Berkeley Energia Limited
Annual Report 2022

Plain-text annual report

SPANISH OFFICE BERKELEY MINERA ESPAÑA, CARRETERA SA - 322, KM 30 37495 RETORTILLO SALAMANCA, ESPAÑA TELEPHONE +34 923 193 903 LONDON OFFICE UNIT 3C, PRINCES HOUSE 38 JERMYN STREET REGISTERED OFFICE 28 THE ESPLANADE PERTH WA 6000 TELEPHONE +61 8 9322 6322 WWW.BERKELEYENERGIA.COM INFO@BERKELEYENERGIA.COM LONDON SW1Y 6DN, UNITED KINGDOM 2022 ANNUAL REPORT REPORT INFORME Berkeley Energia Limited LSE / ASX / BME : BKY ABN: 40 052 468 569 CORPORATE DIRECTORY DIRECTORIO CORPORATIVO SOLICITORS Spain Herbert Smith Freehills, S.L.P United Kingdom Bryan Cave Leighton Paisner LLP Australia Thomson Geer SHARE REGISTRY Spain IBERCLEAR Plaza de la Lealtad, 1, 28014 Madrid, Espana United Kingdom Computershare Investor Services PLC The Pavilions, Bridgewater Road, Bristol BS99 6ZZ Telephone: +44 370 702 0000 Australia Computershare Investor Services Pty Ltd Level 11 , 172 St Georges Terrace, Perth WA 6000 Telephone: +61 8 9323 2000 STOCK EXCHANGE LISTINGS Spain Madrid, Barcelona, Bilboa and Valencia Stock Exchanges (Code: BKY) United Kingdom London Stock Exchange – Main Board (LSE Code: BKY) Australia Australian Securities Exchange (ASX Code: BKY) DIRECTORS Mr Ian Middlemas Mr Robert Behets Mr Francisco Bellón Mr Adam Parker Chairman Acting Managing Director Executive Director Non-Executive Director COMPANY SECRETARY Mr Dylan Browne SPANISH OFFICE Berkeley Minera España, S.A. Carretera SA-322, Km 30 37495 Retortillo Salamanca, España Telephone: +34 923 193 903 LONDON OFFICE Unit 3C, Princes House 38 Jermyn Street London SW1Y 6DN, United Kingdom REGISTERED OFFICE Level 9, 28 The Esplanade, Perth WA 6000 Australia Telephone: +61 8 9322 6322 Facsimile: +61 8 9322 6558 WEBSITE AND EMAIL www.berkeleyenergia.com info@berkeleyenergia.com AUDITOR Spain Ernst & Young España Australia Ernst & Young Australia - Perth BANKERS Spain Santander Bank Australia National Australia Bank Ltd Australia and New Zealand Banking Group Ltd CONTENTS Directors’ Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to and forming part of the Financial Statements Directors’ Declaration Auditor’s Independence Declaration Independent Auditor’s Report Corporate Governance Mineral Resources and Ore Reserves Statement ASX Additional Information 1 22 23 24 25 26 56 57 58 63 64 67  DIRECTORS’ REPORT 30 JUNE 2022 The Directors of Berkeley Energia Limited submit their report on the Consolidated Entity consisting of Berkeley Energia Limited (“Company” or “Berkeley” or “Parent”) and the entities it controlled at the end of, or during, the year ended 30 June 2022 (“Consolidated Entity” or “Group”). OPERATING AND FINANCIAL REVIEW Highlights Highlights for and subsequent to the year end include: • Appointment of Spanish Based Director: The Company strengthened the Board’s technical capacity and Spanish operating experience with the appointment of Mr Francisco Bellón as an Executive Director. Mr Bellón is a Mining Engineer with more than 25 years of experience in the resources sector, including specialisation in mineral processing. During his career, Mr Bellón has participated in the construction, commissioning and operation of four mines in Spain, two in South America and two in West Africa, working at an executive level for Toronto, New York or Madrid Stock Exchange listed companies, such as Rio Narcea Gold Mines, Lundin Mining, ENDESA and Duro Felguera. Mr Bellón who is based in Salamanca, joined Berkeley in 2011 as General Manager of Operations, and was subsequently promoted to Chief Operating Officer in 2017. During this period, Mr Bellón has been responsible for the Company’s day-to-day operations in Spain, and has overseen the development of the Salamanca Project from the Scoping Study stage through to the completion of the Definitive Feasibility Study and Front End Engineering Design. Mr Bellón has a Masters Degrees in Mining Engineering and Occupational Health and Safety, Investor Relations Certification from the Madrid Stock Exchange, and is Member of the Australasian Institute of Mining and Metallurgy. • European Nuclear Power and Global Uranium Market: The outlook for nuclear power and the uranium market strengthened during the year, with a number of important recent events, including: • The response to the Russian invasion of Ukraine and the concern regarding import bans on Russian oil and gas being expanded to uranium, which has also seen electricity prices in Spain increase by more than 10x compared to a year ago, with similar price hikes seen across Europe, causing mass social and economic unrest • In response, the European Parliament voted to reject objections to the inclusion of natural gas and nuclear power in its taxonomy plan which had been subjected to extensive debate since late 2021. A majority of ministers voted against the effort to block the inclusion of the two fuels/generating technologies. Reportedly, “the result means the European Commission’s proposals to include certain nuclear and gas activities within the list of investments that meet the taxonomy requirements, is now due to come into force from the start of 2023, given that the European Council is not expected to object to it”. Further, the European Commission released its proposed “REPowerEU Plan” in response to the Russian invasion of Ukraine. The Plan looks to reduce/eliminate the European Union’s dependency on fossil fuel imports from Russia • Spain’s main opposition party, Partido Popular (“PP”), outlined its economic proposals to deal with the economic and energy crises that the country is currently experiencing. The actions include the resurrection of nuclear power in Spain and "extending the useful life of the reactors" in line with what other European countries are doing. The PP believes that this technology must play a key role in the ecological transition as a support for renewable energies, since the opposite would imply greater gas consumption and therefore greater dependence on countries such as Russia. Further in August 2022, PP outlined its political view that Spain should modify its current climate change law with respect to uranium reserves in Spain to ensure Spain’s energy future is not reliant on Russian sources. Security of supply concerns continued to be raised in Spain given that the country’s existing nuclear power and fuel fabrication facilities import approximate 39% (2020) of their required uranium from Russia. ANNUAL REPORT 2022 1 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) OPERATING AND FINANCIAL REVIEW (Continued) Highlights (Continued) • At the Group of Seven (“G7”) meeting held in Germany, the broad-ranging G7 Leader’s Communique specifically addressed the Russian aggression in Ukraine and its effects on global energy. Regarding commercial nuclear power, the world leaders stated; “Those countries that opt to use it reaffirm the role of nuclear energy in their energy mix. Those countries recognise its potential to provide affordable low-carbon energy and contribute to the security of energy supply as a source of baseload energy and grid flexibility.” Recognising the global role of Russian-sourced nuclear fuel, the communique clearly stated; “We will further reduce reliance on civil nuclear and related goods from Russia, including working to assist countries seeking to diversify their supplies. We task our relevant Ministers to evaluate the feasibility and efficiency of these measures urgently. • The International Energy Agency (“IEA”) released a new report Nuclear Power and Secure Energy Transitions: From Today’s Challenges to Tomorrow’s Clean Energy Systems that highlights nuclear has an essential part to play in delivering a clean, affordable and secure energy future. According to the IEA’s report, a low-carbon, sustainable, affordable and secure energy future needs nuclear. • President Macron cancelled the plan to close 12 reactors by 2035 and requested the state-owned nuclear operator, EDF, to study the feasibility of prolonging reactor lifespans beyond the statutory 50 years. In addition, his government supports the construction of six European Pressurised Reactors by 2050. • Belgium’s Nuclear Research Centre announced that it will soon begin working with international partners to evaluate the use case for advanced reactors in Belgium. The agency said it is now operating with a Belgian federal government issued €100 million budget, and allocated €25 million per year for four years, to conduct in-depth research into new nuclear units. • The Czech Republic has launched a tender to build a new reactor at the Dukovany nuclear plant as the country aims to increase its reliance on nuclear power generation. The project's estimated cost of approximately €6 billion (US$6.4 billion) is the biggest single investment in the Czech Republic. • Germany disclosed that it is reviewing all options at its disposal to ensure the country’s energy supply remains robust amid uncertainty over Russian gas supply. The Economy Ministry stated in July that Germany may extend the life of its three remaining nuclear power plants, as public support increases in the face of growing energy shortages. The three plants – Isar 2, Emsland and Neckarwestheim 2 – which made up 6% of Germany's power production in the first quarter of 2022, are scheduled to close at the end of the year. • The UK government released its national energy strategy policy paper outlining that nation’s plans for enhanced energy security. Under the energy policy, nuclear would provide up to 25% of the country’s electricity by 2050 from up to 24 GWe of nuclear generating capacity. In order to support its ambitious commercial nuclear power goals, the UK will establish the Great British Nuclear Vehicle designed to provide support to nuclear projects “through every stage of the development process. • China announced plans to construct a further six nuclear reactors as the country pursues its Net Zero goals, with approval given for Sanmen units 3 and 4, Haiyang 3 and 4, and Lufeng 5 and 6. • Japan will have as many as nine nuclear power reactors in operation this winter, stated Prime Minister Fumio Kishida. With five reactors currently online, the move will boost combined capacity from nuclear to around 10% of the country's electricity needs. "We want to have ample capacity to ensure a stable supply of electricity during peak times," Kishida said. "The national government will take the lead" on restarting these reactors, "making tenacious efforts to secure the understanding and cooperation of local governments and other stakeholders." • South Korea released its revised energy policy which sets the goal of maintaining nuclear power’s share of total electricity generation at a minimum of 30% by 2030. 2 BERKELEY ENERGIA LIMITED Newly-elected President, Yoon Suk-yeol announced the construction of two reactors would resume immediately. The Ministry of Trade, Industry and Energy also commented that in response to the global goals of carbon neutrality and the Russia-Ukraine conflict which threatens global energy security supply chains, “it is imperative that new energy policy goals and directions are set to better accomplish carbon neutral government projects and the expansion of nuclear power.” Included in the energy policy are the goals of exporting 10 nuclear power plants by 2030 as well as the development of a Korean small modular reactor design. The Uranium spot price closed at US$49 per pound at the end of the year, having seen a high of just below US$65 per pound reached in April. Longer-term uranium price indicators continued to rise steadily with a 23.5% increase year to date. At the end of June, prices closed at US$50.00 per pound (Long-Term); US$54.50 per pound (3-year forward price); and US$57.25 per pound (5-year forward price). • Settlement of OIA Claim: In April 2022, the Company announced that the claims brought against the Company by Singapore Mining Acquisition Co Pte Ltd (a subsidiary of the Oman Investment Authority (“OIA”), formerly the State General Reserve Fund of Oman) in relation to the investment agreement and convertible note (“Convertible Note”) (“Claim”) had been settled with the parties agreeing to discontinue legal proceedings in the Supreme Court of Western Australia. The settlement of the Claim was achieved following the sale of 186,814,815 fully paid ordinary shares issued to OIA in November 2021, via a fixed-price bookbuild at a price of A$0.35 per share executed as a Special Crossing on ASX to clients of Argonaut Securities that included several specialist natural resources funds and a broad array of high-quality investors based in Australia and overseas. • Balance Sheet: The Company is in a strong financial position with A$80 million in cash reserves and no debt. Operations Salamanca Project Summary The Salamanca Project (“Salamanca” or “Project”) is being developed in an historic uranium mining area in Western Spain about three hours west of Madrid. The Project hosts a Mineral Resource of 89.3Mlb uranium, with more than two thirds in the Measured and Indicated category. In 2016, Berkeley published the results of a robust Definitive Feasibility Study (“DFS”) for Salamanca confirming that the Project will be one of the world’s lowest cost producers, capable of generating strong after-tax cash flows. The DFS was based solely on Measured and Indicated Resources, with the following key study outputs and economics: • Producing 4.4 million pounds of uranium per annum (steady state operation) • • Uranium prices based on UxC annual mid-long term base price projection (US$39.06 per pound (2017) – Initial mine life of 14 years US$67.69 per pound (2030)) • Initial capital cost of US$95.7 million • Operating costs of US$15.39 per pound • Post-tax NPV8 of US$531.9 million • Post-tax IRR of 60% In 2021, the Company received formal notification from Ministry for Ecological Transition and the Demographic Challenge (“MITECO”) that it had rejected the Authorisation for Construction for the uranium plant as a radioactive facility (“NSC II”) application at Salamanca. This decision followed the unfavourable NSC II report issued by the Nuclear Safety Council (“NSC”) in July 2021. The Company continues to strongly defend its position in relation to the adverse resolution by MITECO and has submitted an administrative appeal against the decision under Spanish law. ANNUAL REPORT 2022 3 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) OPERATING AND FINANCIAL REVIEW (Continued) Operations (Continued) Salamanca Project Summary (Continued): In Berkeley’s strong opinion, MITECO has rejected the Company’s NSC II application without following a legally established procedure and the Company believes that MITECO has infringed regulations on administrative procedures in Spain, as well as Berkeley’s right of defence, which would imply that the decision on the rejection of the Company’s NSC II application is not legal. NSC II is the only key approval required to commence full construction of the Salamanca mine. The Salamanca Project is being developed to the highest international standards and the Company’s commitment to health, safety and the environment is a priority. Berkeley holds certificates in Sustainable Mining (UNE 22470- 80) and Environmental Management (ISO 14001) which were awarded by AENOR, an independent Spanish government agency. These management systems ensure that Company procedures are compliant with current regulations, ensure that the environment is protected, the project is sustainable, and that all activities are carried out with respect for and in collaboration with the local communities. Berkeley’s efforts in the key area of Sustainable Mining have been independently recognised with it being selected as the winner of the Outstanding Contribution to Sustainable Mining – Europe category in the 2020 Capital Finance International Sustainability Awards. Project Update: The Company continued with its commitment to health, safety and the environment as a priority. During year, the Company measured and reported its performance against its planned 2021 objectives in the areas of health, safety, environment and sustainability. The Sustainability Performance Report is a voluntary transparency initiative through which the Company openly communicates information regarding its management systems in the areas of health, safety, environmental protection and social responsibility, as well as its performance in sustainability, to all stakeholders. The Sustainability Performance Report, which provides a detailed overview of environmental, social and governance (“ESG”) activities over the 12-month period to 31 December 2021, has been distributed to key stakeholders. 4 BERKELEY ENERGIA LIMITED A copy of the Sustainable Performance Report can be found on the Company’s website at: www.berkeleyenergia.com/sustainable-mining/. Berkeley is committed to sustainable development, and accordingly has implemented Environmental and Sustainable Management Systems to ensure compliance with performance standards. The UNE 22470-80 standard for Sustainable Mining Management has established 55 indicators that are certified annually. Of these 55 indicators, 36 are currently applicable to Berkeley’s Salamanca Project. These are divided into: economic (5), social (19) and environmental (12) categories. Highlights from the 2021 performance include: • R&D investment by the Company increased by 5%. • • 74% of consumables acquired by the Company were sourced locally i.e. promoting the socioeconomic development of the province. Investment in environmental protection increased by 55% compared to previous year Also noteworthy is the 29% reduction achieved in energy consumption, derived from fuel and electricity consumption. These energy savings minimise resource depletion and contribute to a decrease in CO2 emissions into the atmosphere. During 2021, The Company reduced CO2 emissions by ~28% or the equivalent of eight tonnes of CO2 emissions to the atmosphere. The Company continued its strong engagement with key stakeholders at a local, regional and federal level in Spain during the year. Exploration: The Company continued with its exploration program focusing on battery and critical metals in Spain. The exploration program is targeting lithium, cobalt, tin, tungsten and rare earths, within the Company’s existing tenement package in western Spain. Further analysis of the mineral and metal endowment across the entire mineral rich province and other prospective regions in Spain is also being undertaken, with a view to identifying additional targets and regional consolidation opportunities. ANNUAL REPORT 2022 5 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) OPERATING AND FINANCIAL REVIEW (Continued) Operations (Continued) Exploration (Continued): Whilst Berkeley remains focused on defending its position in relation to the adverse resolution by MITECO and ultimately advancing the Salamanca Project towards production, the planned battery and critical metals exploration initiative also facilitates the Company’s participation in these important, rapidly evolving, growth sectors which are integral to the global clean energy transition. Investigation Permit Conchas The Investigation Permit (“I.P.”) Conchas is located ~10km south of Berkeley’s Alameda deposit, in the very western part of Salamanca province, close to the Portuguese border (Figure 1). Figure 1: I.P. Conchas Location Map The I.P. covers an area of ~31km2 in the western part of the Ciudad Rodrigo Basin and is largely covered by Cenozoic aged sediments. Only the north-western part of the tenement is uncovered and dominated by the Guarda Batholith (Vilar Formoso-Fuentes de Oñoro sector) intrusion. The tenement hosts a number of sites where small- scale historical tin and tungsten mining was undertaken. In addition, several mineral occurrences (tin, tungsten, titanium, lithium) have been identified during historical mapping or stream sediment sampling programs. The Company completed initial soil sampling programs in northern and central portions of the tenement during 2021. The sampling, which was undertaken on a 200m by 200m grid, defined a tin-lithium anomaly covering approximately 1.1km by 0.7km which correlated with a mapped aplo-pegmatitic leucogranite. During the year, an infill and extension soil sampling program was undertaken to follow-up the 2021 results. A total of 116 samples was collected to close the grid down to a 100m by 100m spacing over the previous defined anomaly, and extend the coverage to the east on a 200m by 200m grid. The samples were subsequently prepared and sent to ALS Seville for analysis. The results of the infill soil sampling program have confirmed the spatial location, scale and tenor of the tin-lithium anomaly defined in 2021 but failed to extend the anomalism to the east (Figure 2). The Company has also recently obtained a report summarising exploration work undertaken by Billiton PLC on the I.P. Conchas between 1981 and 1983. Billiton’s exploration was focused on tin and tantalum and comprised regional and detailed geological mapping, geochemistry, trenching and limited drilling. 6 BERKELEY ENERGIA LIMITED The results of Berkeley’s recent soil sampling program are encouraging and the Company is currently verifying, evaluating and incorporating the additional historical information contained in the Billiton report, with a view to planning the next phase of exploration activity to assess the tin-lithium anomaly. Figure 2: I.P. Conchas 2021 and 2022 Soil Sampling Results Board Changes: On 26 October 2021, Mr Deepankar Panigrahi resigned as a Director of Berkeley. On 1 July 2022, Mr Francisco Bellón was appointed as an Executive Director of Berkeley. Results of Operations The Consolidated Entity’s net profit after tax for the year ended 30 June 2022 was $65,038,000 (2021: restated loss of $49,120,000). Significant items contributing to the year end profit and substantial differences from the previous year include the following: (i) (ii) Exploration and evaluation expenses of $3,792,000 (2021: $5,328,000), which is attributable to the Group’s accounting policy of expensing exploration and evaluation expenditure incurred subsequent to the acquisition of the rights to explore and up to and until a decision to develop or mine is made; Non-cash fair value gain of $64,720,000 (2021 restated: loss of $21,620,000) on the Convertible Note and unlisted options issued to OIA (the “OIA Options”). The fair value of the Convertible Note was calculated using a probability-weighted payout approach on the basis that the Convertible Note converted at 30 November 2021 at the floor price of £0.27. At the date the Convertible Note automatically converted, the valuation date share price was £0.105, which resulted in a gain of $60,789,000 (2021: loss of $18,546,000). These financial liabilities increase or decrease in value as the share price of the Company fluctuates. During the period, the Company issued 186,814,815 fully paid ordinary shares in the capital of the Company to OIA following the automatic conversion of the Convertible Note in accordance with the terms of the investment agreement and Convertible Note entered in with OIA in 2017. This has resulted in the Convertible Note liability being derecognised with the Company’s share capital increasing; ANNUAL REPORT 2022 7 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) OPERATING AND FINANCIAL REVIEW (Continued) Results of Operations (Continued) (iii) (iv) (v) (vi) Foreign exchange gain of $5,311,000 (restated 2021: loss of $9,621,000) largely attributable on the US$53 million held in cash by the Group following the weakening of the AUD against the USD by some 8% during the year; Business development expenses of $124,000 (2021: $160,000) which includes the Group’s investor relations activities including but not limited to public relations costs, marketing and digital marketing, broker fees, travel costs, conference fees, business development consultant fees and stock exchange admission fees; Non-cash share-based payment reversal of $101,000 (2021: expense of $186,000) was recognised in respect of incentive securities granted to directors, employees and key consultants. The Company’s policy is to expense the incentive securities over the vesting period; and Non-cash impairment expenses of nil (restated 2021: $11,082,000). For the year ended 30 June 2021, the Company impaired its non-current assets in relation to the Salamanca Project in accordance with the requisite accounting standards following the formal notification from MITECO that it had rejected the Company’s NSC II application at the Salamanca Project. This decision by MITECO followed the unfavourable NSC II report issued by the NSC in July 2021. The Company continues to strongly defend its position in relation to the adverse resolution by MITECO and has submitted an administrative appeal against the decision under Spanish law. In Berkeley’s strong opinion, MITECO has rejected the Company’s NSC II application without following a legally established procedure and the Company believes that MITECO has infringed regulations on administrative procedures in Spain, as well as Berkeley’s right of defence, which would imply that the decision on the rejection of the Company’s NSC II application is not legal. NSC II is the only key approval required to commence construction of the Salamanca mine. Financial Position At 30 June 2022, the Group is in an extremely strong financial position with cash reserves of $79,943,000 (2021: $79,066,000). The Company had cash outflows during the year totalling $5,884,000, which was offset by foreign exchange gain of $6,761,000 following the weakening of the AUD against the USD by some 8% during the year. The Group had net assets of $87,633,000 at 30 June 2022 (2021 restated: net liabilities $13,332,000). The increase is consistent and largely attributable to the conversion of the Convertible Note and derecognition of the associated financial liability and corresponding increase in issued capital. Business Strategies and Prospects for Future Financial Years Berkeley’s strategic objective is to create long-term shareholder value with the Company's primary focus continuing to be on progressing the approvals required to commence construction of the Salamanca mine and bring it into production. To achieve its strategic objective, the Company currently has the following business strategies and prospects: • • • Continue in the defence of the Company’s rights with respect to the Salamanca Project; Continue to assess other business, development and investment opportunities at the Salamanca Project; and Continue to assess other business and development opportunities in the resources sector. All of these activities are inherently risky and the Board is unable to provide certainty that any or all of these activities will be able to be achieved. The material business risks faced by the Company that are likely to have an effect on the Company’s future prospects, and how the Company manages these risks, include but are not limited to the following: 8 BERKELEY ENERGIA LIMITED Mining licences and government approvals required – With the mining licence, environmental licence and the Urbanism Licence (“UL”) already obtained at the Salamanca Project, the only major approval to commence construction at the Project is NSC II. During the year ended 30 June 2021, Berkeley reported that the NSC had issued an unfavourable report for the grant of the NSC II. In November 2021, the Company received formal notification from MITECO that it had rejected the NSC II application at the Company’s Salamanca Project. This decision followed the unfavourable NSC II report issued by the NSC in July 2021. In this regard, in December 2021, the Company submitted an administrative appeal against MITECO’s decision under Spanish law. In the appeal, the Company refutes the NSC’s assessment on the basis that the NSC has adopted an arbitrary decision with the technical issues used as justification to issue the unfavourable report lacking in both technical and legal support. Furthermore, the Company states in the appeal that MITECO has rejected the Company’s NSC II application without following a legally established procedure, and that MITECO has infringed the Company’s right of defence, which would imply that the decision on the rejection of the Company’s NSC II application is not legal. The MITECO appeal is currently pending resolution and there is no certainty on whether it will be successful. Berkeley also submitted further documentation to MITECO in which the Company, with strongly supported arguments, dismantles all of the technical issues used by the NSC as justification to issue the unfavourable report. Berkeley strongly refutes the NSC’s assessment and notes that all documentation submitted by the Company in relation to NCS II has been prepared following advice from independent, nationally and internationally recognised advisors and consultants who are experts in their field. It should also be noted that more than 120 previous permits and favourable reports have been granted by the relevant authorities at the local, regional, federal and European Union levels in relation to the Salamanca Project, among which nine have been from the NSC. The Company will continue to strongly defend its position in relation to the adverse decision by the NSC however there remains a risk that the Company’s updated documentation and Improvement Report may not be considered and NSCII is not awarded by MITECO. Further, various appeals have also been made against other permits and approvals the Company has received for the Salamanca Project, as allowed for under Spanish law, and the Company expects that further appeals will be made against these and future authorisations and approvals in the ordinary course of events. Whilst none of these appeals have been finally determined, no precautionary or interim measures have been granted in relation to the appeals regarding the award of licences and authorisations at the Salamanca Project to date. However, the successful development of the Salamanca mine will be dependent on the granting of all permits and licences necessary for the construction and production phases, in particular the award NSC II which will allow for the construction of the plant as a radioactive facility. However, with any development project, there is no guarantee that the Company will be successful in applying for and maintaining all required permits and licences to complete construction and subsequently enter into production. If the required permits and licences are not obtained, then this could have a material adverse effect on the Group's financial performance, which has led to a reduction in the carrying value of assets and may materially jeopardise the viability of the Salamanca Project and the price of its Ordinary Shares. Further, the Company’s exploration and any future mining activities are dependent upon the maintenance and renewal from time to time of the appropriate title interests, licences, concessions, leases, claims, permits, environmental decisions, planning consents and other regulatory consents which may be withdrawn or made subject to new limitations. The maintaining or obtaining of renewals or attainment and grant of title interests often depends on the Company being successful in obtaining and maintaining required statutory approvals for its proposed activities. The Company closely monitors the status of its mining permits and licences and works closely with the relevant Government departments in Spain to ensure the various licences are maintained and renewed when required. However, there is no assurance that such title interests, licenses, concessions, leases, claims, permits, decisions or consents will not be revoked, significantly altered or not renewed to the detriment of the Company or that the renewals and new applications will be successful; The Company may not successfully acquire new projects – In conjunction with seeking to overturn the negative MITECO decision, the Company is also searching for and assessing other new business opportunities at the Salamanca Project but also for new business opportunities in the resources sector which could have the potential to build shareholder value. These new business opportunities may take the form of direct project acquisitions, joint ventures, farm-ins, acquisition of tenements/permits, or direct equity participation. ANNUAL REPORT 2022 9 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) OPERATING AND FINANCIAL REVIEW (Continued) Business Strategies and Prospects for Future Financial Years (Continued) The Company’s success in its acquisition activities depends on its ability to identify suitable projects, acquire them on acceptable terms, and integrate the projects successfully, which the Company’s Board is experienced in doing. However, there can be no guarantee that any proposed acquisition will be completed or be successful and the Directors are not able to assess the likelihood or timing of a successful acquisition. If a proposed acquisition is completed the usual risks associated with a new project and/or business activities will remain. Further, any new acquisition may require the establishment of a new business. The Company’s ability to generate revenue from a new business will depend on the Company being successful in exploring, identifying mineral resources and establishing mining operations in relation to a new project. Whilst the Directors have extensive industry experience, there is no guarantee that the Company will be successful in exploring and developing a new project; The Company’s activities are subject to Government regulations and approvals – The Company’s exploration and any future mining activities are dependent upon the maintenance and renewal from time to time of the appropriate title interests, licences, concessions, leases, claims, permits, environmental decisions, planning consents and other regulatory consents which may be withdrawn or made subject to new limitations. The maintaining or obtaining of renewals or attainment and grant of title interests often depends on the Company being successful in obtaining and maintaining required statutory approvals for its proposed activities. The mining licence for the Salamanca Project was granted in April 2014 and is valid until April 2044 (and renewable for two further periods of 30 years each). The Company closely monitors the status of its mining and exploration permits and licences and works closely with the relevant government departments in Spain to ensure the various licences are maintained and renewed when required. However, there is no assurance that such title interests, licenses, concessions, leases, claims, permits, decisions or consents will not be revoked, significantly altered or not renewed to the detriment of the Company or that the renewals and new applications will be successful. If such title interests, licences, concessions, leases, claims, permits, environmental decisions, planning consents and other regulatory consents are not maintained or renewed then this could have a material adverse effect on the Company’s financial performance and the price of its Ordinary Shares. There can also be no assurances that the Company’s interests in its properties and licences are free from defects. The Company has investigated its rights and believes that these rights are in good standing. There is no assurance, however, that such rights and title interests will not be revoked or significantly altered to the detriment of the Company. In April 2021, the parliament in Spain (the “Spanish Parliament”) approved an amendment to the draft climate change and energy transition bill relating to the investigation and exploitation of radioactive minerals (e.g. uranium). The Spanish Parliament reviewed and approved the amendment to Article 10 under which: (i) new applications for exploration, investigation and direct exploitation concessions for radioactive materials, and their extensions, would not be accepted following the entry into force of this law; and (ii) existing concessions, and open proceedings and applications related to these, would continue as per normal based on the previous legislation. The new law was published in the Official Spanish State Gazette and came into effect in May 2021. The Company currently holds legal, valid and consolidated rights for the investigation and exploitation of its mining projects, including the 30-year mining licence (renewable for two further periods of 30 years) for the Salamanca Project, however any new proceedings opened by the Company is now not allowed under the aforementioned new law. This could create uncertainty and pose a risk on future applications, renewals or proceedings the Company may have to make in the future at the Salamanca Project or elsewhere, which if unfavourable could have a detrimental effect on the viability of the Salamanca Project or the Company’s pursuit of other development opportunities. Therefore, there can be no assurances that the Company’s rights and title interests will not be challenged or impugned by third parties or governments in the future. To the extent that any such rights or title interests are revoked or significantly altered to the detriment of the Company, then this could have a material adverse effect on the Group’s financial performance and the price of its Ordinary Shares; Additional requirements for capital – the ability to finance a mining project is dependent on the Company’s existing financial position, the availability and cost of project funding and other debt markets, the availability and cost of leasing and similar finance packages for project infrastructure and mobile equipment, the availability of mezzanine and offtake financing and the ability to access equity markets to raise new capital. There can be no guarantees that when the Company seeks to implement further financing strategies to pursue the development of its projects that suitable financing alternatives will be available and at a cost acceptable to the Company; 10 BERKELEY ENERGIA LIMITED The Company may be adversely affected by fluctuations in commodity prices – The price of uranium has fluctuated widely since the Fukushima nuclear power plant disaster in March 2011 and is affected by further numerous factors beyond the control of the Company. Future production, if any, from the Salamanca Project will be dependent upon the price of uranium being adequate to make these properties economic. The Company currently does not engage in any hedging or derivative transactions to manage commodity price risk, but as the Company’s Salamanca Project advances, this policy will be reviewed periodically; The Group’s projects are not yet in production – As a result of the substantial expenditures involved in mine development projects, mine developments are prone to material cost overruns versus budget. The capital expenditures and time required to develop new mines are considerable and changes in cost or construction schedules can significantly increase both the time and capital required to build the mine; and Global financial conditions may adversely affect the Company’s growth and profitability – Many industries, including the mineral resource industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and energy markets, and a lack of market liquidity. A slowdown in the financial markets or other economic conditions may adversely affect the Company’s growth and ability to finance its activities. DIRECTORS The names of Directors in office at any time during the financial year or since the end of the financial year are: Directors Mr Ian Middlemas Mr Robert Behets Mr Francisco Bellón Mr Adam Parker Mr Deepankar Panigrahi Chairman Non-Executive Director (Acting Managing Director) Executive Director (appointed 1 July 2022) Non-Executive Director Non-Executive Director (resigned 26 October 2021) Unless otherwise disclosed, Directors held their office from 1 July 2021 until the date of this report. CURRENT DIRECTORS AND OFFICERS Ian Middlemas Chairman Qualifications – B.Com, CA Mr Middlemas is a Chartered Accountant, a member of the Australian Institute of Company Directors and holds a Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive corporate and management experience, and is currently a director with a number of publicly listed companies in the resources sector. Mr Middlemas was appointed a Director and Chairman of Berkeley Energia Limited on 27 April 2012. During the three year period to the end of the financial year, Mr Middlemas has held directorships in Constellation Resources Limited (November 2017 – present), Apollo Minerals Limited (July 2016 – present), GCX Metals Limited (October 2013 – present), GreenX Metals Limited (August 2011 – present), Salt Lake Potash Limited (January 2010 – present), Equatorial Resources Limited (November 2009 – present), Sovereign Metals Limited (July 2006 – present), Odyssey Gold Limited (September 2005 – present), Peregrine Gold Limited (September 2020 – February 2022), Piedmont Lithium Limited (September 2009 – December 2020) and Cradle Resources Limited (May 2016 – July 2019). ANNUAL REPORT 2022 11 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) CURRENT DIRECTORS AND OFFICERS (Continued) Robert Behets Acting Managing Director, Non-Executive Director Qualifications – B.Sc (Hons), FAusIMM, MAIG Mr Behets is a geologist with over 30 years’ experience in the mineral exploration and mining industry in Australia and internationally. He was instrumental in the founding, growth and development of Mantra Resources Limited, an African focused uranium company, through to its acquisition by ARMZ for approximately A$1 billion in 2011. Prior to Mantra, Mr Behets held various senior management positions during a long career with WMC Resources Limited. Mr Behets has a strong combination of technical, commercial and managerial skills and extensive experience in exploration, mineral resource and ore reserve estimation, feasibility studies and operations across a range of commodities, including uranium, gold and base metals. He is a Fellow of The Australasian Institute of Mining and Metallurgy, a Member of the Australian Institute of Geoscientists and was also previously a member of the Australasian Joint Ore Reserve Committee (“JORC”). Mr Behets was appointed a Director of the Company on 27 April 2012. During the three year period to the end of the financial year, Mr Behets has held directorships in Odyssey Gold Limited (August 2020 – present), Constellation Resources Limited (June 2017 – present), Apollo Minerals Limited (October 2016 – present) and Equatorial Resources Limited (February 2016 – present). Francisco Bellón del Rosal (Francisco Bellón) Executive Director and Chief Operations Officer Qualifications – M.Sc, MAusIMM Mr Bellón is a Mining Engineer with more than 25 years of experience in the resources sector, including specialisation in mineral processing. During his career, Mr Bellón has participated in the construction, commissioning and operation of four mines in Spain, two in South America and two in West Africa, working at an executive level for Toronto, New York or Madrid Stock Exchange listed companies, such as Rio Narcea Gold Mines, Lundin Mining, ENDESA and Duro Felguera. Mr Bellón who is based in Salamanca, joined Berkeley in 2011 as General Manager of Operations, and was subsequently promoted to Chief Operating Officer in 2017. During this period, Mr Bellón has been responsible for the Company’s day-to-day operations in Spain, and has overseen the development of the Salamanca Project from the Scoping Study stage through to the completion of the Definitive Feasibility Study and Front End Engineering Design. He has also been a Director of the Company’s Spanish subsidiaries since 2011. Mr Bellón has a Masters Degrees in Mining Engineering and Occupational Health and Safety, Investor Relations Certification from the Madrid Stock Exchange, and is Member of the Australasian Institute of Mining and Metallurgy (“AusIMM”). Mr Bellón was appointed a Director of the Company on 1 July 2022. Mr Bellón has not been a Director of another listed company in the three years prior to the end of the financial year. Adam Parker Non-Executive Director Qualifications – MA.Chem (Hons), ASIP Mr Parker joined the Company after a long and successful career in institutional fund management in the City of London spanning almost three decades, including being a co-founder of Majedie Asset Management. Mr Parker began his career in 1987 at Mercury Asset Management (subsequently acquired by Merrill Lynch and now part of BlackRock) and left in 2002 when he co-founded Majedie Asset Management. Mr Parker was instrumental in building Majedie Asset Management into the successful investment boutique that it is today. He managed funds including the Majedie UK Opportunities Fund, the Majedie UK Smaller Companies Fund and a quarter of the Majedie UK Focus Fund. He left Majedie in 2015 and Majedie Asset Management has since been acquired by Liontrust Asset Management in 2022. Mr Parker was appointed a Director of Berkeley Energia Limited on 14 June 2017. Mr Parker has not been a Director of another listed company in the three years prior to the end of the financial year. 12 BERKELEY ENERGIA LIMITED Dylan Browne Company Secretary Qualifications – B.Com, CA, AGIA ACG Mr Browne is a Chartered Accountant and Associate Member of the Governance Institute of Australia (Chartered Secretary) who is currently Company Secretary for a number of ASX and European listed companies that operate in the resources sector. He commenced his career at a large international accounting firm and has since been involved with a number of exploration and development companies operating in the resources sector, based in London and Perth, including Sovereign Metals Limited, Apollo Minerals Limited, GreenX Metals Limited and Papillon Resources Limited. Mr Browne successfully listed GreenX on the Main Board of the London Stock Exchange and the Warsaw Stock Exchange in 2015 and oversaw Berkeley’s listings on the Main Board London Stock Exchange and the Spanish Stock Exchanges. Mr Browne was appointed Company Secretary of the Company on 29 October 2015. PRINCIPAL ACTIVITIES The principal activities of the Consolidated Entity during the year consisted of mineral exploration and development. There was no significant change in the nature of those activities. DIVIDENDS No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2022 (2021: nil). EARNINGS PER SHARE 2022 Cents 2021 Restated (Note 1(e)) Cents Basic and diluted earnings/(loss) per share 14.59 (11.03) SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the Consolidated Entity during the year. SIGNIFICANT EVENTS AFTER THE BALANCE DATE (i) On 1 July 2022, the Company strengthened the board with the appointment of Mr Francisco Bellón as an Executive Director. Other than as outlined above, as at the date of this report there are no matters or circumstances, which have arisen since 30 June 2022 that have significantly affected or may significantly affect: • • • the operations, in financial years subsequent to 30 June 2022, of the Consolidated Entity; the results of those operations, in financial years subsequent to 30 June 2022, of the Consolidated Entity; or the state of affairs, in financial years subsequent to 30 June 2022, of the Consolidated Entity. ENVIRONMENTAL REGULATION AND PERFORMANCE The Consolidated Entity's operations are subject to various environmental laws and regulations under the relevant government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations to achieve. Instances of environmental non-compliance by an operation are identified either by external compliance audits or inspections by relevant government authorities. There have been no significant known breaches by the Consolidated Entity during the financial year. In September 2012, Berkeley qualified for certification in accordance with ISO 14001 of Environmental Management, which sets out the criteria for an environmental management system, and UNE 22470-40 of Sustainable Mining Management, which allows for the systematic monitoring and tracking of sustainability indicators, and is useful in the establishment of targets for constant improvement. These certificates are renewed following completion of audits established by the regulations, with the most recent renewal audit successfully completed in July 2021. ANNUAL REPORT 2022 13 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) INFORMATION ON DIRECTORS' INTERESTS IN SECURITIES OF BERKELEY Current Directors Ian Middlemas Robert Behets Francisco Bellón Adam Parker Interest in Securities at the Date of this Report Ordinary Shares(i) Incentive Options(ii) 12,100,000 2,490,000 1,150,000 300,000 - 2,000,000 2,000,000 - Notes: (i) (ii) ‘Ordinary Shares’ means fully paid ordinary shares in the capital of the Company. ‘Incentive Options’ means an unlisted option to subscribe for one Ordinary Share in the capital of the Company SHARE OPTIONS AND PERFORMANCE RIGHTS At the date of this report the following unlisted securities have been issued over unissued Ordinary Shares of the Company: • • • 2,900,000 Incentive Options exercisable at $0.35 each on or before 31 December 2022; 3,700,000 Incentive Options exercisable at $0.40 each on or before 31 December 2023; OIA Options as follows: • • • 10,089,000 unlisted options exercisable at £0.60 each expiring on 30 November 2022; 15,133,000 unlisted options exercisable at £0.75 each expiring on 30 May 2023; and 25,222,000 unlisted options exercisable at £1.00 each, expiring on 30 November 2023. These securities do not entitle the holders to participate in any share issue of the Company or any other body corporate. During the year ended 30 June 2022, no Ordinary Shares were issued as a result of the exercise of Incentive Options or OIA Options. Subsequent to the end of the financial year and up and until the date of this report, no Ordinary shares have been issued as a result of the exercise of Incentive Options or OIA Options. During the year ended 30 June 2022, 186,814,815 Ordinary Shares were issued following the automatic conversion of the Convertible Note. MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company's Directors and the board committees held during the year ended 30 June 2022, and the number of meetings attended by each director. The Board as a whole currently performs the functions of an Audit Committee and Risk Committee, however this will be reviewed should the size and nature of the Company’s activities change. Current Directors Ian Middlemas Robert Behets Francisco Bellón(ii) Deepankar Panigrahi(iii) Adam Parker Board Meetings Remuneration and Nomination Committee(i) Number Eligible to Attend Number Attended Number Eligible to Attend Number Attended 3 3 - 1 3 3 3 - 1 3 - - - - - - - - - - Notes: (i) (ii) (iii) Remuneration and Nomination Committee meetings are generally considered and approved by means of written resolutions of committee members. Appointed as an Executive Director of the Company on 1 July 2022. Resigned 26 October 2021. 14 BERKELEY ENERGIA LIMITED REMUNERATION REPORT (AUDITED) This report details the amount and nature of remuneration of each director and executive officer of the Company. Details of Key Management Personnel The Key Management Personnel (“KMP”) of the Group during or since the end of the financial year were as follows: Directors Mr Ian Middlemas Mr Robert Behets Mr Francisco Bellón Mr Adam Parker Mr Deepankar Panigrahi Other KMP Mr Dylan Browne Chairman Non-Executive Director (Acting Managing Director) Executive Director (appointed 1 July 2022) Non-Executive Director Non-Executive Director (resigned 26 October 2021) Company Secretary There were no other KMP of the Company or the Group. Unless otherwise disclosed, the KMP held their position from 1 July 2021 until the date of this report. Remuneration Policy The remuneration policy for the Group's KMP has been developed by the Board taking into account the size of the Group, the size of the management team for the Group, the nature and stage of development of the Group's current operations and market conditions and comparable salary levels for companies of a similar size and operating in similar sectors. In addition to considering the above general factors, the Board has also placed emphasis on the following specific issues in determining the remuneration policy for KMP: • • • the Group is currently focused on undertaking development and construction activities; risks associated with resource companies whilst exploring and developing projects; and other than profit which may be generated from asset sales (if any), the Group does not expect to be undertaking profitable operations until sometime after the successful commercialisation, production and sales of commodities from one or more of its current projects, or the acquisition of a profitable mining operation. Remuneration and Nomination Committee The Board has established an independent Remuneration and Nomination Committee (“Remcom”) to oversee the Group’s remuneration and nomination responsibilities and governance. The remuneration committee members currently consist of two directors being Mr Parker (as Chair) and Mr Behets. The Remcom’s role is to determine the remuneration of the Company’s executives, oversee the remuneration of KMP, and approve awards under the Company's long-term incentive plan (“Plan”). The Remcom reviews the performance of executives and KMP and sets the scale and structure of their remuneration and the basis of their service/consulting agreements. In doing so, the Remcom will have due regard to the interests of shareholders. In determining the remuneration of executives and KMP, the Remcom seeks to enable the Company to attract and retain executives of the highest calibre. In addition, the Remcom decides whether to grant incentives securities in the Company and, if these are to be granted, who the recipients should be. ANNUAL REPORT 2022 15 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) REMUNERATION REPORT (AUDITED) (Continued) Remuneration Policy for Executives The Group's remuneration policy is to provide a fixed remuneration component and a performance based component (Incentive Options, Performance Rights and cash bonuses, see below). The Board believes that this remuneration policy is appropriate given the considerations discussed in the section above and is appropriate in aligning KMP objectives with shareholder and business objectives. Fixed Remuneration Fixed remuneration consists of base salaries, as well as employer contributions to superannuation funds and other non-cash benefits. Non-cash benefits may include provision of motor vehicles, housing and health care benefits. Fixed remuneration will be reviewed annually by the Remcom. The process consists of a review of Company and individual performance, relevant comparative remuneration externally and internally and, where appropriate, external advice on policies and practices. Performance Based Remuneration – Short Term Incentive Some KMP are entitled to an annual cash bonus upon achieving various key performance indicators (“KPI’s”), as set by the Board. Having regard to the current size, nature and opportunities of the Company, the Board has determined that these KPI’s will include measures such as successful completion of exploration activities (e.g. completion of exploration programmes within budgeted timeframes and costs), development activities (e.g. completion of feasibility studies and initial infrastructure), corporate activities (e.g. recruitment of key personnel and project financing) and business development activities (e.g. project acquisitions and capital raisings). On an annual basis, after consideration of performance against KPI’s, the Board determines the amount, if any, of the annual cash bonus to be paid to each KMP. During the financial year no bonus (2021: nil) was paid, or is payable to KMP. Performance Based Remuneration – Long Term Incentive The Group has adopted a Plan comprising the grant of Performance Rights and/or Incentive Options to reward KMP and key employees and contractors for long-term performance of the Company. Shareholders approved the new Plan in February 2020. To achieve its corporate objectives, the Group needs to attract, incentivise, and retain its key employees and contractors. The Board believes that grants of Performance Rights and/or Incentive Options to KMP will provide a useful tool to underpin the Group's employment and engagement strategy. (i) Incentive Options The Group has a Plan that provides for the issuance of Incentive Options as part of KMP and key employees and contractors remuneration and incentive arrangements in order to attract, retain and to provide an incentive linked to the performance of the Company. The Board’s policy is to grant Incentive Options to KMP with exercise prices at or above market share price (at the time of agreement). As such, Incentive Options granted to KMP are generally only of benefit if the KMP perform to the level whereby the value of the Group increases sufficiently to warrant exercising the Unlisted Options granted. Other than service-based vesting conditions (if any) and the exercise price required to exercise the Incentive Options, there are no additional performance criteria on the Unlisted Options granted to executives, as given the speculative nature of the Company’s activities and the small management team responsible for its running, it is considered the performance of the KMP and the performance and value of the Group are closely related. The Company prohibits executives entering into arrangements to limit their exposure to Incentive Options granted as part of their remuneration package. During the financial year, no Incentive Options were granted to KMP and key employees under the Plan. No Incentive Options were exercised by key employees during the financial year. 16 BERKELEY ENERGIA LIMITED (ii) Performance Rights The Plan also enables the Group to issue unlisted Performance Rights which, upon satisfaction of the relevant performance conditions attached to the Performance Rights, will result in the issue of an Ordinary Share for each Performance Right. Performance Rights are issued for no consideration and no amount is payable upon conversion thereof. The Plan enables the Group to: (a) recruit, incentivise and retain KMP and other key employees and contractors needed to achieve the Group's business objectives; (b) link the reward of key staff with the achievement of strategic goals and the long-term performance of the Group; (c) align the financial interest of participants of the Plan with those of Shareholders; and (d) provide incentives to participants of the Plan to focus on superior performance that creates Shareholder value. Performance Rights granted under the Plan to eligible participants will be linked to the achievement by the Group of certain performance conditions as determined by the Board from time to time. These performance conditions must be satisfied in order for the Performance Rights to vest. Upon Performance Rights vesting, Ordinary Shares are automatically issued for no consideration. If a performance condition of a Performance Right is not achieved by the expiry date then the Performance Right will lapse. During the financial year, 200,000 Performance Rights lapsed on 31 December 2021 and no Performance Rights were granted or converted. Performance Based Remuneration – Long Term Incentive Remuneration Policy for Non-Executive Directors The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. Given the current size, nature and risks of the Company, incentive options have been used to attract and retain Non-Executive Directors. The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting. The maximum aggregate amount that may be paid to Non-Executive Directors in a financial year is $350,000, as approved by shareholders at a Meeting of Shareholders held on 6 May 2009. Director’s fees paid to Non-Executive Directors accrue on a daily basis. Fees for Non-Executive Directors are not directly linked to the performance of the economic entity. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company. Given the size, nature and opportunities of the Company, Non-Executive Directors may receive Incentive Options or Performance Rights in order to secure and retain their services. Fees for the Chairman were set at $50,000 per annum (2021: $50,000) (including post-employment benefits). Fees for Non-Executive Directors’ were set at $45,000 per annum (2021: $45,000) (including post-employment benefits). These fees cover main board activities only. Non-Executive Directors may receive additional remuneration for other services provided to the Company, including but not limited to, membership of committees. During the 2022 financial year, no Incentive Options or Performance Rights were granted to Non-Executive Directors. The Company prohibits Non-Executive Directors entering into arrangements to limit their exposure to Incentive Options granted as part of their remuneration package. Relationship between Remuneration and Shareholder Wealth During the Group's exploration and development phases of its business, the Board anticipates that the Company will retain future earnings (if any) and other cash resources for the operation and development of its business. Accordingly, the Company does not currently have a policy with respect to the payment of dividends and returns of capital. Therefore, there was no relationship between the Board’s policy for determining, or in relation to, the nature and amount of remuneration of KMP and dividends paid and returns of capital by the Company during the current and previous four financial years. ANNUAL REPORT 2022 17 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) REMUNERATION REPORT (AUDITED) (Continued) Relationship between Remuneration and Shareholder Wealth (Continued) The Board does not directly base remuneration levels on the Company's share price or movement in the share price over the financial year and the previous four financial years. Discretionary annual cash bonuses are based upon achieving various non-financial KPIs as detailed under ‘Performance Based Remuneration – Short Term Incentive’ and are not based on share price or earnings. As noted above, a number of KMP have also been granted Performance Rights and Incentive Options, which generally will be of greater value should the value of the Company's shares increase (subject to vesting conditions being met), and in the case of options, increase sufficiently to warrant exercising the Incentive Options granted. Relationship between Remuneration of KMP and Earnings As discussed above, the Group is currently undertaking exploration and development activities, and does not expect to be undertaking profitable operations until sometime after the successful commercialisation, production and sales of commodities from one or more of its current projects. Accordingly, the Board does not consider earnings during the current and previous four financial years when determining, and in relation to, the nature and amount of remuneration of KMP. The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting. Fees for Non-Executive Directors are not linked to the performance of the economic entity. However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company and Non-Executive Directors have received Performance Rights and Incentive Options in order to secure their services and as a key component of their remuneration. General Where required, KMP receive superannuation contributions (or foreign equivalent), currently equal to 10% (2021: 9.5%) of their salary, and do not receive any other retirement benefit. From time to time, some individuals have chosen to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to KMP is valued at cost to the Company and expensed. Incentive Options and Performance Rights are valued using an appropriate valuation methodology. The value of these Incentive Options and Performance Rights is expensed over the vesting period. KMP Remuneration Details of the nature and amount of each element of the remuneration of each Director and other KMP of the Company or Group for the financial year are as follows: Short-term Benefits Non-Cash Other Non- Cash Benefits (4) $ - - Post Employ- ment Benefits (5) $ 4,560 4,091 Share- Based Payments (6) $ Total $ - - 50,160 243,000 56,827 24,008 17,534 399,585 - - - 2,250 - - - - 62,250 11,250 56,827 34,909 23,671 772,382 6,137 6,137 100.0 Percentage of Total Remunerat- ion that Consists of Options/ Rights % Percent- age Perform- ance Related % - - 4.4 - - - - - - - - 2022 Directors Ian Middlemas Robert Behets Francisco Bellón(1) Adam Parker Deepankar Panigrahi(2) Other KMP Dylan Browne(3) Total Salary & Fees $ Cash Incentive $ 45,600 238,909 301,216 60,000 11,250 - 656,975 - - - - - - - 18 BERKELEY ENERGIA LIMITED Notes: (1) Mr Bellón was appointed as an Executive Director of the Company on 1 July 2022. Mr Bellón has been the Company’s Chief Operations Officer since 2017. (2) Mr Panigahi resigned effective 26 October 2021. (3) Mr Browne provided services as the Company Secretary through a services agreement with Apollo Group Pty Ltd (“Apollo Group”). During the year, Apollo Group was paid or is payable A$240,000 for the provision of serviced office facilities and administrative, accounting, company secretarial and transaction services to the Group Other Non-Cash Benefits includes payments made for housing and car benefits. Contains statutory superannuation and social security. Share-based payments are measured for by using a Black-Scholes option pricing valuation method and are expensed over the vesting period of the Incentive Options on issue. (4) (5) (6) Other Non- Cash Benefits (3) $ - - - - - 2021 Directors Ian Middlemas Robert Behets Adam Parker Nigel Jones(1) Deepankar Panigrahi Other KMP Francisco Bellón Dylan Browne(2) Total Salary & Fees $ Cash Incentive $ 45,600 206,696 60,000 18,173 45,000 309,886 - 685,355 - - - - - - - - Short-term Benefits Non-Cash Post Employ- ment Benefits (4) $ Share- Based Payments (5) $ Percentage of Total Remunerat- ion that Consists of Options/ Rights % Percent- age Perform- ance Related % Total $ 4,332 3,904 1,666 - - - 49,932 23,682 234,282 - - - 61,666 18,173 45,000 54,614 24,491 - - 50,743 21,499 439,734 21,499 54,614 34,393 95,924 870,286 - 10.1 - - - 11.5 100.0 - - - - - - - Notes: (1) Mr Jones resigned effective 25 November 2020. (2) Mr Browne provided services as the Company Secretary through a services agreement with Apollo Group Pty Ltd (“Apollo Group”). During the year, Apollo Group was paid or is payable A$240,000 for the provision of serviced office facilities and administrative, accounting, company secretarial and transaction services to the Group Other Non-Cash Benefits includes payments made for housing and car benefits. Contains statutory superannuation and social security. Share-based payments are measured for by using a Black-Scholes option pricing valuation method and are expensed over the vesting period of the Incentive Options on issue. (3) (4) (5) Incentive Options and Performance Rights Granted to KMP No Incentive Options and Performance Rights were granted, exercised or lapsed for KMP of the Group during the year ended 30 June 2022. Employment Contracts with Directors and KMP Current Directors Mr Ian Middlemas, Chairman, has a letter of appointment dated 29 June 2015 confirming the terms and conditions of his appointment. Effective from 1 July 2013, Mr Middlemas has received a fee of $50,000 per annum inclusive of superannuation. Mr Robert Behets, Non-Executive Director (Acting Managing Director), has a letter of appointment dated 29 June 2015 confirming the terms and conditions of his appointment. Effective 1 July 2017, Mr Behets has received a fee of $45,000 per annum inclusive of superannuation. Mr Behets also has a services agreement with the Company dated 18 June 2012, which provides for a consultancy fee at the rate of $1,200 per day for management and technical services provided by Mr Behets. Either party may terminate the agreement without penalty or payment by giving two months’ notice. ANNUAL REPORT 2022 19 DIRECTORS’ REPORT 30 JUNE 2022 (Continued) REMUNERATION REPORT (AUDITED) (Continued) Employment Contracts with Directors and KMP (Continued) Current Directors (Continued) Mr Francisco Bellón, has a letter of appointment confirming the terms and conditions of his appointment as an executive director of the Company dated 24 June 2022. Mr Bellón was appointed as an executive director of the Company effective 1 July 2022. Mr Bellón also has a contract of employment dated 14 April 2011 which was amended on 1 July 2011, 13 January 2015 and 16 March 2017. The contract specifies the duties and obligations to be fulfilled by the Chief Operations Officer. The contract has a rolling term and may be terminated by the Company giving six months’ notice, or 12 months in the event of a change of control of the Company. In addition to the notice period, Mr Bellón will also be entitled to receive an amount equivalent to statutory unemployment benefits (approximately €25,000) and statutory severance benefits (equivalent to 45 days remuneration per year worked from 9 May 2011 to 11 February 2012, and 33 days remuneration per year worked from 12 February 2012 until termination). No amount is payable in the event of termination for neglect of duty or gross misconduct. Mr Bellón received a fixed remuneration component of €190,000 per annum (increasing to €220,000 per annum as at 1 July 2022) plus compulsory social security contributions regulated by Spanish law, as well as the provision of accommodation in Salamanca and a motor vehicle. Mr Adam Parker, Non-Executive Director, has a letter of appointment with Berkeley dated 5 June 2017 confirming the terms and conditions of his appointment. Effective from 28 August 2017, Mr Parker receives a fee of $45,000 per annum for his Board duties and $15,000 for chairing the Remcom. Equity instruments held by Key Management Personnel Incentive Options and Performance Rights holdings of KMP 2022 Directors Ian Middlemas Robert Behets Francisco Bellón(1) Adam Parker Deepankar Panigrahi Other KMP Dylan Browne Held at 1 July 2021 Granted as Compen- sation Vested securities exercised Expired Held at 30 June 2022 Vested and exerciseable at 30 June 2022 - 2,000,000 2,000,000 - - 700,000 - - - - - - - - - - - - - - - - - - - - 2,000,000 2,000,000 2,000,000 2,000,000 - -(2) - - 700,000 700,000 Notes: (1) (2) Appointed as an Executive Director of the Company on 1 July 2022. Mr Bellón has been the Company’s Chief Operations Officer since 2017. As at resignation date being 26 October 2021. Shareholdings of KMP 2022 Directors Ian Middlemas Robert Behets Francisco Bellón(1) Adam Parker Deepankar Panigrahi Other KMP Dylan Browne Held at 1 July 2021 Granted as Compensation Options exercised/Rights converted On market purchase/(sale) Held at 30 June 2022 9,300,000 2,490,000 1,150,000 200,000 - - - - - - - - - - - - - - 2,800,000 12,100,000 - - 100,000 - - 2,490,000 1,150,000 300,000 -(2) - 20 BERKELEY ENERGIA LIMITED Notes: (1) (2) Appointed as an Executive Director of the Company on 1 July 2022. Mr Bellón has been the Company’s Chief Operations Officer since 2017. As at resignation date being 26 October 2021. End of Remuneration Report. AUDITOR’S AND OFFICERS' INDEMNITIES AND INSURANCE Under the Constitution the Company is obliged, to the extent permitted by law, to indemnify an officer (including Directors) of the Company against liabilities incurred by the officer in that capacity, against costs and expenses incurred by the officer in successfully defending civil or criminal proceedings, and against any liability which arises out of conduct not involving a lack of good faith. During the financial year, the Company has paid an insurance premium to insure Directors and officers of the Company against certain liabilities arising out of their conduct while acting as a Director or Officer of the Company. Under the terms and conditions of the insurance contract, the nature of liabilities insured against cannot be disclosed. To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. NON-AUDIT SERVICES During the year, the Company’s auditor, Ernst & Young, received, or is due to receive, $80,747 (2021: $55,038) for the provision of non-audit services. The Directors are satisfied that the provision of non-audit services is compatible with the general standard and independence for auditors imposed by the Corporations Act 2001 (“Corporations Act”). ROUNDING The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) where noted ($000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which this legislative instrument applies. AUDITOR'S INDEPENDENCE DECLARATION The auditor's independence declaration is on page 57 of the Annual Financial Report. This report is made in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations Act. For and on behalf of the Directors ROBERT BEHETS Director 30 August 2022 Forward Looking Statement Statements regarding plans with respect to Berkeley’s mineral properties are forward-looking statements. There can be no assurance that Berkeley’s plans for development of its mineral properties will proceed as currently expected. There can also be no assurance that Berkeley will be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic or that a mine will successfully be developed on any of Berkeley’s mineral properties. ANNUAL REPORT 2022 21 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2022 Note 2 18 3 4(c) 5 Interest income Exploration and evaluation expenses Business development expenses Corporate and administration expenses Share-based payment reversal/(expenses) Fair value movement on financial liabilities Foreign exchange movements Impairment expenses Profit/(loss) before income tax Income tax benefit/(expense) Profit/(loss) after income tax Other comprehensive income, net of income tax: Items that may be classified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Other comprehensive loss, net of income tax Total comprehensive attributable to Members of Berkeley Energia Limited income/(loss) for the year 2022 $000 32 (3,792) (124) (1,210) 101 64,720 5,311 - 65,038 - 65,038 2021 Restated (Note 1(e)) $000 23 (5,328) (160) (1,146) (186) (21,620) (9,621) (11,082) (49,120) - (49,120) (514) (514) (604) (604) 64,524 (49,724) Basic and diluted earnings/(loss) per share (cents per share) 21 14.59 (11.03) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying Notes 22 BERKELEY ENERGIA LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022 Note 22 6 7 8 9 10 11 12 13 14 ASSETS Current Assets Cash and cash equivalents Other receivables Total Current Assets Non-current Assets Exploration expenditure Property, plant and equipment Other financial assets Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Financial liabilities Other liabilities Total Current Liabilities TOTAL LIABILITIES NET ASSETS/(LIABILITIES) EQUITY/(SHAREHOLDERS’ DEFICIT) Equity attributable to equity holders of the Company Issued capital Reserves Accumulated losses TOTAL EQUITY/(DEFICIENCY) 2022 $000 79,943 977 80,920 - 8,872 97 8,969 2021 Restated (Note 1(e)) $000 79,066 1,506 80,572 - 9,370 123 9,493 89,889 90,065 1,005 669 582 2,256 2,256 1,767 100,978 652 103,397 103,397 87,633 (13,332) 206,404 (2,187) (116,584) 87,633 169,862 (1,572) (181,622) (13,332) The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying Notes ANNUAL REPORT 2022 23 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2022 Restated as at 1 July 2021 Total comprehensive profit/(loss) for the period: Net profit/(loss) for the year Other Comprehensive Income: Exchange differences arising on translation of foreign operations Total comprehensive profit/(loss) Issue of ordinary shares Share issue costs Lapse of Performance Rights Share-based payments expense As at 30 June 2022 Issued Capital $000 169,862 - - - 36,635 (93) - - 206,404 Share- Based Payments Reserve $000 Foreign Currency Translation Reserve $000 Accumulated Losses Total Equity $000 $000 442 (2,014) (181,622) (13,332) - - - - - (148) 47 341 - 65,038 65,038 (514) - (514) (514) 65,038 64,524 - - - - - - - - 36,635 (93) (148) 47 (2,528) (116,584) 87,633 As at 1 July 2020 169,829 294 (1,410) (132,502) 36,211 Total comprehensive loss for the period: Restated net loss for the year (note 1(e)) Other Comprehensive Income: Exchange differences arising on translation of foreign operations Restated total comprehensive loss Issue of ordinary shares Share issue costs Share-based payments expense - - - 38 (5) - As at 30 June 2021 (restated) 169,862 - - - (38) - 186 442 - (49,120) (49,120) (604) - (604) (604) (49,120) (49,724) - - - - - - - (5) 186 (2,014) (181,622) (13,332) The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes 24 BERKELEY ENERGIA LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2022 Cash flows from operating activities Payments to suppliers and employees Interest received Note 2022 $000 2021 $000 (5,823) (5,614) 32 23 Net cash outflow from operating activities 22(a) (5,791) (5,591) Cash flows from investing activities Payments for property, plant and equipment Net cash outflow from investing activities Cash flows from financing activities Transaction costs from issue of securities Net cash outflow from financing activities Net decrease in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year 22(b) - - (93) (93) (5,884) 79,066 6,761 79,943 (95) (95) (5) (5) (5,691) 91,767 (7,010) 79,066 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes ANNUAL REPORT 2022 25 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in preparing the financial report of Berkeley Energia Limited (“Berkeley” or “Company” or “Parent”) and its consolidated entities (“Consolidated Entity” or “Group”) for the year ended 30 June 2022 are stated to assist in a general understanding of the financial report. Berkeley is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (“ASX”), the Main Board of the London Stock Exchange (“LSE”) and the Madrid, Barcelona, Bilboa and Valencia Stock Exchanges (together the “Spanish Stock Exchanges”). The financial report of the Company for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the Directors. (a) Basis of Preparation The financial report is a general purpose financial report, which has been prepared in accordance with Australian Accounting Standards (“AASBs”) adopted by the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001. The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The financial report has been prepared on a historical cost basis, except for certain financial liabilities which have been measured at fair value. The financial report is presented in Australian dollars. The consolidated financial statements have been prepared on a going concern basis which assumes the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. (b) Statement of Compliance The financial report complies with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. In the current period, the Group has adopted all of the new and revised Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group include: • • AASB 2020-3 Amendment to AASB 9 – Test for Derecognition of Financial Liabilities Conceptual Framework and Financial Reporting The adoption of these new and amended Accounting Standards and Interpretations had no impact on the Group. Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ended 30 June 2022. Those which may be relevant to the Group are set out in the table below, but these are not expected to have any significant impact on the Group's financial statements as detailed below. Standard/Interpretation Application date of standard Application date for Group AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments (AASB 1, 3, 9, 116, 137 & 141) 1 January 2022 1 July 2022 AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current 1 January 2023 1 July 2023 AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current – Deferral of Effective Date 1 January 2023 1 July 2023 AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates 1 January 2023 1 July 2023 AASB 2021-7(a-c) Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections 1 January 2025 1 July 2025 26 BERKELEY ENERGIA LIMITED (c) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Berkeley Energia Limited at reporting date. Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power. Where controlled entities have entered or left the group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. (d) Business Combinations The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The cost of a business combination is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange and the amount of any non- controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred. Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of the business combination over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired. If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. (e) Significant Accounting Judgements, Estimates, Assumptions and Adjustments to the Comparative Period The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: ANNUAL REPORT 2022 27 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 1. (e) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Significant Accounting Judgements, Estimates, Assumptions and Adjustments to the Comparative Period (Continued) Exploration and Evaluation Assets (Note 7) – the Group’s accounting policy for exploration and evaluation assets is set out in Note 1(t). The application of this policy requires management to make certain judgements and estimates as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves have been found and the point at which exploration and evaluation assets should be transferred to mine development properties. The determination of an area of interest also requires judgement. Accounting for derivative financial liabilities (Note 11) – Estimating fair value for financial liabilities requires the determination of the most appropriate valuation model and the determination of the most appropriate inputs to the valuation model. The assumptions used for estimating the fair value of the financial liabilities are disclosed in Note 11. Share-Based Payments (Note 18) - The Group initially measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instrument at the date at which they are granted. Estimating fair value for share-based payment transactions requires the determination of the most appropriate valuation model. This estimate also requires the determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield. The assumption and models used for estimating the fair value for share-based payment transactions are disclosed in Note 18. Functional currency of foreign operations (Note 1(g)) - determination of the functional currency of foreign subsidiaries requires judgement regarding the primary currency of labour, material and exploration spend in that subsidiary. Adjustments to the Comparative Period For the year ended 30 June 2021, the Group impaired all its non-current assets in relation to the Salamanca Project after an unfavourable NSC II report was issued by the NSC in July 2021 which was followed by a formal notification from MITECO that it had rejected the Company’s NSC II application at the Salamanca Project. During the current financial year, the Group reviewed the impairment write-down of the land previously purchased in connection with the Salamanca Project and has assessed that the carrying value of the land, prior to the impairment write-down in 2021, was not in excess of its estimated recoverable value. Accordingly, the 2021 comparatives in these financial statements have been restated and the impairment loss recognised on the land amounting to $9,276,000 reversed. In addition, the Group reassessed the valuation of the Convertible Note in 2021. The Convertible Note was classified as a financial liability at fair value through profit and loss. It was determined that the market share price of the Company should have been used as the input into the valuation model rather than the conversion price of the Convertible Note as stipulated in the contract. As a consequence of using the conversion price valuation input, the carrying value of the Convertible Note has been adjusted by $3,443,000 at 30 June 2021. The 2021 comparatives have been restated in these financial statements. These adjustments can be quantified as follows: Restatement of comparative financial information Impact on consolidated statement of financial position 30 June 2021 as previously disclosed $000 30 June 2021 adjustments $000 30 June 2021 Restated $000 Property, plant and equipment Total assets Financial liabilities Total liabilities Issued capital Reserves Accumulated losses TOTAL EQUITY/(DEFICIENCY) 94 80,789 97,535 99,954 169,862 (1,572) (187,455) (19,165) 9,276 9,276 3,443 3,443 - - 5,833 5,833 9,370 90,065 100,978 103,397 169,862 (1,572) (181,622) (13,332) 28 BERKELEY ENERGIA LIMITED Impact on consolidated statement of profit or loss and other comprehensive income 30 June 2021 as previously disclosed $000 30 June 2021 adjustments $000 30 June 2021 Restated $000 Fair value movement on financial liabilities Impairment expenses Profit/(loss) before income tax Profit/(loss) after income tax Other comprehensive loss, net of income tax Total comprehensive income/(loss) for the year attributable to Members of Berkeley Energia Limited (18,253) (20,358) (54,953) (54,953) (604) (3,367) 9,276 5,833 5,833 - (21,620) (11,082) (49,120) (49,120) (604) (55,557) 5,833 (49,724) As a result of the above restatements, loss per share for the year ended 30 June 2021 has been restated from 12.36 cents per share to 11.03 cents per share. Restatement of 31 December 2021 half year financial statements The change in the fair value measurement of the Convertible Note liability and the value ascribed to the shares issued on conversion of the Convertible Notes has been adjusted in the 30 June 2022 annual financial statements from what was disclosed in the 31 December 2021 half year financial statements. The Convertible Note liability was converted into ordinary shares on 30 November 2021 through the issue of 186,814,815 shares. The change in the fair value of the Convertible Notes between 30 June 2021 and the conversion date of 30 November 2021 was determined based on Berkley’s closing share price at 30 November 2021 of £0.105, a gain of $60,789,000 which was not recognised in the 31 December 2021 half year financial statements. Had the correct amount been recorded in the 31 December 2021 half year financial statements, the gain on fair value movement on financial liabilities within the statement of profit or loss would have increased by $60,789,000, and issued capital and accumulated losses would have decreased by an equivalent amount. The earnings per share disclosed in the 31 December 2021 half year financial statements should have been 14.31 cents per share. (f) Revenue Recognition Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. (g) Foreign Currency Translation Both the functional and presentation currency of Berkeley at 30 June 2022 was Australian Dollars. The following table sets out the functional currency of the subsidiaries (unless dormant) of the Group: Company Name Berkeley Exploration Limited Berkeley Minera Espana, S.L.U Berkeley Exploration Espana, S.L.U Functional Currency A$ Euro Euro 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 at 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 sheet date. All exchange differences in the consolidated financial report are taken to the income statement with the exception of exchange differences on intercompany loans which are not expected or planned to be repaid. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in the income statement. ANNUAL REPORT 2022 29 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (g) Foreign Currency Translation (Continued) 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. Where the functional currency of a subsidiary of Berkeley Energia Limited is not Australian Dollars the assets and liabilities of the subsidiary at reporting date are translated into the presentation currency of Berkeley at the rate of exchange ruling at the balance sheet date and the income statements are translated by applying the average exchange rate for the year. Any exchange differences arising on this retranslation are taken directly to the foreign currency translation reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity and relating to that particular foreign operation is recognised in the Statement of Profit or Loss and Other Comprehensive Income. (h) Income Tax The income tax expense for the year is the tax payable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose on goodwill or in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Parent Entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of deferred income tax assets is reviewed at each balance sheet 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. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against tax liabilities and the deferred tax liabilities relate to the same taxable entity and the same taxation authority. (i) Cash and Cash Equivalents ‘Cash and cash equivalents’ includes cash on hand, deposits held at call with financial institutions, and other 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. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above. 30 BERKELEY ENERGIA LIMITED (j) Impairment of Non-Current Assets The Group assesses at each reporting date whether there is an indication that a non-current asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to dispose and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets of groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at a revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (k) Trade and Other Receivables Trade receivables are recognised and carried at original invoice amount less any Expected Credit Loss (“ECL”). Receivables from related parties are recognised and carried at the nominal amount due and are interest free. (l) (i) Financial Assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (“OCI”), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, less transaction costs. (ii) Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • • • • • Financial assets at amortised cost (relevant to the Group); Financial assets at fair value through OCI with recycling of cumulative gains and losses (not relevant to the Group); Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments – not relevant to the Group); and Financial assets at fair value through profit or loss (relevant to the Group). ANNUAL REPORT 2022 31 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 1. (l) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial Assets (Continued) Financial assets at amortised cost (debt instruments) The Group measures financial assets at amortised cost if both of the following conditions are met: • • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest rate (“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost includes GST and other taxes receivables, interest receivable and security deposits. Impairment The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For receivables due in less than 12 months, the Group recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. Given the nature of financial assets held by the Group, it considers a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. (m) Property, Plant and Equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Property, plant and equipment is depreciated on a reducing balance or straight line basis at rates based upon the individual assets effective useful life as follows: Plant and equipment Property (buildings and land) Life 2 - 13 years 50 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. 32 BERKELEY ENERGIA LIMITED An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. An item of plant and equipment is derecognised upon disposal or when no further economic benefits are expected from its use or disposal. Gains and losses on disposals are determined by comparing the net disposal proceeds with carrying amount of the asset. These are included in the profit or loss in the period the asset is derecognised. (n) Trade and Other Payables Trade payables and other payables are carried at amortised cost and represent liabilities for the goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days. Payables are carried at amortised cost. (o) Financial liabilities (i) Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables and financial instruments. (ii) Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in AASB 9 are satisfied. The Group has designated the Convertible Note and OIA Options as financial liabilities at fair value through profit or loss (termed Financial Derivatives in the notes). Loans and borrowings After initial recognition, loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are then recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on initial recognition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. ANNUAL REPORT 2022 33 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (o) Financial liabilities (Continued) (iii) Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another liability on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. (p) Employee Benefits Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within twelve months of the reporting date are recognised in provisions in respect of employees' services up to the reporting date, and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Employee benefits payable later than 12 months have been measured using the projected unit credit valuation method. (q) Issued Capital Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the consideration received by the Company. 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. (r) Dividends Provision is made for the amount of any dividend declared on or before the end of the year but not distributed at balance date. (s) Earnings per Share (EPS) Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (t) Exploration and Evaluation Expenditure Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method. Exploration and evaluation expenditure encompasses expenditures incurred by the Group in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised, classified as tangible or intangible, and recognised as an exploration and evaluation asset. Exploration and evaluation assets are measured at cost at recognition and are recorded as an asset if: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met: • • the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation expenditure incurred by the group subsequent to the acquisition of the rights to explore is expensed as incurred, up to until a decision to develop or mine is made. 34 BERKELEY ENERGIA LIMITED A provision for unsuccessful exploration and evaluation is created against each area of interest by means of a charge to the income statement. The recoverable amount of each area of interest is determined on a bi-annual basis and impairment recorded in respect of that area adjusted so that the net carrying amount does not exceed the recoverable amount. For areas of interest that are not considered to have any commercial value, or where exploration rights are no longer current, the capitalised amounts are derecognised and any remaining balance charged against profit or loss. When a decision is made to proceed with development, the accumulated exploration and evaluation asset will be tested for impairment and transferred to development properties, and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. Impairment Capitalised exploration costs are reviewed each reporting date to establish whether an indication of impairment exists. If any such indication exists, the recoverable amount of the capitalised exploration costs is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. (u) Goods and Services Tax (“GST”) 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 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 are 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. (v) Share Based Payments (i) Equity settled transactions: The Group provides benefits to directors, employees, consultants and other advisors of the Group in the form of share-based payments, whereby the directors, employees, consultants and other advisors render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using an appropriate method (e.g. binomial model or Black-Scholes option pricing model). In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Berkeley (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). ANNUAL REPORT 2022 35 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (v) Share Based Payments (Continued) The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group's best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. (w) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, 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 finance cost. 2. REVENUE Interest income 3. FAIR VALUE MOVEMENTS Notes 2022 $000 2021 $000 32 32 23 23 Fair value movement on financial liabilities through profit and loss 11(b) 64,720 (21,620)1 Note: (1) Please refer to Note 11 and Note 1(e) for further disclosure. 36 BERKELEY ENERGIA LIMITED 4. EXPENSES Profit/(Loss) from ordinary activities before income tax expense includes the following specific expenses: (a) Expenses Depreciation and amortisation - Plant and equipment - Lease amortisation (b) Employee Benefits Expense Salaries, wages and fees Defined contribution/Social Security Share-based reversal/(payments) (refer Note 18(a)) Total Employee Benefits Expense (c) Impairment Expenses Exploration expenditure impairment expense Property, plant and equipment expenses Total Impairment Expense(1) 2022 $000 2021 $000 (13) (81) (94) (1,723) (274) 101 (1,896) (320) (163) (483) (1,645) (347) (186) (2,178) Notes 7 8 2021 Restated (Note 1(e)) $000 (8,206) (2,876) (11,082) 2022 $000 - - - Note: (1) For the year ended 30 June 2021, the Group impaired all its non-current assets in relation to the Salamanca Project after an unfavourable NSC II report was issued by the NSC in July 2021 this was followed by a formal notification from MITECO that it had rejected the Company’s NSC II application at the Salamanca Project. In the 30 June 2021 financial statements due to the uncertainties, the fair value less cost of disposal of the Salamanca project assets were assessed to be nil. During the current financial year, the Group reviewed the impairment of land previously purchased in connection with the Salamanca Project and has assessed that the carrying value of the land, prior to any impairment write-down in 2021, was not in excess of its estimated recoverable value. In this regard the recoverable value of the land was determined based on its estimated fair value less cost of disposal using a market comparison approach which is level 3 within the fair value hierarchy. Accordingly, the 2021 comparatives in these financial statements have been restated to reverse the impairment write-down of the land (see note 1(e)). The Company strongly refutes the NSC’s assessment and, in the Company’s opinion, the NSC has adopted an arbitrary decision with the technical issues used as justification to issue the unfavourable report lacking in both technical and legal support. In this regard, Berkeley has submitted an administrative appeal against MITECO’s decision under Spanish law. In Berkeley’s strong opinion, MITECO has rejected the Company’s NSC II application without following a legally established procedure and the Company believes that MITECO has infringed regulations on administrative procedures in Spain, as well as Berkeley’s right of defence, which would imply that the decision on the rejection of the Company’s NSC II application is not legal. The Company will continue to strongly defend its position in relation to the adverse resolution by MITECO. Refer to Notes 7 and 8 for further details. ANNUAL REPORT 2022 37 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 5. INCOME TAX EXPENSE (a) Recognised in the Income Statement Current income tax Current income tax expense in respect of the year Deferred income tax Relating to origination and reversal of temporary differences Income tax reported in the income statement (b) Reconciliation Between Tax Expense and Accounting Profit/(Loss) Before Income Tax Accounting profit/(loss) before income tax At the domestic income tax rate of 30% (2021: 26%) Expenditure not allowable for income tax purposes Income not assessable for income tax purposes Effect of increase in tax rate Temporary differences previously not brought to account Temporary differences not brought to account Income tax (benefit)/expense reported in the income statement c) Deferred Income Tax Deferred income tax relates to the following: Deferred Tax Liabilities Accrued interest Unrealised foreign exchange Deferred tax assets used to offset deferred tax liabilities Deferred Tax Assets Accrued expenditure Capital allowances Tax losses available to offset against future taxable income Deferred tax assets used to offset deferred tax liabilities Deferred tax assets not brought to account 2022 $000 2021 Restated (Note 1(e)) $000 - - - 65,038 19,511 - (18,216) (3,653) (2,215) 4,573 - 925 (925) - 17 17,344 11,879 (925) - - - (49,120) (12,771) 8,998 - - - 3,773 - - - - - 15 14,041 9,686 - (28,315) (23,742) - - This future income tax benefit will only be obtained if: • • • future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised; the conditions for deductibility imposed by tax legislation continue to be complied with; and no changes in tax legislation adversely affect the Company in realising the benefit. (d) Tax Consolidations As Berkeley Energia Limited is the only Australian company in the Group, tax consolidation is not applicable. 38 BERKELEY ENERGIA LIMITED 6. CURRENT ASSETS – OTHER RECEIVABLES GST and other taxes receivable Other 7. NON-CURRENT ASSETS – EXPLORATION EXPENDITURE The Group has mineral exploration costs carried forward in respect of areas of interest(1)(2): Areas in exploration at cost: Balance at the beginning of year Foreign exchange differences Impairment provision Balance at end of year Note 4(c) 2022 $000 763 214 977 2022 $000 2021 $000 1,235 271 1,506 2021 $000 - - - - 8,293 (87) (8,206)(3) - Notes: (1) The value of the exploration interests is dependent upon the discovery of commercially viable reserves and the successful development or alternatively sale, of the respective tenements. An amount of €6m (A$8.994m) was capitalised in respect of fees paid to ENUSA under the Co-operation Agreement relating to the tenements within the State Reserves. The Company reached agreement with ENUSA in July 2012 in the form of an Addendum to the Consortium Agreement signed in January 2009. The Addendum includes the following terms: • The Consortium now consists of State Reserves 28 and 29; • Berkeley's stake in the Consortium has increased to 100%; • ENUSA will remain the owner of State Reserves 28 and 29, however the exploitation rights have been assigned to Berkeley, together with authority to submit all applications for the permitting process; • The Company is now the sole and exclusive operator in the Addendum Reserves, with the right to exploit the contained uranium resources and has full ownership of any uranium produced; • ENUSA will receive a production fee equivalent to 2.5% of the net sale value (after marketing and transport costs) of any uranium produced within the Addendum Reserves; • Berkeley has waived its rights to mining in State Reserves 2,25, 30, 31, Hoja 528-1 and the Saelices El Chico Exploitation Concession, and has waived any rights to management of the Quercus plant; and • The Co-operation Agreement with ENUSA, signed on 29 January 2009, has been terminated. The Group’s accounting policy is to account for contingent consideration on asset acquisitions as contingent liabilities. (2) In June 2016, the Company completed an upfront royalty sale. The royalty financing comprised the sale of a 0.375% fully secured net smelter royalty over the project for US$5 million (A$6.7million) which was deducted from exploration expenditure. (3) Refer to Note 4(c) for details on the impairment. ANNUAL REPORT 2022 39 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 8. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT Land and Buildings Plant and equipment Right-of- use assets Carrying amount at 1 July 2021 Additions Disposals Depreciation and amortisation Foreign exchange differences Impairment provision (Note 4(c)) Carrying amount at 30 June 2022 - at cost - accumulated depreciation, amortisation and impairment $000 9,276 - - - (404) - 8,872 10,720 (1,848) $000 13 - - $000 81 - - (13) (81) - - - - - - Total $000 9,370 - - (94) (404) - 8,872 3,225 (3,225) 407 14,352 (407) (14,352) Carrying amount at 1 July 2020 10,798 1,813 244 12,855 Additions Disposals Adjustment Depreciation and amortisation Foreign exchange differences Impairment provision (Notes 4(c) and 1(e)) Restated carrying amount at 30 June 2021 - at cost - accumulated depreciation, amortisation and impairment - - 1,215 (33) (371) (2,333) 9,276 10,720 (1,444) 95 (29) (1,215) (91) (17) (543) 13 3,225 (3,212) - - - (163) - - 81 407 (326) 2022 $000 95 (29) - (287) (388) (2,876) 9,370 14,352 (4,982) 2021 $000 9. NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS Security bonds 97 123 10. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES Trade creditors 1,005 1,767 All trade and other payables are current. There are no overdue amounts. Trade creditors are non-interest bearing and settled on 30-day terms. Accrued expenses are non-interest bearing and have an average term of six months. 40 BERKELEY ENERGIA LIMITED 11. FINANCIAL LIABILITIES (a) Financial liabilities at fair value through profit and loss Convertible Note(1) OIA Options Consolidated 30 June 2021 Restated (Note 1(e)) 2022 $000 - 669 669 2021 Restated (Note 1(e)) $000 96,393 4,585 100,978 Consolidated 30 June 2022 Opening Balance $000 Fair Value Change $000 Foreign Exchange Loss/(Gain) $000 Automatic conversion Total $000 (b) Reconciliation Convertible Note OIA Options Total fair value 96,393 4,585 100,978 (60,789) (3,931) (64,720) 1,031 (36,635)(1) 15 1,046 - (36,635) - 669 669 Note: (1) On 30 November 2017, the Company issued an interest-free and unsecured US$65 million Convertible Note to OIA. On 30 November 2021, the Company issued 186,814,815 fully paid ordinary shares in the capital of the Company to OIA following the automatic conversion of the Convertible Note in accordance with the terms of the Investment Agreement and Convertible Note entered in with OIA in 2017. Refer to note 13(b) for further disclosure Consolidated 30 June 2020 Opening Balance $000 Fair Value Change $000 Foreign Exchange Loss/(Gain) $000 Convertible Note OIA Options Total fair value 75,331 1,416 76,747 18,546 3,074 21,620 2,516 95 2,611 Consolidated 30 June 2021 Restated (Note 1(e)) Total $000 96,393 4,585 100,978 ANNUAL REPORT 2022 41 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 11. FINANCIAL LIABILITIES (Continued) (c) Fair Value Estimation The fair value of the OIA Options was determined using a binomial option pricing model. The fair value of the Convertible Note was calculated using a probability-weighted payout approach on the basis that the Convertible Note converted at 30 November 2021 at the floor price of £0.27. At the date the Convertible Note automatically converted, the valuation date share price was £0.105. The fair value movement of both the OIA Options and the Convertible Note has been recognised in the Statement of Profit and Loss. Both fair value measurements are Level 2 valuation in the fair value hierarchy. On 30 November 2021, the Convertible Note converted into ordinary shares in the Company and was derecognised as a liability. The reporting date fair values of the Convertible Note and OIA Options were estimated using the following assumptions: Convertible Note (Fair Value Level 2 Measurements): Conversion price Valuation date share price Number of shares (probability weighted average) (‘000) Fair value per share Note (1) Fair value as at conversion date, 30 November 2021. OIA Options (Fair Value Level 3 Measurements): 2022 £0.270 £0.105 186,815 $0.196(1) 2021 Restated (Note 1(e)) £0.270 £0.280 186,815 $0.516 30 June 2022 Exercise price Valuation date share price Dividend yield(1) Volatility(2) Risk-free interest rate Number of OIA Options Estimated Expiry date Fair value (£) Fair value ($) 30 June 2021 Exercise price Valuation date share price Dividend yield(1) Volatility(2) Risk-free interest rate Number of OIA Options Estimated Expiry date Fair value (£) Fair value ($) Tranche 1 Tranche 2 Tranche 3 £0.600 £0.201 - 85% 1.83% 10,088,625 30 Nov 2022 0.002 0.003 £0.750 £0.201 - 85% 1.83% 15,132,973 31 May 2023 0.007 0.012 £1.000 £0.201 - 85% 1.90% 25,221,562 30 Nov 2023 0.010 0.018 Tranche 1 Tranche 2 Tranche 3 £0.600 £0.280 - 82% 0.05% 10,088,625 30 Nov 2022 0.047 0.086 £0.750 £0.280 - 82% 0.08% 15,132,973 31 May 2023 0.050 0.093 £1.000 £0.280 - 82% 0.12% 25,221,562 30 Nov 2023 0.050 0.092 Notes (1) (2) The dividend yield reflects the assumption that the current dividend payout will remain unchanged. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome. 42 BERKELEY ENERGIA LIMITED Historical volatility is deemed to be the only unquoted input used in the fair value measurements of the OIA Options. The higher the volatility, the higher is the fair value of the OIA option moves due to the increased uncertainty. A 10% (2021: 10%) increase (decrease) in the historical volatility would increase in fair value of the OIA options by $425,000 (2021: $1,442,000) while a 10% decrease of the historical volatility increase the fair value of OIA options by $304,000 (2021: increase of $1,354,000). 12. CURRENT LIABILITIES – OTHER LIABILITIES Provisions(1) Lease liability 2022 $000 582 - 582 Note: (1) Reforestation provision to plant 30,000 young oak trees as part of the environmental licence at the project. 2022 $000 2021 $000 551 101 652 2021 $000 13. ISSUED CAPITAL (a) Issued and Paid up Capital 445,797,000 (2021: 258,982,000) fully paid ordinary shares 206,404 169,862 (b) Movements in Ordinary Share Capital During the Past Two Years: Date Details 1 Jul 21 Opening Balance 30 Nov 21 Automatic Conversion of Convertible Note (Note 11(b)) Jul 21 to Jun 22 Share issue costs 30 Jun 22 Closing Balance 1 Jul 20 Opening Balance 26 Mar 21 Exercise of A$0.35 Incentive Options (cashless) Jul 20 to Jun 21 Share issue costs 30 Jun 21 Closing Balance (c) Terms and conditions of Ordinary Shares (i) General Number of Shares ‘000 258,982 186,815 - 445,797 258,605 377 - $000 169,862 36,635 (93) 206,404 169,829 38 (5) 258,982 169,862 The ordinary shares (“Shares”) are ordinary shares and rank equally in all respects with all ordinary shares in the Company. The rights attaching to the Shares arise from a combination of the Company's Constitution, statute and general law. Copies of the Company's Constitution are available for inspection during business hours at its registered office. (ii) Reports and Notices Shareholders are entitled to receive all notices, reports, accounts and other documents required to be furnished to shareholders under the Company's Constitution, the Corporations Act and the Listing Rules. ANNUAL REPORT 2022 43 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 13. ISSUED CAPITAL (Continued) (c) Terms and conditions of Ordinary Shares (Continued) (iii) Voting Subject to any rights or restrictions at the time being attached to any shares or class of shares of the Company, each member of the Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of members will be decided by a poll. On a poll each eligible member has one vote for each fully paid share held and a fraction of a vote for each partly paid share determined by the amount paid up on that share. (iv) Variation of Shares and Rights Attaching to Shares Shares may be converted or cancelled with member approval and the Company's share capital may be reduced in accordance with the requirements of the Corporations Act. Class rights attaching to a particular class of shares may be varied or cancelled with the consent in writing of holders of 75% of the shares in that class or by a special resolution of the holders of shares in that class. (v) Unmarketable Parcels The Company may procure the disposal of Shares where the member holds less than a marketable parcel of Shares within the meaning of the Listing Rules (being a parcel of shares with a market value of less than $500). To invoke this procedure, the Directors must first give notice to the relevant member holding less than a marketable parcel of Shares, who may then elect not to have his or her Shares sold by notifying the Directors. (vi) Changes to the Constitution The Company's Constitution can only be amended by a special resolution passed by at least three quarters of the members present and voting at a general meeting of the Company. At least 28 days' written notice specifying the intention to propose the resolution as a special resolution must be given. (vii) Listing Rules Provided the Company remains admitted to the Official List of the Australian Securities Exchange Ltd, then despite anything in the Constitution, no act may be done that is prohibited by the Listing Rules, and authority is given for acts required to be done by the Listing Rules. The Company's Constitution will be deemed to comply with the Listing Rules as amended from time to time. 14. RESERVES Share-based payments reserve Foreign currency translation reserve (a) Nature and Purpose of Reserves Share-based payments reserve Note 14(b) 2022 $000 341 (2,528) (2,187) 2021 $000 442 (2,014) (1,572) The share-based payments reserve records the fair value of share-based payments made by the Company. Foreign currency translation reserve Exchange differences arising on translation of a foreign controlled entity are taken to the foreign currency translation reserve, as described in Note 1(g). The reserve is recognised in profit and loss when the net investment is disposed of. 44 BERKELEY ENERGIA LIMITED (b) Movements in Incentive Options and Performance Rights during the Past Two Years: Date Details 1 Jul 21 Opening Balance 31 Dec 21 Lapse of unvested Performance Rights Jul 21 to Jun 22 Share-based payments expense 30 Jun 22 Closing Balance 1 Jul 20 Opening Balance 26 Mar 21 Exercise of A$0.35 Incentive Options (cashless) Jul 20 to Jun 21 Share-based payments expense 30 Jun 21 Closing Balance (c) Terms and conditions of Incentive Options Number of Incentive Options ‘000 Number of Performance Rights ‘000 6,600 - - 6,600 7,400 (800) - 6,600 200 (200) - - 200 - - 200 $000 442 (148) 47 341 294 (38) 186 442 Incentive Options granted as share-based payments have the following terms and conditions: • Each Incentive Option entitles the holder to the right to subscribe for one Share upon the exercise of each Incentive Option; • The Incentive Options granted as share-based payments at the end of the financial year have the following exercise prices and expiry dates: • • 2,900,000 Incentive Options expiring exercisable at $0.35 on or before 31 December 2022; and 3,700,000 Incentive Options expiring exercisable at $0.40 on or before 31 December 2023. The Incentive Options are exercisable at any time prior to the Expiry Date, subject to vesting conditions being satisfied (if applicable); Shares issued on exercise of the Incentive Options rank equally with the then Shares of the Company; Application will be made by the Company to ASX for official quotation of the Shares issued upon the exercise of the Incentive Options; If there is any reconstruction of the issued share capital of the Company, the rights of the Incentive Option holders may be varied to comply with the ASX Listing Rules which apply to the reconstruction at the time of the reconstruction; and • • • • • No application for quotation of the Incentive Options will be made by the Company. ANNUAL REPORT 2022 45 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 15. PARENT ENTITY INFORMATION Current assets Total assets Current liabilities Total liabilities Net Assets/(Liabilities) Issued Capital Reserves Accumulated losses Total equity Profit/(Loss) of the parent entity Total comprehensive Profit/(Loss) of the parent entity 2022 $000 79,768 79,775 1,017 1,017 78,758 206,404 341 (127,987) 78,758 61,575 61,575 2021 Restated (Note 1(e)) $000 78,703 93,895 101,505 101,505 (7,610) 169,862 442 (177,914) (7,610) (37,600) (37,600) The Parent Company had no guarantees, commitments or contingencies at 30 June 2022 other than as disclosed elsewhere in this report (2021: None). 16. RELATED PARTY DISCLOSURES (a) Subsidiaries The consolidated financial statements include the financial statements of the Company and the subsidiaries listed in the following table: Name of Controlled Entity Place of Incorporation Equity Interest Berkeley Exploration Ltd Berkeley Minera Espana S.L.U Berkeley Exploration Espana S.L.U (b) Ultimate Parent UK Spain Spain 2022 % 100 100 100 2021 % 100 100 100 Berkeley Energia Limited is the ultimate parent of the Group. (c) Key Management Personnel Details relating to KMP, including remuneration paid, are included at Note 17. (d) Transactions with Related Parties in the Consolidated Group Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. 46 BERKELEY ENERGIA LIMITED 17. KEY MANAGEMENT PERSONNEL (a) Details of Key Management Personnel The KMP of the Group during or since the end of the financial year were as follows: Directors Ian Middlemas Robert Behets Francisco Bellón Adam Parker Deepankar Panigrahi Other KMP Dylan Browne Chairman Non-Executive Director (Acting Managing Director) Executive Director (appointed 1 July 2022) Non-Executive Director Non-Executive Director (resigned 26 October 2021) Company Secretary There were no other KMP of the Company or the Group. Unless otherwise disclosed, the KMP held their position from 1 July 2021 to 30 June 2022. (b) Key Management Personnel Compensation Short-term benefits Post-employment benefits Share-based payments 18. SHARE-BASED PAYMENTS (a) Recognised Share-Based Payment Expense Net expense arising from equity-settled share-based payment transactions (incentive securities) Lapse of unvested performance rights Total share-based reversal/(payments) recognised during the year 2022 $ (713,802) (34,909) (23,671) (772,382) 2022 $000 (47) 148 101 2021 $ (739,969) (34,393) (95,924) (870,286) 2021 $000 (186) - (186) (b) Summary of Incentive Options and Performance Rights Granted as Share-based Payments No Incentive Options were granted as share-based payments during the last two years. The following table illustrates the number and weighted average exercise prices (“WAEP”) of Incentive Options issued as share-based payments at the beginning and end of the financial year: Options Outstanding at beginning of year Granted during the year Exercised during the year Outstanding at end of year 2022 ‘000 6,600 - - 2022 WAEP $0.378 - - 6,600 $0.378 2021 ‘000 7,400 - (800)(1) 6,600 2021 WAEP $0.375 - $0.350 $0.378 Note (1) The weighted average share price at the date of exercise was $0.645. ANNUAL REPORT 2022 47 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 18. SHARE-BASED PAYMENTS (Continued) (b) Summary of Incentive Options and Performance Rights Granted as Share-based Payments (Continued) The outstanding balance of Incentive Options as at 30 June 2022 is represented by: • • 2,900,000 Incentive Options expiring exercisable at $0.35 on or before 31 December 2022; and 3,700,000 Incentive Options expiring exercisable at $0.40 on or before 31 December 2023. The following table illustrates the number and WAEP of Performance Rights issued as share-based payments at the beginning and end of the financial year: Performance/share Rights Outstanding at beginning of year Lapsed during the year Cancelled during the year Converted during the year Outstanding at end of year 2022 ‘000 200 (200) - - - 2022 WAEP - - - - - 2021 ‘000 200 - - - 200 2021 WAEP - - - - - (c) Weighted Average Remaining Contractual Life At 30 June 2022, the weighted average remaining contractual life for Incentive Options on issue that had been granted as share-based payments was 1.06 years (2021: 2.06 years). (d) Range of Exercise Prices At 30 June 2022 and 2021, the range of exercise prices for Incentive Options on issue that had been granted as share-based payments was $0.35 and $0.40. (e) Weighted Average Fair Value There were no Incentive Options or Performance Rights granted as share-based payments during the year ended 30 June 2022 and 30 June 2021. (f) Option and Performance Rights Pricing Model The fair value of the equity-settled Incentive Options granted is estimated as at the date of grant using the binomial option valuation model taking into account the terms and conditions upon which the Incentive Options are granted. The fair value of the equity-settled share Performance Rights granted is estimated as at the date of grant with reference to the share price on that date. No Incentive Options were granted as share-based payments in the financial year ended 30 June 2022 (2021: nil). No Performance Rights were issued as share-based payments in the financial years ended 30 June 2022 (2021: nil). 48 BERKELEY ENERGIA LIMITED 19. REMUNERATION OF AUDITORS Amounts received or due and receivable by Ernst & Young Australia for: - an audit or review of the financial reports of the Company and any other entity in the Consolidated Group - preparation of income tax return Amounts received or due and receivable by related practices of Ernst & Young for: - an audit or review of the financial reports of the Company - other services in relation to the Company Other auditors for: - an audit or review of the financial reports Total Auditors Remuneration 20. SEGMENT INFORMATION 2022 $ 2021 $ 51,032 23,500 41,640 32,000 42,196 57,247 - 173,975 43,410 23,038 - 140,088 The Consolidated Entity operates in one operating segment and one geographical segment, being uranium exploration in Spain. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Consolidated Entity. The corporate and administrative functions based in Australia are considered incidental to Consolidated Entity’s uranium exploration activities in Spain. The Group’s interest income is all earned in Australia. (a) Reconciliation of Non-Current Assets by geographical location United Kingdom Spain 21. EARNINGS PER SHARE 2022 $000 - 8,872 8,872 2021 Restated (Note 1(e)) $000 94 9,276 9,370 The following reflects the income data used in the calculations of basic and diluted earnings per share: Net profit/(loss) used in calculating basic and diluted earnings per share 2021 Restated (Note 1(e)) $000 2022 $000 65,038 (49,120) ANNUAL REPORT 2022 49 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 21. EARNINGS PER SHARE (Continued) (a) Weighted Average Number of Shares The following reflects the share data used in the calculations of basic and diluted earnings per share: Number of Shares 2022 ‘000 Number of Shares 2021 ‘000 Weighted average number of ordinary shares 445,797 258,705 Weighted average number of ordinary shares to be issued upon conversion of Convertible Note Effect of dilutive securities(2) Weighted average number of ordinary shares and potential ordinary shares used in calculating basic and diluted earnings per share -(1) - 186,815 - 445,797 445,520 Notes: (1) (2) Convertible Note converted to Ordinary Shares on 30 November 2021. Please refer to Note 11 for further disclosure. At 30 June 2022, 6,600,000 Incentive Options and 50,444,000 OIA Options (which represent 57,044,000 potential ordinary shares) were considered not dilutive as the exercise price of the options was greater than the average market price of the Company’s shares during the year whilst the performance conditions of the Rights have not been met and as such were both excluded from the weighted average number of shares for the purposes of diluted earnings per share. (b) Conversions, Calls, Subscriptions or Issues after 30 June 2022 There have been no conversions to, calls of, or subscriptions for ordinary shares, since the reporting date and before the completion of this financial report. 22. STATEMENT OF CASH FLOWS (a) Reconciliation of Net Profit/ (Loss) Before Income Tax Expense to Net Cash Flows from Operating Activities 2022 $000 65,038 94 (101) (65,178) (5,311) 529 (862) - (5,791) 79,893 50 79,943 2021 Restated (Note 1(e)) $000 (49,120) 320 186 32,608 9,621 (70) 388 476 (5,591) 79,016 50 79,066 Net profit/(loss) before income tax expense Adjustment for income and expense items Depreciation & amortisation Share-based payments reversal/(expense) Other non-cash movements Foreign exchange movement Changes in operating assets and liabilities (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables (Increase)/decrease in other financial assets Net cash outflow from operating activities (b) Reconciliation of Cash and Cash Equivalents Cash at bank and on hand Bank short term deposits 50 BERKELEY ENERGIA LIMITED (c) Credit Standby Arrangements with Banks At balance date, the Company had no used or unused financing facilities (2021: None). (d) Non-cash Financing and Investment Activities In 2022 and 2021 no amount was recognised as a share-based payment for the issue of shares to a consultant as part of their consulting fee. Please refer to Note 18(a) for further disclosure. 23. FINANCIAL INSTRUMENTS (a) Overview The Group's principal financial instruments comprise receivables, payables, security deposits, other financial liabilities, cash and short-term deposits. The main risks arising from the Group's financial instruments are interest rate risk, equity price risk, foreign currency risk, credit risk and liquidity risk. This note presents information about the Group's exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk, and the management of capital. Other than as disclosed, there have been no significant changes since the previous financial year to the exposure or management of these risks. The Group manages its exposure to key financial risks in accordance with the Group's financial risk management policy. Key risks are monitored and reviewed as circumstances change (e.g. acquisition of a new project) and policies are revised as required. The overall objective of the Group's financial risk management policy is to support the delivery of the Group's financial targets whilst protecting future financial security. Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows, the Group does not enter into derivative transactions to mitigate the financial risks. In addition, the Group's policy is that no trading in financial instruments shall be undertaken for the purposes of making speculative gains. As the Group's operations change, the Directors will review this policy periodically going forward. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees policies for managing the Group's financial risks as summarised below. (b) Credit Risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This risk arises principally from cash and cash equivalents and trade and other receivables. There are no significant concentrations of credit risk within the Group. The carrying amount of the Group's financial assets represents the maximum credit risk exposure, as represented below: Current Assets Cash and cash equivalents Trade and other receivables Non-current Assets Other financial assets 2022 $000 79,943 977 80,920 97 97 2021 $000 79,066 1,506 80,572 123 123 Total 81,017 80,695 ANNUAL REPORT 2022 51 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 23. FINANCIAL INSTRUMENTS (Continued) (b) Credit Risk (Continued) The Group does not have any significant customers and accordingly does not have any significant exposure to ECLs. Trade and other receivables are expected to be collected in full and the Group has no history of ECLs. As at 30 June 2022, other receivables comprise GST/VAT receivable, accrued interest and other miscellaneous receivables. Where possible the Group trades only with recognised, creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to ECLs is not significant. The Group’s receivables balance consists of GST/VAT refunds from recognised government entities with minimal credit risk. While and interest receivables and cash and cash equivalents are due and/or held with reputable financial institutions that are rated the equivalent of investment grade and above. (c) Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to meet its liabilities when due. At 30 June 2022 and 2021, the Group has sufficient liquid assets to meet its financial obligations. The contractual maturities for cash settled financial liabilities, including estimated interest payments, are provided below. There are no netting arrangements in respect of financial liabilities. ≤ 6 months $000 6 - 12 months $000 1 - 5 years $000 ≥ 5 years $000 Total $000 2022 Financial Liabilities Trade and other payables Lease liability 2021 Financial Liabilities Trade and other payables Lease liability (d) Interest Rate Risk 1,005 - 1,005 1,767 101 1,868 - - - - - - - - - - - - - - - - - - 1,005 - 1,005 1,767 101 1,868 The Group's exposure to the risk of changes in market interest rates relates primarily to cash and cash equivalents with a floating interest rate. These financial assets with variable rates expose the Group to cash flow interest rate risk. All other financial assets and liabilities, in the form of receivables, security deposits and payables are non-interest bearing. At balance date, the variable interest rate exposure of the Group's was: Interest-bearing Financial Instruments Cash at bank and on hand Bank short term deposits 52 BERKELEY ENERGIA LIMITED 2022 $000 79,893 50 79,943 2021 $000 79,016 50 79,066 The Group's cash at bank and on hand and short term deposits had a weighted average variable interest rate at year end of 0.01% (2021: 0.04%). The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk. Interest rate sensitivity A sensitivity of one per cent has been selected as this is considered reasonable given the current level of both short term and long term interest rates. A 1% movement in interest rates at the reporting date would have increased (decreased) profit and loss by the amounts shown below based on the average amount of interest bearing financial instruments held. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2021. Profit or Loss Other Comprehensive Income 1% Increase $000 1% Decrease $000 1% Increase $000 1% Decrease $000 2022 Group Cash and cash equivalents 799 (799) 2021 Group Cash and cash equivalents 791 (791) (e) Foreign Currency Risk - - - - The Group also has transactional currency exposures. Such exposure arises from transactions denominated in currencies other than the functional currency of the entity. The Group currently does not engage in any hedging or derivative transactions to manage foreign currency risk. The Group is also exposed to foreign currency risk on the Euro, Sterling and US Dollar cash and cash equivalents that it holds. Sensitivity analysis for currency risk A sensitivity of 10 per cent has been selected as this is considered reasonable given historic and potential future changes in foreign currency rates. This has been applied to the net financial instruments of Berkeley Minera Espana, S.L.U and Berkeley Exploration Espana, S.L.U. and to the Euro and Sterling cash and cash equivalents that the Group holds. This sensitivity analysis is prepared as at balance date. A 10% strengthening/weakening of the Australian dollar against the Euro at 30 June 2022 would have increased/(decreased) the net financial liabilities of the Spanish controlled entities by A$12,000/(A$12,000) (2021: $2,000/(A$2,000)). There would be no impact on profit or loss arising from these changes in the currency risk variables as all changes in value are taken to a reserve. A 10% strengthening/weakening of the Australian dollar against the Euro at 30 June 2022 of €92,000 cash held (2021: €241,000) would have increased/(decreased) the cash and cash equivalents and profit or loss of the Group by A$14,000/(A$14,000) (2021: A$38,000/(A$38,000)). A 10% strengthening/weakening of the Australian dollar against the Sterling at 30 June 2022 of £41,000 cash held (2021: £290,000) would have increased/(decreased) the cash and cash equivalents and profit or loss of the Group by A$7,000/(A$7,000) (2021: A$53,000/(A$53,000)). A 10% strengthening/weakening of the Australian dollar against the US Dollar at 30 June 2022 of US$52,711,000 cash held (2021: US$52,609,000) would have increased/(decreased) the cash and cash equivalents and profit or loss of the Group by A$7,647,000/(A$7,647,000) (2021: A$7,008,000/(A$7,008,000)). The above analysis assumes that all other variables, in particular interest rates, remain constant. The analysis for 2021 has been performed on the same basis. ANNUAL REPORT 2022 53 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 (Continued) 23. FINANCIAL INSTRUMENTS (Continued) (f) Commodity Price Risk The Group is exposed to uranium commodity price risk. These commodity prices can be volatile and are influenced by factors beyond the Group's control. As the Group is currently engaged in exploration and business development activities, no sales of commodities are forecast for the next 12 months, and accordingly, no hedging or derivative transactions have been used to manage commodity price risk. (g) Capital Management The Group normally defines its Capital as total equity of the Group, (being a net asset at 30 June 2022 of $78,758,000 (2021: net liability $19,165,000)). The OIA Convertible Note which automatically converted on 30 November 2021 resulted in the decrease of Company liabilities of $36,635,000 (based on the 30 November 2021 valuation) and increase in share capital of the same amount increasing net assets to $78,758,000. The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while financing the development of its project through primarily equity-based financing. The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Given the stage of development of the Group, the Board's objective is to minimise debt and to raise funds as required through the issue of new shares. There were no changes in the Group's approach to capital management during the year. The Group is not subject to externally imposed capital requirements. (h) Fair Value The fair value of financial assets and financial liabilities approximates their carrying value. The methods for estimating fair value are outlined in the relevant notes to the financial statements. Please refer to Note 11 for further disclosure. (i) Equity Price Risk The Group is exposed to equity securities price risk. This arises from the OIA Options held by the Group and classified in the Statement of Financial Position as financial liabilities through profit and loss, refer to Note 11. Equity price sensitivity A sensitivity of 10% has been selected as this is considered reasonable given the recent trading of the Company’s shares. The sensitivity analyses below have been determined based on the exposure to equity price risks at the reporting date. This analysis assumes that all other variables remain constant. Profit or loss Other Comprehensive Income 10% increase $000 10% decrease $000 20% increase $000 20% decrease $000 - (239) - 182 (9,639) (1,010) 9,639 925 - - - - - - - - 2022 Group Convertible Note(1) OIA Options Restated (Note 1(e)) 2021 Group Convertible Note OIA Options Note: (1) Convertible Note converted to Ordinary Shares on 30 November 2021. Please refer to Note 11 for further disclosure. 54 BERKELEY ENERGIA LIMITED 24. CONTINGENT LIABILITIES Other than the production fee arrangement with ENUSA disclosed in Note 7, the Group had no contingent liabilities at 30 June 2022 (2021: Nil). 25. COMMITMENTS During the financial year, management has identified the following material commitments for the Group: Payable within 1 year $000 Payable after 1 year and less than 5 years $000 2022 Operating Commitments 2021 Operating Commitments - 236 - - Total $000 - 236 Operating commitments include costs (excluding lease costs) for the provision of serviced offices and short term minimum operational supply agreements. The disclosed amounts are based on the current terms of agreements and based on current levels of operating activities. Agreements entered into by the Group generally provide early termination clauses for the cancellation of agreements allowing the Group to modify the ongoing level of expenditure to an amount significantly less than the disclosed commitments above. 26. SUBSEQUENT EVENTS (i) On 1 July 2022, the Company strengthened the board with the appointment of Mr Francisco Bellón as an Executive Director. Other than as outlined above, as at the date of this report there are no matters or circumstances, which have arisen since 30 June 2022 that have significantly affected or may significantly affect: • • • the operations, in financial years subsequent to 30 June 2022, of the Consolidated Entity; the results of those operations, in financial years subsequent to 30 June 2022, of the Consolidated Entity; or the state of affairs, in financial years subsequent to 30 June 2022, of the Consolidated Entity. ANNUAL REPORT 2022 55 DIRECTORS’ DECLARATION In accordance with a resolution of the Directors of Berkeley Energia Limited, I state that: (1) In the opinion of the Directors: (a) the financial statements, notes and the additional disclosures included in the directors' report designated as audited of the Consolidated Entity are in accordance with the Corporations Act 2001 including: (i) giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2022 and of its performance for the year ended on that date; and (ii) complying with accounting standards and the Corporations Act 2001; (iii) complying with International Financial Reporting Standards; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (2) To the best of the Directors’ knowledge, the Directors’ report includes a fair review of the development and performance of the business and the financial position of the Group, together with a description of the principal risks and uncertainties that the Group faces. (3) This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2022. On behalf of the Board. ROBERT BEHETS Director 30 August 2022 56 BERKELEY ENERGIA LIMITED AUDITOR'S INDEPENDENCE DECLARATION AuditorsIndependenceDec Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of Berkeley Energia Limited As lead auditor for the audit of the financial report of Berkeley Energia Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Berkeley Energia Limited and the entities it controlled during the financial year. Ernst & Young Jared Jaworski Partner 30 August 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ANNUAL REPORT 2022 ANNUAL REPORT 2022 57 59 INDEPENDENT AUDITOR’S REPORT INDEPENDENTAUDITOR’SREPORT Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor’s report to the members of Berkeley Energia Limited Report on the audit of the financial report Opinion We have audited the financial report of Berkeley Energia Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial 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 (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 58 BERKELEY ENERGIA LIMITED We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial report. 1. Convertible note arrangement Why significant How our audit addressed the key audit matter The Group issued a convertible note and share options in the 2018 financial year. Both the convertible note and share options are recognised as financial liabilities and measured at fair value through profit and loss. As disclosed in note 11 of the financial report, on 30 November 2021, under the terms of the convertible note agreement, the convertible note automatically converted into ordinary shares, requiring the Group to issue 186,814,815 fully paid ordinary shares to the noteholder. The convertible note was fair valued up to the date of conversion with any changes in fair value recognised in the profit and loss. At 30 June 2022 the share options remain unexercised and continue to be recognised as a financial liability. The accounting treatment for the convertible note and share options are complex. Judgment is required in determining the classification of the host contract as debt or equity for the convertible note and in valuing both the convertible note and the share options. Due to the value of these financial liabilities relative to the Group’s net assets, the number of shares issued during the year on conversion of the convertible note, the complexity of the accounting treatment and the related estimation uncertainty in determining the fair value of the convertible note prior to its conversion and the share options at 30 June 2022, this was considered a key audit matter. We evaluated the Group’s accounting treatment of the convertible note and share options. Our audit procedures included the following: ► Reviewed management’s assessment of the applicable accounting treatment for the convertible note and share options and the conversion rights. ► Read the convertible note agreement to understand the terms of the convertible note and share options, including the terms of conversion. ► Assessed, with the involvement of our valuation specialists, the methodologies, inputs and assumptions used by the Group in determining the fair value of the convertible note prior to it being converted into ordinary shares and the fair value of the share options at 30 June 2022. ► Assessed whether the number of ordinary shares issued on conversion of the convertible note was in accordance with the terms of the convertible note agreement. ► Considered the adequacy of the Group’s disclosures in respect of the convertible note and share options, including disclosures related to the fair value measurement of the financial liabilities and the conversion of the convertible note in the financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ANNUAL REPORT 2022 59 INDEPENDENT AUDITOR’S REPORT (Continued) 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 Company’s 2022 annual report but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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 member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 60 BERKELEY ENERGIA LIMITED As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. ► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ► Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation ANNUAL REPORT 2022 61 INDEPENDENT AUDITOR’S REPORT (Continued) From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 15 to 21 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Berkeley Energia Limited for the year ended 30 June 2022, 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. Ernst & Young Jared Jaworski Partner Perth 30 August 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 62 BERKELEY ENERGIA LIMITED CORPORATE GOVERNANCE Berkeley Energia Limited and the entities it controls believe corporate governance is important for the Company in conducting its business activities. The Board of Berkeley has adopted a suite of charters and key corporate governance documents which articulate the policies and procedures followed by the Company. These documents are available in the Corporate Governance section of the Company’s website, www.berkeleyenergia.com. These documents are reviewed annually to address any changes in governance practices and the law. The Company’s Corporate Governance Statement 2022, which explains how Berkeley complies with the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations – 4th Edition’ in relation to the year ended 30 June 2022, is available in the Corporate Governance section of the Company’s website, www.berkeleyenergia.com and will be lodged with ASX together with an Appendix 4G at the same time that this Annual Report is lodged with ASX. In addition to the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations – 4th Edition’ the Board has taken into account a number of important factors in determining its corporate governance policies and procedures, including the: relatively simple operations of the Company, which is focused on developing a single uranium property; cost verses benefit of additional corporate governance requirements or processes; size of the Board; • • • • Board’s experience in the relevant sector; • organisational reporting structure and limited number of reporting functions, operational divisions and employees; relatively simple financial affairs with limited complexity and quantum; relatively moderate market capitalisation and economic value of the entity; and direct shareholder feedback. • • • ANNUAL REPORT 2022 63 MINERAL RESOURCES AND ORE RESERVES STATEMENT 1. MINERAL RESOURCES Berkeley’s Mineral Resource Statement as at 30 June 2022 and 30 June 2021 is grouped by deposit, all of which form part of the Salamanca Project in Spain as follows: Resource Tonnes U3O8 U3O8 Tonnes U3O8 U3O8 2022 2021 Deposit Name Retortillo Zona 7 Las Carbas Cristina Caridad Villares Villares North Category Measured Indicated Inferred Total Measured Indicated Inferred Total Inferred Inferred Inferred Inferred Inferred Total Retortillo Satellites Inferred Alameda Villar Alameda Nth Zone 2 Alameda Nth Zone 19 Alameda Nth Zone 21 Indicated Inferred Total Inferred Inferred Inferred Inferred Total Alameda Satellites Inferred Gambuta Salamanca Poject Inferred Measured Indicated Inferred Total (Mt) 4.1 11.3 0.2 15.6 5.2 10.5 6.0 21.7 0.6 0.8 0.4 0.7 0.3 2.8 20.0 0.7 20.7 5.0 1.2 1.1 1.8 9.1 12.7 9.3 41.8 31.5 82.6 (ppm) (Mlbs) (Mt) (ppm) (Mlbs) 498 395 368 422 674 761 364 631 443 460 382 672 388 492 455 657 462 446 472 492 531 472 394 597 516 425 490 4.5 9.8 0.2 14.5 7.8 17.6 4.8 30.2 0.6 0.8 0.4 1.1 0.2 3.0 20.1 1.0 21.1 4.9 1.3 1.2 2.1 9.5 4.1 11.3 0.2 15.6 5.2 10.5 6.0 21.7 0.6 0.8 0.4 0.7 0.3 2.8 20.0 0.7 20.7 5.0 1.2 1.1 1.8 9.1 11.1 12.7 12.3 47.5 29.5 89.3 9.3 41.8 31.5 82.6 498 395 368 422 674 761 364 631 443 460 382 672 388 492 455 657 462 446 472 492 531 472 394 597 516 425 490 4.5 9.8 0.2 14.5 7.8 17.6 4.8 30.2 0.6 0.8 0.4 1.1 0.2 3.0 20.1 1.0 21.1 4.9 1.3 1.2 2.1 9.5 11.1 12.3 47.5 29.5 89.3 (*) All figures are rounded to reflect appropriate levels of confidence. Apparent differences occur due to rounding. The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves As a result of the annual review of the Company’s Mineral Resources, there has been no change to the Mineral Resources reported for the Salamanca Project. 64 BERKELEY ENERGIA LIMITED 2. ORE RESERVES The Company’s Ore Reserves as at 30 June 2022 and 30 June 2021, reported in accordance with the 2012 Edition of the JORC Code, for the Salamanca Project are as follows: Deposit Name Retortillo Zona 7 Alameda Total 2022 2021 Reserve Category Tonnes (Mt) U3O8 (ppm) U3O8 (Mlbs) Tonnes (Mt) U3O8 (ppm) U3O8 (Mlbs) Proved Probable Total Proved Probable Total Proved Probable Total Proved Probable Total (*) 4.0 11.9 15.9 6.5 11.9 18.4 0.0 26.4 26.4 10.5 50.3 60.7 397 329 325 542 624 595 0.0 327 327 487 391 408 3.5 7.9 11.4 7.8 16.4 24.2 0.0 19.0 19.0 11.3 43.4 54.6 4.0 11.9 15.9 6.5 11.9 18.4 0.0 26.4 26.4 10.5 50.3 60.7 397 329 325 542 624 595 0.0 327 327 487 391 408 3.5 7.9 11.4 7.8 16.4 24.2 0.0 19.0 19.0 11.3 43.4 54.6 As a result of the annual review of the Company’s Ore Reserves, there has been no change to the Ore Reserves reported for the Salamanca Project. 3. GOVERNANCE OF MINERAL RESOURCES AND ORE RESERVES The Company engages external consultants and Competent Persons (as determined pursuant to the JORC Code (2004 and 2012 editions)) to prepare and estimate the Mineral Resources and Ore Reserves. Management and the Board review these estimates and underlying assumptions for reasonableness and accuracy. The results of the Mineral Resource and Ore Reserve estimates are then reported in accordance with the requirements of the JORC Code and other applicable rules (including ASX Listing Rules). Where material changes occur during the year to the project, including the project’s size, title, exploration results or other technical information, previous Mineral Resource and Ore Reserve estimates and market disclosures are reviewed for completeness. The Company generally reviews its Mineral Resources and Ore Reserves as at 30 June each year. Where a material change has occurred in the assumptions or data used in previously reported Mineral Resources or Ore Reserves, then where possible a revised Mineral Resource or Ore Reserve estimate will be prepared as part of the annual review process. However, there are circumstance where this may not be possible (e.g. an ongoing drilling programme), in which case a revised Mineral Resource or Ore Reserve estimate will be prepared and reported as soon as practicable. ANNUAL REPORT 2022 65 MINERAL RESOURCES AND ORE RESERVES STATEMENT (Continued) 4. COMPETENT PERSONS STATEMENT The information in this report that relates to Ore Reserve Estimates for the Salamanca Project, is based on, and fairly represents, information compiled or reviewed by Mr Francisco Bellon, a Competent Person who is a member of the Australasian Institute of Mining and Metallurgy. Mr Bellon is the Chief Operating Officer for Berkeley and a holder of shares and options in Berkeley. Mr Bellon has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Bellon consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears. The information in this report that relates to the Mineral Resources for the Salamanca Project (which includes Retortillo, Zona 7, the Retortillo Satellites, Alameda, Alameda Satellites and the Gambuta deposits) is based on, and fairly represents, information compiled or reviewed by Mr Enrique Martínez, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Martínez is Berkeley’s Geology Manager and a holder of shares and options in Berkeley. Mr Martínez has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Martínez consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to the DFS, Mineral Resources, Ore Reserve Estimates, Mining, Uranium Preparation, Infrastructure, Production Targets and Cost Estimation is extracted from the announcement entitled ‘Study confirms the Salamanca project as one of the world’s lowest cost uranium producers’ dated 14 July 2016, which is available to view on Berkeley’s website at www.berkeleyenergia.com. Berkeley confirms that: a) it is not aware of any new information or data that materially affects the information included in the original announcement; b) all material assumptions and technical parameters underpinning the Mineral Resources, Ore Reserve Estimate, Production Target, and related forecast financial information derived from the Production Target included in the original announcement continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings presented in this report have not been materially modified from the original announcements. The information in this report that relates to the exploration results is extracted from the Company’s June 2022 quarterly report dated 29 July 2022 (“Quarterly Report”), which is available to view on Berkeley’s website at www.berkeleyenergia.com. Berkeley confirms that: a) it is not aware of any new information or data that materially affects the information included in the Quarterly Report; b) all material assumptions and technical parameters continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings presented in this report have not been materially modified from the Quarterly Report. Forward Looking Statements This announcement may include forward-looking statements. These forward-looking statements are based on Berkeley’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Berkley, which could cause actual results to differ materially from such statements. Berkeley makes no undertaking to subsequently update or revise the forward-looking statements made in this announcement, to reflect the circumstances or events after the date of that announcement. 66 BERKELEY ENERGIA LIMITED ASX ADDITIONAL INFORMATION The shareholder information set out below was applicable as at 31 July 2022. 1. TWENTY LARGEST HOLDERS OF LISTED SECURITIES The names of the twenty largest holders of each class of listed securities are listed below: Ordinary Shares Name No of Ordinary Shares Held Percentage of Issued Shares BNP Paribas Nominees Pty Ltd BPSSMDRDRENT4BANCBERKEL 213,582,955 HSBC Custody Nominees (Australia) Limited Computershare Clearing Pty Ltd BNP Paribas Noms Pty Ltd Treasury Services Group Pty Ltd Arredo Pty Ltd HSBC Custody Nominees (Australia) Limited - A/C 2 CS Third Nominees Pty Limited CS Fourth Nominees Pty Limited Brispot Nominees Pty Ltd Citicorp Nominees Pty Limited BNP Paribas Nominees Pty Ltd ACF Clearstream National Nominees Limited Warbont Nominees Pty Ltd Merrill Lynch (Australia) Nominees Pty Limited Mr Robert Arthur Behets + Mrs Kristina Jane Behets Inkese Pty Ltd Argonaut Securities (Nominees) Pty Ltd Warbont Nominees Pty Ltd Mr Jay Hughes + Mrs Linda Hughes 45,851,911 36,388,599 29,773,681 14,285,714 12,100,000 11,549,168 11,428,571 7,778,044 6,096,251 5,890,762 5,088,887 4,079,610 2,519,247 2,141,696 2,000,000 2,000,000 1,248,706 1,057,055 1,000,000 47.91 10.29 8.16 6.68 3.20 2.71 2.59 2.56 1.74 1.37 1.32 1.14 0.92 0.57 0.48 0.45 0.45 0.28 0.24 0.22 Total Top 20 Others Total Ordinary Shares on Issue 415,860,857 29,935,858 445,796,715 93.28 6.72 100.00 ANNUAL REPORT 2022 67 ASX ADDITIONAL INFORMATION (Continued) 2. DISTRIBUTION OF EQUITY SECURITIES An analysis of numbers of holders of listed securities by size of holding as at 31 July 2022 is listed below: Distribution Number of Shareholders Number of Shares Ordinary Shares 1 1,001 5,001 10,001 100,001 – – – – – 1,000 5,000 10,000 100,000 and over Totals 358 418 185 320 73 1,354 91,763 1,148,369 1,475,159 10,275,907 432,805,517 445,796,715 There were 409 holders of less than a marketable parcel of ordinary shares. 3. SUBSTANTIAL SHAREHOLDERS No Substantial Shareholder notices have been received by the Company. 4. UNQUOTED SECURITIES The names of the security holders holding 20% or more of an unlisted class of security at 31 July 2022, other than those securities issued or acquired under an employee incentive scheme, are listed below: £0.60 OIA Options Expiring 30-Nov-22 £0.75 OIA Options Expiring 30-May-23 £1.00 OIA Options Expiring 30-Nov-23 Holder Singapore Mining Acquisition Co Pte Ltd 10,088,625 15,132,937 25,221,562 Others (holding less than 20%) - - - Total Total holders 5. VOTING RIGHTS See Note 13 of the Notes to the Financial Statements. 6. ON-MARKET BUY BACK 10,088,625 15,132,937 25,221,562 1 1 1 There is currently no on-market buy back program for any of Berkeley's listed securities. 68 BERKELEY ENERGIA LIMITED 7. EXPLORATION INTERESTS As at 31 July 2022, the Company has an interest in the following tenements: Location Spain Salamanca Cáceres Badajoz Tenement Name Percentage Interest Status D.S.R Salamanca 28 (Alameda) D.S.R Salamanca 29 (Villar) E.C. Retortillo-Santidad E.C. Lucero I.P. Abedules I.P. Abetos I.P. Alcornoques I.P. Alisos I.P. Bardal I.P. Barquilla I.P. Berzosa I.P. Campillo I.P. Castaños 2 I.P. Ciervo I.P. Conchas I.P. Dehesa I.P. El Águlia I.P. El Vaqueril I.P. Espinera I.P. Horcajada I.P. Lis I.P. Mailleras I.P. Mimbre I.P. Pedreras E.P. Herradura I.P. Almendro I.P. Ibor I.P. Olmos I.P. Don Benito Este I.P. Don Benito Oeste 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Granted Granted Granted Pending Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted(1) Granted Granted Granted Granted Granted Note: (1) An application for a one-year extension at E.P. Herradura was rejected by the relevant government organisation during the year but this decision has been appealed by the Company. ANNUAL REPORT 2022 69 

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