2 3 4 PEAKO LIMITED ABN 79 131 843 868 Operations Report Minerals Exploration East Kimberley Project Peako’s primary focus is its large consolidated ground-holding across four contiguous exploration tenements over a 1,350 km2 area in the East Kimberley region of Western Australia (refer Figure 1) comprising two granted tenements (E80/4990 and E80/5182) and two further areas under application (E80/5346 and E80/5472). Peako’s East Kimberley tenement package is considered prospective for a wide range of minerals including gold, base metals and PGEs. The tenements are largely located on Louisa Downs Station, 120 km to the southwest of Halls Creek. Access to the tenements is via the Great Northern Highway and station tracks. Figure 1 Peako's East Kimberley Tenement Package Systematic exploration across this southern part of the East Kimberley region has lagged behind that of most of Australia’s Proterozoic provinces and has been characterised by sporadic campaigns by numerous explorers over more than 50 years. Historical exploration was primarily guided by occurrences of surface gossan and geochemical anomalies that provided encouragement of the area’s economic potential, but was hindered by cover sequences, deep weathering, complex stratigraphy and structure, and non-contiguous tenements. Despite favourable host rock, structure and known mineralisation, the district’s poorly constrained geological framework and lack of understanding of key controls on mineralisation defocussed historical exploration efforts. Peako’s exploration strategy is underpinned by the application of data-driven science to define and prioritise robust quality targets for efficient and economic field testing programs. 5 PEAKO LIMITED ABN 79 131 843 868 Peako’s Eastman (E80/4990) tenement area has been the subject of very little gold exploration historically. Gold exploration has largely been peripheral to the focus of exploration for base metal sulphides including copper-lead-zinc and copper-nickel-PGE styles of mineralisation. Previous explorers executed disjointed and sporadic exploration campaigns across fragmented tenement holdings targeting a wide range of mineralisation styles and commodities over a large area, yet very few explorers analysed their soil, rock or drill samples for gold. The Eastman tenement’s potential prospectivity for gold is validated by a known gold signature as demonstrated by Peako’s 2019 RC drilling results as well as historical rock chip results (refer Figure 2) that include a rock sample with up to 11.7g/t Au. In 2019, RC drilling results identified gold potential such as PLRC004 with 6m at 1.16g/t Au and 27.27g/t Ag and PLRC001 with 7m at 1.1 g/t Au and 7.51 g/t Ag. In addition, petrology results from RC chip samples have also identified the occurrence of gold as free gold grains hosted by deformed quartz veins at Landrigan (refer Figure 3). PLRC004: 6m @ 1.16 g/t Au & 27.27 g/t Ag PLRC001: 7m @ 1.1 g/t Au & 7.51 g/t Ag EYD020: 9.6m @ 1.5 g/t Au & 12.6 g/t Ag Gossan rockchip: 11.7 g/t Au Digi(cid:410)al ca(cid:393)(cid:410)(cid:437)(cid:396)e (cid:381)f hi(cid:400)(cid:410)(cid:381)(cid:396)ical da(cid:410)a ac(cid:396)(cid:381)(cid:400)(cid:400) (cid:410)he La(cid:374)d(cid:396)iga(cid:374) a(cid:396)ea c(cid:381)(cid:374)(cid:410)i(cid:374)(cid:437)ed d(cid:437)(cid:396)i(cid:374)g (cid:410)he (cid:395)(cid:437)a(cid:396)(cid:410)e(cid:396) (cid:449)i(cid:410)h a f(cid:381)c(cid:437)(cid:400) (cid:381)(cid:374) (cid:410)he ca(cid:393)(cid:410)(cid:437)(cid:396)e (cid:381)f (cid:410)he (cid:1005)(cid:1013)(cid:1012)(cid:1007) BHP RAB bed(cid:396)(cid:381)ck ge(cid:381)che(cid:373)i(cid:400)(cid:410)(cid:396)(cid:455) (cid:393)(cid:396)(cid:381)g(cid:396)a(cid:373) (cid:894)(cid:1008)(cid:1012)(cid:1006) d(cid:396)ill h(cid:381)le(cid:400) f(cid:381)(cid:396) 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ERC057: 7m @ 0.58g/t Au and 35.2 g/t Ag including 1m @ 3.07 g/t Au & 8.5 g/t Ag including 1m @ 2.48 g/t Au & 87.0 g/t Ag ERC058: 9m @ 0.51g/t Au and 15.0 g/t Ag Pe(cid:410)(cid:396)(cid:381)l(cid:381)g(cid:455) a(cid:374)d XRD (cid:449)a(cid:400) c(cid:381)(cid:373)(cid:393)le(cid:410)ed (cid:381)(cid:374) (cid:400)(cid:437)b(cid:400)(cid:437)i(cid:410)e (cid:381)f RC chi(cid:393) (cid:400)a(cid:373)(cid:393)le(cid:400) (cid:396)e(cid:393)(cid:396)e(cid:400)e(cid:374)(cid:410)i(cid:374)g ke(cid:455) h(cid:381)(cid:400)(cid:410) (cid:396)(cid:381)ck(cid:853) li(cid:410)h(cid:381)(cid:882) a(cid:374)d al(cid:410)e(cid:396)a(cid:410)i(cid:381)(cid:374) (cid:410)(cid:455)(cid:393)e(cid:400) a(cid:410) La(cid:374)d(cid:396)iga(cid:374)(cid:856) XRD c(cid:381)(cid:374)fi(cid:396)(cid:373)ed a (cid:410)(cid:396)a(cid:374)(cid:400)i(cid:410)i(cid:381)(cid:374) f(cid:396)(cid:381)(cid:373) calci(cid:410)ic (cid:410)(cid:381) d(cid:381)l(cid:381)(cid:373)i(cid:410)ic ca(cid:396)b(cid:381)(cid:374)a(cid:410)e (cid:449)i(cid:410)h i(cid:374)c(cid:396)ea(cid:400)ed g(cid:396)ade(cid:856) H(cid:381)(cid:449)e(cid:448)e(cid:396)(cid:853) (cid:393)e(cid:410)(cid:396)(cid:381)l(cid:381)g(cid:455) (cid:396)e(cid:400)(cid:437)l(cid:410)(cid:400) (cid:449)e(cid:396)e (cid:437)(cid:374)able (cid:410)(cid:381) de(cid:410)e(cid:396)(cid:373)i(cid:374)e if ca(cid:396)b(cid:381)(cid:374)a(cid:410)e h(cid:381)(cid:396)i(cid:460)(cid:381)(cid:374)(cid:400) a(cid:396)e (cid:393)(cid:396)i(cid:373)a(cid:396)(cid:455) (cid:381)(cid:396) (cid:396)e(cid:393)lace(cid:373)e(cid:374)(cid:410) i(cid:374) (cid:381)(cid:396)igi(cid:374)(cid:856) H(cid:381)(cid:400)(cid:410) (cid:396)(cid:381)ck al(cid:410)e(cid:396)a(cid:410)i(cid:381)(cid:374) a(cid:400)(cid:400)(cid:381)cia(cid:410)ed (cid:449)i(cid:410)h (cid:400)(cid:437)l(cid:393)hide (cid:373)i(cid:374)e(cid:396)ali(cid:400)a(cid:410)i(cid:381)(cid:374) i(cid:374)c(cid:381)(cid:396)(cid:393)(cid:381)(cid:396)a(cid:410)e(cid:400) (cid:410)alc a(cid:374)d Mg(cid:882)(cid:396)ich chl(cid:381)(cid:396)i(cid:410)e (cid:400)(cid:437)(cid:393)(cid:393)(cid:381)(cid:396)(cid:410)i(cid:374)g a Mg(cid:882)(cid:373)e(cid:410)a(cid:400)(cid:381)(cid:373)a(cid:410)i(cid:400)(cid:373) acc(cid:381)(cid:373)(cid:393)a(cid:374)(cid:455)i(cid:374)g (cid:373)i(cid:374)e(cid:396)ali(cid:400)a(cid:410)i(cid:381)(cid:374) (cid:449)he(cid:396)eb(cid:455) (cid:410)alc(cid:882)al(cid:410)e(cid:396)a(cid:410)i(cid:381)(cid:374) (cid:396)e(cid:393)(cid:396)e(cid:400)e(cid:374)(cid:410)(cid:400) a ke(cid:455) (cid:393)a(cid:410)hfi(cid:374)de(cid:396) a(cid:374)d (cid:410)a(cid:396)ge(cid:410)i(cid:374)g (cid:448)ec(cid:410)(cid:381)(cid:396) (cid:410)(cid:381) (cid:400)(cid:437)l(cid:393)hide (cid:373)i(cid:374)e(cid:396)ali(cid:400)a(cid:410)i(cid:381)(cid:374)(cid:856) ERC060: 1m @ 0.797 g/t Au & 5.0 g/t Ag ERC067: 1m @ 2.75g/t Au 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i(cid:400) (cid:374)(cid:381)(cid:410) (cid:449)ell (cid:437)(cid:374)de(cid:396)(cid:400)(cid:410)(cid:381)(cid:381)d c(cid:437)(cid:396)(cid:396)e(cid:374)(cid:410)l(cid:455)(cid:853) (cid:410)he (cid:381)cc(cid:437)(cid:396)(cid:396)e(cid:374)ce (cid:381)f def(cid:381)(cid:396)(cid:373)a(cid:410)i(cid:381)(cid:374)(cid:882)(cid:396)ela(cid:410)ed A(cid:437) c(cid:381)(cid:437)ld (cid:396)eflec(cid:410) a Gold in PLRC001 (cid:393)(cid:396)e(cid:448)i(cid:381)(cid:437)(cid:400)l(cid:455) (cid:437)(cid:374)(cid:396)ec(cid:381)g(cid:374)i(cid:400)ed (cid:400)(cid:410)(cid:455)le (cid:381)f A(cid:437) (cid:373)i(cid:374)e(cid:396)ali(cid:400)a(cid:410)i(cid:381)(cid:374)(cid:856) A(cid:400)(cid:400)e(cid:400)(cid:400)(cid:373)e(cid:374)(cid:410) (cid:381)f hi(cid:400)(cid:410)(cid:381)(cid:396)ical da(cid:410)a(cid:400)e(cid:410)(cid:400) f(cid:381)(cid:396) e(cid:448)ide(cid:374)ce (cid:381)f a(cid:374) Figure 2 Eastman Tenement Gold Signature – Historic Data Compilation Ongoing 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high(cid:882)(cid:393)(cid:396)i(cid:381)(cid:396)i(cid:410)(cid:455) (cid:410)a(cid:396)ge(cid:410) f(cid:381)(cid:396) field (cid:448)alida(cid:410)i(cid:381)(cid:374) a(cid:374)d d(cid:396)ill (cid:410)e(cid:400)(cid:410)i(cid:374)g i(cid:374) (cid:437)(cid:393)c(cid:381)(cid:373)i(cid:374)g ca(cid:373)(cid:393)aig(cid:374)(cid:400)(cid:856) Ea(cid:400) (cid:410) m an P(cid:396) (cid:381) (cid:400) (cid:393) ec(cid:410) The (cid:1006)(cid:1004)(cid:1005)(cid:1013) d(cid:396)ill ca(cid:373)(cid:393)aig(cid:374) a(cid:410) Ea(cid:400)(cid:410)(cid:373)a(cid:374) f(cid:381)c(cid:437)(cid:400)(cid:400)ed (cid:381)(cid:374) (cid:410)e(cid:400)(cid:410)i(cid:374)g (cid:410)(cid:449)(cid:381) GAIP a(cid:374)(cid:381)(cid:373)al(cid:455) a(cid:396)ea(cid:400) a(cid:393)(cid:393)(cid:396)(cid:381)(cid:454)i(cid:373)a(cid:410)el(cid:455) (cid:1006)(cid:1004)(cid:1004)(cid:373) (cid:410)(cid:381) (cid:410)he (cid:449)e(cid:400)(cid:410) (cid:381)f (cid:410)he Ea(cid:400)(cid:410)(cid:373)a(cid:374) Ce(cid:374)(cid:410)(cid:396)al C(cid:437)(cid:882)Z(cid:374) (cid:393)(cid:396)(cid:381)(cid:400)(cid:393)ec(cid:410) a(cid:374)d i(cid:374)c(cid:381)(cid:396)(cid:393)(cid:381)(cid:396)a(cid:410)ed (cid:1008) RC d(cid:396)ill h(cid:381)le(cid:400) f(cid:381)(cid:396) a (cid:410)(cid:381)(cid:410)al (cid:381)f (cid:1009)(cid:1007)(cid:1004)(cid:373)(cid:856) D(cid:396)ill (cid:396)e(cid:400)(cid:437)l(cid:410)(cid:400) did (cid:374)(cid:381)(cid:410) i(cid:374)(cid:410)e(cid:396)ce(cid:393)(cid:410) a(cid:374)(cid:455) (cid:400)ig(cid:374)ifica(cid:374)(cid:410) (cid:400)(cid:437)l(cid:393)hide a(cid:374)d a(cid:400)(cid:400)a(cid:455) (cid:396)e(cid:400)(cid:437)l(cid:410)(cid:400) did (cid:374)(cid:381)(cid:410) c(cid:381)(cid:374)(cid:410)ai(cid:374) (cid:400)ig(cid:374)ifica(cid:374)(cid:410) a(cid:400)(cid:400)a(cid:455) i(cid:374)(cid:410)e(cid:396)ce(cid:393)(cid:410)(cid:400)(cid:856) I(cid:410) i(cid:400) c(cid:381)(cid:374)(cid:400)ide(cid:396)ed likel(cid:455) (cid:410)ha(cid:410) (cid:410)he (cid:374)ea(cid:396) (cid:400)(cid:437)(cid:396)face GAIP (cid:410)a(cid:396)ge(cid:410)(cid:400) (cid:410)e(cid:400)(cid:410)ed a(cid:396)e (cid:410)he (cid:396)e(cid:400)(cid:437)l(cid:410) (cid:381)f (cid:393)(cid:455)(cid:396)i(cid:410)ic (cid:373)(cid:437)d(cid:400)(cid:410)(cid:381)(cid:374)e a(cid:374)d (cid:400)hale(cid:400)(cid:856) (cid:26) PEAKO LIMITED ABN 79 131 843 868 EIS co-funding support Peako’s activities continue to be supported by the Western Australian government’s Exploration Incentive Scheme. Peako’s RC drilling undertaken during the financial year was supported by Round- 19 co-funding which resulted in reimbursement to Peako of $83,458 during the financial year. During the year Peako was successful in its application for EIS co-funding in both Rounds 20 and Round 21. A round 20 grant was awarded for $131,161 towards drilling completed in the twelve months to 31 December 2020 and a round 21 grant was awarded for $150,000 towards drilling completed in the twelve months ending 30 June 2021. Covid-19 Impact In view of the risks posed by the COVID-19 pandemic and to protect the health and welfare of the Kimberley community, Peako decided to postpone field activities it had planned to carry out in the June 2020 quarter. Peako instead directed its efforts to desktop compilation to further define and prioritise a pipeline of targets for field checking and drill testing that will underpin the next stage of field activities. Travel restrictions specific to the Kimberley were subsequently announced by the Western Australian and Commonwealth Governments on 26 March 2020 which further limited Peako’s ability to undertake field activities during the remainder of the financial year. 2019 RC drilling Peako’s early focus was on the Landrigan and Eastman prospects within E80/4990. Induced Polarisation (IP) surveys in 2018 identified targets considered to represent potential strike extensions to VHMS-style mineralisation coincident with anomalous surface geochemistry and outcropping ironstone. Peako’s maiden RC drill program in 2019 (supported by a Round 19 Exploration Incentive Scheme co-funded drilling grant from the Western Australian government) tested targets at Landrigan and Eastman with a total of 15 holes for 2,398m. VHMS-style mineralisation was confirmed by drilling at Landrigan with assay intercepts including: 6m at 6.52% Cu 27.27g/t Ag and 1.16g/t Au (PLRC004), and 15m at 1.04% Cu, 8.88g/t Ag and 0.38 g/t Au including 6m at 1.61% Cu, 7.23g/t Ag and 0.62g/t Au (PLRC011). Integration of 2019 drilling program multi-element geochemistry, petrology, XRD datasets, in conjunction with relogging and reclassification of historical geological logging by different explorers over more than five decades to a single framework, was completed during the year and underpins a simplified consistent stratigraphic framework for Landrigan and Eastman. The new stratigraphic framework identifies favourable prospective marker horizons in the stratigraphy that hosts targeted mineralisation. The framework is anticipated to provide a fundamental targeting tool with potential to unlock the mineral potential across the wider tenement package. Additional Farm-in Option During the year Peako executed an Amended and Restated Farmin and Joint Venture Agreement with Sandrib Pty Ltd to effect a Stage 2 farm-in option by which it may earn an additional joint venture interest to increase its total interest in the Eastman project tenement (E80/4990) to 85%. The Company intends to exercise this option. 7 PEAKO LIMITED ABN 79 131 843 868 Paterson Province Project Paterson Province Projects Peako’s Broadhurst (Sunday Creek) Project tenement is located in the Rudall River area of the Peak(cid:381)(cid:859)(cid:400) B(cid:396)(cid:381)adh(cid:437)(cid:396)(cid:400)(cid:410) (cid:894)S(cid:437)(cid:374)da(cid:455) C(cid:396)eek(cid:895) P(cid:396)(cid:381)jec(cid:410) (cid:410)e(cid:374)e(cid:373)e(cid:374)(cid:410) i(cid:400) l(cid:381)ca(cid:410)ed i(cid:374) (cid:410)he R(cid:437)dall Ri(cid:448)e(cid:396) a(cid:396)ea (cid:381)f (cid:410)he Pa(cid:410)e(cid:396)(cid:400)(cid:381)(cid:374) Paterson Province of Western Australia (Figure 4). Peako also has three long standing applications for P(cid:396)(cid:381)(cid:448)i(cid:374)ce (cid:381)f We(cid:400)(cid:410)e(cid:396)(cid:374) A(cid:437)(cid:400)(cid:410)(cid:396)alia (cid:894)Fig(cid:437)(cid:396)e (cid:1011)(cid:895)(cid:856) Peak(cid:381) al(cid:400)(cid:381) ha(cid:400) (cid:410)h(cid:396)ee l(cid:381)(cid:374)g (cid:400)(cid:410)a(cid:374)di(cid:374)g a(cid:393)(cid:393)lica(cid:410)i(cid:381)(cid:374)(cid:400) f(cid:381)(cid:396) e(cid:454)(cid:393)l(cid:381)(cid:396)a(cid:410)i(cid:381)(cid:374) exploration licences located close to its Broadhurst Project tenement. According to historical lice(cid:374)ce(cid:400) l(cid:381)ca(cid:410)ed cl(cid:381)(cid:400)e (cid:410)(cid:381) i(cid:410)(cid:400) B(cid:396)(cid:381)adh(cid:437)(cid:396)(cid:400)(cid:410) P(cid:396)(cid:381)jec(cid:410) (cid:410)e(cid:374)e(cid:373)e(cid:374)(cid:410)(cid:856) Acc(cid:381)(cid:396)di(cid:374)g (cid:410)(cid:381) hi(cid:400)(cid:410)(cid:381)(cid:396)ical ge(cid:381)l(cid:381)gical (cid:373)a(cid:393)(cid:393)i(cid:374)g(cid:853) (cid:410)he geological mapping, the bedrock geology of the project area is entirely made up of carbonaceous shales bed(cid:396)(cid:381)ck ge(cid:381)l(cid:381)g(cid:455) (cid:381)f (cid:410)he (cid:393)(cid:396)(cid:381)jec(cid:410) a(cid:396)ea i(cid:400) e(cid:374)(cid:410)i(cid:396)el(cid:455) (cid:373)ade (cid:437)(cid:393) (cid:381)f ca(cid:396)b(cid:381)(cid:374)ace(cid:381)(cid:437)(cid:400) (cid:400)hale(cid:400) a(cid:374)d (cid:400)il(cid:410)(cid:400)(cid:410)(cid:381)(cid:374)e(cid:400) (cid:381)f (cid:410)he and siltstones of the Broadhurst Formation, and quartz sandstones and siltstones of the underlying B(cid:396)(cid:381)adh(cid:437)(cid:396)(cid:400)(cid:410) F(cid:381)(cid:396)(cid:373)a(cid:410)i(cid:381)(cid:374)(cid:853) a(cid:374)d (cid:395)(cid:437)a(cid:396)(cid:410)(cid:460) (cid:400)a(cid:374)d(cid:400)(cid:410)(cid:381)(cid:374)e(cid:400) a(cid:374)d (cid:400)il(cid:410)(cid:400)(cid:410)(cid:381)(cid:374)e(cid:400) (cid:381)f (cid:410)he (cid:437)(cid:374)de(cid:396)l(cid:455)i(cid:374)g C(cid:381)(cid:381)lb(cid:396)(cid:381) Sa(cid:374)d(cid:400)(cid:410)(cid:381)(cid:374)e(cid:856) Coolbro Sandstone. F(cid:381)(cid:396)(cid:373)a(cid:410)i(cid:381)(cid:374)(cid:856) Figure 4 Peako’s Sunday Creek - Broadhurst tenement area in the Paterson Province, Western Australia. Figure (cid:1011) The Sunday Creek (cid:882) Broadhurst tenement area in the Paterson Province, Western Australia(cid:856) The Broadhurst tenement is under-explored and hosts an array of encouraging features that indicate the potential of the area for Nifty (Cu) or Maroochydore (Cu-Co) style mineralisation. No dedicated, consistent exploration evaluation of the tenement has occurred and the tenement has not been drill tested for base metal mineralisation targets within the Broadhurst Formation. Historic exploration has been minimal and fragmented, comprised of a ‘revolving door’ of explorers divided in commodity focus between Base Metals or Uranium. Only very limited, precursory drilling has been completed on the tenement (a total of 6 holes for 1,243m) all testing for Uranium along the eastern Broadhurst Formation – Coolbro Sandstone contact adjacent to NW-trending Sunday Creek Fault. 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(cid:410)e(cid:400)(cid:410)i(cid:374)g f(cid:381)(cid:396) U(cid:396)a(cid:374)i(cid:437)(cid:373) al(cid:381)(cid:374)g (cid:410)he ea(cid:400)(cid:410)e(cid:396)(cid:374) B(cid:396)(cid:381)adh(cid:437)(cid:396)(cid:400)(cid:410) F(cid:381)(cid:396)(cid:373)a(cid:410)i(cid:381)(cid:374) (cid:884) C(cid:381)(cid:381)lb(cid:396)(cid:381) Sa(cid:374)d(cid:400)(cid:410)(cid:381)(cid:374)e c(cid:381)(cid:374)(cid:410)ac(cid:410) adjace(cid:374)(cid:410) (cid:410)(cid:381) NW(cid:882)(cid:410)(cid:396)e(cid:374)di(cid:374)g S(cid:437)(cid:374)da(cid:455) C(cid:396)eek Fa(cid:437)l(cid:410)(cid:856) CORPORATE Peak(cid:381)(cid:859)(cid:400) deci(cid:400)i(cid:381)(cid:374) (cid:410)(cid:381) (cid:393)(cid:381)(cid:400)(cid:410)(cid:393)(cid:381)(cid:374)e field ac(cid:410)i(cid:448)i(cid:410)ie(cid:400) (cid:393)la(cid:374)(cid:374)ed f(cid:381)(cid:396) (cid:410)he J(cid:437)(cid:374)e (cid:1006)(cid:1004)(cid:1006)(cid:1004) (cid:395)(cid:437)a(cid:396)(cid:410)e(cid:396) a(cid:400) a (cid:396)e(cid:400)(cid:437)l(cid:410) (cid:381)f (cid:410)he COVID(cid:882)(cid:1005)(cid:1013) (cid:393)a(cid:374)de(cid:373)ic (cid:373)ea(cid:374)(cid:400) (cid:410)ha(cid:410) i(cid:410) (cid:449)ill be (cid:437)(cid:374)able (cid:410)(cid:381) (cid:437)(cid:374)de(cid:396)(cid:410)ake f(cid:437)(cid:396)(cid:410)he(cid:396) d(cid:396)illi(cid:374)g i(cid:374) (cid:410)he c(cid:437)(cid:396)(cid:396)e(cid:374)(cid:410) fi(cid:374)a(cid:374)cial (cid:455)ea(cid:396)(cid:856) Acc(cid:381)(cid:396)di(cid:374)gl(cid:455)(cid:853) Peak(cid:381) (cid:400)(cid:437)b(cid:373)i(cid:410)(cid:410)ed i(cid:410) EIS R(cid:381)(cid:437)(cid:374)d (cid:1005)(cid:1013) i(cid:374)(cid:410)e(cid:396)i(cid:373) (cid:396)e(cid:393)(cid:381)(cid:396)(cid:410) i(cid:374) (cid:396)e(cid:400)(cid:393)ec(cid:410) (cid:381)f d(cid:396)illi(cid:374)g c(cid:381)(cid:374)d(cid:437)c(cid:410)ed i(cid:374) (cid:410)he (cid:393)e(cid:396)i(cid:381)d (cid:410)(cid:381) (cid:1007)(cid:1004) J(cid:437)(cid:374)e (cid:1006)(cid:1004)(cid:1006)(cid:1004) a(cid:374)d a(cid:374) i(cid:374)(cid:410)e(cid:396)i(cid:373) (cid:393)a(cid:455)(cid:373)e(cid:374)(cid:410) (cid:381)f (cid:936)(cid:1011)(cid:1007)(cid:853)(cid:1008)(cid:1008)(cid:1007) (cid:449)a(cid:400) (cid:396)ecei(cid:448)ed d(cid:437)(cid:396)i(cid:374)g (cid:410)he (cid:395)(cid:437)a(cid:396)(cid:410)e(cid:396) (cid:894)c(cid:381)(cid:373)(cid:393)(cid:396)i(cid:400)i(cid:374)g (cid:1012)(cid:1004)(cid:1081) (cid:381)f Peak(cid:381)(cid:859)(cid:400) R(cid:381)(cid:437)(cid:374)d (cid:1005)(cid:1013) EIS clai(cid:373)(cid:895)(cid:856) (cid:28) 8 PEAKO LIMITED ABN 79 131 843 868 Directors’ Report Your directors’ present their annual financial report on the consolidated entity (referred to hereafter as the “Group”) consisting of Peako Limited (the “Company” or “parent entity”) and the entities it controlled at the end of, or during, the financial year ended 30 June 2020. In order to comply with the Corporations Act 2001, the directors report is as follows: Directors The following persons were directors of the Company during the financial year and up to the date of this report: Geoffrey Albers Non-Executive Chairman Raewyn Clark Executive Director Dr Darryl Clark Non-Executive Director Information on Directors E. Geoffrey Albers LLB, FAICD Mr Albers was appointed to the board of Peako Limited on 4 February 2013. Mr Albers has over 35 years’ experience as a director and administrator in corporate law, resource exploration and resource sector investment. Mr Albers has interests in a number of companies active in the petroleum industry in Australia. Mr Albers is a director of the ASX listed companies Octanex Limited and Enegex Limited. His companies are active resource sector investors. Raewyn Clark, B.Bus(dist), CA, MAICD, AGIA, ACIS Ms Clark has more than twenty years experience focussed primarily on the upstream oil and gas sector. Her experience includes business development, financial modelling and analysis, capital raising and mergers and acquisitions, as well as managing joint venture partners, government, regulator and investor relations. Ms Clark was appointed to the Board on 4 December 2014. Mrs Clark is also a Director of the ASX listed companies Octanex Limited and Enegex Limited. Dr Darryl Clark BSc (Hons), PhD and FAusIMM Dr Clark is an exploration geologist whose career has taken him throughout Australia, Central Asia and South East Asia for over 26 years. His responsibilities over the last 16 years have involved him in a diverse range of technological, political and cultural environments with unique challenges. During previous corporate roles with both Vale and BHP Billiton, and in consulting roles including SRK, he has been responsible for business development strategies, designing multi-commodity exploration programs and the co-ordination of exploration teams to deliver discovery events. Dr Clark was appointed to the Board on 20 March 2019. Dr Clark was also a director of the ASX listed company Xanadu Mines Ltd during the year, from which position he resigned on 28 November 2019. B Bus, CPA Information on Company Secretary Robert Wright Mr Wright was appointed as Company Secretary of Peako on 2 May 2017. Mr Wright is a senior financial professional with over 30 years commercial experience in the resource, energy and manufacturing industries gained at various companies and locations, including 14 years at BHP. As well as carrying out his secretarial duties for Peako, he is the company’s Chief Financial Officer and the 9 PEAKO LIMITED ABN 79 131 843 868 Company Secretary and CFO of the ASX listed companies Octanex Limited and Enegex Limited. Mr Wright is a member of CPA Australia. Ordinary shares On the 16 August 2019 the company completed a pro-rata non renounceable rights issue. A total of 38,489,359 new shares and 38,489,359 free attaching new options were subscribed for, raising gross proceeds of $756,945. Options During the year 38,489,359 listed options (exerciseable at $0.025 (2.5 cents) on or before 30 April 2020) were granted; with 13,463,675 being exercised. The balance of 25,025,684 expired at 30 April 2020. As at 30 June 2020 there were nil listed options (2019: nil listed options). At 30 June 2020 13,000,000 unlisted options were on issue (30 June 2019: 6,000,000 unlisted options). During the year 13,000,000 unlisted options were granted with 6,000,000 options expiring. Dividends No dividend has been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. Principal activities The principal activities of the Group during the financial year continued to be advancing the exploration for and development of natural resources. Review of operations A detailed review of the Group's activities and operations is set out on pages 4-7 of this Report. Significant changes in the state of affairs There have been no significant changes in the state of affairs of the Group to the date of this Report, other than those changes detailed in the review of activities and operations, and elsewhere in this Report. Matters subsequent to balance date On 17 July 2020 the company announced it has been allocated up to $450,000 in Junior Minerals Exploration Incentive (JMEI) credits for the 2020/21 financial year which may be distributed to eligible future subscribing investors as a tax offset. On 3 September 2020 the company completed a share placement raising $939,500 before costs. On 10 September 2020 the company announced a 1 for 5 pro-rate non-renounceable rights issue to raise up to approximately $1,010,171. Likely developments and expected results The likely developments in the company’s operations in future years and the expected result from those operations are dependent on exploration success in the tenements in which the company holds an interest. 10 PEAKO LIMITED ABN 79 131 843 868 Environmental legislation The Group is subject to significant environmental legal regulations in respect to its exploration and evaluation activities in Australia. There have been no known breaches of these regulations and principles. Indemnification of directors and officers During the financial year and to the date of this report, the company did not pay premiums in respect of contracts insuring officers or auditors of the company against liabilities arising from their position of officers or auditor of the company. The Company has entered into Deeds of Access and Indemnity with each of the Directors referred to in this report who held office during the year indemnifying each against all liabilities incurred in their capacity as directors of the Company to the full extent permitted by law Meetings of directors There were no formal board and committee meetings held during the year. All matters that required formal Board resolutions were dealt with via written circular resolutions. The directors met and corresponded at numerous times throughout the financial year to discuss the Group’s affairs. The board undertakes all audit committee functions. Proceedings on behalf of Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Corporate Governance Statement A corporate governance statement reporting on Peako’s governance framework, principles and practices is provided on the Peako website www.peako.com.au. 11 PEAKO LIMITED ABN 79 131 843 868 Remuneration Report This report is audited. Directors / Executives Position Held Geoffrey Albers Non-Executive Chairman Raewyn Clark Executive Director Darryl Clark Non-Executive Director During the year there were no employees or consultants to the company that meet the definition of key management personnel, other than the directors. Remuneration levels are reviewed annually through a process that considers the performance of individual directors and the overall performance of the entity. Director Remuneration During the year under review, directors were remunerated a total of $60,221 (2019: $Nil) which included shareholder-approved non-executive remuneration of $20,521 (2019: $Nil). There is no performance related remuneration for directors. There is no direct relationship between remuneration of directors and the company’s performance for the last five years. Components of directors’ compensation are disclosed below. Salary and/or consulting fees $ Primary benefits paid / payable Directors’ fees $ Super- annuation $ Year ended 30 June 2020 Directors Geoffrey Albers Raewyn Clark Darryl Clark Year ended 30 June 2019 Directors Geoffrey Albers Raewyn Clark Darryl Clark - - 10,000 10,000 - - - - - - - - - - - - - - 950 950 - - - - Equity Settled Equity option issues $ - 39,700 9,571 49,271 - - - - TOTAL $ - 39,700 20,521 60,221 - - - - Loans to key management personnel No loans were made to key management personnel during the current or previous financial year. 12 PEAKO LIMITED ABN 79 131 843 868 REMUNERATION REPORT (Continued) Other transactions with key management personnel In the year ended 30 June 2020, the Company incurred consulting fees of $38,880 (2019: $31,590) with Samika Pty Ltd, a director-related entity of Raewyn Clark. The fees were provided under normal commercial terms and conditions with $Nil remaining unpaid at 30 June 2020 (2019: $1,215). Key management personnel interest in equity holdings Fully paid ordinary shares 30 June 2020 Geoffrey Albers(1) Raewyn Clark Darryl Clark(1) (1) Other Change in shares – on market purchases, rights issue participation and exercise of options 30 June 2019 Geoffrey Albers Raewyn Clark Darryl Clark Number of shares at start of year Other Change Number of shares at end of year 1 July 2019 44,019,895 - 300,000 44,319,895 1 July 2018 41,331,763 - - 41,331,763 36,096,068 - 700,000 36,796,068 2,688,132 - 300,000 2,988,132 30 June 2020 80,115,963 - 1,000,000 81,115,963 30 June 2019 44,019,895 - 300,000 44,319,895 Unlisted options (exercisable at $0.04 on or before 24 November 2019) Number of options at start of year Number of options at end of year Numbers of options vested and exercisable 1 July 2019 - 4,000,000 - 4,000,000 1 July 2018 - 4,000,000 1,000,000 5,000,000 30 June 2020 - - - - 30 June 2019 - 4,000,000 - 4,000,000 30 June 2020 - - - - 30 June 2019 - 4,000,000 - 4,000,000 30 June 2020 Geoffrey Albers Raewyn Clark Darryl Clark 30 June 2019 Geoffrey Albers Raewyn Clark Peter Armitage # # resigned 20 March 2019 13 PEAKO LIMITED ABN 79 131 843 868 REMUNERATION REPORT (Continued) Unlisted options (exercisable at $0.05 on or before 18 March 2021) 30 June 2020 Geoffrey Albers Raewyn Clark Darryl Clark# Number of options at start of year Number of options at end of year Numbers of options vested and exercisable 1 July 2019 - - 1,000,000 1,000,000 30 June 2020 - - 1,000,000 1,000,000 30 June 2020 - - 1,000,000 1,000,000 # Options issued prior to appointment on March 2019. Listed options (exerciseable at $0.025 on or before 30 April 2020) 30 June 2020 Geoffrey Albers Raewyn Clark Darryl Clark Number of options at start of year 1 July 2019 - - - - Options granted during year Options exercised/exp ired during year 22,009,948 (22,009,948) - - 150,000 (150,000) 22,159,948 (22,159,948) Number of options at end of year 30 June 2020 - - - - * acquired via pro-rata non renounceable rights issue End of remuneration report Auditor independence Section 307C of the Corporations Act 2001 requires our auditors, Grant Thornton Audit Pty Ltd, to provide the directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 15 and forms part of this directors’ report for the year ended 30 June 2020. Non-audit services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. The Company has considered the position and is satisfied that the provision of the non- audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The auditor has not provided any non-audit services and as such auditor independence was not compromised. This report is made in accordance with a resolution of the directors. R.L.Clark Director 25 September 2020 14 Collins Square, Tower 5 727 Collins Street Melbourne Victoria 3008 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Peako Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Peako Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants B L Taylor Partner – Audit & Assurance Melbourne, 25 September 2020 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 15 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020 Financial income Expenses Audit fees Impairment of exploration assets Exploration costs Professional and consultancy fees Office costs Other costs Stock exchange and share registry costs Loss before income tax expense Income tax expense Net loss for the year Other comprehensive income Items that may be reclassified to profit or loss Foreign exchange loss on translation of subsidiary financial statements Other comprehensive income net of tax Total comprehensive income for the year Basic loss per share Diluted loss per share Note 18 2 3 3 2020 $ - - (43,137) - (49,429) (180,640) (130,970) (60,899) (22,035) (487,110) (487,110) - (487,110) 2019 $ 73 73 (29,500) (59,982) (10,449) (99,165) (30,560) (33,252) (22,525) (285,433) (285,360) - (285,360) (487,110) (285,360) 1,192 1,192 (485,918) Cents (0.41) (0.41) 74 74 (285,286) Cents (0.39) (0.39) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 16 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Financial Position as at 30 June 2020 Current Assets Cash and cash equivalents Trade and other receivables Prepayments Total Current Assets Non-Current Assets Trade and other receivables Exploration and evaluation assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Borrowings Total Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity Note 4 5 4 6 7 8 9 10 2020 $ 145,657 7,922 27,200 180,779 - 861,929 861,929 2019 $ 30,193 5,410 27,200 62,803 6,336 415,556 421,892 1,042,708 484,695 377,372 - 377,372 163,988 265,000 428,988 377,372 428,988 665,336 55,707 38,284,139 54,923 (37,673,726) 37,208,259 34,064 (37,186,616) 665,336 55,707 The above statement of financial position should be read in conjunction with the accompanying notes. 17 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Changes in Equity for the year ended 30 June 2020 Issued capital $ Share compensation reserve $ Foreign currency translation reserve $ Accumulated losses Total equity $ $ Balance at 1 July 2019 37,208,259 33,744 320 (37,186,616) 55,707 Loss for the year Other comprehensive loss Total comprehensive loss for the year - - - Issue of Shares Grant of options Costs of issue Balance at 30 June 2020 1,108,306 - (32,426) 38,284,139 - - - - 19,667 - 53,411 - 1,192 (487,110) - (487,110) 1,192 1,192 (487,110) (485,918) - - - 1,512 - - - (37,673,726) 1,108,306 19,667 (32,426) 665,336 Balance at 1 July 2018 37,106,549 33,744 246 (36,901,256) 239,283 Loss for the year Other comprehensive loss Total comprehensive loss for the year - - - - - - Issue of Shares Costs of issue Balance at 30 June 2019 105,197 (3,487) 37,208,259 - - 33,744 - 74 74 - - 320 (285,360) - (285,360) 74 (285,360) (285,286) - - (37,186,616) 105,197 (3,487) 55,707 The above statement of changes in equity should be read in conjunction with the accompanying notes. 18 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Cash Flows for the year ended 30 June 2020 Cash flows from operating activities Payments to suppliers and employees Financial income Net cash outflows from operating activities Cash flows from investing activities Payments to suppliers - exploration Proceeds from exploration grant Net cash outflows from investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from the issue of shares Repayment of borrowings Share issue costs Net cash inflows from financing activities Net increase / (decrease) in cash held Cash at the beginning of reporting period Effect of exchange rate fluctuations on cash held Cash at the end of the reporting period Note 17 2020 $ (249,049) - (249,049) 2019 $ (124,255) 73 (124,182) (538,177) 91,804 (446,373) (332,253) - (332,253) 46,000 1,108,306 (311,000) (32,426) 810,880 115,458 30,193 6 145,657 265,000 30,197 - - 295,197 (161,238) 191,419 12 30,193 The above statement of cash flows should be read in conjunction with the accompanying notes. 19 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies (a) Basis of preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and other requirements of the law. The financial report has also been prepared on a historical cost basis. The Parent Entity is registered and domiciled in Australia. The financial statements comprise the consolidated financial statements for the Group. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The financial statements are presented in Australian dollars, unless otherwise stated. Going concern For the year ended 30 June 2020 the Group incurred a net cash outflow from operating and investing activities of $695,422 (2019: $456,435) and a net loss after tax of $487,110 (2019: $285,360). As at 30 June 2020, the Group has negative working capital of $196,593 (2019: $366,185). The financial report has been prepared on a going concern basis. The Group raised $939,500 (before costs) in a share placement completed on 3 September 2020. Directors expect that the Group will raise approximately $1,010,000 from a rights issue announced 10 September 2020 to enable it to continue to meet its debts, if and when they fall due, for at least 12 months from the signing of the annual financial report. (b) Adoption of new and revised standards Changes in accounting policies on initial application of Accounting Standards The Group has adopted all of the new and revised Accounting Standards issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for annual reporting periods beginning on 1 July 2019. The adoption of the new and revised Australian Accounting Standards and Interpretations, including AASB 16 Leases, has had no impact on the company’s accounting policies or the amounts reported during the current year. 20 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (c) Statement of compliance The financial report was authorised by the board of directors for issue on 23 September 2020. The consolidated financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, including the Accounting Interpretations, issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The financial report of the company complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board (d) Basis of consolidation The consolidated financial statements consolidate those of the parent company and all of its subsidiaries as of 30 June 2020 (“Group”). The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non- controlling interests based on their respective ownership interests. 21 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (e) Exploration and evaluation expenditure Exploration and evaluation assets, including the costs of acquiring tenements, are capitalised as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the rights to tenure of the area of interest are current and either: (i) (ii) the expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale or partial sale: or activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. The tests contained in AASB6.20 are applied to determine whether exploration and evaluation assets are assessed for impairment: (i) (ii) (iii) (iv) the exploration and evaluation tenure right has expired or are expected to expire in the near future, and is not expected to be renewed. substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned. exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area. sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale Proceeds from the sale of exploration tenements or recoupment of exploration costs from farmin arrangements are credited against exploration costs previously capitalised. Any excess of the proceeds overs costs recouped are accounted for as a gain on disposal. 22 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (f) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (i) Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. (g) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Temporary bank overdrafts are included in cash at bank and in hand. Permanent bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (h) Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the taxable temporary difference is associated with investments in controlled entities, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry- forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or 23 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continues (h) Income tax (continued) • when the deductible temporary difference is associated with investments in controlled entities, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the financial period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. 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. (i) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. 24 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (j) Impairment of assets The carrying amounts of the company’s assets are reviewed at each statement of financial position date to determine whether there are indicators of impairment. At each reporting date the company assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Due to the uncertainty surrounding each of the interests that Group holds in relation to the Cadlao development project, the directors have, as a matter of caution, decided to continue to impair all of the interests associated with Cadlao. As a result, no value is attributed to those interests, with the assets therefore not included on the Statement of Financial Position. (k) Trade and other payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. (l) Provisions Where applicable, provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost. (m) Share-based payment transactions Equity settled transactions The fair value of options granted are recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the grantee become unconditionally entitled to the options. 25 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (n) Issued capital 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. (o) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares. (p) Foreign currency translation Both the functional and presentation currency of Peako Limited and its Australian subsidiaries is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The functional currencies of the foreign operations are not nominated in Australian Dollars. As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Peako Limited at the rate of exchange ruling at the balance date and their income statements are translated at the weighted average exchange rate for the year. The exchange differences arising on the translations are taken directly to a separate component of recognised in the foreign currency translation reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. 26 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (q) Trade and other receivables and contract assets The company makes uses of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the company uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. (r) Segment Reporting Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker, which has been identified as the Board of Directors of Peako Limited. (s) Parent entity financial information The financial information for the parent entity, Peako Limited, disclosed in Note 15 has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. 27 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (t) Critical accounting estimates and judgements Management determine the development, selection and disclosure of the company’s critical accounting policies and estimates and the application of these policies and estimates. There are no estimates and judgements that are considered to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods Recovery of exploration expenditure Management exercise judgement as to the recoverability of exploration expenditure. Any judgement may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploitation, then the relevant capitalised amount will be written off through profit or loss and other comprehensive income. Recovery of deferred tax assets Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. Currently the Group has not recognised any deferred tax assets in the Statement of Financial Position. 28 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued (u) Financial Instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: • amortised cost • fair value through profit or loss (FVTPL) • fair value through other comprehensive income (FVOCI). In the periods presented the corporation does not have any financial assets categorised as FVOCI. The classification is determined by both: • the entity’s business model for managing the financial asset • the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Subsequent measurement of financial assets Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding Impairment of financial assets IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. This replaced IAS 39’s ‘incurred loss model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. 29 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 1: Statement of significant accounting policies continued Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between: • financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and • financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’). ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. 30 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 2: Income tax Consolidated Income tax expense recognised in statement of comprehensive income 2020 $ 2019 $ Current income tax Current income tax payable Deferred income tax Relating to origination and reversal of temporary differences Income tax expense Reconciliation to income tax expense on accounting loss - - - - - - Accounting loss before tax Tax benefit at the statutory income tax rate of 30% Non-deductible expenses Non-assessable income Unrealised tax losses not recognised Temporary differences not recognised Income tax expense (487,110) (146,133) 2,631 (2) 277,603 (134,099) - (278,028) (83,408) 3,337 (6) 193,574 (113,497) - Unrecognised deferred tax balances Deferred tax assets: Tax revenue losses (Australian) Tax capital losses (Australian) Tax revenue losses (Foreign) Unamortised business related costs Accruals & provisions Deferred tax liabilities: Exploration expenses Net unrecognised deferred tax assets 16,277,403 4,430,516 174,175 (8,726) 25,000 15,352,060 4,430,516 174,175 6,228 18,000 (889,131) 20,009,237 (450,088) 19,530,891 Potential tax benefit @ 30% (2019: 30%) 6,002,771 5,859,267 The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because there is presently no expectation of future taxable profit against which the Group could utilise such benefits. 31 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 3: Earnings per share Consolidated 2020 2019 $ $ The loss and weighted average number of ordinary shares used in the calculation of basic and dilutive loss per share is as follows: Net loss for the year The weighted average number of ordinary shares Total basic and dilutive loss per share (cents) (487,110) 119,601,653 (0.41) (278,028) 72,563,243 (0.39) Note 4: Trade and other receivables Current GST Non-current Security deposit Note 5: Prepayments Prepaid tenement rent 7,922 5,410 - 6,336 27,200 27,200 The Company applied for exploration tenement E80/5346 in March 2019. If the tenement is granted rent paid on application will cover rent required on the first year of exploration in the tenement. As at 30 June 2020 and to the date of signing the report the tenement has not been granted. If the tenement is not granted the rent paid on application is fully refundable. Note 6: Exploration and evaluation assets Balance at the beginning of the year Costs for the year Recoupment of costs through exploration grant Exploration Written off Balance at the end of the year 415,556 538,177 (91,804) - 861,929 86,204 389,334 - (59,982) 415,556 The recoupment of exploration project acquisition costs carried forward is dependent upon the recoupment of costs through successful development and commercial exploitation, or alternatively by sale of the respective areas. Exploration assets relate to the areas of interest in the exploration phase for minerals exploration licences as shown in the table below: 30/06/2019 Notes 30/06/2020 E 45/3278 E 80/4990 E 45/3278 E 80/4990 E 80/5182 E 80/5182 Granted 30 September 2016 In November 2017 the company executed an agreement with Sandrib Pty Ltd under which it has the right to earn a 60% interest. In July 2019 the company executed a further agreement with Sandrib Pty Ltd under which it has the right to earn a further 25% for a total 85% interest. Granted 28 September 2018 32 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 7: Trade and other payables Current Trade and other payables* Director-related entities – other payables (Note 14) Consolidated 2020 $ 2019 $ 32,332 345,040 377,372 67,597 96,391 163,998 * Trade payables are non-interest bearing and are normally paid on 30 day terms. Note 8: Borrowings Balance at the beginning of the year Repayment of loan Drawdowns Balance at the end of the year 265,000 (311,000) 46,000 - - - 265,000 265,000 The borrowings were a line of credit facility from Australis Finance Pty Ltd which has an interest rate of 7% p.a. Australis Finance Pty Ltd is a director-related entity (note 14). Note 9: Issued Capital As at 30 June 2020 there were 128,931,579 fully paid ordinary shares on issue (2019: 76,978,545). Movement in ordinary share capital 2020 $ 2019 $ 2020 # 2019 # Consolidated At the beginning of the year Shares issued during the year Costs associated with share issue Exercise of options 37,208,259 771,713 (32,426) 37,106,549 105,197 (3,487) 76,978,545 38,489,359 - 72,020,678 4,957,867 - 336,593 - 13,463,575 - Balance at the end of the year 38,284,139 37,208,259 128,931,579 76,978,545 Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares. On a show of hands every shareholder of ordinary shares present at a meeting in person or by proxy is entitled to one vote and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. Movement in options 2020 Listed 2019 Listed 2020 Unlisted 2019 Unlisted At the beginning of the year Options granted Expired/exercised - 38,489,359 (38,489,359) 21,001,541 - (21,001,541) 6,000,000 13,000,00 (6,000,000) 5,000,000 1,000,000 - Balance at the end of the year - - 13,000,000 6,000,000 33 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 10: Reserves Foreign currency translation reserve (a) Share compensation reserve (b) Consolidated 2020 $ 1,512 53,411 54,923 2019 $ 320 33,744 34,064 (a) (b) Foreign currency translation reserve The foreign currency translation reserve represents foreign exchange movements on the translation of financial statements for controlled entities from the functional currency into the presentation currency of Australian dollars. Share compensation reserve The share compensation reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of their remuneration. Note 11: Share based payments Share options to directors and consultants 5,000,000 options were granted to directors in the year ended 30 June 2020. (2019: Nil options). 1,000,000 options (exerciseable at $0.04 (4.0 cents) on or before 28 November 2022 were granted to Darryl Clark on 28/11/19. The accounting value of the options granted was $9,571 with the share based payment expense for the year $1,878. 2,000,000 options (exerciseable at $0.04 (4.0 cents) on or before 28 November 2022 were granted to Rae Clark on 28/11/19. 2,000,000 options (exerciseable at $0.05 (4.0 cents) on or before 28 November 2023 were granted to Rae Clark on 28/11/19. The accounting value of the options granted was $39,700 with the share based payment expense for the year $6,780. Note 12: Financial instruments (a) Capital risk management Prudent capital risk management implies maintaining sufficient cash and marketable securities to ensure continuity of tenure to exploration assets and to be able to conduct the Group’s business in an orderly and professional manner. The Board monitors its future capital requirements on a regular basis and will when appropriate consider the need for raising additional equity capital, debt funding or to farm-out exploration projects as a means of preserving capital. (b) Categories of financial instruments The Group’s principal financial instruments comprise of cash and short-term deposits and short term borrowings. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. (c) Financial risk management objectives The Group is exposed to market risk (including, interest rate risk and equity price risk), credit risk and liquidity risk. The main risks arising from the Group’s financial instruments are interest rate risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. 34 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 12: Financial instruments (continued) (d) Market risk There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk from the previous period. Interest rate risk management All cash balances attract a floating rate of interest. Excess funds that are not required in the short term are placed on deposit for a period of no more than 6 months. The Group’s exposure to interest rate risk and the effective interest rate by maturity periods is set out below. Interest rate sensitivity analysis At 30 June 2020, if interest rates had changed on cash and cash equivalent by 100 basis points (1%) and all other variables were held constant, the Group’s after tax profit would have been $1,457 (2019: $302) lower/higher as a result of higher/lower interest income on cash and cash equivalents. (e) Credit risk management Credit risk relates to the risk that counterparties will default on their contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from any defaults. (f) Liquidity risk management Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. Liquidity risk is monitored to ensure sufficient monies are available to meet contractual obligations as and when they fall due. The following are the contractual maturities of the financial liabilities, including interest payments. Contractual amounts have not been discounted. 30 June 2020 Consolidated: Non-derivative Financial Liabilities Trade and other payables Borrowings 30 June 2019 Consolidated: Non-derivative Financial Liabilities Trade and other payables Borrowings Carrying Amount $ Contractual cash flows $ 0-12 months $ 1-2 years $ 2-10 years $ 377,372 - 377,372 377,372 - 377,372 377,372 - 377,372 163,988 265,000 428,988 163,988 265,000 428,988 163,988 265,000 428,988 - - - - - - - - - - - - (g) Foreign currency risk The Group is exposed to foreign currency risk on purchases that are denominated in a currency other than the respective functional currency. The functional currency of the group is denominated is Australian dollars. 35 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 12: Financial instruments (continued) (g) Foreign currency risk (continued) The Group’s policy is to maintain and hold the sufficient foreign currency to meet its liabilities when due. Surplus financial assets are transferred and held within Australian dollar currency based financial products. Unhedged amounts in respect of cash, receivable and payable in foreign currency Receivables – non-current Consolidated 2019 $ 6, 336 2020 $ - The only foreign currency the Group is currently exposed to is the US dollar. At 30 June 2020 if AUD:USD rates had changed by +/- 10% and all other variables were held constant, the Group’s after tax loss would have been $0 (2019: $634) higher/ (lower) as a result of lower/higher foreign exchange translations on cash, receivables and payables. Note 13: Commitments for expenditure Not longer than 1 year Longer than 1 year and not longer than 5 year 57,000 776,500 99,680 959,500 833,500 1,059,180 Expenditure commitments (minerals) The Group has a commitment in minerals tenement E45/3278 which has a current year commitment of $30,000. The permit year ends 29 September each year. The five year term ends 29 September 2021. In November 2017 the Group signed a farmin agreement in relation to the tenement E80/4990. The yearly expenditure commitment is $68,000 On 28 September 2018 the Group was granted minerals tenement E80/5182. The yearly expenditure commitment is $130,000. Combined expenditure has been granted by the Western Australia Department of Mines, Industry Regulation and Safety allowing for expenditure obligations for E80/5182 to be combined. Note 14: Related party disclosure The ultimate parent entity in the wholly-owned group and the ultimate Australian parent entity is Peako Limited. The consolidated financial statements include the financial statements of Peako Limited and the controlled entities listed in the following table: Name of entity Peak Oil & Gas (Australia) Pty Ltd Peak Oil & Gas (Singapore) Pte Ltd Peak Royalties Ltd Peak Oil & Gas Philippines Ltd Energy Best Limited SA Drilling Pty Ltd Samarai Pty Ltd Country of Class of shares incorporation Ordinary Australia Singapore Ordinary British Virgin Islands Ordinary British Virgin Islands Ordinary British Virgin Islands Ordinary Ordinary Australia Ordinary Australia Equity holding % 2019 2020 100 100 100 - 100 100 100 100 100 100 100 100 100 100 36 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 14: Related party disclosure (continued) Director-related entities During the year services and/or facilities were provided under normal commercial terms and conditions by director-related entities as disclosed below: Entity Related director Service Amounts paid 2020 $ Amounts paid 2019 $ Payable at 30/06/20 $ Payable at 30/06/19 $ Samika Pty Ltd RL Clark Consulting Exoil Pty Ltd EG Albers Office services 38,880 130,970 31,590 30,589 - 158,898 Natural Resources Group Pty Ltd EG Albers Project management 5,000 - - 1,215 32,461 - Octanex Limited EG Albers Accounting and administrative support 136,020 59,850 186,142 62,715 Director – related borrowings During the year the Company repaid $265,000 (2019: $265,000 owed) (note 8) against a line of credit facility from Australis Finance Pty Ltd, with interest rate of 7% p.a. Australis Finance Pty Ltd is a director-related entity of EG Albers. Interest of $10,767 was also repaid (2019: $nil). 312,870 122,029 345,040 96,391 Note 15: Parent Entity Disclosures Parent Entity Financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net Assets Issued capital Accumulated losses Options reserve Total Equity Financial performance Loss for the year Other comprehensive income Total comprehensive loss 2020 $ 145,657 861,930 1,007,587 369,451 - 369,451 638,136 60,201,011 (59,616,286) 53,411 638,136 2019 $ 30,193 132,726 162,919 401,931 - 44,877 (239,012) 59,125,131 (59,397,887) 33,744 (239,012) (218,399) (578,649) - - (218,399) (578,649) Note 16: Matters Subsequent to Balance Date On 3 September 2020 the company completed a share placement raising $939,500 before costs. On 10 September 2020 the company announced a 1 for 5 pro-rate non-renounceable rights issue to raise up to approximately $1,010,171. 37 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2020 Note 17: Reconciliation of loss after income tax to net cash outflow from operating activities Reconciliation of loss from ordinary activities after income tax to net cash outflow from operating activities Net loss for the year Foreign exchange gain (loss) Impairment of exploration asset Exploration expenditure expensed Grant of options Decrease (increase) in trade and other receivables Decrease in trade and other payables (487,110) 1,186 - - 19,667 3,825 213,383 (285,360) (262) 59,982 7,332 - (228) 94,354 Net cash outflow from operating activities (249,049) (124,182) Note 18: Auditor’s remuneration The auditors of the Group are Grant Thornton Audit Pty Ltd. Assurance services Grant Thornton Audit Pty Ltd Non-Audit services Grant Thornton Audit Pty Ltd Total auditors’ remuneration Note 19: Segment information 43,137 29,500 - - 43,137 29,500 Segment information is presented using a 'management approach', i.e. segment information is provided on the same basis as information used for internal reporting purposes by the directors. At regular intervals, the board is provided management information at a group level for the company’s cash position, and a company cash forecast for the next twelve months of operation. On this basis, no segment information is included in these financial statements. 38 PEAKO LIMITED ABN 79 131 843 868 Directors’ Declaration The directors of the company declare that: The financial statements, comprising the consolidated statement of profit or loss and other 1. comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001 and: (a) (b) (c) comply with Accounting Standards and the Corporations Regulations 2001; give a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance for the year ended on that date; and the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(a). In the directors’ opinion, there are reasonable grounds to believe that the company will be 2. able to pay its debts as and when they become due and payable. 3. The remuneration disclosures included in pages 12 to 14 of the directors’ report, (as part of audited Remuneration Report), for the year ended 30 June 2020, comply with section 300A of the Corporations Act 2001. The directors have been given the declarations by the chief executive officer and chief 4. financial officer required by section 295A. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by: R.LClark Director 25 September 2020 39 Collins Square, Tower 5 727 Collins Street Melbourne Victoria 3000 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Peako Limited Report on the audit of the financial report Opinion We have audited the financial report of Peako Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1(a) in the financial statements, which indicates that the Group incurred a net loss of $487,110 during the year ended 30 June 2020, and as of that date, the Group had negative working capital of $196,593. As stated in Note 1(a), these events or conditions, along with other matters as set forth in Note 1(a), indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 40 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key audit matter How our audit addressed the key audit matter Exploration and Evaluation Assets Valuation (Note 6) The tenements held by Peako Limited and its subsidiaries are in the exploration stage and exploration expenditure is capitalised in accordance with Australian Accounting Standard AASB 6 Exploration for and Evaluation of Mineral Resources. The group is required to assess at each reporting date if there are any triggers for impairment which may suggest the carrying value is in excess of the recoverable value. Any impairment losses are then measured in accordance with AASB 136 Impairment of Assets. AASB 6 requires exploration and evaluation asset to be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. AASB 6 provides a list of four indicators, however that list is not exhaustive and therefore subjectivity is involved in the assessment. This area is a key audit matter as significant judgement is required in determining whether the facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, and then consequently in measuring any impairment loss. Our procedures included, amongst others: obtaining the management reconciliation of capitalised exploration and evaluation expenditure and agreeing to the general ledger; reviewing management’s area of interest considerations against AASB 6; conducting a detailed review of management’s assessment of trigger events prepared in accordance with AASB 6 including; o o o tracing projects to statutory registers, exploration licenses and third party confirmations to determine whether a right of tenure existed; enquiry of management regarding their intentions to carry out exploration and evaluation activity in the relevant exploration area, including review of management’s budgeted expenditure; understanding whether any data exists to suggest that the carrying value of these exploration and evaluation assets are unlikely to be recovered through development or sale; evaluating the competence, capabilities and objectivity of management’s experts in the evaluation of potential impairment triggers; and assessing the appropriateness of the related financial statement disclosures. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 41 Responsibilities of the Directors’ for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Company’s/Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company/Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf. This description forms part of our auditor’s report. Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 12 to 14 of the Directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Peako Limited, for the year ended 30 June 2020 complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Grant Thornton Audit Pty Ltd Chartered Accountants B L Taylor Partner – Audit & Assurance Melbourne, 25 September 2020 42 PEAKO LIMITED ABN 79 131 843 868 Additional Shareholder Information (unaudited) The shareholder information set out below was applicable as at 24 September 2020. A. Distribution of equity securities – ordinary shares Analysis of numbers of equity security holders by size of holding: 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and above Total Ordinary shares 226 201 60 309 151 947 There were 529 holders of less than a marketable parcel of ordinary shares. B. Equity security holders – ordinary shares Twenty largest holders Holder Name HAWKESTONE RESOURCES PTY LTD SOUTHERN ENERGY PTY LTD MR ERNEST GEOFFREY ALBERS SACROSANCT PTY LTD 500 CUSTODIAN PTY LTD AUSTRALIS FINANCE PTY LTD RAM PLATINUM PTY LTD GREAT AUSTRALIA CORPORATION PTY LTD MR MICHAEL LESLIE JEFFERIES AURALANDIA PTY LTD GREAT MISSENDEN HOLDINGS PTY LTD MR CHARLES WAITE MORGAN SANPEREZ PTY LTD ALBERS CUSTODIAN COMPANY PTY LTD SAGEPARK HOLDINGS PTY LTD JIMZBAL PTY LTD PONTIA PTY LTD 7 ENTERPRISES PTY LTD HEBEI MINING (AUSTRALIA) HOLDING PTY LTD MR ISSY LISSEK Total Total issued capital Holding 18,990,720 13,814,177 10,116,648 9,580,000 7,560,000 5,390,808 4,708,151 4,604,726 4,000,000 3,290,808 2,742,340 2,629,736 2,500,000 2,420,000 2,139,041 2,076,922 1,886,637 1,700,000 1,387,298 1,245,570 102,783,582 157,839,269 % IC 12.03% 8.75% 6.41% 6.07% 4.79% 3.42% 2.98% 2.92% 2.53% 2.08% 1.74% 1.67% 1.58% 1.53% 1.36% 1.32% 1.20% 1.08% 0.88% 0.79% 65.12% 100.00% 43 PEAKO LIMITED ABN 79 131 843 868 C. Substantial holders – ordinary shares Substantial shareholders as disclosed in substantial shareholding notices given to the Company are as follows: Albers Group D. Unlisted Option Holders 14,000,000 unlisted options in total Number Held 80,115,963 Percentage 50.76% Two holders - 1,000,000 unlisted options (exercisable at $0.06 on or before 30 November 2020. One holder - 1,000,000 unlisted options (exercisable at $0.05 on or before 18 March 2021. Two holders - 1,000,000 unlisted options (exercisable at $0.075 on or before 30 November 2021 One holder - 1,000,000 unlisted options (exercisable at $0.03 on or before 1 May 2022. Four holders - 5,000,000 unlisted options (exercisable at $0.04 on or before 28 November 2022 Two holders - 1,000,000 unlisted options (exercisable at $0.010 on or before 30 November 2022 One holder - 2,000,000 unlisted options (exercisable at $0.05 on or before 28 November 2023. One holder - 2,000,000 unlisted options (exercisable at $0.05 on or before 1 May 2025. Minerals Exploration Interests Mining Tenements held at 30 June 2020 and their location Tenement Peako interest Western Australia (East Kimberley Region) E 80/4990 E 80/5182 E 80/5346 E 80/5472 Western Australia (Paterson Province) E 45/3278 E 45/3345 E 45/3477 E 45/3292 60%* 100% 100% 100% 100% 100% 100% 100% Tenement status Granted Granted Application Application Granted Application Application Application * Earning pursuant to farm-in agreements, with potential to increase to 85% Tenements acquired during the year and their location Western Australia (East Kimberley) E80/5472 100% Tenements disposed of during the year and their location Nil. 44 PEAKO LIMITED ABN 79 131 843 868 Beneficial percentage interests held in farm-in or farm-out agreements at 30 June 2020: Farm-out Agreements Nil. Farm-in Agreements: Western Australia (East Kimberley) E 80/4990 Granted – Peako earning a 60% interest via Farmin arrangement with Sandrib Pty Ltd with stage 2 option to increase interest to 85% 45
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