period by the auditor are outlined in note 12 to the financial statements. There were no non-audit services provided by KPMG in 2023 (2022: Nil). The Directors are satisfied that the provision of non-audit services during the period by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Austral Gold Limited 46 Annual Report 2023 The Directors are of the opinion that the services as disclosed in note 12 during the period do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. Dividends No dividends were paid to shareholders during the 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 purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Auditor’s Independence Declaration The lead auditor’s independence declaration for the period ended 31 December 2023 has been received and is included in this report. Signed in accordance with a resolution of Directors at Sydney. Rounding of Amounts The Company is a company of the kind referred to in ASIC Instru- ment 2016/191, dated 1 April 2016, and in accordance with that Instrument amounts in the Directors’ Report and the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. Signed in accordance with a resolution of Directors made pursuant to s.298(2) of the Corporations Act 2001. Review of prospects for future years The Group’s prospects for future years are based on the achieve- ment of its 2024 objectives described on page 46. The achievement of these objectives are subject to several risks including business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluc- tuations; political or economic instability and regulatory changes; environmental risks, currency fluctuations, the state of the capital markets, uncertainty in the measurement of mineral reserves and resource estimates, the Group’s ability to attract and retain quali- fied personnel and management, potential labour unrest, reclama- tion and closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company’s control, and the availability of capital to fund all of the Company’s projects. Note that these risks are not exhaustive of all risks. For and on behalf of the board Robert Trzebski Director 28 March 2024 Austral Gold Limited 47 Annual Report 2023 MINE COMPLEXES Background Austral Gold Limited 48 Annual Report 2023 The Guanaco and Amancaya mine complex remains the Company’s flagship asset. Guanaco and Amancaya OVERVIEW The Guanaco and Amancaya mine complex remains the Company’s flagship asset. Guanaco is located approximately 220km south- east of Antofagasta in Northern Chile at an elevation of 2,700m and 45km from the Pan American Highway. Guanaco is embedded in the Paleocene/Eocene belt, a geological feature which runs north/south through the centre of the Antofagasta region, Chile. Gold mineralisation at Guanaco is controlled by pervasively silicified, sub-vertical east/ northeast-west/southwest trending zones with related hydro-thermal breccias. Silicification grades outward into advanced argillic alteration and further into zones with argillic and propylitic alteration. In the Cachinalito vein system, most of the gold minerali- sation is concentrated between depths of 75m and 200m and is contained in horizontally elongated mineralised shoots. The alteration pattern and the mineralogical composition of the Guanaco mineralisation have led to the classification as a high-sulfidation epith- ermal deposit. In July 2014, the Company acquired the Amancaya Project (‘Amancaya’) from Yamana Gold Inc (TSX:YRI | NYSE:AUY) which is located approximately 60km south-west of the Guanaco mine. Amancaya is a low sulfidation epithermal gold-silver deposit consisting of eight mining exploration concessions covering 1,755 hectares (and a further 1,390 hectares of second layer mining claims). On 6 June 2017, Austral Gold completed the construction of a new agitation leaching plant at Guanaco. At Amancaya, open-pit mining operations began during the first half of 2017 while under- ground operations at Guanaco started in 2018. The Amancaya ore is delivered to the Guanaco plant for processing. On 25 March 2022, the technical report(1) was updated, revealing an extended mine life at Guanaco/ Amancaya that could sustain production levels of 30,000-35,000 gold equivalent ounces over the next three to four years plus a further 10,000 gold equivalent ounces of production over the subsequent seven to eight years through heap processing. Austral Gold Limited 49 Annual Report 2023 (1) see notes to the mineral resources & ore reserves statement on page 23 In 2023, the Company completed the construction of the Heap Reprocessing Project at the Guanaco mine site, which is expected to be the main source of mineral production at Guanaco/ Amancaya in the following years. Cerro Buenos Aires Project S A P M A P S A L O C A N A U G A Y A C N A M A Sierra Inesperada Project Sierra Juncal Project PALEOCENE BELT Austral Gold controls an extensive portfolio of +50,000 hectares of mining properties. Chile’s Paleocene Belt hosts major gold and silver deposits and porphyry copper mines. Austral Gold Limited 50 Annual Report 2023 Austral Gold Limited 51 Annual Report 2023 GUANACO & AMANCAYA MINE COMPLEX 1 Strategic location (220km from Antofagasta, Chile) with + 50K hectares of mining property 2 3 Guanaco, high-sulphidation epithermal deposit, and Amancaya a low sulphidation epithermal deposit, both hosted in the Paleocene/Eocene Belt • 1,500 tpd milling circuit to agitation leaching and Merrill-Crowe processing plant • +3,000 tpd crushing, heap leaching, and CC cir- cuit processing plant 4 Austral Gold historical production of + 500K gold-equivalent ounces since 2010 Austral Gold Limited 52 Annual Report 2023 Austral Gold Limited 53 Annual Report 2023 Casposo Manantiales OVERVIEW The Casposo mine is in the department of Calingasta, San Juan Province, Argentina, approximately 150km from the city of San Juan, and covers an area of 100.21km2. Casposo is a low sulfida- tion epithermal deposit of gold and silver located in the eastern border of the Cordillera Frontal geological province. The Cordillera Frontal represents the eastern portion of the Cordillera Principal that runs along the Chile-Argentine border for approximately 1,500km. The Casposo gold– silver mineralisation is Permian in age, and occurs in the extensive Permo-Triassic volca- nic rocks of the Choiyoi Group, at both rhyolite, and underlying andesitic rocks, where it is associated with NW-SE, E-W and N-S striking banded quartz, chalcedony and calcite veins, typical of low sulfidation epithermal environments. Post-mineralisation dykes of rhyolitic, mafic, and trachytic composition often cut the vein systems. These dykes, sometimes reaching up to 30m thickness, are usually steeply dipping and north–south oriented. Mineralisa- tion at Casposo occurs along a 10km long north- west to southeast trending regional structural corridor, with the main Kamila Vein system forming a 500m long sigmoidal set near the centre. The Mercado Vein system is the northwest continuation of Kamila and is separated by an east–west fault from the Kamila deposit. In March 2016, Austral Gold acquired a controlling stake and management of the Casposo gold and silver project. Since then, Austral Gold undertook a complete revision of historical work (geology, geochemistry, geophysics and drillings), and completed a regional mapping at a 1:10,000 scale to identify potential oppor- tunities for discovering additional mineralisation and ranking a series of mine and brownfield exploration targets. In March 2017, Austral Gold acquired an additional 19% of the Casposo silver and gold project and in December 2019, it effec- tively acquired the remaining 30%. The Manantiales project is located immediately to the west and adjacent to Casposo. Exploration rights and an option for exploita- tion were granted by the Instituto Provincial de Exploraciones y Explotaciones Mineras de la Provincia de San Juan (IPEEM) in 2019. The Casposo Mine was placed on care and maintenance during the June 2019 quarter and exploration activities that commenced during the December 2019 quarter have been ongoing with the goal of recommencing processing operations. Since then, Austral has incurred approximately US$6,500 thousand on exploration activities. During 2023, Austral engaged a third-party consultant to prepare a Mineral Resource Estimate (MRE) for Casposo and Manantiales, including Manantiales, Mercado, B-Vein, and Julieta Veins. The report is expected to be completed during Q2 2024. Austral Gold Limited 54 Annual Report 2023 Austral Gold Limited 55 Annual Report 2023 CASPOSO MANANTIALES MINE COMPLEX 1 On Care & Maintenance since 2019 with the strategic objective to restart operations 2 1,300 tpd crushing circuit to agitation leach and Merril-Crowe processing plant 3 Historical 2010-2019 production of 530K gold-equivalent ounces 4 Camp facilities 21km from mine site 5 +70K hectares of land plus mining property Austral Gold Limited 56 Annual Report 2023 Austral Gold Limited 57 Annual Report 2023 EXPLORATION Three years ago, we established a new exploration strategy which includes the following: • Find high-sulfidation gold and silver deposits in a high quality land portfolio; • Discover brownfields ounces at Amancaya, Casposo and Manantiales; • Guanaco District: complete delineation at Sierra Inesperada to drill the best ranked targets; • New Opportunities: Identify and consolidate third-party projects with potential near existing Austral Gold infrastructure; • Explore other oxide and deeper gold-rich sulfide mineralisation opportunities in the Chilean Paleocene-Eocene Belt Austral Gold Limited 58 Annual Report 2023 A total of 4,265 metres of diamond drill- ing (“DD”) was conducted across 15 DD holes in the Manantiales and Cerro Amarillo areas, as announced on 30 January 2023. Exploration in Argentina CASPOSO-MANANTIALES PROJECT, ARGENTINA During FY23, the Group completed the drilling campaign that started in FY22. A total of 4,265 metres of diamond drilling (“DD”) was conducted across 15 DD holes in the Manantiales and Cerro Amarillo areas, as disclosed on 30 January 2023. The focus of the drilling program was to follow up on the results achieved in previous drilling campaigns at the Manantiales vein, as disclosed in the 27 July 2022 and 26 October 2021 announce- ments. The drilling at the Manantiales vein intercepted some high gold grades at the top and bottom of the central ore-shoot, indicat- ing possible continuity at depth. The two best holes confirmed the continuity of mineralisation in the central ore-shoot and opened up potential upside at depth. Drill hole MDH-022-68 appears to confirm shallow mineralisa- tion and provides continuity to the previously reported drill hole MDH-022-64. Additionally, drill hole MDH-022-72 intercepted gold high-grade, further confirming the continuity of mineralisation in the central ore-shoot and opening up potential upside at depth. The best assay results received in Q1 2023 were: MDH-22-72: 6.10 m @ 11.77 gpt gold and 10.0 gpt silver (incl. 1.10 m @ 54.03 gpt gold and 21.40 gpt silver) MDH-22-68: 2.40 m @ 7.39 gpt gold and 18.0 gpt silver (incl. 1.30 m @ 12.93 gpt gold and 22.30 gpt silver) Manantiales District In FY23, we completed the geological model for the Manantiales vein, and the Company hired an external consulting firm to assist with the next steps for the Casposo-Manantiales project. At the Cerro Amarillo area, two holes were drilled to validate new structural controls in the Awada and La Puerta areas. Favorable alteration was intercepted, but with discrete gold anomalies. Austral Gold Limited 59 Annual Report 2023 Casposo District In FY23, a thorough analysis was conducted at the Julieta vein to differentiate the textural, mineralogical, and structural arrangements of the main structure from secondary ones. The Julieta vein predominantly consists of a breccia vein composed of quartz + carbon- ate, often found alongside polymictic and monomictic breccias. Banded vein pulses are infrequent in the main structure. The Company plans to perform an assessment of the continuity of these structures at the Julieta vein. At the Mercado vein, the historical database was validated, and the main stratigraphic units, intrusive bodies, and mineralisation were verified in the field. An updated geological model was completed and peer-reviewed, incorporating the interpretation of 16 cross sections, a longitudinal section, a surface map, and 2450 and 2400 level plans. In all the analysed sections, the Mercado vein is continuous except for an interruption in the junc- tion zone with the MV1 vein and post-mineral faulting in the SE sector. Within the 350 meters of vein extension, two irregular mineralised ore shoots are formed. During Q4 2023, the Company initiated geological modelling of the southeastern exten- sions of the Inca and B-vein veins. The block, named Kamila SE, exhibits minimal miner- alisation and appears structurally complex, influenced by abundant post-mineral andesitic dykes. The highest grades seem to be associated with the unexploited sectors of Inca 2B and Inca 3. In the second half of the year, the Company evaluated third-party opportunities to utilise the processing plant at the Casposo-Manantiales mine complex. This evaluation process is expected to continue into 2024. Additionally, a third-party consultant was engaged to prepare a Mineral Resource Estimate (MRE) for the Manantiales and Casposo Districts, covering Manantiales, Mercado, B-Vein, and Julieta Veins. The report is anticipated to be completed in Q2 2024. Casposo- Manantiales Project Our presence in the Triassic Choiyoi Belt is in the Casposo District, located on the eastern edge of the Cordillera Frontal (Calingasta Department), about 170 km NW of the city of San Juan Figure: Casposo-Manantiales District, Argentina Austral Gold Limited 60 Annual Report 2023 JAGUELITO PROJECT, ARGENTINA (Option agreement) As announced on 2 December 2022, a 5,000-metre drilling campaign commenced at the Jaguelito project in the San Juan Province of Argentina as part of the first stage of the option agreement with Mexplort Perforaciones Mineras SA (Mexplort) to acquire 50% of the mining rights for the project (the Option Agreement). During FY 2023, the Company drilled 4,331 meters of DDH at the Jaguelito Project in Argentina, which is part of the 5,000-meter program committed under the 2022 option agreement with Mexplort under the First Stage of the Option Agreement set to expire in August 2024. Austral incurred US$4,942 thousand in exploration expenditures as of 31 December 2023, exceeding the US$2,000 thousand required for each of the First and Second Stages of the Option Agreement. Best intercepts were as follows: Capote-Alcatraz target (Norte Zone) DJN-003 26m @ 0.60 grams per tonne (gpt) gold and 7 gpt silver Including 1.5m @ 1.12 gpt gold and 45 gpt silver DJN-004 21m @ 1.24 gpt gold and 1 gpt silver Including 3.0m@ 3.32 gpt gold and <0.5 gpt silver La Cuña Norte target (Norte Zone) DJN-006 4m@ 1.40 gpt gold and 26 gpt silver Capote-Alcatraz target (Norte Zone) DJN-003 DJN-004 26m @ 0.60 gpt gold and 7 gpt silver Incl 1.5m @ 1.12 gpt gold and 45 gpt silver 21m @ 1.24 gpt gold and 1 gpt silver Incl 3.0 m@ 3.32 gpt gold and <0.5 gpt silver La Cuña Norte target (Norte Zone) DJN-006 4m@ 1.40 gpt gold and 26 gpt silver Sagitario (Sur) target DJNS-001A 4m @ 0.70 grams per tonne (gpt) gold and 17 gpt silver Including 4.4m @ 1.44 gpt gold and 30 gpt silver A total of eight targets were identified across two zones, Norte and Sur, and drilling was conducted at the La Cuña Norte (Norte) and Sagitario (Sur) targets. Jaguelito Sur Target Area: • Preliminary analysis identified five structures related to phreatomagmatic activity, suggesting potential mineralisation in the sector. • The only drill hole completed in the Sagitariio target during this campaign intercepted strong alteration consisting of silica flooding in a quartz-alunite-jarosite vuggy silica interval developed in phreatomagmatic rocks, validating the exploratory model. Jaguelito Norte: • Relogging of drillholes and interpretation of sections were completed. • The faults that controlled the configuration of the Miocene basin, their control in phreatomagmatism, and the relationship with alteration and mineralisation were identified and modelled. • The La Cuña (F1CÑ) and Capote (F1CA) faults configured the initial geometry of the basin. • In general, the central block deepens from NW to SE, where the bottom of the depocenter is not known. • Several successive pulses of dilation - subsidence and phreatomagmatism were modelled, controlled to the west by the fault system and to the east by a set of faults with eastern vergence, with activity advancing progressively towards the east. • The diatremes generated in the earliest events have been submerged and covered by the volcanic sequences associated with the evolution of the basin. However, the later diatremes maintain a shallower location. • The alteration modelling suggests a main event, evidenced by a sub horizontal distribution centered at approximately 4,000 m.a.s.l. in all structural blocks. • A subordinate event, identified at deeper levels, may correspond to precursor alterations with little or no associated mineralisation. Austral Gold Limited 61 Annual Report 2023 Next steps and activities on Jaguelito are to be defined going forward in conjunction with Mexplort, owner of the project. Figure: Jaguelito Project, Argentina SIERRA BLANCA, ARGENTINA (Option agreement) In FY23, no major activities were conducted in Sierra Blanca where the Company owns 51% interest as of 31 December 2023. During FY23, the Company did not complete the second tranche of the Purchase Agreement to acquire a further 29% interest in the project Austral Gold Limited 62 Annual Report 2023 Exploration in Chile GUANACO-AMANCAYA MINE COMPLEX, CHILE In FY23, we focused on Natalia and Los Nanos areas, which are near the Amancaya and Guanaco mine complex. Our efforts included surface mapping, relogging of historical drillholes, and geological interpretation. In addition, the Company conducted a comprehensive review of the total exploration projects in Chile and opted to initiate a rationalization program aimed at decreasing the number of exploration tenements. As a result, the Company has reduced its overall portfolio from around 137,022 hectares to 51,345 hectares in Chile. Los Nanos: • a set of cross sections were reinterpreted, considering new logs and a revision of drill core. • The geological team’s analysis indicates that two main bodies can be modeled, and the continuity towards the East of the geological controls of these two mineralised bodies extends over a length of more than 250 meters. • The geological setting in Los Nanos appears similar to the Cachinalito System, with structures dipping north and faults/feeders dipping south. The greatest difference lies in the inclination of the ore bodies. Our analysis suggest that this may be related to the intensity of syn/post mineral tilting in each structural block, resulting in bodies with gentle dips and thicknesses in the Los Nanos sector. Dumbo and Perserverancia: • We continued with geological modelling, utilising surface mapping, systematic spec- troscopy, historical drillhole re-logging and metallurgical and channel sampling tests to explore additional opportunities for exploitation. • Ongoing modelling highlights the presence of under explored favourable host rock in the southern structural block. • Two structural blocks separated by the Dumbo fault were recognised. • A sequence of dacitic tuffs were identified in both blocks. These tuffs are exposed and partially exploited towards the Defensa pit to the northeast, but preserved towards the Perseverancia area. This confirms a potential target towards the southwest. Known mineralisation of both Au and Cu is best developed in these volcanic rocks, as well as in phreatomagmatic breccias. Austral Gold Limited 63 Annual Report 2023 Los Nanos Process Plant Cachinalito - Natalia Dumbo - Defensa Guanaco Mine Exploring within the mine footprint to increase production and LOM Cachinalito West Guanaquito Perseverancia Figure: Guanaco District, Chile SIERRA INESPERADA In FY23, minor activities were conducted in Sierra Inesperada, located 10km SW of Guanaco. Next steps on this project are the preparation of a drill plan to follow-up the gold and silver intercepts obtained in previous drilling phases and drill the remaining untested areas. Multiple targets have confirmed an HS hydrothermal activity controlled by phreatomagmatic complexes with silver mineralisation vectoring to potential blind gold mineralization. Austral Gold Limited 64 Annual Report 2023 AMANCAYA In FY23, we continued exploiting the Amancaya underground mine at the deepest levels of the deposit’s main vein, which we expect to continue in 2024 at a lower path through a rental agreement with a third party. During 2023, we designed a drilling program with the goal of connecting two segments of the Oeste Vein, albeit its starting date is to be defined. Amancaya Mine Amancaya is a low sulfidation (LS) epithermal gold-silver deposit with further expansion potential through exploration DAM-026 24.9 g/t Au & 77 g/t Ag 1.17m DAM-035 20.1 g/t Au & 5 g/t Ag 1.50m DAM-024 10.2 g/t Au & 55 g/t Ag 2.41m DAM-036 5.2 g/t Au & 5 g/t Ag 3.85m Figure: Amancaya Project, Chile Austral Gold Limited 65 Annual Report 2023 Mining Investments Building an equity portfolio of mining companies Austral Gold Limited 66 Annual Report 2023 EQUITY INVESTMENTS UNICO SILVER ENSIGN MINERALS Deseado Massiff, Santa Cruz, Argentina 17% interest Carlin Trend, Utah, USA 12% interest Unico Silver is a pure-play silver development company listed on the ASX that has increased resources through exploration and acquisitions • Austral’s interest in Unico Silver was acquired through the 2023 sale of SCRN Properties, owner of the Pinguino project • Its flagship asset is the new Cerro Leon project comprising two adjacent silver and gold districts, with land holdings in the mining-friendly province of Santa Cruz, Argentina The former producing Mercur mine produced approximately 2.6 million ounces of gold  • Project operator Ensign Minerals controls approximately 6,200 hectares in the Mercur district on primarily patented claims • Excellent infrastructure, easy access, favorable permitting process, and world-class deposits in the area PAMPA METALS RAWHIDE MINE Piuquenes Project, San Juan, Argentina 3% interest Walker Line, Nevada, USA 25% interest Pampa Metals is a copper-gold exploration company listed on the Canadian Stock Exchange, Frankfurt, and OTC exchanges  Located within the prolific Walker Lane gold-silver belt, Rawhide has produced close to 2 million ounces of gold since 1990* • Austral’s interest in Pampa Metals was acquired through the • The Operation is fully permitted with further identified explora- takeover of Revelo Resources in 2021 tion targets • In November 2023, Pampa Metals announced it had entered into an Option and Joint Venture Agreement for the acquisition of an 80% interest in the Piuquenes Copper-Gold Porphyry Project in San Juan Province, Argentina • (1)On 20 December 2023 (the “Petition Date”) Rawhide Mining LLC filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code Name Unico Silver Ltd Pampa Metals Corp. Holding Type Projects Location Flagship Project ASX Listed 17% Exploration Argentina Cerro Leon Project CSE Listed 3% Exploration Argentina Piuquenes Project Ensign Minerals Inc Private 12% Exploration USA Rawhide Mine LLC (1) See Rawhide Mine above Private 25% Restructuring(1) USA Mercur Project Rawhide Mine Austral Gold Limited 67 Annual Report 2023 FINANCIAL STATEMENTS Austral Gold Limited 68 Annual Report 2023 AUSTRAL GOLD LIMITED FINANCIAL REPORT 2023 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME All figures are reported in thousands of US$ Continuing operations Sales revenue Cost of sales (including depreciation and amortisation) Gross profit Other income Other expenses Administration expenses Finance income Finance costs Share of loss of associates (Loss) before income tax Income tax benefit (Loss) after income tax expense (Loss) attributable to: Owners of the Company Non-controlling interests Items that may not be classified subsequently to profit or loss Foreign currency translation Total comprehensive (loss) for the year Comprehensive (loss) attributable to: Owners of the Company Non-controlling interests (Loss) per share (cents per share): Basic (loss) per share Diluted (loss) per share (1) note 41 The notes on pages (73) to (105) are an integral part of these consolidated financial statements. For the year ended 31 December Note 2023 2022 Restated (1) 15 6 7 8 9 10 11 24 13 14 14 47,729 (47,183) 546 3,853 (8,889) (6,145) 4,422 (1,678) (60) (7,951) 708 (7,243) (7,229) (14) (7,243) 1 (7,242) (7,228) (14) (7,242) (1.18) (1.18) 49,710 (47,144) 2,566 1,693 (4,972) (8,404) 2,134 (1,922) (676) (9,581) 1,315 (8,266) (8,257) (9) (8,266) (17) (8,283) (8,274) (9) (8,283) (1.35) (1.35) Austral Gold Limited 69 Annual Report 2023 AUSTRAL GOLD LIMITED FINANCIAL REPORT 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION All figures are reported in thousands of US$ As at 31 December Note 2023 2022 Restated(1) Assets Current assets Cash and cash equivalents Trade and other receivables Prepaid income tax Other financial assets Inventories Assets held for sale Total current assets Non-current assets Other receivables Prepaid income tax Other financial assets Mine properties Property, plant and equipment Exploration and evaluation expenditure Investments accounted for using the equity method Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Income tax payable Employee entitlements Loans and borrowings Lease liabilities Total current liabilities Non-current liabilities Trade and other payables Provisions for reclamation and rehabilitation Loans and borrowings Lease liabilities Employee entitlements Deferred tax liability Total non-current liabilities Total liabilities Net assets Equity Issued capital Accumulated losses Reserves Non-controlling interest Total equity 16 17 18 19 20 17 18 21 22 23 24 25 26 28 22 25 27 28 22 26 13 29 30 31 32 1,039 2,356 83 3,958 9,699 - 926 2,422 1,076 641 8,946 8,294 17,135 22,305 1,127 126 2,127 6,259 49,616 27,894 - 87,149 104,284 904 476 - 4,054 42,257 27,261 60 75,012 97,317 23,121 15,690 - 2,990 13,540 1,169 40,820 3 13,695 2,568 1,143 18 4,464 21,891 62,711 41,573 770 4,053 7,382 1,925 29,820 1,013 10,924 1,264 911 35 4,535 18,682 48,502 48,815 109,114 109,114 (66,549) (1,157) 165 41,573 (59,320) (1,158) 179 48,815 (1) note 41 The notes on pages (73) to (105) are an integral part of these consolidated financial statements. Austral Gold Limited 70 Annual Report 2023 AUSTRAL GOLD LIMITED FINANCIAL REPORT 2023 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the years ended 31 December 2023 and 2022 All figures are reported in thousands of US$ Note Issued capital Accumulated losses Reserves Non- controlling interest Balance at 31 December 2021 109,114 Loss for the year Foreign exchange movements from translation of financial statements to US$ Total comprehensive income/ (loss) - - - Balance at 31 December 2022 109,114 Loss for the year Foreign exchange movements from translation of financial statements to US$ Total comprehensive (loss) Balance at 31 December 2023 - - - 109,114 The notes on pages (73) to (105) are an integral part of these consolidated financial statements. (51,063) (8,257) - (8,257) (59,320) (7,229) - (7,229) (66,549) (1,141) 188 - (17) (17) (1,158) - 1 1 (1,157) (9) - (9) 179 (14) - (14) 165 Total 57,098 (8,266) (17) (8,283) 48,815 (7,243) 1 (7,242) 41,573 Austral Gold Limited 71 Annual Report 2023 AUSTRAL GOLD LIMITED FINANCIAL REPORT 2023 CONSOLIDATED STATEMENT OF CASH FLOWS All figures are reported in thousands of US$ Changes in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents, at the end of the year Net increase/(decrease) in cash and cash equivalents Causes of change in cash and cash equivalents Operating activities Loss after income tax Adjustments for Income tax benefit/(expense) recognized in loss Income tax collection Impairment of exploration and evaluation expenditure Depreciation and amortisation Gain on sale of equipment Gain on sale of subsidiary Exclusivity fee on option agreement Non-cash net finance charges Provision for reclamation and rehabilitation Allowance for doubtful accounts Inventory write-down Non-cash employee entitlements Share of loss of associates Loss in fair value of other financial assets Gain in fair value of other financial assets Net cash from operating activities before change in assets and liabilities Changes in working capital Decrease in inventory (Increase) /decrease in trade and other receivables Increase in trade and other payables (Decrease) in employee entitlements Net cash provided through operating activities Cash flows from investing activities Additions to property, plant and equipment Proceeds from sale of subsidiary Proceeds from sale of equipment Proceeds from exclusivity fee on option agreement Payment for investment in exploration and evaluation Payment for investment in mine properties Payment for equity investments Payment for other financial assets Proceeds from sale of other financial assets Net cash used in investing activities Cash flows from financing activities Restricted proceeds from convertible note offering Proceeds from loans and borrowings Repayment of loans and borrowings Interest paid on loans and borrowings Repayment of lease liabilities Interest paid on leases Net cash used in financing activities Net increase/ (decrease) in cash and cash equivalents (1) note 41 The notes on pages (73) to (105) are an integral part of these consolidated financial statements. For the year ended 31 December Note 2023 2022 Restated (1) 926 1,039 113 2,346 926 (1,420) (7,243) (8,266) 7/8 7 7 24 8 7 22 20 7 21 (708) 928 3,981 6,048 (46) (1,964) (100) 1,511 (126) (107) 302 (20) 60 992 (1,033) 2,475 (1,055) 1,519 6,048 (1,060) 7,927 (11,283) 3,250 113 100 (4,614) (9) - (4) 22 (12,425) 591 17,955 (10,777) (720) (2,252) (186) 4,611 113 (1,315) 2,134 926 7,778 (590) - - 1,089 (1,094) 238 - 27 676 968 - 2,571 1,620 (690) 7,624 (172) 10,953 (6,434) - 675 - (5,790) (30) (124) (27) 135 (11,595) - 11,735 (8,842) (330) (3,133) (208) (778) (1,420) Austral Gold Limited 72 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 1. REPORTING ENTITY Austral Gold Limited (the “Company”) is a company limited by shares that is incorporated and domiciled in Australia. The Company’s shares are publicly traded on the Australian Securities Exchange with the symbol AGD, on the TSX Venture Exchange with the symbol AGLD and on the OTCQB Venture Market with the symbol AGLDF. These consolidated financial statements (“financial statements”) as at and for the year ended 31 December 2023 comprise the Company and its subsidiaries (together referred to as the “Group”). The nature of the operations and principal activities of the Group are described in the Directors’ Report. The consolidated annual financial statements of the Group as at and for the year ended 31 December 2023 are available upon request from the Company’s registered office at Level 5, 126 Phillip Street, Sydney NSW 2000, Australia at www. australgold.com. 2. BASIS OF PREPARATION The financial statements are general purpose financial statements which have been prepared in accordance with Austra- lian Accounting Standards adopted by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for profit oriented entities. The consolidated financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. They were authorised for issue by the Company’s Board of Directors on 28 March 2024. Details of the Group’s accounting policies are described in Note 41. 2.1 Functional and Presentation currency These consolidated financial statements are presented in United States dollars (US$), which is the Company’s functional currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with the legislative instrument, amounts in the consolidated financial statements have been rounded off to the nearest thousand dollars, unless otherwise stated. Change in classification During the year ended 31 December 2023, the Group updated the classification of certain income, expenses and cash flow items to better reflect the nature of the items. The effects of such reclassifications on the comparative period are disclosed in Note 41 to the financial statements. 2.2 Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supple- mentary information about the parent entity is disclosed in note 36. 3. GOING CONCERN The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. During the year ended 31 December 2023, the Group incurred a net loss after tax of US$7,243 thousand (year ended 31 December 2022: US$8,266 thousand net loss after income tax) with net cash inflows of US$7,927 thousand in 2023 (2022: inflows of US$10,953 thousand) generated through operating activities. Net cash used in investing activities totaled US$12,425 thousand during FY23 (FY22:US$11,595 thousand) while net cash received from financing activities totaled US$4,611 thousand during FY23 (FY22: outflows US$778 thousand). At 31 December 2023, the Group has net assets of US$41,573 thousand and net current liabilities of US$23,685 thousand (31 December 2022: US$48,815 thousand and US$7,515 thousand, respectively). For the year ended 31 December 2023, the net increase of loans and borrowings was US$7,462 thousand (2022: US$2,893 thousand). Management and the Directors prepared cashflow forecasts that are dependent on a combination of the following main assumptions: • Renewal of the existing short-term fully drawn loans and borrowings as at 31 December 2023 from lenders disclosed in Note 28 Loans and Borrowings, as follows: Santander Bank (US$3,400 thousand), Banco de Credito e Inversiones SA (BCI) (US$3,500 thousand), Inversiones Financiera del Sur S.A. (US$2,555 thousand), Eduardo Elsztain (US$1,700 thousand) and Saul Zang (US$300 thousand). These loans all mature on or before 30 June 2025 and are assumed to be renewed in full when they mature. • Continuing the extension of payment terms with Guanaco/Amancaya suppliers. On 31 December 2023 US$11,777 thousand of the aggregate $15,179 thousand of trade payables disclosed in Note 25 Trade and Other Payables are overdue. Extension of payment terms with overdue suppliers has not been formally agreed. • Obtaining additional loans and borrowings, equity contributions or other forms of assistance from related parties as required by the Group. Mr. Elsztain, Mr. Zang and their related entities Inversiones Financieras del Sur S.A. and Consultores Asset Management S.A. have confirmed their intention, (rather than binding commitment) to continue providing ongoing financial support and assistance, as deemed necessary. Austral Gold Limited 73 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS • Achieving production of 26,000 – 28,000 gold equivalent ounces (‘GEOs’) in 2024 with all in sustaining costs (AISC) in the range of US$1,300-US$2,283 and an annual average AISC of US$1,533 per GEO, by executing on the integration of the agitation leaching and heap leaching processes, using material from the Heaps and remaining ore and stocks from the Amancaya and Guanaco mines. • Achieving average 2024 prices realised per gold equivalent ounce of approximately US$2,016. • Realisation of the carrying value at 31 December 2023 of non core assets through sale. The going concern basis presumes that a combination of the above funding and operational solutions, as deemed appropriate by the Directors, will be achieved and that the realisation of assets and settlement of liabilities will occur in the normal course of business. The combined effect of the above represents a material uncertainty as to whether the Group would continue as a going concern. The directors of Austral Gold consider that the Group will continue to fulfil all obligations as and when they fall due for the foreseeable future and accordingly consider that the Group’s financial statements should be prepared on a going concern basis. Accordingly, the financial statements do not include any adjust- ments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. 4. USE OF ESTIMATES AND JUDGEMENTS In preparing these financial statements, Management has made judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospec- tively. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 December 2023 are detailed below: Carrying value of Mine Properties The Group estimates its ore reserves and mineral resources annually at each year end, based on information compiled by Competent Persons as defined in accordance with the Australasian code for reporting Exploration Results, Mineral Resources and Ore Resources (JORC code 2012). The estimated quantities of economically recoverable reserves are based upon interpretations of geological models and require assumptions to be made regarding factors such as estimates of short and long-term exchange rates, estimates of short and long-term commodity prices, future capital requirements and future operating performance. Changes in reported reserves estimates can impact the carrying amount of mine development (including mine properties, property, plant and equipment and exploration and evaluation assets), the provisions for reclamation and rehabilitation (further details on the mine closure provisions are included in note 27), the recognition of deferred tax assets (further details on deferred tax assets are included in note 13), as well as the amount of amortisation charged to the statement of profit or loss. Impairment Significant judgements, estimates and assumptions are required in determining value in use or fair value less costs of disposal. This is particularly so in the assessment of long life assets. It should be noted that the CGU recoverable amounts are subject to variability in key assumptions including, but not limited to, gold and silver prices, currency exchange rates, discount rates, production profiles and operating and capital costs. A change in one or more of the assumptions used to determine value in use or fair value less costs of disposal could result in a change in a CGU’s recoverable amount (further details on the value of the CGU’s are included in note 21). Carrying value of exploration and evaluation assets The Group tests at each reporting date whether there are any indicators of impairment as identified by AASB 6 “Exploration for and Evaluation of Mineral Resources”. Where indicators of impairment are identified, the recoverable amounts of the assets are determined, and an impairment is recorded when the carrying value exceeds recoverable value. In assess- ing indicators of impairment, assumptions relating to whether the exploration and evaluation activity will be recouped through successful development and exploitation of the area are made. Mine closure provisions Obligations associated with exploration and mine properties are recognised when the Group has a present obligation, the future sacrifice of the economic benefits is probable, and the provision can be measured reliably. The provision is measured at the present value of the future expenditure and a corresponding rehabilitation asset is also recognised. On an ongoing basis, the rehabilitation will be remeasured in line with the changes in the time value of money (recognised as an expense and an increase in the provision), and additional disturbances (recognised as additions to a correspond- ing asset and rehabilitation liability). The calculation of this provision requires assumptions such as application of envi- ronmental legislation, mine closure dates, available technologies and engineering cost estimates. The related carrying amounts are disclosed in note 27. Austral Gold Limited 74 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Measurement of fair values The Group has established a control framework with respect to the measurement of fair values. A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: i. Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities ii. Level 2 — inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly (i.e. as prices), or indirectly (i.e. derived from prices) iii. Level 3 — inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. The Group holds listed equity securities on the Australian and Canadian stock exchanges and listed Argentine sovereign bonds at fair value, which are measured at the closing bid price at the end of the reporting period. These financial assets are held at fair value fall within Level 1 of the fair value hierarchy. The Group also holds options which rely on estimates and judgements to calculate a fair value for these financial instruments using the Black Scholes model. These financial assets held at fair value fall within Level 3 of the fair value hierarchy. Further information about the assumptions made in measuring fair values is included in the following notes: • Note 17—Trade and Other receivables • Note 18—Other financial assets • Note 33 — Financial instruments. 5. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES AND ADOPTION OF NEW/AMENDED AASB Adoption of other narrow scope amendments to IFRSs and IFRS Interpretations There are a number of new and revised Standards that are applicable for the first time for the year ended 31 December 2023. These Standards have been adopted by the Group for the first time for the year ended 31 December 2023. In addition, a number of new standards and amendments to standards are effective for annual periods beginning after January 2024 and earlier application is permitted; the Group has early adopted amendments effective for IAS 7 State- ment of Cash Flows and IFRS 7 Financial Instruments: Disclosures. The amendments introduce additional disclosure requirements for companies that enter into supplier finance arrangements. The Group has not early adopted any other new or amended standards in preparing these consolidated financial state- ments as the impact of adoption was not material to the Group’s Consolidated Financial Statements. 6. COST OF SALES All figures are reported in thousands of US$ Production Staff costs Royalty Mining Fees Gold precipitate stolen Inventory movements Total cost of sales before depreciation and amortisation expense Depreciation of plant and equipment Amortisation of mine properties Total depreciation and amortisation expense Total cost of sales Severance included in staff costs For the year ended 31 December 2023 31,107 9,707 1,198 523 - (1,363) 41,172 5,562 449 6,011 47,183 317 2022 26,864 9,307 1,134 594 838 736 39,473 6,663 1,008 7,671 47,144 467 Austral Gold Limited 75 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 7. OTHER INCOME All figures are reported in thousands of US$ Gain on sale of subsidiary (note 20) Gain on revaluation of equity securities (note 24) Gain on sale of financial assets Sale of equipment Sale of inventory parts Equipment rental Exclusivity fee on Colossus Agreement (note 23) Other Total other income 8. OTHER EXPENSES All figures are reported in thousands of US$ Impairment loss exploration and evaluation assets (note 23) Cost of equipment sold Cost of inventory parts sold Loss on fair value of financial assets Care and maintenance Rawhide option and due diligence expenses (note 24) Exploration expenses Inventory allowance at non-operating mine Other Total other expenses 9. ADMINISTRATION EXPENSES All figures are reported in thousands of US$ Office and utility costs Staff costs (1) (2) Consulting and professional services Non-executive director fees (2) Depreciation on equipment Business, property and other taxes Other Total administration expenses (1) Severance included in staff costs (2) Amounts for defined contribution plans included in staff costs and director fees 10. FINANCE INCOME All figures are reported in thousands of US$ Interest income Gain from foreign exchange Present value adjustment to mine closure provision Total finance income For the year ended 31 December 2023 1,964 1,012 21 113 129 222 100 292 2022 - - - 675 399 298 - 321 3,853 1,693 For the year ended 31 December 2023 3,981 67 55 992 2,143 617 365 272 397 8,889 2022 926 85 504 968 2,068 - 421 - - 4,972 For the year ended 31 December 2023 1,039 2,767 1,194 300 19 652 174 6,145 138 27 2022 799 4,537 1,634 300 33 924 177 8,404 493 21 For the year ended 31 December 2023 140 4,108 174 4,422 2022 4 2,130 - 2,134 Austral Gold Limited 76 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 11. FINANCE COSTS All figures are reported in thousands of US$ Loss from foreign exchange Interest expense Interest expense on leases Present value adjustment to mine closure provision Present value adjustment to GST/VAT receivable Total finance costs 12. AUDITOR’S REMUNERATION All figures are reported in US$ Audit and review services Auditors of the Group-KPMG Audit and review of financial statements-Group Audit and review of financial statements-controlled entities 13. INCOME TAX EXPENSE All figures are reported in thousands of US$ (A) Income tax expense comprises: Current income tax (benefit)/expense Deferred income tax expense Income tax (B) Reconciliation of effective income tax rate: Loss before tax Prima facie income tax (benefit)/expense calculated at 30% Difference due to blended overseas tax rate* Share of loss of associates Non-deductible expenses Prior year deferred income tax expense adjustments Prior year current income tax true up Recognition of previously unrecognised deductible temporary differences and tax losses Income tax * Chile tax rate: 27% (31 December 2022: 27%). Argentina tax rate: 30-25% (31 December 2022: 30-25%%). For the year ended 31 December 2023 - 1,216 179 138 145 1,678 2022 842 452 208 420 - 1,922 For the year ended 31 December 2023 2022 110,839 105,700 216,539 113,343 99,200 212,543 For the year ended 31 December 2023 (637) (71) (708) (7,951) (2,386) 460 16 740 87 (637) 1,012 (708) 2022 777 (2,092) (1,315) (9,581) (2,874) 1,008 186 (921) 690 - 596 (1,315) Austral Gold Limited 77 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS All figures are reported in thousands of US$ (C) Deferred tax assets and liabilities Deferred tax assets Other receivable Inventory Mining concessions brought Accrual for mine closure Financial assets Tax losses carried forward Payroll accrual Other Leasing 31 December 2023 31 December 2022 Chile Argentina Other Total Chile Argentina Other Total 83 77 - 2,728 699 6,857 295 36 793 - 11 46 842 - 375 - 26 - - - - - - 83 88 46 3,570 699 7,337 14,569 - - - 295 62 793 224 69 - 1,932 650 5,860 268 - 902 - 44 45 686 - 631 - 191 - - - - - - 224 113 45 2,618 650 7,226 13,717 - - - 268 191 902 Allowance for tax carry forward - (1,300) (7,337) (8,637) - (1,550) (7,226) (8,776) Deferred tax assets Deferred tax liabilities Exploration assets and property, plant and equipment Deferred income Property, plant and equipment inflation adjustment Leasing assets Deferred tax liabilities Net deferred tax liabilities Movement in deferred tax balances Opening balance Exchange rate difference Charged to profit or loss Closing balance 11,568 (13,627) (597) - - - - (881) (927) (15,151) (3,583) - (881) (881) - - - - - - - 11,568 9,905 47 (13,627) (12,512) (597) (774) - - (881) - (415) (927) (725) (16,032) (14,011) (4,464) (4,106) (4,106) (368) (61) (4,535) (6,627) - 523 (3,583) - (513) (881) - 61 - 71 - 2,521 - (4,464) (4,106) - (415) (368) 20 (8) (380) (368) - - - (61) - (61) (61) 9,952 (12,512) (774) (476) (725) (14,487) (4,535) (20) (6,627) 8 (49) (61) - 2,092 (4,535) Deferred tax assets have not been recognised in respect to tax losses for certain entities of the Group. See Note 38 for details. (D) The Group operates in Australia, which has enacted new legislation to implement the global minimum top-up tax in accordance with Pillar Two of the OECD/G20 Two-Pillar Solution. The Group and its subsidiaries (note 35) operate in various jurisdictions with statutory income tax rates greater than 15%, with the exception of Guanaco Mining Company, incorporated in the British Virgin Island , which is not an operating company and has no taxable income. The Group has determined there is no current tax impact related to the top-up tax legislation for the year ended 31 December 2023. 14. EARNINGS PER SHARE All figures are reported in thousands of US$ Net loss attributable to owners Weighted-average number of ordinary shares (basic) Weighted-average number of ordinary shares (diluted) at 31 December Basic earnings (loss) per ordinary share (cents) Diluted earnings (loss) per ordinary share (cents) For the year ended 31 December 2023 (7,229) 2022 (8,257) 612,311,353 612,311,353 612,311,353 612,311,353 (1.18) (1.18) (1.35) (1.35) Austral Gold Limited 78 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 15. OPERATING SEGMENTS Management have determined the operating segments based on reports reviewed by the Chief Operating Decision Maker (“CODM”). The CODM considers the business from both an operations and geographic perspective and has identified two reportable segments, Guanaco/Amancaya which is based in Chile and Casposo which is based in Argentina. The CODM monitors the performance in these two regions separately. During the year ended 31 December 2023, the Group earned 100% of its consolidated revenue from sales made to one customer (2022-95% of its consolidated revenue from sales made to one customer). All figures are reported in thousands of US$ Revenue: Gold Silver Cost of sales Depreciation and amortisation expense Other income Other expenses1 Administration expenses Finance income Finance expenses Share of loss of associates Income tax (expense)/ benefit Segment (loss) Segment assets Segment liabilities Capital expenditure For the year ended 31 December 2023 For the year ended 31 December 2022 Guanaco/ Amancaya Casposo Group and unallocated items Consolidated Guanaco/ Amancaya Casposo Group and unallocated items Consolidated 45,872 1,857 (41,172) (6,011) - - - - - - - - 45,872 47,772 1,857 1,938 (41,172) (39,473) (6,011) (7,671) - - - - - - - - 249 474 (2,906) (2,537) 3,130 (3,446) 3,853 - (8,889) (1,290) 1,072 (1,782) 619 (1,900) 47,772 1,938 (39,473) (7,671) 1,693 (4,972) (2,963) (34) (3,148) (6,145) (4,791) (63) (3,550) (8,404) 1,986 (1,307) 396 (182) 2,040 (189) 4,422 425 (1,678) (1,608) 1,008 (278) - - (60) (60) - - 701 (36) (676) 2,134 (1,922) (676) 1,221 (513) - 708 1,822 (380) (127) 1,315 (3,174) (2,396) (1,673) (7,243) (2,876) (423) (4,969) (8,266) 71,868 50,966 12,044 14,163 18,253 104,284 4,985 919 6,760 2,943 62,711 15,906 64,518 39,708 8,780 15,332 17,467 5,783 2,864 3,011 2,211 97,317 48,502 13,855 1 Includes Impairment of US$2,328 related to Guanaco/Amancaya and US$1,653 related to Group and unallocated items. Geographic information: All figures are reported in thousands of US$ Revenue by geographic location Chile Total revenue All figures are reported in thousands of US$ Non-current assets by geographic location Chile Argentina United States Canada British Virgin Islands Total non-current assets For the year ended 31 December 2023 2022 47,729 47,729 49,710 49,710 For the year ended 31 December 2023 2022 66,724 19,400 - 915 110 60,074 14,768 60 - 110 87,149 75,012 Austral Gold Limited 79 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 16. CASH AND CASH EQUIVALENTS All figures are reported in thousands of US$ Cash at call and in hand Short-term investments Total cash and cash equivalents Reconciliation of Cash As at 31 December 2023 1,039 - 1,039 2022 926 - 926 Cash at the end of the financial year as shown in the Statement of Cash Flows, is reconciled to items in the Statement of Financial Position as follows: Cash and cash equivalents Restricted cash received from private placement of convertible note offering (note 25.2) Bank overdraft Cash and cash equivalents 670 591 (222) 1,039 926 - - 926 Risk Exposure The Group’s exposure to interest rate risk is discussed in note 33. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above. 17. TRADE AND OTHER RECEIVABLES All figures are reported in thousands of US$ Current Trade Receivables Other receivables GST/VAT receivable Total current receivables Non-current GST/VAT receivable Other receivables Total non-current receivables Allowance for doubtful accounts Net non-current receivables Trade debtors ageing The ageing of trade receivables is 0-30 days >30 days As at 31 December 2023 668 911 777 2,356 540 1,032 1,572 (445) 1,127 668 - 2022 808 611 1,003 2,422 1,117 339 1,456 (552) 904 808 - As part of the Other receivables disclosed above, the main balances are the receivables from Unico disclosed in note 20. These have been discounted using the following US treasury yield rates: Due date 25 November 2024(1) 25 November 2025(2) (1) current other receivable (2) non-current other receivable All figures are reported in thousands of US$ Undiscounted receivable Discounted receivable Discount rate (%) 750 1,000 1,750 716 915 1,631 5.18 4.73 1.1 Past due but not impaired There were no receivables past due at 31 December 2023 (31 December 2022: nil). 1.2 Fair value and credit risk Due to the short-term nature of trade receivables, their carrying amount is assumed to approximate their fair value. Refer to note 33 for more information on the risk management policy of the Group and the credit quality of the receivables. 1.3 Key customers During 2023 the Group is reliant on one customers to which gold and silver produced from the Guanaco/Amancaya mines are sold. During 2022, the major customer purchased 95% of sales and the other customer purchased the remaining 5% of sales. Austral Gold Limited 80 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 18. OTHER FINANCIAL ASSETS All figures are reported in thousands of US$ Current Listed bonds — level 1 Listed equity securities — level 1 Unico Silver options— level 3 (note 20) Unlisted equity securities, Ensign—level 3 Ensign warrants — level 3 Total current other financial assets at fair value Non-Current Listed equity securities — level 1 Total non-current other financial assets at fair value As at 31 December 2023 23 2,427 496 1,012 - 3,958 2,127 2,127 2022 23 590 - - 28 641 - - The table above sets out the Group’s assets and liabilities that are measured and recognised at fair value at the end of each reporting period with any movements recorded through the profit and loss statement. Non-current listed equity securities refers to listed equity securities that will be released from escrow on 1 March 2025. Listed equity securities and bonds are shares of Australian and Canadian listed mining companies nominated in A$ and C$ and sovereign bonds nominated in ARS as at 31 December 2023 and 31 December 2022, respectively. Level 3 recurring fair value Reconciliation of Level 3 fair values The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values. All figures are reported in thousands of US$ Equity securities Options Balance at 1 January 2022 Loss included in financial cost Balance al 31 December 2022 Addition from sale of SCRN Properties Ltd. (note 20) Gain on revaluation of equity securities (note 24) Balance al 31 December 2023 - - - 1,012 1,012 86 (58) 28 712 (244) 496 Unlisted equity securities In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. Given the strategy of the Group to invest in privately held assets, the assets held by the Group are of such a nature where there is generally an absence of an active market in the asset and the valuation of these assets can be volatile owing to their high-risk nature, lack of profitability and level of negative cash flow. The Group selects several other valuation techniques which requires the Group to make certain assumptions and judgements in assessing the fair value of these assets. Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Company gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. The “fair value” of financial assets is assumed to be the price that would be received for the financial asset in an orderly transaction between knowledgeable and willing but not anxious market participants acting at arm’s length given current market conditions at the relevant measurement date. Fair value for unquoted or illiquid investments is often estimated with reference to the potential realisation price for the investment or underlying business if it were to be realised or sold in an orderly transaction at the measurement date, regardless of whether an exit in the near future is anticipated and without reference to amounts received or paid in a distressed sale. An assessment will be made at each measurement date as to the most appropriate valuation methodology, Each port- folio company will be subject to individual assessment. As of 31 December 2023, The Group prepared several valuation models and determined using publicly available information, noting Ensign’s peer group consists of listed companies. The Group determined that the chosen valuation metric, Enterprise Value to Mineral Resources, is a widely accepted Austral Gold Limited 81 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS standard in the sector for assessing the relative valuation of capital and the most appropriate valuation methodology for its investment in Ensign Minerals Inc. (“Ensign”). The following assumptions were used to determine the fair value of the Group’s investment in Ensign under the Enterprise Value to Mineral Resources model: • Group’s shareholding in Ensign-11.7% • Discount factor of 40% of 1,640 thousand inferred resources advised by Ensign • Illiquidity discount 20% • EV to Mineral Resource factor 16.08 The sensitivity to +/- 10% variation in the discount factor to inferred resources (36%-44%) on the fair value of the Ensign investment results in an impact of -US$87 thousand and +US$106 thousand respectively. The sensitivity to +/- 10% variation in the illiquidity factor (18%-22%) on the fair value of the Ensign investment results in an impact of -US$15 thousand and +US$35 thousand respectively. The sensitivity to +/- 10% variation in the EV to Resources multiple (14.5x-17.7x) on the fair value of the Ensign invest- ment results in an impact of +US$154 thousand and -US$135 thousand respectively Fair value hierarchy Refer to note 4 of these financial statements for details of the fair value hierarchy. Transfers During the year ended 31 December 2023 there were no transfers between the financial instrument levels of hierarchy. However, as the Group lost significant influence in Ensign during the year, it remeasured its common shares of Ensign at fair value at 31 December 2023. Key assumptions for Options/Warrants Strike price Annual volatility Interest rate Expiration date 19. INVENTORIES All figures are reported in thousands of US$ Materials and supplies Ore stocks Gold bullion and gold in process Total inventories Unico Silver A$0.26 99.79% 3.96% Ensign C$1.50 55% 0.20% 1 March 2026 18 February 2024 As at 31 December 2023 6,558 1,736 1,405 9,699 2022 7,167 274 1,505 8,946 * Ore stock inventories require estimates and assumptions most notably in regard to grades, volumes, densities, future completion costs and ultimate sale price. Such estimates and assumptions may change as new information becomes available which may impact upon the carrying value of inventory. The allowance for inventory obsolescence forming part of the above balance is US$1,874k (31 December 2022:US$1,572k) resulting in an expense of US$272K included with other expenses (note 8) and US$30k charged to cost of sales (note 6). 20. ASSETS FOR SALE All figures are reported in thousands of US$ Transfers from property, plant and equipment Transfers from exploration and evaluation expenditures Assets held for sale As at 31 December 2023 - - - 2022 951 7,343 8,294 On 25 November 2022, the Group entered into a Share Sale Agreement (“Agreement”) with E2 Metals Limited, whose name was subsequently changed to Unico Silver Limited (“Unico”) to sell the common shares of its subsidiary, SCRN Properties Ltd. (“SCRN”), whose major assets are exploration assets and property and equipment. As closing of the transaction was subject to several conditions including Unico shareholder approval of the total shares and options to be issued by Unico, the Group recorded the transaction as an asset held for sale at its carrying value on 31 December 2022. All conditions for closing the transaction were met and the sale was completed on 1 March 2023. A gain on the sale of US$1,964 thousand was recognised (note 7) based on the difference between the US$8,249 thou- sand carrying value of the assets held for sale and the total consideration of US$10,213 thousand related to: Austral Gold Limited 82 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS a. Total cash consideration of US$5,000 thousand, (US$2,500 thousand received at closing, while US$2,500 thousand is due over three subsequent years on the anniversary of the Agreement date, of which US$750 thousand was received in November 2023) which fair value was estimated at US$4,793 thousand at closing); b. 49,751,970 shares of Unico valued at US$4,709 thousand (A$6,965 thousand) at closing that are being held in escrow with 50% released on the first anniversary of the closing date and 50% released on the second anniversary of the closing date, which was equal to (19.9%) Unico’s shareholding on a non-diluted basis on 1 March 2023 (31 December 2023-17%) and; c. 15 million options of Unico. The value of the options using the Black-Scholes model at closing was US$0.712 million using t key assumptions disclosed in note 18: 21. MINE PROPERTIES All figures are reported in thousands of US$ Mine Properties – 31 December 2022 Cost Accumulated amortisation Carrying value — Mine Properties Mine Properties – 31 December 2023 Cost Accumulated amortisation Carrying value — Mine Properties All figures are reported in thousands of US$ Costs carried forward in respect of areas of interest Carrying amount at the beginning of the year Additions Transfers from exploration and evaluation expenditure Transfers to property, plant and equipment Increase in provision for reclamation and rehabilitation Amortisation Carrying amount at end of the year Guanaco/ Amancaya Casposo Total 65,862 (61,808) 4,054 68,516 (62,257) 6,259 9,795 (9,795) - 9,795 (9,795) - 75,657 (71,603) 4,054 78,311 (72,052) 6,259 For the year ended 31 December 2023 4,054 9 - - 2,645 (449) 6,259 2022 1,217 30 3,585 (368) 598 (1,008) 4,054 Carrying value — Guanaco/Amancaya The Guanaco and Amancaya mines have been determined by Management to be a single cash generating unit (“CGU”). The fair value less cost of disposal, is used to assess the recoverable value of the CGU. The mine properties noted above and the property, plant and equipment that is an intrinsic part of the mine and its structure (included in note 22) are included in determining the carrying value of the CGU, which has been estimated at US$24,372 thousands after considering working capital, for the purposes of assessing for impairment, while the carrying value of the Guanaco/ Amancaya mine properties, plant and equipment is US$51,623 thousands. Management have assessed the recoverable value to be above book value of the Guanaco/Amancaya project and there- fore no impairment charge has been applied to the assets for the current year. An impairment test was also performed internally using the discounted cash flow model (DCF) as the primary valuation methodology. This FVLCOD discounted cashflow model is a level 3 fair value hierarchy. Main assumptions of the DCF model for impairment test purposes are as follows: • Forecast Gold price (2024-2033): US$2,048/oz-1,815/oz (31 December 2022 (2023-2033): US$1,800/oz – US$1,720/oz) • Forecast Silver price (2024-2033):US$24/oz-25/oz (31 December 2022 (2022-2033) US$20/oz– US$23.5/oz) • The gold and silver assumptions represent management’s assessment of future prices are based on current commodity prices and market expectations of future changes. • Life of mine operations based on the current model are forecast to end in 2033 (31 December 2022: 2033). • Discount Rate (pre-tax): 9.6% (31 December 2022:8.1%) • Discount Rate (after-tax): 8.5% (31 December 2022: 7.5%) • The discount rate was a measure estimated based on the Company’s current weighted average cost of capital. • Production costs 2024 (US$1,364/oz) 2023 (US$1,645/oz) • Production costs are management’s estimate of costs based on estimated production, historical data and anticipated inflationary changes. Austral Gold Limited 83 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Production is based on Proven and Probable reserves and resource estimates to 31 December 2023 that are based on an independent technical report provided to the Group in 2022. No reasonably possible change to the key assumptions would result in a recoverable value below the book value of any of the projects. The sensitivities to the key assumptions would have the following results; The sensitivity to +/- 10% variation in the gold price (US$1,692-US$2,068 /oz) on the recoverable value of the Guanaco/ Amancaya project results in an impact of +/- US$16,700 thousand. The sensitivity to +/- 10% variation in the discount rate 7.7%-9.4%) recoverable value of the Guanaco/Amancaya project results in an impact of +/- US$1,800 thousand. The sensitivity to +/- 10% variation in production costs on the recoverable value of the Guanaco/Amancaya project results in an impact of +/- US$10,600 thousand. 22. PROPERTY, PLANT AND EQUIPMENT All figures are reported in thousands of US$ Property, plant and equipment owned Right of use assets Property, plant and equipment owned Cost Accumulated depreciation Carrying amount at end of the year All figures are reported in thousands of US$ Movements in carrying value Carrying amount at beginning of the year Additions Transfers from mining properties Transfers to assets held for sale Depreciation Disposals Depreciation on disposals Carrying amount at end of the year As at 31 December 2023 42,581 7,035 49,616 175,490 (132,909) 42,581 2022 35,549 6,708 42,257 164,967 (129,418) 35,549 For the year ended 31 December 2023 2022 35,549 11,283 - - (4,184) (760) 693 42,581 34,334 6,434 368 (952) (4,590) (1,687) 1,642 35,549 The majority of the property, plant and equipment is included in the Guanaco/Amancaya Cash Generating Unit (“CGU”). Prop- erty, plant and equipment that does not form part of the Guanaco CGU are being carried at the lower of their book value and recoverable amount. The Casposo property, plant and equipment is recorded at salvage value as it is currently not being used. 22.1 Reconciliation of carrying amount All figures are reported in thousands of US$ Underground Mine Development Plant Mining Equipment Buildings Heap Land Other Total Cost Balance at 31 December 2021 Additions Transfer from Mine properties Reallocation Disposals Transfers to asset held for sale Balance at 31 December 2022 Additions Disposals Balance at 31 December 2023 81,070 35,716 21,528 14,580 5,663 336 262 42 - - - - - - - - - - (1,687) - - - (196) (304) 86,733 36,052 19,907 14,318 5,009 - 122 - 40 (760) - - - 105 368 139 - - 612 5,633 - 91,742 36,174 19,187 14,318 6,245 815 7,476 161,185 - - - - 26 - (139) - 6,434 368 - (1,687) (815) (18) (1,333) - - - - 7,345 164,967 479 - 11,283 (760) 7,824 175,490 Austral Gold Limited 84 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS All figures are reported in thousands of US$ Underground Mine Development Plant Mining Equipment Buildings Heap Land Other Total Accumulated depreciation Balance at 31 December 2021 Depreciation Disposals Transfers to asset held for sale Balance at 31 December 2022 Depreciation Disposals Balance at 31 December 2023 Carrying amounts At 31 December 2022 At 31 December 2023 63,558 27,016 17,433 11,873 3,378 590 - - - - 309 (1,637) 238 - (190) (174) 66,936 27,606 15,915 11,937 3,133 - 561 - 162 (693) 219 - 70,069 28,167 15,384 12,156 - - - - - 103 - 103 19,797 8,446 3,992 2,381 612 21,673 8,007 3,803 2,162 6,142 - - - - - - - - - - 6,971 126,851 75 (5) (17) 4,590 (1,642) (381) 7,024 129,418 6 - 4,184 (693) 7,030 132,909 321 35,549 794 42,581 22.2 Right of use assets All figures are reported in thousands of US$ Office Vehicles Machinery and equipment Balance at 31 December 2021 Additions Disposals Less depreciation Balance at 31 December 2022 Additions Disposals Less depreciation Balance at 31 December 2023 22.3 Future lease payments* All figures are reported in thousands of US$ Undiscounted Less than a year Greater than a year Discounted Less than a year Greater than a year *Expiration dates are disclosed in note 33 (d) 108 - - (99) 9 232 - (83) 158 3,077 1,220 (5) (1,748) 2,544 - (160) (1,033) 1,351 4,488 - - (333) 4,155 1,670 - (299) 5,526 As at 31 December 2023 1,352 1,256 2,608 1,169 1,143 2,312 Total 7,673 1,220 (5) (2,180) 6,708 1,902 (160) (1,415) 7,035 2022 2,026 953 2,979 1,925 911 2,836 Austral Gold Limited 85 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 23. EXPLORATION AND EVALUATION EXPENDITURE All figures are reported in thousands of US$ Costs carried forward in respect of areas of interest: Carrying amount at the beginning of the year Additions Transfers to assets held for sale Transfers to mine properties Impairment for the year Carrying amount at end of the year For the year ended 31 December 2023 2022 27,261 4,614 - - (3,981) 27,894 32,322 6,793 (7,343) (3,585) (926) 27,261 The recovery of the carrying amount of the exploration and evaluation assets is dependent on the successful develop- ment and commercial exploitation or sale of the areas of interest. This balance mainly relates to expenditures at the Guanaco, and Casposo exploration projects and the fair value of the properties acquired from Revelo. Additions for the year ended 31 December 2023 and 2022 relate mainly to exploration on the Jaguelito project, located in the Indio belt in Argentina, the Casposo-Manantiales project, located in San Juan, Argentina and the Guanaco projects located in Chile. During 2023, the Group impaired the Morro Blanco project for US$1,850 thousand as the Group did not expect to meet the commitments under the option agreement with Pampa Metals that expired on 27 July 2023. In addition, it impaired the following properties: a. Reprado project acquired from Revelo Resources for US$258 thousand as it abandoned the property. b. Between 20-54% of the Las Pampas, Victoria Sur and Loro properties acquired from Revelo Resources and the San Guillermo property for US$1,643 thousand as the Group relinquished a selected number of hectares based on histori- cal geological information and the Group’s internal estimate of the potential for further discoveries, c. Expenditures of US$230 thousand on phase II of the Sierra Blanca project as US$400 thousand was due to be incurred by 31, August 2023, but was not spent. During 2022, the Group impaired the Orca property acquired from Revelo for US$156 thousand as it abandoned the property and impaired US$769 thousand related to Cerro Blanco after advising Pampa that it was withdrawing from the property. Impairment for the year ended 31 December 2023 and 2022 relate to impairment on the exploration projects with either no expected value or partial value. Jaguelito Option Agreement During February 2022, the Group signed a binding offer letter with Mexplort Perforaciones Mineras S.A. (”Mexplort”) where the parties agreed to enter into a Joint Venture Agreement to identify and develop new precious metal projects located in the Indio belt in the Province of San Juan, Argentina and Mexplort is to grant Austral Gold Argentina S.A., a subsidiary company in Argentina, an earn-in option whereby it may acquire a 50% of the mining rights the Jaguelito project (“50% interest”) held by Mexplort through a concession granted by the Instituto Provincial de Exploraciones y Explotaciones Mineras de la Provincia de San Juan (IPEEM) in October 2011 which was approved on 10 August 2022. During the year ended 31 December 2023, a company owned equally by Group and Mexplort was incorporated. The consideration to acquire the 50% interest is as follows: i. US$2,000 thousand in exploration expenditures on Jaguelito within two years from the approval of the Option by IPEEM (the “First Stage”), including drilling a minimum of 5,000 meters. As of 31 December 2023, US$4,943 thousand of exploration expenses was incurred and 4,331 meters has been drilled. ii. US$2,000 thousand in exploration expenditures on Jaguelito within two years after completing the First Stage (the “Second Stage”), and iii. US$3,000 thousand payment to Mexplort if the Board of the JV Company approves the construction of the project based on a bankable feasibility study (“BFS”). The Group must comply with the conditions in (i)-(iii) above to acquire a 50% interest in the Jaguelito project. Austral Gold Limited 86 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS At the time of acquisition, the Jaguelito project had no probable and proven resources. The project was not in production and there was no mine plan to place them into production. For these reasons, the acquisition was accounted for as an acquisition of assets and liabilities and not a business combination as defined under AASB3 “Business combinations” and note 41. Sierra Blanca Agreement The significant terms of the transaction to acquire the Sierra Blanca signed with New Dimension Guernsey Ltd. in October 2020 include the payment of US$100 thousand cash (paid) on signing and work commitments of US$700 thousand. The transaction is being accounted for as an acquisition of an asset and the future work commitments are to be paid before the following dates: 31 August 2021: $100 thousand (paid) (Year 1) 31 August 2022: $200 thousand (paid) (Year 2) 31 August 2023: $400 thousand (Year 3) As the work commitments in Year 1 were incurred, the Group acquired a 51% interest in Sierra Blanca S.A., which resulted in Exploration and Evaluation rights of US$392 thousand, the non-controlling interest at the time of acquisition, for total cash consideration of US$200 thousand. Although the work commitments in Year 2 were incurred, as the work commitments in Year 3 were not incurred, the Group did not acquire an additional interest. At the time of acquisition, the Sierra Blanca project had no probable and proven resources. The project was not in produc- tion and there was no mine plan to place them into production. For these reasons, the acquisition was accounted for as an acquisition of assets and liabilities and not a business combination as defined under AASB3 “Business combina- tions” and note 41. Colossus Resource Agreement On 4 April 2023, the Group entered executed a letter of intent to grant Colossus Resources Corp. (“Colossus”) an option to purchase the Group’s Chilean Calvario and Mirador copper projects. Colossus paid the Group US$100 thousand, which was recorded as other income (note 7), of which US$75 thousand was agreed to be used to pay the 2023 maintenance fees for the projects. Subsequently, the parties executed an agreement on 15 November 2023. Consideration comprised mainly of (i) a US$2,500 thousand work commitment over a two-year period, (ii) 19.99% shareholding in Colossus (non- diluted basis), (iii) one million Colossus warrants at an exercise price of C$0.50 and anti-dilution rights up to Colossus raising US$3,800 thousand. Additional payment of two million Colossus common shares if Colossus prepares a prefea- sibility study. Colossus is to complete an equity financing for proceeds of not less than US$1,500 thousand within 90 days after the date of the Agreement and any required regulatory approval. Required regulatory approval by the TSXV has not been received as of the date of the annual report. 24. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD The Group’s interests in equity-accounted investees comprise an interest in a Rawhide Acquisition Holding LLC. (“Rawhide”) that owns Rawhide Mining LLC, a gold and silver operating mine in Nevada, USA and which carry value is US$ nil )31 December 2022: US$ nil) and an interest in Ensign Gold Limited (“Ensign”) that is engaged in the acquisition, exploration, and development of precious metal mineral properties primarily in the state of Utah, United States through its subsidiary, Ensign Gold (US) Corp. Subsequent to acquiring the interest, Ensign changed its name to Ensign Minerals Inc. All figures are reported in thousands of US$ Carrying amount of interest in associates Carrying amount of interest in Ensign Group’s total carrying amount of interest in associates 24.1 Investment in Rawhide As at 31 December 2023 2022 - - 60 60 During the year ended 31 December 2023, the Group provided bridge funding of US$555 thousand to the Rawhide Mining LLC in exchange for takeover options with the other unitholders to acquire an equity position of approximately 99.98% of the Mine, subject to due diligence. Total expenses related to the takeover option, which include due diligence expenses and the bridge funding, were US$617 thousand. As the Group did not exercise the takeover options, the Group recognised these expenses in the consolidated statement of profit or loss and other comprehensive income as Other expenses (note 8). On 20 December 2023 (the “ Petition Date “) Rawhide Mining LLC filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. During the year ended 31 December 2022, the Group advanced Rawhide US$124 thousand. As the Group did not expect to recover this amount, the Group recognised this amount in share of loss of associates in the consolidated statement of profit or loss and other comprehensive income during that period. Austral Gold Limited 87 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 24.2 Investment in Ensign The Group has reviewed the facts and circumstances that affect the Group’s assessment of significant influence over Ensign, including that one of the Group’s directors is on Ensign’s board as at 31 December 2023 (31 December 2022-two of the Group’s directors were on Ensign’s board), and believes that as at 31 December 2023, it no longer has significant influence. As a result, the Group has derecognised its equity accounted investment in Ensign and recognised an invest- ment in Ensign as a financial asset, measured at fair value. This has resulted in a gain of $1,012 thousand which has been recognised as an item in the Group’s profit or loss (note 8). Any subsequent gains or losses on the fair value of the investment will be recognised in its Profit or Loss statement. At 31 December 2023, the Group had only one member of its board on Ensign’s board (31 December 2022: 2 board members) and it’s percentage ownership interest was 11.7% (31 December 2022: 11.91%). 25. TRADE AND OTHER PAYABLES All figures are reported in thousands of US$ Current Trade payables Trade payables-supply chain financing arrangement (note 25.1) Accrued expenses Royalty payable Director fees Restricted cash received on private placement of convertible notes (note 25.2) Other As at 31 December 2023 15,179 835 5,312 578 531 591 95 2022 8,655 876 4,668 376 341 - 774 Total current trade and other payables 23,121 15,690 Non-Current Other payables Total non-current trade and other payables 25.1 Supply chain financing arrangements All figures are reported in thousands of US$ Carrying amount of financial liabilities Presented in trade and other payables Of which suppliers have received payment from finance providers Range of payment due dates Liabilities that are part of the arrangements Comparable trade payables that are not part of the arrangements 3 3 As at 31 December 2023 835 795 1,013 1,013 2022 876 854 180 days after invoice date 180 days after invoice date 30-60 days 30-60 days The Group participates in a supply chain financing arrangement (SCF) under which its supplier may elect to receive early payment of their invoice from a financial institution by factoring their receivable from the Group. Under the arrangement, a financial institution agrees to pay amounts to a participating supplier in respect of invoices owed by the Group and receives settlement from the Group at a later date. The principal purpose of this arrangement is to facilitate efficient payment processing and enable the willing suppliers to sell their receivables due from the Group to a bank before their due date. The Group has not derecognised the original liabilities to which the arrangement applies because neither a legal release was obtained, nor the original liability was substantially modified on entering into the arrangement. From the Group’s perspective, the arrangement extends payment terms to six months. The Group incurs interest ranging from approxi- mately 16%-20% per annum to the financial institutions on the amounts due to suppliers. The Group therefore discloses the amounts factored by suppliers within trade payables because the nature and function of the financial liability remain similar to those of other trade payables but discloses disaggregated amounts in the notes. All payables under SCF are classified as current as at 31 December 2023. The payments to the financial institutions are included within operating cash flows because they continue to be part of the normal operating cycle of the Group and their principal nature remains operating- i.e. payments for services required to earn revenue. The payments to a supplier by the financial institution are considered non-cash transactions and as at 31 December 2023 amount to US$795 thousand (31 December 2022-US$854 thousand) plus accrued interest of US$40 thousand (31 December 2022-US$22 thousand). Austral Gold Limited 88 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 25.2 Cash received on private placement of convertible notes On 10 October 2023, the Group entered into an Agreement to issue approximately 1,548 thousand non-transferable unsecured convertible notes, each with a face value of A$1, to an accredited and sophisticated investor. The number of notes will be determined by converting the gross proceeds into equivalent Australian dollars. The notes are to bear interest at a rate of 9% per annum and mature on the second anniversary of the date they are issued. Each note will entitle the holder to convert the notes into ordinary shares of the Company at the holder’s option at a conversion price of A$0.059 per share during the first year and A$0.118 during the second year. The private placement is expected to yield gross proceeds of US$1,000 thousand (approximately A$1,548 thousand). At 31 December 2023, the Group had received US$591 thousand from the investor, and as the aggregate of US$1,000 thousand stated in the agreement had not been received, the Group has not closed the financing, and classified the cash received as restricted cash. The closing of the Agreement is also subject to acceptance by the TSX Venture Stock Exchange. On 14 February 2024, a Deed of Variation of the Convertible Note Agreement was entered into which allowed for the closing of the convertible notes in two tranches, with the first tranche totaling US$591 thousand. On 15 February 2024, the first tranche of the Agreement was completed and the US$591 thousand became unrestricted cash. The investor did not subscribe for the second tranche, which was due by 15, March 2024. 26. EMPLOYEE ENTITLEMENTS All figures are reported in thousands of US$ Current Salaries, social security and bonuses Employee entitlements Total current employee entitlements As at 31 December 2023 1,967 1,023 2,990 2022 3,009 1,044 4,053 The current provision for employee entitlements includes all unconditional entitlements in accordance with the applicable legislation. The entire amount is presented as current, since the Group does not have an unconditional right to defer payment. The entire balance of employee benefits is expected to be settled within the next 12 months. Total employee salary, benefits and bonuses of the Group in the profit and loss statement was US$13,286 thousand (2022- US$14,176 thousand), including US$9,707 thousand (2022-US$9,307 thousand) in cost of sales and US$3,579 thousand (2022-US$4,869 thousand) in administration. Non-current Employee entitlements Total non-current employee entitlements 18 18 35 35 Retirement benefits Retirement benefits are to be paid upon the death of workers and for disability and retirement. The methodology followed to determine the provision for all employees adhering to the agreements has considered turn- over rates and the RV-2014 mortality table established by the Superintendency of Securities and Insurance to calculate the reserves of life insurance in Chile according to the valuation method called Accumulated Benefit Valuation Method or Accrued Benefit Cost. This methodology is established in AASB 119 Employee benefits on Retirement Benefits Costs. The parameters of turnover rates, rates of increase of remunerations and discount rate have been determined by the Group. 27. PROVISIONS All figures are reported in thousands of US$ Mine closure Movement in non-current provisions Opening balance Increase of provision for reclamation and rehabilitation Exchange difference Present value adjustment Closing balance As at 31 December 2023 13,695 10,924 2,645 161 (35) 13,695 2022 10,924 9,232 598 674 420 10,924 Austral Gold Limited 89 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Mine closure provision Provision for rehabilitation work has been recognised in relation to estimated future expenditures including rehabilitating mine sites, dismantling operating facilities and restoring affected areas. These future cost estimates are discounted to their present value. The calculation of this provision requires assumptions such as application of environmental legisla- tion, mine closure dates, available technologies and engineering cost estimates. During the year ended 31 December 2023, the Company adjusted the Reclamation and rehabilitation/Mine-Closure Plan (MCP) for the Guanaco-Amancaya mine complex in compliance with local regulations in Chile. The increase in the estimated provision for reclamation and rehabilitation was primarily driven by increases in inflation, labor costs, and the inclusion of the Heap Reprocessing Project, which extended the life of the mine complex to 2033 from 2026. The MCP encompasses the entire mine complex, and it foresees the initiation of closure activities in 2033, following the conclusion of production from the Heap Reprocessing Project. The MCP is expected to receive approval by “Servicio Nacional de Geología y Minería” (SERNAGEOMIN) during the first half of 2024. If the SERNAGEOMIN requires changes to the MCP, the reclamation and rehabilitation provision would change. The carrying amount of the mine closure asset of US$3,587 thousand is included in the carrying value of mine properties disclosed in note 21. As at 31 December 2023, the total restoration provision amounts to US$10,103 thousand (31 December 2022–US$7,157 thousand) for Guanaco/ Amancaya mine. The present value of the restoration provision was determined based on the following assumptions: Undiscounted rehabilitation costs: • US$12,860 thousand (31 December 2022– US$ 7,647 thousand); • Discount period: 10 years (Discount period based on expected timing of restoration work). • Discount rate: 2.44% (2022- 1.7%) At 31 December 2023, the total restoration provision amounts to US$3,592 thousand (31 December 2022: US$3,767) for the Casposo mine. The present value of the restoration provision was determined based on the following assumptions: • Number of years, 5 (31 December 2022-2 years) (increase based on Group’s expectation of when reclamation and rehabilitation work is expected to be performed). • Undiscounted reclamation and rehabilitation costs: US$3,912 thousand (31 December 2022-US$3,912 thousand); • Discount rate: 1.7% (2022–2.2%) 28. LOANS AND BORROWINGS All figures are reported in thousands of US$ Current Loan facilities Related party loans Total current loans and borrowings Non-current Loan facilities Total non-current loans and borrowings As at 31 December 2023 8,823 4,717 13,540 2,568 2,568 2022 7,382 - 7,382 1,264 1,264 Loan Facilities At 31 December 2023, the current and non-current Loan facilities are to be repaid over 9 months and 34 months respec- tively at an annual average interest rate of 9.6% (2022–6.9%). Related party loans During the year ended 31 December 2023, the Group received unsecured related party loans totaling US$4,555,000 (including accrued interest, the total amount owed at 31 December 2023 is US$4,716,790). Further information about these loans is described in note 37. Austral Gold Limited 90 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Reconciliation of movements of liabilities to cash flows arising from financing activities All figures are reported in thousands of US$ Balance at 1 January 2022 Change from financing cash flows Proceeds from loans and borrowings Repayments Other changes New leases Interest expense Interest paid Balance at 31 December 2022 Balance at 1 January 2023 Change from financing cash flows Proceeds from loans and borrowings Repayments Other changes New leases Foreign exchange Interest expense Interest paid Balance at 31 December 2023 Loans 5,753 11,735 (8,842) - 330 (330) 8,646 8,646 17,955 (10,777) - - 1,004 (720) 16,108 Leasing 4,763 - (3,133) 1,220 194 (208) 2,836 2,836 - (2,252) 1,742 (14) 186 (186) 2,312 All figures are reported in US$ 31 December 2023 Lender Santander Bank(3) Santander Bank(3) Inversiones Financieras del Sur S.A.(2)(3) Santander Bank(3) Santander Bank Face value Carrying value 1,000,000 1,000,000 555,000 500,000 500,000 1,039,119 1,016,903 562,077 515,119 515,602 Inversiones Financieras del Sur S.A.(2) 2,000,000 2,059,750 Eduardo Elsztain(2) Saul Zang(2) Eduardo Elsztain(2) Saul Zang(2) 850,000 150,000 850,000 150,000 870,188 153,638 910,468 160,671 Banco de Crédito e Inversiones SA (BCI) 1,000,000 1,061,686 Banco de Crédito e Inversiones SA (BCI Santander Bank Banco de Crédito e Inversiones SA (BCI) Banco de Crédito e Inversiones SA (BCI) Santander Bank Santander Bank Banco de Crédito e Inversiones SA (BCI) 500,000 400,000 500,000 500,000 3,500,000 3,500,000 1,000,000 531,546 418,225 515,697 505,830 1,263,889 3,062,500 944,444 Total 18,455,000 16,107,352 Interest rate (%) Maturity date (1) 8.97 9.22 9.00 8.85 9.52 9.00 9.00 9.00 9.00 9.00 11.94 13.93 12.62 12.15 12.35 4.27 8.50 12.35 23 January 2024 24 January 2024 10 February 2024 26 February 2024 01 March 2024 12 March 2024 12 March 2024 12 March 2024 31 March 2024 31 March 2024 17 June 2024 17 July 2024 19 August 2024 23 September 2024 23 September 2024 25 January 2025 17 April 2026 23 October 2026 (1) The Maturity date refers to the date when the loan is to be completely repaid. Loans and borrowings have been classified based on the actual repayment calendar as disclosed in note 33. (2) Related party loans (3) During January and February 2024, a total of US$2,500 thousand in pre-export facilities were renewed with Santander Bank for an additional 6 months at an average interest rate of 9.36% per annum as three 6-month pre-export facilities were renewed as follows: US$1,000 thousand at 9.12%, US$500 thousand at 9.32%, and US$500 thousand at 9.75% and US$500 thousand at 9.60%. In addition, the loan maturity dates of the loans held by Inversiones Financieras del Sur S.A., Eduardo Elsztain and Saul Zang were extended to 30 September 2024. Austral Gold Limited 91 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 29. ISSUED CAPITAL Fully paid ordinary shares (in thousands of US$) Number of ordinary shares Weighted average number of ordinary shares Movements in ordinary share capital As at 31 December 2023 109,114 612,311,353 612,311,353 Number of ordinary shares 2022 109,114 612,311,353 612,311,353 US$000’s Balance at 31 December 2023 and 2022 612,311,353 109,114 Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The ordinary shares do not have any par value. 30. ACCUMULATED LOSSES LO All figures are reported in thousands of US$ Accumulated losses at beginning of year Net (loss) for the year Accumulated losses at end of year 31. RESERVES All figures are reported in thousands of US$ Foreign currency translation reserve Balance at beginning of year Foreign exchange movements from translation of financial instruments to US dollars Balance end of year Business combination reserve Balance at beginning of year Balance end of year Profit appropriation reserve Balance at beginning of year Dividend paid Balance end of year Total reserves For the year ended 31 December 2023 (59,320) (7,229) (66,549) 2022 (51,063) (8,257) (59,320) For the year ended 31 December 2023 234 1 235 (1,406) (1,406) 14 - 14 2022 251 (17) 234 (1,406) (1,406) 14 - 14 (1,157) (1,158) Foreign Currency Translation Reserve Exchange differences arising on translation of the non-US$ denominated non-monetary balances of Group Companies are recognised in the foreign currency translation reserve. The reserve is recognised in profit or loss when the net invest- ment is disposed. Business Combination Reserve Created on the acquisition of non-controlling interests. The reserve is reversed when the entity acquired is sold or wound up. Profit appropriation Reserve Transfers up to the net income earned during the year may be transferred from accumulated losses and paid as a dividend. 32. NON-CONTROLLING INTEREST All figures are reported in thousands of US$ Non-controlling interest in subsidiaries comprise Non-controlling interest during the year Balance end of the year For the year ended 31 December 2023 2022 (14) 165 (9) 179 During November 2021, the Group completed the work commitment to acquire 51% of Sierra Blanca S.A as disclosed in note 23. Austral Gold Limited 92 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 33. FINANCIAL INSTRUMENTS Financial risk management objectives The Group’s principal financial instruments include items such as borrowings, receivables, listed equity securities, cash and short- term deposits. These activities expose the Group to a variety of financial risks: market risk (interest rate risk and foreign currency risk), credit risk, price risk and liquidity risk. The Group recognises the importance of risk management and has adopted a Risk Management and Internal Compliance and Control policy which describes the role and accountabilities of management and of the Board. The Directors manage the different types of risks to which the Group is exposed by considering risk and monitoring levels of exposure to the main financial risks by being aware of market forecasts for interest rates, foreign exchange rates, commodity and market prices. The Group’s exposure to credit risk and liquidity risk is monitored through general business budgets and forecasts. The Group holds the following financial instruments: All figures are reported in thousands of US$ Financial Assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities Trade and other payables Borrowings Financial leases a. Market Risk As at 31 December 2023 1,039 3,483 3,958 23,124 16,108 2,312 2022 926 3,326 641 16,703 8,646 2,836 Foreign Currency Risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign currency exchange rate fluctuations. Foreign exchange rate risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the functional currency of the Group. The risk is measured using cash flow forecasting. Foreign currency risk is minimal as most of the transactions are settled in US$. At 31 December 2023, the Group was exposed to foreign exchange risk through the following financial assets and liabilities denominated in currencies other than the Group’s functional currency (thousands of US$). The following significant exchange rates have been applied. US$ ARS CLP A$ C$ Average rate Year-end spot rate 2023 295.19 839.69 1.51 1.35 2022 139.84 850.28 1.44 1.25 2023 806.95 877.12 1.47 1.32 2022 177.06 855.86 1.48 1.35 Sensitivity analysis A reasonably possible strengthening (weakening) of the Argentine peso, Chilean peso, Australian dollar, Canadian dollar and US dollar against all other currencies at 31 December 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. Austral Gold Limited 93 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Effect in thousands of US$ 31 December 2023 Profit or loss Equity, net of tax Strengthening Weakening Strengthening Weakening ARS (70% movement) CLP (10% movement) A$ (5% movement) C$ (2% movement) 31 December 2022 ARS (70% movement) CLP (10% movement) A$ (5% movement) C$ (1% movement) (198) (1,952) 289 5 198 1,952 (289) (5) (198) (1,952) 289 5 198 1,952 (289) (5) Strengthening Weakening Strengthening Weakening 688 (585) - 9 (688) 585 - (9) 688 (585) - 9 (688) 585 - (9) All figures are reported in thousands of US$ 31 December 2023 Argentinian Peso (ARS) Chilean Peso (CLP) Australian Dollar (A$) Canadian Dollar (C$) Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities Trade and other payables Financial leases 29 28 23 278 - 14 733 - 19,482 136 9 20 5,774 85 - 42 - 288 28 - All figures are reported in thousands of US$ 31 December 2022 Argentinian Peso (ARS) Chilean Peso (CLP) Australian Dollar (A$) Canadian Dollar (C$) Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Financial liabilities Trade and other payables Borrowings Financial leases 75 1,599 23 709 - 5 17 1,128 - 6,799 - - 10 20 - 30 - - 24 9 590 40 - - ii. Price Risk The Group’s revenues are exposed to fluctuations in the price of gold, silver and other prices. Gold and silver produced is sold at prevailing market prices in US$. The Group has resolved that for the present time production should remain unhedged. The Group considers exposure to commodity price fluctuations within reasonable boundaries to be an integral part of the business. The graph below shows the long term upward trend of gold and silver prices. 2500 2000 1500 1000 500 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gold Price (US$/oz) Silver Price (US$/oz) 60 50 40 30 20 10 0 Austral Gold Limited 94 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS iii. Interest Rate Risk The Group’s main interest rate risk arises from recent higher interest rates on new borrowings and finance leases. The Group’s borrowings and finance leases are at fixed rates and therefore do not carry any variable interest rate risk. Changes in interest rates are not expected to have a significant impact on the Group. a. Financial Market Risk The financial market risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes in market prices, which occurs due to the Group’s investment in listed securities where share prices can fluc- tuate over time. This risk, however, is not deemed to be significant as these investments are held for long term strategic purposes and therefore movement in the market prices impact the short-term profit or loss or cash flows of the Group. The group holds listed government bonds, and listed equity securities (note 4). These are classified as level 1 within the fair value hierarchy as per AASB 7 “Financial Instruments”. Sensitivity analysis-Equity price risk All of the Group’s listed equity investments are listed on either the Australian Stock Exchange (“ASX”) or the Toronto Venture Exchange (“TSXV”) or the Canadian Stock Exchange (“CSE”). For such investments, an increase in the value of the investments at the reporting date on profit or loss would have resulted in an increase of US$243 thousand before tax and US$206 thousand after tax (2022: US$59 thousand before tax and US$42 thousand after tax). An equal change in the opposite direction would have decreased profit or loss by US$243 thousand (2022: US$59 thousand after tax). b. Credit Risk The maximum exposure to credit risk at the reporting date to recognised financial assets, including receivables from government authorities, is the carrying amount, net of any allowance for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its other receivables. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. There is no significant credit risk of concentration as although the Group typically sells to one refinery, it has the flexibility to sell through alternative channels such as financial institutions and merchant banks. In addition, credit risk is minimised as generally funds are collected within two days of the date of shipment. c. Liquidity Risk The liquidity of the Group is managed to ensure sufficient funds are available to meet financial commitments in a timely and cost effective manner. Management continuously reviews the Group’s liquidity position through cash flow projections based upon the current life of mine plan to determine the forecast liquidity position and maintain appropriate liquidity levels. d. Maturities of financial liabilities The tables below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. All figures reported in US$ 31 December 2023 Financial liabilities Trade and other payables Borrowings Leasing Total 31 December 2023 liabilities 31 December 2022 Financial liabilities Trade and other payables Borrowings Leasing Total 31 December 2022 liabilities 6 months 6-12 months 1-5 years > 5 years Total Consolidated 23,121 10,617 699 34,437 15,690 4,367 1,405 21,462 - 3,576 653 4,229 - 3,226 621 3,847 3 2,748 1,256 4,007 1,013 1,296 953 3,262 - - - - - - - - 23,124 16,941 2,608 42,673 16,703 8,889 2,979 28,571 Austral Gold Limited 95 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 34. COMMITMENTS All figures are reported in thousands of US$ Operating leases not recognised as liabilities Exploration commitment at the reporting date and recognised as liabilities Capital expenditure not recognised as liabilities As at 31 December 2023 - - 383 2022 - 1,003 616 To maintain legal rights to its properties, the Group pays fees for mining concessions and exploration. It anticipates that it will need to pay approximately US$383 thousand during the next year to maintain legal rights to all of its properties. 35. SUBSIDIARIES Subsidiaries Country of Incorporation % owned as at 31 December 2023 2022 Guanaco Mining Company Limited British Virgin Islands 100.000 100.000 Chile Chile Chile Chile Chile Chile Argentina Argentina United States Canada Canada Canada Canada Canada Argentina Argentina Guanaco Compañía Minera SpA Minera Mena Chile Ltda SCM Pampa Buenos Aires Ltda Minera Celeste Chile Ltda Minera Serena Chile Ltda SMC Montezuma Ltda Austral Gold Argentina S.A. Sierra Blanca S.A. Austral Gold North America Corp. Austral Gold Canada Limited SCRN Properties Ltd. Casposo Argentina Mining Limited Revelo Resources Corp. 1388631 BC Ltd Casposo Energias Renovables S.A.U. Minera Cuyo S.A. 36. PARENT ENTITY INFORMATION All figures are reported in thousands of US$ Current assets Total assets Current liabilities Total liabilities Net assets Issued capital Accumulated losses Reserves Total shareholders’ equity (Loss) for the year Foreign exchange movements from translation of financial statements to US$ Total comprehensive (loss) for the year Details of any guarantees entered into by the parent entity in relation to the debts of its subsidiaries Details of any contingent liabilities of the parent entity Details of any contractual commitments by the parent for the acquisition of property, plant or equipment 99.998 99.990 99.990 99.990 99.990 99.990 99.970 51.000 100.000 100.000 - 100.000 100.000 - - 50.000 As at 31 December 2023 4,586 59,970 18,832 18,832 41,138 109,114 (67,571) (405) 41,138 (18,608) 1 (18,607) None None None 99.998 99.990 99.990 99.990 99.990 99.990 99.970 51.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 - 2022 334 73,260 13,515 13,515 59,745 109,114 (48,963) (406) 59,745 (1,293) (3) (1,296) None None None Austral Gold Limited 96 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 37. RELATED PARTY TRANSACTIONS 37.1 KMP holdings of shares and share options at 31 December 2023 • Mr. Eduardo Elsztain holds 461,294,560 shares directly and indirectly in Austral Gold Limited. (31 December 2022— 461,294,560 shares) • Mr. Saul Zang holds 1,640,763 shares directly in Austral Gold Limited. (31 December 2022— 1,640,763 shares) • Mr. Pablo Vergara del Carril holds 68,119 shares directly in Austral Gold Limited. (31 December 2022—68,119) • Mr. E. Elsztain and Mr. S. Zang are Directors of IFISA which holds 380,234,614 shares (31 December 2022—380,234,614) • Mr. P. Vergara del Carril, Mr. E. Elsztain and Mr. S Zang are Directors of Guanaco Capital Holding Corp which holds 38,859,957 shares. (31 December 2022—38,859,957) • Mr. Stabro Kasaneva holds 7,881,230 shares indirectly in Austral Gold Limited. (31 December 2022—7,881,230) • Mr. Rodrigo Ramirez holds 279,514 shares directly in Austral Gold Limited. (31 December 2022—279,514) • Mr. Ben Jarvis holds 600,000 shares directly in Austral Gold Limited (31 December 2022—250,000) • Mr. Jose Bordogna holds 126,495 shares directly in Austral Gold Limited. (31 December 2022—126,495) 37.2 Directors and Key Management Personnel Remuneration The aggregate compensation made to Directors and other members of Key Management Personnel of the Group is set out below. All figures are reported in US$ Short-term benefits Other long term benefits Termination benefits Total For the year ended 31 December 2023 1,516,867 27,382 71,762 2022 2,422,596 21,484 - 1,616,011 2,444,080 37.3 Other transactions with related parties Zang, Bergel & Viñes Abogados (“ZBV”) is a related party since one non-executive Director, Pablo Vergara del Carril has significant influence over this law firm based in Buenos Aires, Argentina. Fees charged and expenses reimbursed by the Group for the year ended 31 December 2023 amounted to US$80,922 (2022: US$79,219). As at 31 December 2023, the Group owed ZBV US$5,990 (31 December 2022-US$7,967). IRSA Inversiones y Representaciones S.A. and Consultores Asset Management S.A. are related parties as they are controlled by Non-executive Director and Chair, Eduardo Elsztain. During the year ended 31 December 2023 a total of US$61,975 was charged to and reimbursed by the Company (2022: US$72,303) in regard to IT services support, HR services, software licenses building/office expenses and other fees at 31 December 2023, the Group owed these companies US$$7,285 (31 December 2022-US$12,755) During 2023, the Group entered into loans with Inversiones Financieras del Sur S.A. it’s directors, Eduardo Elsztain and Saul Zang. Terms of the loans are described in note 28 and the respective amounts owed and interest expense are disclosed in the following table: All figures are reported in US$ Lender Inversiones Financieras del Sur S.A. Eduardo Elsztain Saul Zang * Includes US$25,525 of interest paid during the year 37.4 Ultimate parent entity For the year ended 31 December 2023 Balance due Interest expense 2,621,827 1,780,656 314,309 88,797* 80,656 14,309 The Parent Entity is controlled by IFISA with a 62.1% non-diluted and diluted interest in Austral Gold Limited and is incorporated in Uruguay. As IFISA is a private company, they do not produce consolidated financial statements avail- able for public use. The ultimate beneficial owner of IFISA is Eduardo Elsztain. 37.5 Board positions with Companies that we hold equity interests Mr. Kasaneva, CEO and Director of Austral Gold Limited is a Director of Ensign Minerals Inc. (note 18) and Mr. Bordogna, CFO of Austral Gold Limited is a director of Unico Silver Limited (note 18). Austral Gold Limited 97 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 38. UNRECOGNISED DEFERRED TAX ASSETS In certain entities of the Group, deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits. The ability of the Group to utilise Australian, Argentina, US or Canadian tax losses will depend on the applicability and compliance with the respective country’s tax laws regarding continuity of ownership or same or similar business tests. All figures are reported in thousands of US$ Gross amount Gross amount As at 31 December 2023 Expiry 2022 Expiry Australia Tax losses Capital losses 13,658 2,208 no-expiry no-expiry 13,505 2,187 no-expiry no-expiry All figures are reported in thousands of US$ Canada Tax losses Capital losses Gross amount Gross amount As at 31 December 2023 4,861 311 Expiry 2037-2044 no-expiry 2022 5,123 - Expiry 2036-2043 no-expiry All figures are reported in thousands of US$ Gross amount Gross amount As at 31 December 2023 Expiry 2022 Expiry USA Tax losses All figures are reported in thousands of US$ Argentina Tax losses Deferred tax assets All figures are reported in thousands of US$ Total Tax losses Capital losses Deferred tax assets 5,624 no-expiry 5,405 no-expiry Gross amount Gross amount As at 31 December 2023 1,495 3,700 Expiry 2024-2028 no-expiry 2022 2,524 3,676 Expiry 2023-2027 no-expiry Gross amount Gross amount As at 31 December 2023 25,638 2,208 3,700 2022 26,557 2,187 3,676 Austral Gold Limited 98 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 39. CAPITAL MANAGEMENT The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to ordinary shareholders. The Group maintains strong relationships with its lenders, including banks which provide the Group with borrowings and lines of credit, and the gold refinery that the Group has an agreement with, and other customers of the Group that may fund the purchase of gold and silver in advance of delivery. The Group monitors capital using a ratio of ‘net debt’ to equity’. Net debt is calculated as total liabilities (as shown in the statement of financial position) less cash and cash equivalents. All figures are reported in thousands of US$ Total liabilities Less: cash and cash equivalents Net debt Total equity Net debt to adjusted equity ratio 40. SUBSEQUENT EVENTS For the year ended 31 December 2023 62,711 (1,039) 61,672 41,573 1.48 2022 48,502 (926) 47,576 48,815 0.97 40.1 On 1 March 2024, the Group executed a loan agreement for up to US$2,200,000 from a company related to two of its directors and the Company received US$1,000,000 on 5 March 2024. In addition, the loan maturity dates of the loans held by Inversiones Financieras del Sur S.A., Eduardo Elsztain and Saul Zang aggregating principal of US$4,555 thou- sands were extended to 30 September 2024 (note 28). 40.2 On 15 February 2024, the Company issued 919,158 non-transferable unsecured convertible notes valued at US$591 thousand immediately following the execution by the investor and the Company of an amendment agreement to allow for closing the private placement in two tranches. There will be no further tranches under the agreement as the second tranche was not closed by the due date of 15 March 2024 (note 25.2). 40.3 During January and February 2024, a total of US$2,500 thousand in pre-export facilities were renewed with Santander Bank for an additional 6 months at an average interest rate of 9.36% per annum as three 6-month pre-export facilities were renewed as follows: US$1,000 thousand at 9.12%, US$500 thousand at 9.32%, and US$500 thousand at 9.75% and US$500 thousand at 9.60% (note 28). 41. MATERIAL ACCOUNTING POLICIES The group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements, except if mentioned otherwise (see also Note 5). Change in classification During the year ended 31 December 2023, the Group updated the classification of certain disclosures to better reflect the nature of the items. Changes were made to the Consolidated statement of profit or loss and other comprehensive income to: • disclose other income and other expenses separately • reclassify administration expenses to other expenses related to care and maintenance disclose • disclose finance income and finance costs separately Changes were made to the Consolidated statement of financial position to reallocate a payable related to the Provisions for reclamation and rehabilitation. Changes to the Consolidated statement of cash flows were primarily due to changes to the Consolidated statement of profit or loss and other comprehensive income. Austral Gold Limited 99 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Comparative amounts in the profit and loss and other comprehensive income and notes to the financial statements were re-stated as follows: Previous financial statement captions 31 December 2022 $000’s Re-stated financial statement captions 31 December 2022 $000’s Consolidated profit or loss and other comprehensive income Other income Other expenses Administration expenses Finance income Finance costs Consolidated statement of financial position Non-current trade and other payables Provisions for reclamation and rehabilitation Consolidated statement of cash flows Gain on sale of equipment Provision for reclamation and rehabilitation Decrease in inventory Net cash provided through operating activities Proceeds from sale of inventory and equipment Net cash flow from investing activities - Other income (2,676) Other expenses (9,007) Administration expenses 1,292 Finance income (1,080) Finance costs (11,471) 1,003 10,934 11,937 (485) (1,096) 1,655 11,093 535 (11,735) 7,593 1,693 (4,972) (8,404) 2,134 (1,922) (11,471) 1,013 10,924 11,937 (590) (1,094) 1,620 10,953 675 (11,595) 7,593 41. 1 41.2 41.3 41.4 41.5 41.6 41.7 41.8 41.9 41.10 41.11 41.12 41.13 41.14 41.15 41.16 41.17 41.18 41.19 41.20 41.21 41.22 41.23 41.24 Basis of consolidation Revenue recognition Goods and services tax (GST)/ Value added tax (VAT) Foreign currency Mine properties Exploration and evaluation expenditure Property, plant and equipment Cash and cash equivalents Income tax Inventories Trade and other receivables Trade and other payables Interest bearing liabilities Provisions Leases Impairment of non-financial assets Contributed equity Earnings per share Borrowing costs Employee leave benefits Segment reporting Share-based payment arrangements Assets held for sale New, revised or amending Accounting Standards and Interpretations adopted Austral Gold Limited 100 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS 41.1 Basis of consolidation A subsidiary is any entity over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. A list of subsidiaries is contained in note 35 to the financial statements. The financial statements of the subsidiaries are prepared for the same reporting periods as the parent company using consistent accounting policies. All intercompany balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Non-controlling interests in the equity and results of the subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. 41.2 Revenue Recognition Under AASB 15 “Revenue from Contracts with Customers”, the sale of minerals is recognised at the transfer of control or point of sale, which is when the customer has taken delivery of the goods, the risks and rewards have been transferred to the customer and there is a valid contract. Determining the timing of the transfer of control at a point in time or over time requires judgement. The Group has an agreement with the refinery and sales are made via correspondence or an on-line trading platform with the customer. When the customer is the refinery, the control of the metals is transferred upon stowage of the material into the approved carrier’s vehicle at the gold room at the mine. The metal availability date is when the metals are available for pricing by the refinery. If the customer is not the refinery, revenue is recognised when the metals are transferred to the customer upon receipt and the customer obtains control of the metals. Invoices are payable two business days after the metal availability date. At the Guanaco/Amancaya mine, revenue is recognised when control of the metal is transferred as the related risk and rewards of ownership is transferred. When the customer is not a refinery, control occurs when the ounces of metals are transferred to the customer. The price is set by the market using the London gold market. 41.3 Goods and services tax (GST)/ Value added tax (VAT) Revenues, expenses and assets are recognised net of the amount of GST/VAT, except where the amount of GST/ VAT incurred is not recoverable from the tax authorities. In these circumstances the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST/VAT. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST/VAT component of investing and financing activities, which are disclosed as operating cash flows. 41.4 Foreign currency transactions Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value is determined. Non- monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs. Foreign currency transactions are translated into US$ using the exchange rates prevailing at the dates of the transac- tions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. The assets and liabilities of foreign operations are translated into US dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into US dollars at the exchange rates at the dates of the transactions. 41.5 Mine Properties Mine properties in production represent the aggregated exploration and evaluation expenditure and capitalised develop- ment costs in respect of areas of interest in which mining is ready to or has commenced. Mine development costs are deferred until commercial production commences, at which time they are amortised on a units-of-production basis of Austral Gold Limited 101 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS gold equivalent ounces over mineable reserves. Once production has commenced, further development expenditure is classified as part of the cost of production, (e.g. stripping costs) unless substantial future economic benefits can be established. Amortisation Aggregated costs on productive areas are amortised over the life of the area of interest to which such costs relate on the units-of-production basis. 41.6 Exploration and evaluation expenditure Exploration and evaluation expenditure incurred is capitalised in respect of each identifiable area of interest and carried forward in the statement of financial position where rights to tenure of the area of interest are current; and at least one of the following conditions is met: 40.6.1 such costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sales; or 40.6.2 exploration and/or evaluation activities in the area of interest have not, at reporting date, yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in the area of interest are continuing. Expenditure relating to pre-exploration activities, including costs incurred prior to the Group having an exploration license, is written off to the profit or loss during the period in which the expenditure is incurred. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Accumulated expenditure on areas that have been abandoned, or are considered to be of no value, are written off in the year in which such a decision is made. When the technical and commercial feasibility of an undeveloped mining project has been demonstrated, the project enters the construction phase. The cost of the project assets are transferred from exploration and evaluation expenditure and reclassified into construction phase and include past exploration and evaluation costs, development drilling and other subsurface expenditure. When full commercial operation commences, the accumulated costs are transferred into Mine Properties or an appropriate class of property, plant and equipment. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the units of production basis. 41.7 Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation The depreciated amount of property, plant and equipment is recorded either on a straight-line basis or on the production output basis to the residual value of the asset over the lesser of mine life or estimated useful life of the asset. Depreciation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Fixed assets except for underground mine development are depreciated on a straight line basis over three years. The depreciation rate used in underground mine development is provided for over the life of the area of interest on a production output basis. Assets that are idle or no longer ready for use are not depreciated but are separately tested for impairment and where the recoverable value is less than the book value of the asset, an impairment is recorded. De-recognition and disposal An item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss in the year the asset is de-recognised. 41.8 Cash and cash equivalents Cash includes: i. cash on hand and at call deposits with banks or financial institutions; and ii. other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. 41.9 Income tax Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by reporting date. Deferred income tax is provided on all temporary differences at reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Austral Gold Limited 102 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a trans- action that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in subsidiaries, associates, or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: i. when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or ii. when the deductible temporary difference is associated with investments in subsidiaries, associates, or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary differ- ence can be utilised. The carrying amount of any deferred income tax assets recognised is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply for the year when the asset is realised or the liability is settled, based on tax laws that have been enacted or substantively enacted at report- ing date. Income taxes relating to items recognised directly to equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. 41.10 Inventories Materials and supplies used in production are stated at the lower of cost and net realisable value on a ‘first in first out’ basis. Cost comprises direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. If the ore stockpile is not expected to be processed in the normal operating cycle, it is included in non-current assets and the net realisable value is calculated on a discounted cash flow basis. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained ounces based on assay data, and the estimated recovery percentage. Stockpile tonnages are verified to periodic surveys. Gold bullion and gold-in-process are valued at the lower of cost and net realisable value. Net realisable value is deter- mined using the prevailing metal prices. 41.11 Trade and other receivables Trade accounts receivable, amounts due from related parties and other receivables represent the principal amounts due at balance date plus accrued interest and less, where applicable, net of provisions for doubtful accounts. 41.12 Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. They are measured at amortised cost and are not discounted. The amounts are unsecured. 41.13 Interest bearing liabilities Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are clas- sified as non-current. 41.14 Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Austral Gold Limited 103 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS Mine Closure provision Close-down and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. Provisions for close-down and restoration costs do not include any addi- tional obligations which are expected to arise from future disturbances. The costs are based on the net present value of the estimated future costs of a closure. Estimated changes resulting from new disturbances, updated cost estimates including information from tenders, changes to the lives of operations and revisions to discount rates are capitalised within the property, plant and equipment. These costs are then depreciated over the lives of the assets to which they relate. The amortisation or “unwinding” of the discount applied in establishing the net present value provisions is charged to the income statement in each period as part of finance costs. The cost of property, plant and equipment includes the estimated cost of dismantling and removing infrastructure and restoring the site to the extent that such cost is recognised as a provision. 41.15 Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period for time in exchange for consideration. At commencement or on modification of a contract that contains a lease component, the Group allocates the consid- eration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component. Right of use The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right- of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. 41.16 Impairment of non-financial assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal or value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the profit or loss. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax rate. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives or more frequently if events or circumstances indicate that the carrying value may be impaired. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. 41.17 Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. 41.18 Earnings per share Basic earnings per share Basic earnings per share is determined by dividing net profit after income tax attributable to members of the parent, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Diluted earnings per share Diluted earnings per share adjusts the figures used in determination of basic earnings per share to take into account Austral Gold Limited 104 Annual Report 2023 NOTES TO THE FINANCIAL STATEMENTS the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 41.19 Borrowing costs Borrowing costs are recognised as an expense when incurred unless they are attributable to qualifying assets, in which case they are then capitalised as part of the assets. 41.20 Employee leave benefits/Short-term employee benefits Liabilities for employees’ entitlements to wages and salaries, annual leave and other employee entitlements expected to be settled within 12 months of the reporting date are recognised in the current provisions in respect of employees’ services up to reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabili- ties for non- accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated cash outflows. Superannuation The Company contributes to employee superannuation funds. Contributions made by the Company are legally enforce- able and contributions are made in accordance with the requirements of the Superannuation Guarantee Legislation. 41.21 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (“CODM”). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. 41.22 Share-based payment arrangements The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. 41.23 Assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for sale if it is highly prob- able that they will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property or biological assets, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-for distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. 41.24 New, revised or amending Accounting Standards adopted The Group has adopted all of the new, revised or amending Accounting Standards issued by the AASB that are manda- tory for the current reporting period. The adoption of these Accounting Standards did not have any material impact on the financial performance or position of the Group. Austral Gold Limited 105 Annual Report 2023 DIRECTORS’ DECLARATION Austral Gold Limited 106 Annual Report 2023 IN THE DIRECTORS’ OPINION: 1. In the opinion of the directors of Austral Gold Limited (“the Company”) a. the consolidated financial statements and notes that are set out on pages 69 to 105 and the Remuneration report in sections 41 to 46 in the Directors’ report, are 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 performance for the financial year ended on that date; and ii. complying with Australian Accounting Standards and the Corporation Regulations 2021; and iii. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. There are reasonable grounds to believe that the Company and the group entities identi- fied in Note 35 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785. 3. The directors have been given the declarations required by section 295A of the Corpora- tions Act 2001 from the chief executive officer and chief financial officer for the financial year ended 31 December 2023. 4. The directors draw attention to Note 2 to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards. Signed on behalf of the Directors by: Robert Trzebski Director Sydney 28 March 2024 Austral Gold Limited 107 Annual Report 2023 Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Austral Gold Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Austral Gold Limited for the financial year ended 31 December 2023 there have been: i. ii. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. KPMG KPM_INI_01 Jessica Dillon Partner Sydney 28 March 2024 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Austral Gold Limited 108 Annual Report 2023 Austral Gold Limited 109 Annual Report 2023 INDEPENDENT AUDITOR’S REPORT Austral Gold Limited 110 Annual Report 2023 Independent Auditor’s Report To the shareholders of Austral Gold Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Austral Gold Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • • 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 complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion The Financial Report comprises: • • consolidated statement of financial position as at 31 December 2023 consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity, and consolidated statement of cash flows for the year then ended • Notes, including material accounting policies • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year end or from time to time during the financial year. We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 fulfilled our other ethical responsibilities in accordance with these requirements. KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Austral Gold Limited Annual Report 2023 111 Material uncertainty related to going concern We draw attention to note 3, “Going Concern” in the Financial Report. The events or conditions disclosed in note 3, indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the Financial Report. Our opinion is not modified in respect of this matter. In concluding there is a material uncertainty related to going concern, evaluated the extent of uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of going concern. Our approach to this involved: • Analysing the cash flow projections by: • Evaluating the underlying data used to generate the projections for consistency with other information tested by us, our understanding of the Group’s intentions, and past results and practices; • Assessing the planned levels of operating cash inflows and outflows, for feasibility, timing, consistency of relationships and trends to the Group’s historical results, particularly in light of loss making operations, results since year end, and our understanding of the business, industry and economic conditions of the Group; • Assessing significant non-routine forecast cash inflows and outflows for feasibility, quantum and timing. We used our knowledge of the Group, its industry and current status of those initiatives to assess the level of associated uncertainty; • Reading correspondence with existing and potential financiers to understand the financing options available to the Group, and assessing the level of associated uncertainty resulting from renegotiation of existing debt facilities and negotiation of additional/revised funding arrangements; • Reading Directors’ minutes and relevant correspondence with the Group’s advisors to understand the Group’s ability to raise additional shareholder funds, and assessing the level of associated uncertainty; and • Evaluating the Group’s going concern disclosures in the Financial Report by comparing them to our understanding of the matter, the events or conditions incorporated into the cash flow projection assessment, the Group’s plans to address those events or conditions, and accounting standard requirements. We specifically focused on the principal matters giving rise to the material uncertainty. Key Audit 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: • Carrying value of Guanaco/Amancaya mine assets and property, plant and equipment • Carrying value of exploration and evaluation assets 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. Austral Gold Limited 112 Annual Report 2023 Carrying value of Guanaco/Amancaya mine assets and property, plant and equipment (US$51.6 million) Refer to Notes 21 “Mine properties” and 22 “Property, plant and equipment” to the Financial Report The key audit matter How the matter was addressed in our audit The Group’s Guanaco/Amancaya mine properties and property, plant and equipment are a significant portion (49%) of the Group’s total assets. The recoverable value of the Guanaco/Amancaya cash generating unit (CGU) is based on the Group’s fair value less costs of disposal model for the CGU, and this is a Key Audit Mater due to: • the high level of judgement used in evaluating key assumptions applied by the Group in the Guanaco/Amancaya CGU model, which are affected by expected future operating performance and market conditions, including: forecast gold and silver price; level of resources and reserves estimates for which the Group engaged an external expert during the financial year ended 31 December 2022; future production costs; and the specific discount rate applied in the model. - - - - • • These forward-looking assumptions necessitate additional scrutiny by us due to: • the inherent uncertainties in auditing these assumptions which are forward looking and not based on observable data; the consistency of application of assumptions and the fluctuations in forecast gold and silver d(commodity) pricing increasing the risk of inaccurate forecasting; and the sensitivity of assumptions in the Group’s Guanaco/Amancaya CGU model such as gold prices, production costs and discount rate, reducing available headroom. This drives additional audit effort specific to their feasibility and consistency of application. Our procedures included: • • testing the design and implementation of the management review control associated with the approval of the fair value less costs of disposal model used to assess the recoverable amount of the Group’s Guanaco/Amancaya CGU; evaluating the fair value less costs of disposal methodology used by the Group for consistency with the requirements of the accounting standards; • working with our valuations specialists challenging the Group’s key assumptions used to determine the recoverable amount of the Guanaco/Amancaya CGU. The assumptions evaluated are those relating to gold and silver prices, production costs and discount rate based on our knowledge of the industry, publicly available data of comparable entities and published forecast price expectations of industry commentators; • working with our valuations specialists, considering the sensitivity of the model by varying key assumptions, such as production costs and discount rates within a reasonably possible range to identify those assumptions at higher risk of impairment, inconsistency in application and to focus our further procedures; • • checking the forecast cost of producing silver and gold, future productions volumes and timing to those within the Group’s Reserves Report, Board approved plans and budgets. We assessed these against our understanding of the business, and historical production costs; assessing the historical accuracy of Austral Gold Limited 113 Annual Report 2023 . budgeting and forecasting by the Group to inform our evaluation of forecasts incorporated in the Guanaco/Amancaya CGU model; assessing the level of resources and reserves estimates against external expert report findings subject to assessment in our prior year audit, our understanding of current period changes in the business and against the Group’s mine closure plan; and assessing the Financial Report disclosures based on our understanding obtained from our testing and the requirements of the accounting standards. • • Carrying value of exploration and evaluation assets (US$27.9 million) Refer to Note 23 “Exploration and evaluation expenditure” to the Financial Report The Key Audit Matter How the matter was addressed in our audit Exploration and evaluation expenditure capitalised (‘E&E’) is a key audit matter due to: • • the significance of the balance (27%) of the Group’s total assets; the greater level of audit effort to evaluate the Group’s application of the requirements of the industry specific accounting standard AASB 6 Exploration for and Evaluation of Mineral Resources in particular the conditions allowing capitalisation of relevant expenditure and presence of impairment indicators. The presence of impairment indicators would necessitate a detailed analysis by the Group of the value of E&E, therefore given the criticality of this to the scope and depth of our work, we involved senior team members to challenge the Group’s determination that no such indicators existed. In assessing the conditions allowing capitalisation of relevant expenditure, we focus on: • the determination of the areas of interest (areas); Our procedures included: • • • • • evaluating the Group’s accounting policy to recognise E&E assets using the criteria in the accounting standard; testing the design and implementation of the management review control associated with the approval of the impairment assessment used to assess the carrying value of the E&E assets; evaluating the Group’s determination of areas of interest for consistency with the definition in the accounting standard based on the Group’s planned work programs and results of exploration activity of each area of interest; for each area of interest, we assessed the Group’s current rights tenure by examining the ownership of the relevant license to government registries and agreements in place with other parties. We also tested for compliance with conditions, such as minimum expenditure requirements, on a sample of licenses; testing the Group’s additions to E&E assets Austral Gold Limited 114 Annual Report 2023 • • documentation available regarding the rights to tenure, via licensing, and compliance with relevant conditions, to maintain current rights to an area of interest and the Group’s intention and capacity to continue the relevant E&E activities; and the Group’s determination of whether the E&E assets are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale. In assessing the presence of impairment indicators, we focused on those that may draw into question the commercial continuation of E&E activities for the areas of interest where significant capitalised E&E assets exist. In addition to the assessments above, and given the financial position of the Group, we paid particular attention to: • • the impact of changes in gold and silver prices to the Group’s strategy and intentions; and the ability of the Group to fund the continuation of activities. • • • • for the period by evaluating a sample of recorded expenditure for consistency to underlying records, the capitalisation requirements of the Group’s accounting policy and the requirements of the accounting standard; evaluating Group documents, such as minutes of director’s meetings and ASX market announcements, for consistency with the Group’s stated intentions for continuing E&E activities in certain areas. We corroborated this through interviews with key operational and finance personnel; analysing the Group’s determination of recoupment through successful development and exploration of the area by evaluating the Group’s documentation of planned future work programs and project and corporate budgets for a sample of areas; assessing the impact of changes in the gold and silver prices to the Group’s modelling underlying their decision for commercial continuation of activities; and obtaining project and corporate budgets identifying areas with existing funding and those requiring alternate funding sources. We compared this for consistency with areas of E&E activities, for evidence of the ability to fund continued activities. We identified those areas relying on alternate funding sources and evaluated the capacity of the Group to secure such funding. Other Information Other Information is financial and non-financial information in Austral Gold Limited’s annual report which is provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. Austral Gold Limited 115 Annual Report 2023 We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our Auditor’s Report. Austral Gold Limited 116 Annual Report 2023 Report on the Remuneration Report Opinion Directors’ responsibilities In our opinion, the Remuneration Report of Austral Gold Limited for the year ended 31 December 2023, complies with Section 300A of the Corporations Act 2001. 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 responsibilities We have audited the Remuneration Report included in pages 41 to 46 of the Directors’ report for the year ended 31 December 2023. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Jessica Dillon Partner Sydney 28 March 2024 Austral Gold Limited 117 Annual Report 2023 ADDITIONAL INFORMATION Austral Gold Limited 118 Annual Report 2023 Forward Looking Statements In this annual report that are not historical facts are forward-looking statements. Forward-looking statements are statements that are not historical, and consist primarily of projections — statements regarding future plans, expectations and developments. Words such as “expects”, “intends”, “plans”, “may”, “could”, “potential”, “should”, “antici- pates”, “likely”, “believes” and words of similar import tend to identify forward-looking statements. All forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets, uncertainty in the measurement of mineral reserves and resource estimates, Austral’s ability to attract and retain qualified personnel and manage- ment, potential labour unrest, reclamation and closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company’s control, the availability of capital to fund all of the Company’s projects and other risks and uncertainties identified under the heading “Risk Factors” in the Company’s continuous disclosure documents filed on the ASX and SEDAR. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Austral cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management’s assumptions may prove to be incorrect. Austral’s forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expecta- tions or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements. CORPORATE GOVERNANCE STATEMENT Austral Gold Limited and its subsidiaries have adopted the corporate governance framework and practices set out in its Corporate Governance Statement. The Corporate Governance Statement is available on the Company’s website at www.australgold.com. STATEMENT OF ISSUED CAPITAL As at 28 February 2024 the total issued capital of Austral Gold Limited was 612,311,353 ordinary shares. 547,725,329 shares were quoted on the Australian Securities Exchange under the code AGD. The only shares of the Company on issue are fully paid ordinary shares. None of these shares are restricted securities or securities subject to voluntary escrow within the meaning of the Listing Rules of the Australian Securities Exchange. 64,586,024 shares were quoted on the Toronto Venture Exchange under the code AGLD, of which 4,765,285 shares were also quoted on the OCTQB. There are no restrictions on the voting rights attached to the fully paid ordinary shares. On a show of hands, every member present in person, by proxy, by attorney or by representative shall have one vote. On a poll, every member present in person, by proxy, by attorney or by representative shall have one vote for every share held. DISTRIBUTION OF FULLY PAID ORDINARY SHARES As at 29 February 2024 Size of Holding 1-1000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 >100,001 Holders Shares held % of issued capital 946 519 199 379 161 2,204 301,448 1,427,835 1,536,109 13,952,386 595,093,575 612,311,353 0.05% 0.23% 0.25% 2.28% 97.19% 100% SUBSTANTIAL SHAREHOLDERS The Company has been notified of the following substantial shareholdings as at 29 February 2024: Registered Holder HSBC Custody Nominees (Australia) Limited Citicorp Nominees Pty Limited HSBC Custody Nominees (Australia) Limited HSBC Custody Nominees (Australia) Limited Beneficial Holder Shares Held Inversiones Financieras Del Sur SA (IFISA) Inversiones Financieras Del Sur SA (IFISA) 332,576,152 47,658,462 Eduardo Elsztain 42,199,990 Guanaco Capital Holding Corp 38,859,956 Austral Gold Limited 119 Annual Report 2023 TWENTY LARGEST SHAREHOLDERS Rank Name No. of shares % of issued capital 1 2 3 4 5 6 7 8 9 EDUARDO SERGIO ELSZTAIN 461,294,560 75.34% MICHAEL D WINN 15,502,212 2.53% EMX ROYALTY CORPORATION 9,381,770 1.53% HSBC CUSTODY NOMINEES 9,244,452 1.51% STABRO KASANEVA 7,881,230 1.29% BNP PARIBAS NOMINEES 5,691,714 0.93% CITICORP NOMINEES PTY LIMITED 3,931,343 0.64% WAYNE HUBERT 2,545,500 0.42% MRS ANNA VORONTSOVA 2,312,594 0.38% 10 SAUL ZANG 1,640,763 0.27% 11 MR PHILIP BOMFORD 1,420,000 0.23% 12 MR POH SENG TAN 1,300,000 0.21% 13 MR MICHAEL WEHBE 1,160,000 0.19% 14 ASOCIACION ISRAELITA ARGENTINA 1,158,265 0.19% 15 FUSION ELECTRICS (AUST) PTY 1,000,000 0.16% 16 MS LEANNE MARION HUNTER 1,000,000 0.16% 17 MR DEAN MICHAEL MATHEWS 1,000,000 0.16% 18 MRS NICOLA PAULINE COURT 900,000 0.15% 19 TAYLOR FAMILY INVESTMENTS PTY 800,000 0.13% 20 MR ALEXANDER IAN BURTON 696,635 0.11% Total Other 528,364,403 86.29% 83,946,950 13.71% Total Shares on issue 612,311,353 100% *Beneficial holdings Austral Gold Limited 120 Annual Report 2023 Austral Gold Limited 121 Annual Report 2023 Austral Gold Limited 122 Annual Report 2023 Austral Gold Limited 123 Annual Report 2023 www.australgold.com 

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