Brightstar Resources
Annual Report 2021

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 (formerly Stone Resources Australia Limited) ABN 44 100 727 491 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 this page left blank intentionally ABOVE: Strike Drilling RC Rig on Site at Cork Tree Well. BELOW: Brightstar Processing Facility. Brightstar Resources Limited Contents Corporate Information Chairman’s Letter to Shareholders Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Corporate Governance Statement ASX Additional Information 1 2 3 18 19 20 21 22 23 54 55 62 63 -1- Brightstar Resources Limited CORPORATE INFORMATION ABN 44 100 727 491 Directors Mr William Hobba – Executive Director Mr Yongji Duan – Chairman (Non-Executive) Mr Josh Hunt – Director (Non-Executive) Other Key Officers Mr Luke Wang – Company Secretary Registered and Principal Office 3/25 Belgravia Street Belmont WA 6104 Telephone: (618) 9277 6008 Facsimile: (618) 9277 6002 Email: info@brightstarresources.com.au www.brightstarresources.com.au/ Share register Computershare Investor Services Pty Limited Level11, 172 St Georges Terrace Perth WA 6000 Telephone; (618) 9323 2000 Facsimile: (618) 9323 2033 Free call: 1300 787272 Solicitors Hunt DRG 137 Curtin Avenue, Cottesloe WA 6011 Lawton Macmaster Legal Suite 2, 257 York Street, Subiaco WA 6008 Bankers Westpac Banking Corporation 1257-1261 Hay Street, West Perth WA 6005 Auditors Pitcher Partners BA&A Pty Ltd Level 11, 12-14 The Esplanade Perth WA 6000 Securities Exchange Listings ASX Code: BTR CORPORATE INFORMATION ABN 44 100 727 491 Directors Mr William Hobba – Executive Director Mr Yongji Duan – Chairman (Non-Executive) Mr Josh Hunt – Director (Non-Executive) Other Key Officers Mr Luke Wang – Company Secretary Registered and Principal Office 3/25 Belgravia Street Belmont WA 6104 Telephone: (618) 9277 6008 Facsimile: (618) 9277 6002 Email: info@brightstarresources.com.au www.brightstarresources.com.au/ Share register Computershare Investor Services Pty Limited Level11, 172 St Georges Terrace Perth WA 6000 Telephone; (618) 9323 2000 Facsimile: (618) 9323 2033 Free call: 1300 787272 Solicitors Hunt DRG 137 Curtin Avenue, Cottesloe WA 6011 Lawton Macmaster Legal Suite 2, 257 York Street, Subiaco WA 6008 Bankers Westpac Banking Corporation 1257-1261 Hay Street, West Perth WA 6005 Auditors Pitcher Partners BA&A Pty Ltd Level 11, 12-14 The Esplanade Perth WA 6000 Securities Exchange Listings ASX Code: BTR -1- Brightstar Resources Limited CHAIRMAN’S LETTER TO SHAREHOLDERS - 2 - Brightstar Resources Limited Brightstar Resources Limited (Brightstar or the Company) has successfully completed the significant debt cancellation and share cancellation (DECA) after having shareholders’ approval at the AGM on 16 November 2020. The DECA recapitalisation has provided the Company a fresh start for the development as a junior gold exploration and development company. Brightstar has achieved a number of acquisitions during the year: On 8 February 2021, the Company has acquired a prospective exploration licence in Western Australia, E38/3438 from Mining Equities Pty Ltd. This tenement is prospective brownfields ground less than 15km from our Brightstar plant and adjacent to a number of our existing prospecting and exploration licences. On 6 April 2021, the Company has acquired an exploration licence E38/3279 (Ophir Bore) which is located immediately adjacent to Brightstar’s existing exploration licences E38/3331 and E38/2411 and consolidates Brightstar’s exploration ground less than ten kilometres east of the Granny Smith Mine operated by Goldfields Limited. The Company has been busy finalising its Three-Year Strategic Plan: On 17 December 2020, the Company commenced a sub-audio magnetics (SAM) survey programme conducted by GAP Geophysics on the Company’s Cork Tree Well Project in the Laverton region of Western Australia. The SAM programme results released on 9 June 2021 has provided great insight into the continuation of the lithological and structural features that host the Cork Tree Well deposits to the south. The SAM survey results been utilised to assist the development of the Three-Year Strategic Plan. On 22 February 2021, the Company has appointed Ian Pegg who is the former Granny Smith Mining Company Exploration Superintendent as Brightstar’s exploration manager. Ian’s expertise on the geology of the Laverton region can support the Company in finalising our three-year strategy for Brightstar. On 5 May 2021, the Company has received a report prepared by Como Engineers Pty Ltd that confirms an estimated cost of $5.5 million to refurbish the Brightstar Processing Plant at the Company’s flagship Brightstar Gold Project, near Laverton in the northern Goldfields. On 15 September 2021, the Company has appointed Strike Drilling as the drill contractor for Mineral Resource development drilling at Brightstar’s Cork Tree Well Project in the Laverton district of Western Australia. Brightstar has also entered into a Royalty Call Option Deed with Stone Resources (HK) Limited (SRHK) on 27 September 2021. SRHK is the payee of a 3% net smelter royalty (NSR) over a substantial portion of Brightstar’s tenement holdings, which was granted as part of the consideration given to SRHK under the DECA. Under the Call Option Deed, SRHK has agreed to grant Brightstar an option to purchase the NSR (Call Option). I wish to thank Mr Hobba and Mr Hunt for the difficult task of successfully negotiating the Company’s Restructuring, our Employees at the Belmont Office and Laverton site for their excellent efforts. I believe we will seize the potential of our valuable mining assets to bring abundant rewards to our shareholders. To all our shareholders, I express my appreciation of your confidence, support and loyalty. Yours truly, Yongji Duan Chairman Perth, 1 October 2021. - 3 - Brightstar Resources Limited DIRECTORS’ REPORT Your directors submit the annual financial report of the consolidated entity consisting of Brightstar Resources Limited (“BTR” or “Company”) and the entities it controlled during the financial year ended 30 June 2021 (“Group”). In order to comply with the provisions of the Corporations Act, the directors report as follows: Directors The names of directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience, and special responsibilities William Hobba Managing Director (Appointed on 3 December 2020, Executive Director 10 September 2020 to 2 December 2020, Non- Executive Director 1 July 2020 to 9 September 2020) William Hobba has been a director of Brightstar for the past seven years. Mr Hobba has previously served as a non- executive director and technical advisor of Brightstar. Mr Hobba’s appointment to the position of Managing Director reflects the leadership role he has assumed in helping the company recapitalisation and plan to return to production. Mr Hobba is an experienced minesite technical advisor who brings 40 years of operational experience in developing mine sites to his role, including over ten years’ experience constructing and operating the Brightstar plant. Mr Hobba holds no directorships in other listed companies in Australia. Yongji Duan Chairman (Non-Executive) Yongji Duan is the Chairman of the board of directors of Stone Resources Limited, a previous major shareholder of Brightstar Resources Limited. He joined Stone Group Corporation in 1985 and has served as Vice President and President prior to his promotion to the Chairman of its board of directors in 1999. He was appointed President and Chief Executive Officer of Stone Group Holdings Limited and its subsidiaries in 2002. As a well-known entrepreneur and business leader in China, Mr Duan has achieved outstanding performances. From 1999 to 2007, he has held the position as Director of Beijing Centergate Technologies (Holding) Co. Ltd., a company listed on Shenzhen Stock Exchange. From 2003 to 2008, he also served as Director of SINA Corporation (NASDAQ: SINA). Mr Duan graduated from Tsinghua University and was a researcher at Beijing University of Aeronautics & Astronautics. He acted as Vice Director of 621 Laboratory at China National Space Administration from 1982 to 1984. Mr Duan holds no other directorships in other listed companies in Australia. Josh Hunt Director (Non-Executive) Josh Hunt is an experienced capital markets and M&A lawyer and has extensive experience in all aspects of mining and energy project acquisitions and disposals and general mining legislation compliance throughout Australia. He has advised on numerous IPOs, fundraisings, and acquisitions by both public and private companies on the ASX and internationally. Mr Hunt will assist the Brightstar board with corporate governance, company law and capital market management going forward. Mr Hunt holds no other directorships in other listed companies in Australia. Yong Han Executive Director (Resigned on 18 November 2020) Mr Han joined the Company management team in November 2011. Prior to his appointment as CEO, Mr Han was the executive vice president of Stone Resources Limited, a previous major shareholder of Brightstar Resources Limited. He was appointed President of Shaanxi Ma’anqiao & Mine Industry Co., Ltd., in 1993. Since 1998, he has been Tenure Researcher at China Academy of Management Science. He held the position of Vice Chairman of Shaanxi Gold Association in 2005. Mr Han is a senior economist and a Chinese certified professional manager. Mr Han holds no other directorships in other listed companies in Australia. DIRECTORS’ REPORT - 3 - Your directors submit the annual financial report of the consolidated entity consisting of Brightstar Resources Limited (“BTR” or “Company”) and the entities it controlled during the financial year ended 30 June 2021 (“Group”). In order to comply with the provisions of the Corporations Act, the directors report as follows: The names of directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience, and special responsibilities Directors William Hobba Managing Director (Appointed on 3 December 2020, Executive Director 10 September 2020 to 2 December 2020, Non- Executive Director 1 July 2020 to 9 September 2020) William Hobba has been a director of Brightstar for the past seven years. Mr Hobba has previously served as a non- executive director and technical advisor of Brightstar. Mr Hobba’s appointment to the position of Managing Director reflects the leadership role he has assumed in helping the company recapitalisation and plan to return to production. Mr Hobba is an experienced minesite technical advisor who brings 40 years of operational experience in developing mine sites to his role, including over ten years’ experience constructing and operating the Brightstar plant. Mr Hobba holds no directorships in other listed companies in Australia. Yongji Duan Chairman (Non-Executive) Yongji Duan is the Chairman of the board of directors of Stone Resources Limited, a previous major shareholder of Brightstar Resources Limited. He joined Stone Group Corporation in 1985 and has served as Vice President and President prior to his promotion to the Chairman of its board of directors in 1999. He was appointed President and Chief Executive Officer of Stone Group Holdings Limited and its subsidiaries in 2002. As a well-known entrepreneur and business leader in China, Mr Duan has achieved outstanding performances. From 1999 to 2007, he has held the position as Director of Beijing Centergate Technologies (Holding) Co. Ltd., a company listed on Shenzhen Stock Exchange. From 2003 to 2008, he also served as Director of SINA Corporation (NASDAQ: SINA). Mr Duan graduated from Tsinghua University and was a researcher at Beijing University of Aeronautics & Astronautics. He acted as Vice Director of 621 Laboratory at China National Space Administration from 1982 to 1984. Mr Duan holds no other directorships in other listed companies in Australia. Josh Hunt Director (Non-Executive) forward. Yong Han in 2005. Josh Hunt is an experienced capital markets and M&A lawyer and has extensive experience in all aspects of mining and energy project acquisitions and disposals and general mining legislation compliance throughout Australia. He has advised on numerous IPOs, fundraisings, and acquisitions by both public and private companies on the ASX and internationally. Mr Hunt will assist the Brightstar board with corporate governance, company law and capital market management going Mr Hunt holds no other directorships in other listed companies in Australia. Executive Director (Resigned on 18 November 2020) Mr Han joined the Company management team in November 2011. Prior to his appointment as CEO, Mr Han was the executive vice president of Stone Resources Limited, a previous major shareholder of Brightstar Resources Limited. He was appointed President of Shaanxi Ma’anqiao & Mine Industry Co., Ltd., in 1993. Since 1998, he has been Tenure Researcher at China Academy of Management Science. He held the position of Vice Chairman of Shaanxi Gold Association Mr Han is a senior economist and a Chinese certified professional manager. Mr Han holds no other directorships in other listed companies in Australia. Brightstar Resources Limited Brightstar Resources Limited - 4 - DIRECTORS’ REPORT (continued) Directors (continued) Kaiye Shuai Non-Executive Director (Resigned on 18 November 2020) Dr Kaiye Shuai served as Chief Executive Officer from November 2011 and resigned from the latter position in January 2014, continuing as a Non-Executive Director. He is a director of Stone Resources Limited, a previous major shareholder of the Company. He was appointed Chief Geologist of Stone Resources Limited and was also appointed to its board of directors in 2007. Dr Shuai is an experienced geologist with a wealth of expertise in the mining sector. Prior to his appointment, he has been Professor in China University of Geosciences for over 10 years. Early in his professional career, Dr Shuai served as Geological Engineer in No. 16 Geological Team at Yunnan Provincial Geology Bureau from 1970 to 1979. He has participated in the exploration of Potash, Copper, and Iron Deposit in Yunnan province in the 1980s. Dr Shuai graduated from Chengdu Geology College in 1970. He received his Doctorate and Master degree from China University of Geosciences in the 1980s. From 1991 to 1992, he was a visiting professor at California Santa Barbara (UCSB) in the United States of America. Dr Shuai holds no other directorships in other listed companies in Australia. the exploration of Zhaoyuan Gold mine in Shandong province the 1970s and in Fang Lu Executive Director (Resigned on 18 November 2020) Mr Fang Lu is the vice president of Stone Resources Limited since 2000, a previous major shareholder of Brightstar Resources Limited, having joined the latter in 1990. Mr Lu is the vice president of Beijing Stone New Technology Industrial Company and Beijing Stone Investment Co., Ltd. Mr Lu graduated from Beijing University of Aeronautics and was a visiting scholar at McMaster University (Canada) in 1988. Mr Lu holds no directorships in other listed companies. Other Key Management Personnel Luke Wang Joint Company Secretary (Appointed on 24 November 2020) Mr Wang is a Certified Practising Accountant. He joined the Company in 2012. In addition to the Company Secretary work, Mr Wang is also managing the Company’s accounting and financial reporting, as well as assisting with tenement management and various administration tasks. Tony Lau, FCPA (HK) Joint Company Secretary (Resigned on 19 July 2021) Mr Lau has over 20 years of audit, accounting, and corporate finance experience. He worked in PricewaterhouseCoopers in Hong Kong for 12 years and thereafter held a senior finance executive for a number of PRC Groups in Hong Kong. He had extensive exposures in working on complex projects including overseas mergers, acquisitions, and IPOs. Sheng Hui Lu Deputy Executive Officer / Joint Company Secretary (Resigned on 24 November 2020) Mr Lu has more than 25 years as senior manager and an entrepreneur in various companies in China and in Australia. He has rich experience in management. He is a well-known writer and community leader of the Chinese Community in Perth. He is part time Chief Editor of “Oceania Times” in WA. He holds a Bachelor of Arts Degree from China and a post graduate certificate in marketing from Australia. DIRECTORS’ REPORT (continued) - 5 - Interests in the shares and options of the company and related bodies corporate The following relevant interests in shares and options of the company or a related body corporate were held by the directors as at the date of this report. Brightstar Resources Limited Directors William Hobba (Managing Director) Yongji Duan (Non-Executive Chairman) Josh Hunt (Non-Executive Director) Number of options over ordinary shares Number of fully paid ordinary shares - - - 68,727,775 31,449,497 3,357,999 There were no options granted to key management personnel (directors and executives) during the year. There were no ordinary shares issued by the company during or since the end of the financial year as a result of the exercise of an option. There are no unpaid amounts on the shares issued. Dividends No dividends have been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. Principal Activities The principal activities of the Group during the financial year were mineral exploration. There has been no significant change in the nature of these activities during the financial year. Results The consolidated profit after income tax attributable to the members of the Group was $60,551,860 (2020: $6,617,894 loss). Significant change in state of affairs During the year ended 30 June 2021, the Group completed the divestment of its Ben Hur project and a Debt and Equity Compromise Agreement with related entities. These changes allow the Group to focus on its core exploration activities, being the Cork Tree Well, Beta, Alpha and Hawkes Nest projects located nearby to Laverton in Western Australia. Review of operations Corporate On 16 November 2020, shareholders approved a change of name of the Company from Stone Resources Australia Limited to Brightstar Resources Limited. The Group completed divestment of its Ben Hur project in September 2020 and the execution of the Debit and Equity Compromise Agreement (“DECA”) in November 2020. Upon completion of the DECA, the debt totalling $57,252,627 that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”) has extinguished (30 June 2020: $55,524,813). The net profit mentioned above is primarily caused by the debt cancellation. A selective buy-back of 433,452,944 shares previously held by SRL and SRHKL were cancelled at the same time. The total consideration for the buy-back was $11,400,000. At the end of the financial year the Group had $985,036 (2020: $50,032) in cash and cash equivalents. The Group’s capitalised exploration, evaluation and development expenditure totalled $9,313,231 (2020: $2,686,636). During the year the Company issued 33,150,000 shares to two key management personnel of the Company as part remuneration for services rendered. The Company also issued 4,000,000 shares and 1,000,00 options to an unrelated party for the purchase of an exploration licence. 17,000,000 unlisted options were issued by Company to corporate advisors as consideration for consulting services provided. As at 30 June 2021, the Company had 439,750,764 shares on issue (2020: 836,053,708) and 33,000,000 unlisted options (2020: 15,000,000). DIRECTORS’ REPORT (continued) - 5 - Interests in the shares and options of the company and related bodies corporate The following relevant interests in shares and options of the company or a related body corporate were held by the directors as at the date of this report. Brightstar Resources Limited Directors William Hobba (Managing Director) Yongji Duan (Non-Executive Chairman) Josh Hunt (Non-Executive Director) Number of options Number of fully paid over ordinary shares ordinary shares - - - 68,727,775 31,449,497 3,357,999 There were no options granted to key management personnel (directors and executives) during the year. There were no ordinary shares issued by the company during or since the end of the financial year as a result of the exercise There are no unpaid amounts on the shares issued. No dividends have been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. The principal activities of the Group during the financial year were mineral exploration. There has been no significant change in the nature of these activities during the financial year. of an option. Dividends Principal Activities Results The consolidated profit after income tax attributable to the members of the Group was $60,551,860 (2020: $6,617,894 loss). Significant change in state of affairs During the year ended 30 June 2021, the Group completed the divestment of its Ben Hur project and a Debt and Equity Compromise Agreement with related entities. These changes allow the Group to focus on its core exploration activities, being the Cork Tree Well, Beta, Alpha and Hawkes Nest projects located nearby to Laverton in Western Australia. Review of operations Corporate to Brightstar Resources Limited. On 16 November 2020, shareholders approved a change of name of the Company from Stone Resources Australia Limited The Group completed divestment of its Ben Hur project in September 2020 and the execution of the Debit and Equity Compromise Agreement (“DECA”) in November 2020. Upon completion of the DECA, the debt totalling $57,252,627 that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”) has extinguished (30 June 2020: $55,524,813). The net profit mentioned above is primarily caused by the debt cancellation. A selective buy-back of 433,452,944 shares previously held by SRL and SRHKL were cancelled at the same time. The total consideration for the buy-back was $11,400,000. At the end of the financial year the Group had $985,036 (2020: $50,032) in cash and cash equivalents. The Group’s capitalised exploration, evaluation and development expenditure totalled $9,313,231 (2020: $2,686,636). During the year the Company issued 33,150,000 shares to two key management personnel of the Company as part remuneration for services rendered. The Company also issued 4,000,000 shares and 1,000,00 options to an unrelated party for the purchase of an exploration licence. 17,000,000 unlisted options were issued by Company to corporate advisors as consideration for consulting services provided. As at 30 June 2021, the Company had 439,750,764 shares on issue (2020: 836,053,708) and 33,000,000 unlisted options (2020: 15,000,000). Brightstar Resources Limited - 6 - DIRECTORS’ REPORT (continued) Review of operations (continued) Exploration Exploration activities carried out during the year included: • Consolidation work undertaken on all of the Resources in the Group to ensure robustness of the resource base. • Compilation of data for early-stage exploration commenced in a new database MX Deposit. • Surface geochemistry tested on several leases with varied results. Desktop Activities Disparate drilling data from historic drilling data systems including Access databases, Micromine databases, Excel spreadsheets, Micromine data files, and text files of many types were collected. These datasets were collated in the building of a new database structure that was completed in parallel to data clean-up/validation. Currently over 19,000 historic drillholes are contained in the database. Drill hole planning was completed to determine opportunities for extensional targets along the lengths of both Alpha and CTW deposits. These holes will provide an ideal opportunity to update the Resource, convert parts of the current Resource to Reserve and contribute significant information to mining studies early in 2022. Exploration Activities. v Cork Tree Well Reporting Group Sub-Audio Magnetic (SAM) survey undertaken in northern half of M38/346 at Cork Tree Well in December 2020 and the interpretation results were announced in June 2021. This interpretation provided several targets including up to three additional kilometres of strike extent of the interpreted host at CTW proper. 48 samples were collected from the top 10cm of the soil profile on E38/2452. Approximately 1kg of material was sieved to -2mm to remove coarse lag. Sample spacing was at 100m x 200m. Samples were analysed by Minanalytical Perth using an Aqua Regia digest and ICP-MS/ICP-OES finish for a 47 element Suite. ICP-MS and ICP-OES. The nearby Cork Tree Well open cut pit shows a well-developed, +10m, indurated profile (See Figure 1). This is common throughout the Laverton area but is not seen commonly further south. This profile is probably the reason for the poor response from soil sampling away from outcrop/sub crop in the Laverton region. Figure 1: Indurated near surface hardpan and pallid zone below. Figure 1: Indurated near surface hardpan and pallid zone below. - 7 - Brightstar Resources Limited DIRECTORS’ REPORT (continued) Review of operations (continued) v Laverton North Trial surface sampling on E38/2233 was completed on 6 December 2020. 14 soil samples and 4 rock chip samples were collected and analysed by MinAnalytical in Perth. Samples were analysed for a multi-element suite by Aqua Regia Digest with an ICP-MS finish (AR10MS) and an ICP-OES finish (AR10OES). The best gold value was from rock chip sample 2233-3 of 808 ppb. And the best soil Au value was 255 ppb from sample 2233-13. Correlations are indicated between Au and Fe, V, Zn, Ag, Mo and Sb. This suggests that there may be a significant effect from Fe scavenging of some elements. Interestingly, there is no correlation with As or Te which would be expected from an orogenic gold source. Ag, Zn, Mo and Sb are more suggestive of VHMS mineralisation. Au results seem to correlate with the indications from the historic sampling that Au mineralisation is associated with the intersection of NW fractures and a generally NNE trend in the mafic hosts. The high soil sample results provide strong encouragement that economic mineralisation may be concealed under cover in this area. Two intersections of fractures with black shales/shears have been highlighted as potential targets. v Brightstar Reporting Group (including Alpha and Beta Projects) A trial sampling program was undertaken to determine the applicability of soil sampling in this region (E38/2411). 12 soil samples were collected from 0-10cm depth along two lines at 50m x 100m spacing. The samples were sieved to < 2mm and sent to Minanalytical in Perth for analysis. Samples were analysed by AR10_MS - Multi-element by 10g Aqua Regia Digest with ICP-MS Finish or AR10_OES - Multi-element by 10g Aqua Regia Digest with ICP-OES Finish Gold values were very low, which may be an actual representation of Au in the soil or may indicate that depletion in the surface sample has not given a representative sampling of this area. Surficial (sieved) soil sampling does not appear to be effective in this area from the sampling undertaken to date. 11 rockchip samples were taken from outcrop or mullock on M38/549 where quartz veining was exposed. These samples were analysed for 45 elements to determine if any elements or group of elements could be used as pathfinders for the mineralisation. Results indicate that the mineralisation is likely to be extending both north and south of the main workings with the most northern sample returning 3.9g/t and the most southern sample returning 2.4g/t. Mineralisation appears to be constrained to quartz veining with little anomalism seen in the mafic host. Previous work collated and reviewed during the period however no physical activity undertaken. On E38/3108 bedrock geology is interpreted as either basalt or granitic gneiss depending on the dataset. If it is granitic gneiss there is little prospectivity on the tenement however, if there are mafic/granitic contacts then some prospectivity remains to be tested. Testing of sub-surface rock types to be planned for 2022. Previous surface geochemical sampling limited to sub-crop section of lease in the western part of the lease with low level anomalism. This may indicate ‘leakage’ of gold along a structure but does not appear to be the signal of a deposit. Previous surface geochemistry seems to have been effective in the northern part of P38/4444 and P38/4445 however the southern part of these leases are not well tested by surface geochemistry because of the cover thickness. A detailed review of the regolith and digitising of historic drill results is required to determine the next appropriate exploration step. Cover may have made previous surface geochemistry ineffective on P38/4446 and P38/4447. There is limited previous AC and RAB drilling, however no significant intersections on the actual leases. A detailed review of the historic data is required to determine an appropriate program for follow up. The area around P38/4432 & P38/4433 is mainly sub crop, so should be amenable to auger or AC work that the Company intends to investigate further. P38/4433 also has a string of workings on it called the Sailor Prince project which produced over 4000 ounces during the period 1897 to 1930. This is significantly bigger than most of the workings in the area and worthy of drill testing. DIRECTORS’ REPORT (continued) Review of operations (continued) v Laverton North Trial surface sampling on E38/2233 was completed on 6 December 2020. 14 soil samples and 4 rock chip samples were collected and analysed by MinAnalytical in Perth. Samples were analysed for a multi-element suite by Aqua Regia Digest with an ICP-MS finish (AR10MS) and an ICP-OES finish (AR10OES). The best gold value was from rock chip sample 2233-3 of 808 ppb. And the best soil Au value was 255 ppb from sample 2233-13. Correlations are indicated between Au and Fe, V, Zn, Ag, Mo and Sb. This suggests that there may be a significant effect from Fe scavenging of some elements. Interestingly, there is no correlation with As or Te which would be expected from an orogenic gold source. Ag, Zn, Mo and Sb are more suggestive of VHMS mineralisation. Au results seem to correlate with the indications from the historic sampling that Au mineralisation is associated with the intersection of NW fractures and a generally NNE trend in the mafic hosts. The high soil sample results provide strong encouragement that economic mineralisation may be concealed under cover in this area. Two intersections of fractures with black shales/shears have been highlighted as potential targets. v Brightstar Reporting Group (including Alpha and Beta Projects) A trial sampling program was undertaken to determine the applicability of soil sampling in this region (E38/2411). 12 soil samples were collected from 0-10cm depth along two lines at 50m x 100m spacing. The samples were sieved to < 2mm and sent to Minanalytical in Perth for analysis. Samples were analysed by AR10_MS - Multi-element by 10g Aqua Regia Digest with ICP-MS Finish or AR10_OES - Multi-element by 10g Aqua Regia Digest with ICP-OES Finish Gold values were very low, which may be an actual representation of Au in the soil or may indicate that depletion in the surface sample has not given a representative sampling of this area. Surficial (sieved) soil sampling does not appear to be effective in this area from the sampling undertaken to date. 11 rockchip samples were taken from outcrop or mullock on M38/549 where quartz veining was exposed. These samples were analysed for 45 elements to determine if any elements or group of elements could be used as pathfinders for the mineralisation. Results indicate that the mineralisation is likely to be extending both north and south of the main workings with the most northern sample returning 3.9g/t and the most southern sample returning 2.4g/t. Mineralisation appears to be constrained to quartz veining with little anomalism seen in the mafic host. Previous work collated and reviewed during the period however no physical activity undertaken. On E38/3108 bedrock geology is interpreted as either basalt or granitic gneiss depending on the dataset. If it is granitic gneiss there is little prospectivity on the tenement however, if there are mafic/granitic contacts then some prospectivity remains to be tested. Testing of sub-surface rock types to be planned for 2022. Previous surface geochemical sampling limited to sub-crop section of lease in the western part of the lease with low level anomalism. This may indicate ‘leakage’ of gold along a structure but does not appear to be the signal of a deposit. Previous surface geochemistry seems to have been effective in the northern part of P38/4444 and P38/4445 however the southern part of these leases are not well tested by surface geochemistry because of the cover thickness. A detailed review of the regolith and digitising of historic drill results is required to determine the next appropriate exploration step. Cover may have made previous surface geochemistry ineffective on P38/4446 and P38/4447. There is limited previous AC and RAB drilling, however no significant intersections on the actual leases. A detailed review of the historic data is required to determine an appropriate program for follow up. The area around P38/4432 & P38/4433 is mainly sub crop, so should be amenable to auger or AC work that the Company intends to investigate further. P38/4433 also has a string of workings on it called the Sailor Prince project which produced over 4000 ounces during the period 1897 to 1930. This is significantly bigger than most of the workings in the area and worthy of drill testing. Figure 1: Indurated near surface hardpan and pallid zone below. - 7 - DIRECTORS’ REPORT (continued) Review of operations (continued) - 8 - Brightstar Resources Limited Brightstar Resources Limited JORC Resources and Reserves Following the divestment of the Ben Hur project, the company engaged independent consultants in September 2020 to review the resources in Alpha, Beta and Cork Tree Well (CTW) tenements. The table on the JORC Resources and Reserves is shown below: Measured Indicated Location KTonnes g/t Au Cut- off (g/t) KOunces KTonnes KOunces KTonnes g/t Au Inferred g/t Au KOunces KTonnes Total g/t Au KOunces Alpha 0.5 623 1.6 33 374 2.1 25 455 3.3 48 1,452 2.3 106 Beta 0.5 345 1.7 19 576 1.6 29 961 1.7 54 1,882 1.7 102 Cork Tree Well Total 0.5 1,220 1.9 76 944 1.9 57 1,696 1.9 104 3,860 1.9 237 2,188 1.8 128 1,894 1.8 111 3,112 2.1 206 7,194 1.9 445 All data is rounded and discrepancies in summation may occur Competent Person’s Statement The information in the Report that relates to Mineral Resources of the Alpha, Beta and Cork Tree Well deposit is based on information compiled by Mr Richard Maddocks of Auralia Mining Consulting Pty Ltd. Mr Maddocks is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he has undertaken to qualify as a “Competent Person” as that term is defined in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Resources (JORC Code 2012)”. Mr Maddocks consents to the inclusion in this report of the matters based in this information in the form and context in which it appears. Mr Maddocks was employed as a contractor of BTR. Significant events after balance date Drilling over the Company’s Cork Tree Well project commenced from in the 3rd week of September 2021. This is the first drilling campaign since BTR completed recapitalisation in November 2020. It is expected that the results may assist in developing a revised Mineral Resource Estimate for the project and used to plan future exploration drilling at Cork Tree Well and surrounding areas. On 27 September 2021, the Company signed a Call Option Deed with Stone Resources (HK) Limited (SRHKL), under which SRHKL agreed to grant BTR or its nominee an option to purchase the 3% net smelter royalty (NSR) which is applicable to a substantial portion of BTR’s tenements holdings. This Call Option Deed is expected to be settled seven days after BTR’s 2021 Annual General Meeting, however this may be as late as 31 March 2022 depending upon the nature of shareholder approval required. The exercise price of this Call Option is US$25 million, and the expiry is 5 calendar years since settlement date of this Call Option Deed. An Option Fee of $300,000 is payable to SRHKL on the settlement date. Both the exercise price, if exercised, and the Option Fee can be settled in cash and/or BTR shares at the discretion of the Board. SRHKL has no rights to compel or demand exercise of the Call Option. Purchase of part of the NSR is allowed by the Call Option. On 27 September 2021, the Company also executed two Settlement Deeds in relation to an outstanding liability owing to Great Cortex International Limited (“Great Cortex”) and amounts owed to its former Company Secretary Mr Tony Lau. Under the Settlement Deeds: i. ii. iii. The Company will repay the loan principal of $630,000 in cash to Great Cortex on or before 18 November 2023. All related expenses and amounts owing, including accrued interest payments, will be waived once Brightstar meets its obligations under the Settlement Deed. A settlement sum of $300,000 will be paid to Mr Tony Lau, in cash and/or shares at the Company’s discretion, on the earlier of seven days after BTR’s 2021 Annual General Meeting or 7 December 2021. Mr Duan will step down from the Chairman role and remain on the Board as a Non-Executive Director. The deferred remuneration payment of $63,218 will be paid to Mr Duan in cash and/or shares at Brightstar’s election on the same settlement date under Call Option Deed above. Brightstar Resources Limited DIRECTORS’ REPORT (continued) Significant events after balance date (continued) - 9 - iv. All claims between the Parties relating to the past conduct of the Parties are settled in accordance with the terms of the Deeds. v. The DECA remains in force and effect. On 28 September 2021, the Company signed a mandate with Canaccord Genuity (Australia) Limited to act as Lead Manager with regards to a placement. The placement is expected to be completed within the 1st week of October 2021. There were no other significant events occurring after balance sheet date requiring disclosure other than already disclosed. Likely developments The Group will continue to progress its three-year plan by growing its resources with the ultimate target of restarting its mining operations. Environmental legislation The Group’s operations are subject to significant environmental regulation under the law of the Commonwealth and State. The Directors of the Group monitor compliance with environmental regulations. The Directors are not aware of any significant breaches during the period covered by this Report. Remuneration report (audited) The Directors present the Group’s 2021 remuneration report which details the remuneration information for Brightstar Resources Limited’s executive directors, non-executive directors and other key management personnel. Details of key management personnel Directors (i) William Hobba Yongji Duan Josh Hunt Yong Han Fang Lu Kaiye Shuai Managing Director (appointed on 3 December 2020, Executive Director 10 September 2020 to 2 December 2020, Non-Executive Director 1 July 2020 to 9 September 2020) Non-Executive Chairman Non-Executive Director (appointed on 18 November 2020) Executive Director (resigned on 18 November 2020) Executive Director (resigned on 18 November 2020) Non-Executive Director (resigned on 18 November 2020) Other Key Officers (ii) Yafei (Luke) Wang Tony Lau Sheng Hui Lu Company Secretary (appointed on 19 July 2021, formerly Joint Company Secretary) Joint Company Secretary (resigned on 19 July 2021) Deputy Executive Officer / Joint Company Secretary (resigned on 24 November 2020) Remuneration philosophy The philosophy of the Group in determining remuneration levels is to set competitive remuneration packages to attract and retain high calibre employees. Remuneration committee There is no separate Remuneration Committee. The Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the directors and the executive team. The Board assesses the appropriateness of the nature and amount of remuneration of directors and executives on a periodic basis by reference to relevant employment market conditions. Remuneration structure In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct. DIRECTORS’ REPORT (continued) Significant events after balance date (continued) of the Deeds. v. The DECA remains in force and effect. iv. All claims between the Parties relating to the past conduct of the Parties are settled in accordance with the terms On 28 September 2021, the Company signed a mandate with Canaccord Genuity (Australia) Limited to act as Lead Manager with regards to a placement. The placement is expected to be completed within the 1st week of October 2021. There were no other significant events occurring after balance sheet date requiring disclosure other than already disclosed. The Group will continue to progress its three-year plan by growing its resources with the ultimate target of restarting its Likely developments mining operations. Environmental legislation The Group’s operations are subject to significant environmental regulation under the law of the Commonwealth and State. The Directors of the Group monitor compliance with environmental regulations. The Directors are not aware of any significant breaches during the period covered by this Report. Remuneration report (audited) The Directors present the Group’s 2021 remuneration report which details the remuneration information for Brightstar Resources Limited’s executive directors, non-executive directors and other key management personnel. Details of key management personnel (i) Directors William Hobba Yongji Duan Josh Hunt Yong Han Fang Lu Kaiye Shuai Managing Director (appointed on 3 December 2020, Executive Director 10 September 2020 to 2 December 2020, Non-Executive Director 1 July 2020 to 9 September 2020) Non-Executive Chairman Non-Executive Director (appointed on 18 November 2020) Executive Director (resigned on 18 November 2020) Executive Director (resigned on 18 November 2020) Non-Executive Director (resigned on 18 November 2020) (ii) Other Key Officers Yafei (Luke) Wang Company Secretary (appointed on 19 July 2021, formerly Joint Company Secretary) Tony Lau Sheng Hui Lu Joint Company Secretary (resigned on 19 July 2021) Deputy Executive Officer / Joint Company Secretary (resigned on 24 November 2020) Remuneration philosophy retain high calibre employees. Remuneration committee There is no separate Remuneration Committee. The Board of Directors of the Company is responsible for determining and reviewing compensation arrangements for the directors and the executive team. The Board assesses the appropriateness of the nature and amount of remuneration of directors and executives on a periodic basis by reference to relevant employment market conditions. Remuneration structure is separate and distinct. In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration - 9 - - 10 - Brightstar Resources Limited Brightstar Resources Limited DIRECTORS’ REPORT (continued) Remuneration report (audited) (continued) Non-executive director remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The Board considers the fees paid to non-executive directors of comparable companies when undertaking the annual review process. The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. 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. In the current year, no advice was sought. Fees for non-executive directors are not linked to the performance of the Company. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and are able to participate in the option plan. Senior manager and executive director remuneration Remuneration is reviewed annually by the Board. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Board has access to external, independent advice where necessary. In the current year, no advice was obtained. Senior managers are given the opportunity to receive their remuneration in a variety of forms including cash, shares issued in lieu of salary, and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. Voting and comments made at the Company’s 2020 Annual General Meeting (“AGM”) The Group received more than 99% of yes votes on its remuneration report for the 2020 financial year. The Group did not receive any feedback at the AGM or throughout the year on its remuneration practices. Executive Service Agreements The key terms of Mr Hobba and Mr Wang’s service agreements are set out below: William Hobba, Managing Director (a) Terms of agreement dated 1 December 2020, commencing 3 December 2020 for a term of three years (b) Remuneration: Base salary of $120,000 plus $11,400 in superannuation; - - Reimbursement of telephone, travel and other expenses reasonably incurred in connection with his employment; and Eligibility to participate in any executive bonus scheme as approved and implemented by the Group. (c) Termination of the agreement by either Mr Hobba or the Group can be made upon giving one month’s written - notice or by the Group immediately upon giving written notice with payment in lieu. The philosophy of the Group in determining remuneration levels is to set competitive remuneration packages to attract and Yafei (Luke) Wang, Financial Controller and Company Secretary (a) Terms of agreement dated 23 November 2020, commencing 23 November 2020 for a term of three years (b) Remuneration: - Base salary of $100,000 plus $9,500 in superannuation (c) Termination of the agreement by either Mr Wang or the Group can be made upon giving one month’s written notice or by the Group immediately upon giving written notice with payment in lieu. Key Performance Indicators of the Group over the last five years Consolidated Net profit / (loss) before tax Net profit / (loss) after tax Share price at end of year Interim and final dividend Basic profit / (loss) per share (cents) 30-June-21 ($) 60,551,860 30-June-20 ($) (6,617,894) 30-June-19 ($) (4,140,859) 30-June-18 ($) (5,156,614) 30-June-17 ($) (10,724,347) 60,551,860 (6,617,894) (4,140,859) (5,156,614) (10,724,347) 0.031 - 10.25 0.004 - (0.80) 0.002 - (0.51) 0.003 - (0.66) 0.004 - (1.48) -13- -11- Brightstar Resources Limited Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 d e t i i m L s e c r u o s e R r a t s t h g i r B Granted as remuneration 30,000,000 (i) - Ordinary shares held in Brightstar Resources Limited (number) Balance at beginning of period 38,727,775 31,449,497 DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) 30 June 2021 Directors William Hobba Yongji Duan Josh Hunt Yong Han (ii) Kaiye Shuai (ii) Fang Lu (ii) Other Key Officer Luke Wang Sheng Hui Lu (iii) Tony Lau (iv) (i) (ii) (iii) (iv) Mr Sheng Lu resigned on 24 November 2020. Mr Lau resigned 19 July 2021 - 3,150,000 (i) 13,908,219 11,425,436 - - 4,475,178 10,000,000 - - - - - - 109,986,105 33,150,000 - 1 1 - Other - - s t 207,999 i f e n e b (13,908,219) (11,245,436) l t n e m y o p m e - t s o P - d e s a b - - e r a (4,475,178) h S - (29,600,834) l a t o T n o i t a u n n a r e p u S s t n e m y a p $ 8 1 5 end of period , 6 7 Balance at 8 0 1 0 5 0 , , 6 4 7 5 0 0 0 , 6 6 - 3 4 1 , 7 7 7 - - - - - - $ $ 68,727,775 - 31,449,497 7 5 3,357,999 0 , 7 - - - - - - - - - - - - - - - 0 0 0 , 0 6 - ) i i ( 0 0 0 , 0 0 3 10,000,000 - - - - - - - 113,535,271 - - - - - - - - - - $ r e h t O ) i i ( 7 6 7 , 8 5 3 ) i ( $ - - - - - - - - 0 0 6 , 9 3 3 5 , 8 1 9 0 0 , 1 3 3 3 8 , 5 2 $ 6 8 7 , 2 9 0 0 4 , 4 4 9 0 5 , 5 4 5 8 6 , 0 5 0 0 0 , 6 - - - - - - - d e r r e f e D n o i t a r e n u m e r l s t i f e n e b e e y o p m e m r e t - t r o h S t n e m y a p s e e F & y r a a S l 1 6 6 , 9 1 9 8 1 5 , 0 3 1 - 7 5 0 , 7 - 0 0 0 , 0 6 3 - 7 6 7 , 8 5 3 2 4 5 , 9 4 3 3 4 , 5 3 5 8 0 , 5 9 5 9 2 , 4 4 1 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 , t n e m e e r g a n a u D i j g n o Y t n u H h s o J ) i i i ( n a H g n o Y ) i i i ( i a u h S e y a K i ) i i i ( u L g n a F ) s r o t c e r i D ( l a t o T - b u S a b b o H m a i l l i W 0 2 0 2 e n u J 0 3 d n a 1 2 0 2 e n u J 0 3 d e d n e s r a e y e h t r o f ) s r o t c e r i d ( n o i t a r e n u m e R l e n n o s r e P t n e m e g a n a M y e K : 1 e l b a T ) d e u n i t n o c ( – ) d e t i d u a ( t r o p e r n o i t a r e n u m e R ) d e u n i t n o c ( T R O P E R ’ S R O T C E R D I . 0 2 0 2 r e b m e c e D 3 m o r f r o t c e r i i D g n g a n a M s a t n e m e e r g A s e c v r e S e v i t u c e x E s a b b o H i ’ r M n i t u o t e s s e t a r e h t r e p s a s e s n e p x e f o t n e m e s r u b m e r o i t l t d e a e r 7 6 7 8 3 $ r e h t r u , f A . a b b o H r M . y n a p m o C e h t f o d r a o b e h t n o e o r l r i e h t r o f s e e f ’ s r o t c e r i d y n a e v e c e r i i t o n d d y e h T . 0 2 0 2 r e b m e v o N 8 1 n o d e n g s e r u L g n a F r i M d n a i a u h S r M , n a H r M . r o t c e r i D a s a n o i t a r e n u m e r l i a u n n a s h f o 0 0 0 , 0 6 $ f o u e i l n i s e r a h s i y r a n d r o d a p y i l l u f , , 0 0 0 0 5 1 3 d e v e c e r i t n u H r M o t s e r a h s i y r a n d r o d a p y i l l u f 0 0 0 , 0 0 0 , 0 3 f o e u s s i e h t h g u o r h t d e l t t e s s a w t n u o m a s h t i f o 0 0 0 , 0 0 3 $ . A C E D e h t f o s m r e t e h t r e d n u d e e r g a s a t i n e m e s r u b m e r 0 0 0 0 2 6 $ s e d u c n , l i t n e m y a P i ’ . n o i t e r c s d s y n a p m o C e h t t a y t i u q e r o h s a c r e h t i e n i d e l t t e s e b l l i w h c h w i , n o i t a r e n u m e r r i e h t f o n o i t r o p a f o t n e m y a p e h t r e f e d o t d e e r g a s r o t c e r i i D n a t r e c l t a u u m r e d n U ) i ( ) i i ( ) i i i ( ) v i ( Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These shares were approved for issue at the Group’s AGM on 16 November 2020. Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 Table 2: Key Management Personnel Remuneration (executives) for the years ended 30 June 2021 and 30 June 2020 DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) d e t i -13- -12- Brightstar Resources Limited Brightstar Resources Limited ’ i . n o i t e r c s d s y n a p 1 m 2 o 2 C , 5 e 7 Share-based h 2 t payments t a $ y t i u q e r o h s - a c 11,728 r e h t i e n 5 7 3 , 0 1 - - i - - 1 5 4 , 4 0 1 , 1 9 0 9 , 8 1 Post-employment benefits Superannuation $ 8,577 4,826 - - 3,275 5,549 11,852 10,375 Total $ 98,858 55,632 27,500 23,457 58,432 65,614 184,790 144,703 Short-term employee benefits Other Salary & Fees $ $ 0 0 5 , 7 2 2 2 8 Balance at 3 3 5 l a 6 4 8 Deferred t , , , end of period 5 8 8 o 5 5 9 T remuneration payments (i) $ 7 5 4 , 3 2 4 1 6 , 5 6 3 0 7 , 4 4 1 0 9 7 , 4 8 1 Other $ 68,727,775 - - 31,449,497 7 7 $ 3,357,999 5 , 8 6 13,750 (ii) 2 8 - , 4 - - 5 7 2 , 3 9 4 5 , 5 - - - - - 13,750 - - - - 63,292 35,433 - - 2 5 8 , 1 1 5 7 - 3 - , 0 1 - - - - Totals (Directors and Other Key Officers) - s t n e m y a Under mutual agreement, certain Directors agreed to defer the payment of a portion of their remuneration, which will be settled in either cash or equity at the Company’s discretion. p This deferred remuneration payable to Mr Lau was settled in cash immediately on his resignation on 19 July 2021. Mr Sheng Lu resigned on 24 November 2020. d e s a b - e r a h S 10,000,000 - - - - - $ l i 4,475,178 10,000,000 1,104,451 275,221 303,483 217,685 18,909 10,375 8 2 7 , 1 1 - - - 8 2 358,767 7 - , 1 1 8 2 7 , 1 1 0 0 0 , 0 6 3 109,986,105 33,150,000 113,535,271 i m L s e c r Granted as u o s remuneration e R r a t s t h g i r B 30,000,000 (i) 2021 2020 - 3,150,000 (i) 2021 2020 - - - 2021 2020 2021 2020 2021 2020 Ordinary shares held in Brightstar Resources Limited (number) Balance at beginning of period DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) 30 June 2021 Directors William Hobba Yongji Duan Josh Hunt Yong Han (ii) Kaiye Shuai (ii) Fang Lu (ii) Other Key Officer Luke Wang Sheng Hui Lu (iii) Tony Lau (iv) (i) (ii) (iii) (iv) (i) (ii) (iii) Mr Sheng Lu resigned on 24 November 2020. Mr Lau resigned 19 July 2021 38,727,775 Yafei (Luke) Wang 31,449,497 Tony Lau (ii) - 13,908,219 Sheng Hui Lu (iii) 11,425,436 Sub-Total (Executives) - r i e h Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a t f Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These o n shares were approved for issue at the Group’s AGM on 16 November 2020. o i t r Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. o p a f o t n e m y a p e h t ) i i ( 0 5 7 , 3 1 d e r r e f e D 0 5 7 , 3 1 3 3 4 , 5 3 2 9 2 , 3 6 - 2 1 - r o f $ - - - - - - - - - - - - - - $ - 7 6 7 , 8 5 3 - 90,281 50,806 - 13,750 s 207,999 t 11,729 i f e n e 55,157 b 60,065 t n e m (13,908,219) y o (11,245,436) p m e - 159,188 t s o 122,600 P - l - - 0 2 0 2 e n (4,475,178) u J 0 3 d n (29,600,834) a 1 2 0 2 e n u J 0 3 d e d n e s r a e y e h t n o i t a u n n a r e p u S r e h t O ) i ( s t n e m y a p n o i t a r e n u m e r l s t i f e n e b e e y o p m e m r e t - t r o h S ) s e v i t u c e x e ( n o i t a r e n u m e R l e n n o s r e P t n e m e g a n a M y e K : 2 e l b a T ) d e u n i t n o c ( – ) d e t i d u a ( t r o p e r n o i t a r e n u m e R ) d e u n i t n o c ( T R O P E R ’ S R O T C E R D I $ 1 8 2 , 0 9 6 0 8 , 0 5 0 5 7 , 3 1 9 2 7 1 1 , 7 5 1 , 5 5 5 6 0 , 0 6 8 8 1 , 9 5 1 0 0 6 , 2 2 1 3 8 4 , 3 0 3 5 8 6 , 7 1 2 s e e F & y r a a S l 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 g n a W ) e k u L ( i e f a Y ) i i i ( u L i u H g n e h S ) i i ( u a L y n o T ) s e v i t u c e x E ( l a t o T - b u S d n a s r o t c e r i D ( s l a t o T ) s r e c i f f O y e K r e h t O l l i d e l t - t e 11,728 s e b 360,000 w . 11,728 1 h 2 c 0 2 h w y u J 9 1 n o n o i t a n g s e r , n o i t a r e n u m e r i l i s h n o y e t a d e m m i i h s a c n i d e l t t e s s a w u a L r M o t l e b a y a p n o i t a r e n u m e r d e r r e f e d s h T i . 0 2 0 2 r e b m e v o N 4 2 n o d e n g s e r u L g n e h S i r M r e f e d o t d e e r g a s r o t c e r i i D n a t r e c , t n e m e e r g a l a u t u m r e d n U ) i ( ) i i ( ) i i i ( d e t i m i L s e c r u o s e R r a t s t h g i r DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) B -13- -13- Brightstar Resources Limited Brightstar Resources Limited Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 Ordinary shares held in Brightstar Resources Limited (number) Ordinary shares held in Brightstar Resources Limited (number) 30 June 2021 Balance at beginning of period Directors Granted as remuneration Balance at Other beginning of period Granted as Balance at remuneration end of period Other William Hobba 38,727,775 Yongji Duan 31,449,497 30,000,000 (i) - Josh Hunt - 3,150,000 (i) Yong Han (ii) 13,908,219 Kaiye Shuai (ii) 11,425,436 Fang Lu (ii) - Other Key Officer - - - - (13,908,219) 11,425,436 (11,245,436) t a e c n a a B l d o i r e p f o d n e r e h t O 38,727,775 - 5 31,449,497 - 7 7 7 - 2 7 13,908,219 8 6 207,999 , , , 7 9 4 9 4 4 1 3 , - - 30,000,000 (i) 68,727,775 9 9 31,449,497 9 7 3,150,000 (i) 3,357,999 5 3 3 - , , - - - - - - - - - - - 9 9 9 7 0 2 , - - , ) 9 1 2 8 0 9 , 3 1 ( , ) 6 3 4 5 4 2 , 1 1 ( - - - , 0 - 0 0 0 0 0 0 1 , - - , 1 7 2 5 3 5 3 1 1 , , ) 4 3 8 0 0 6 , 9 2 ( 207,999 (13,908,219) (11,245,436) - , ) 8 7 1 5 7 4 , 4 ( - DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) 30 June 2021 Directors William Hobba Yongji Duan Josh Hunt Yong Han (ii) Kaiye Shuai (ii) Fang Lu (ii) Other Key Officer Luke Wang Sheng Hui Lu (iii) Tony Lau (iv) (i) (ii) (iii) (iv) Luke Wang Tony Lau (iv) (i) (ii) (iii) (iv) Mr Sheng Lu resigned on 24 November 2020. Mr Lau resigned 19 July 2021 - - 3 1 - - - 4,475,178 4,475,178 10,000,000 (4,475,178) 109,986,105 Sheng Hui Lu (iii) s a n o i t 10,000,000 a r e d s n o c L I N $ Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a t a Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These s shares were approved for issue at the Group’s AGM on 16 November 2020. e r a Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. h s Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These shares were approved for issue at the Group’s AGM on 16 November 2020. f Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. o g Mr Sheng Lu resigned on 24 November 2020. n n Mr Lau resigned 19 July 2021 n g e b ) i n ( o 0 109,986,105 i t 0 a 0 r , e 0 n 0 u 0 m , 0 e 3 r 10,000,000 ) i ( 0 0 0 , 0 5 1 , 3 (29,600,834) (29,600,834) 113,535,271 113,535,271 5 0 1 , 6 8 9 , 9 0 1 (4,475,178) 33,150,000 10,000,000 0 0 0 , 0 5 1 , 3 3 0 0 0 , 0 0 0 , 0 1 9 1 2 , 8 0 9 , 3 1 5 7 7 , 7 2 7 , 8 3 7 9 4 , 9 4 4 , 1 3 6 3 4 , 5 2 4 , 1 1 t a e c n a l a B s a d e t n a r G 8 7 1 , 5 7 4 , 4 d o i r e p t n u H s a w M - - - - - - r - - - - - - - - - - i i i i i ’ - - - 0 2 0 2 e n u J 0 3 d n a 1 2 0 2 e n u 33,150,000 J 0 3 d e d n e s r a e y e h t i r o f s g n d o h e r a h S l l e n n o s r e P t n e m e g a n a M y e K : 3 e l b a T ) d e u n i t n o c ( – ) d e t i d u a ( t r o p e r n o i t a r e n u m e R ) d e u n i t n o c ( T R O P E R ’ S R O T C E R D I ) r e b m u n ( d e t i i m L s e c r u o s e R r a t s t h g i r B n i l d e h s e r a h s y r a n d r O i 1 2 0 2 e n u J 0 3 s r o t c e r i D a b b o H m a i l l i W r e c i f f O y e K r e h t O ) i i i ( u L i u H g n e h S ) v i ( u a L y n o T g n a W e k u L ) i i ( u L g n a F s a w a b b o H r M ) i ( n a u D i j g n o Y t n u H h s o J ) i i ( n a H g n o Y ) i i ( i a u h S e y a K i f D a s Balance at a n end of period o a r e n u m e r o u e n i t i l i d n a 68,727,775 s e 31,449,497 u d g 3,357,999 n s h i t f i e s e h T . r o t c e r i a s a n o i t a r e n u m e r i l l i f l u f r o f t n e m e s r u b m e r i - - - - o 0 0 0 0 6 $ , f o u e i l n i n o i t i a r e d s n o c L I N $ t a s e r a h s d e u s s . s r a e y 7 r o i r p e h t r e v o p u o r G e h t f o r o t c e r i D y r a n d r o d a p y i l l u f 0 0 0 , 0 0 0 , 0 3 d e u s s i . 0 2 0 2 r e b m e v o N 6 1 n o M G A s p u o r G e h t t a e u s s i r o f d e v o r p p a e r e w s e r a h s . 0 2 0 2 r e b m e v o N 8 1 n o d e n g s e r u L g n a F r i M d n a i a u h S r M , n a H r M . 0 2 0 2 r e b m e v o N 4 2 n o d e n g s e r u L g n e h S i r M l 1 2 0 2 y u J 9 1 d e n g s e r u a L r i M ) i i ( ) i i i ( ) v i ( Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 -13- -14- Brightstar Resources Limited Balance at beginning of period Granted as remuneration Other Balance at end of period 38,727,775 30,000,000 (i) 31,449,497 - - - 68,727,775 31,449,497 - 3,150,000 (i) 207,999 3,357,999 (13,908,219) - d e t i i m L s e c r u o s e R r a t s t h g i r B Ordinary shares held in Brightstar Resources Limited (number) DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) 30 June 2021 Directors William Hobba Yongji Duan Josh Hunt Yong Han (ii) Kaiye Shuai (ii) Fang Lu (ii) Other Key Officer Luke Wang Sheng Hui Lu (iii) Tony Lau (iv) (i) (ii) (iii) (iv) Mr Sheng Lu resigned on 24 November 2020. Mr Lau resigned 19 July 2021 13,908,219 11,425,436 - - 4,475,178 10,000,000 - - - - - - 109,986,105 33,150,000 - 4 1 - Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a 6 Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These 7 2 shares were approved for issue at the Group’s AGM on 16 November 2020. , 3 4 Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. 5 , 3 - - - - - - ) i ( 0 0 0 , 0 6 9 ) i ( 6 7 2 , 3 8 5 , 2 d o i r e p f o d n e l - (4,475,178) t a - e c n a a B (11,245,436) ) d e u n i t n o c ( 9 1 0 2 e n u J - r 0 e 3 h t (29,600,834) d O n a 0 2 0 2 e n u J 0 3 d e d n e s r a e y e h t s a d e t n a r G n o i t a r e n u m e r t a e c n a l a B i f o g n n n g e b i ) r e b m u n ( d e t i i m L s e c r u o s e R i r o f s g n d o h e r a h S l l e n n o s r e P t n e m e g a n a M y e K : 4 e l b a T ) d e u n i t n o c ( – ) d e t i d u a ( t r o p e r n o i t a r e n u m e R ) d e u n i t n o c ( T R O P E R ’ S R O T C E R D I , 7 9 4 9 4 4 1 3 , , - 9 1 2 - 8 0 9 3 1 , , 5 7 7 7 2 7 8 3 , - - , 6 3 4 5 2 4 1 1 , , 0 0 0 0 0 0 0 1 , , 8 7 1 5 7 4 4 , , 5 0 1 6 8 9 9 0 1 , - - - - - 10,000,000 113,535,271 - - - - 6 0 3 , 4 6 8 , 5 ) i i ( 6 0 3 , 4 6 8 , 5 - - 1 2 2 , 6 6 8 , 8 2 5 7 7 , 7 6 7 , 7 3 9 1 2 , 8 0 9 , 3 1 6 3 4 , 5 2 4 , 1 1 d o i r e p 4 9 6 , 5 3 1 , 4 8 7 1 , 5 7 4 , 4 3 2 5 , 8 7 5 , 0 0 1 r a t s t h g i r B n i l d e h s e r a h s y r a n d r O i 0 2 0 2 e n u J 0 3 n a u D i j g n o Y s r o t c e r i D r e c i f f O y e K r e h t O g n a W e k u L u a L y n o T u L i u H g n e h S u L g n a F i a u h S e y a K i n a H g n o Y a b b o H m a i l l i W . n o i t i ’ e r c s d s y n a p m o C e h t t a y t i u q e r o h s a c r e h t i e n i d e l t t e s d n a d e r r e f e d e b o t d e e r g a e r e w t a h t s t n u o m a n o i t a r e n u m e r r i e h t f o t n e m e l t t e s n i s r o t c e r i D o t d e u s s I . d e r e d n e r i s e c v r e s r o f s e e f y c n a t l u s n o c f o t n e m e l t t e s s a t n e m y a p d e s a b - e r a h S ) i ( ) i i ( DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) -15- Brightstar Resources Limited Shares under option There were no unissued shares under option held by any members of Key Management Personnel as at 30 June 2021 (30 June 2020: NIL). Other transactions and balances with Key Management Personnel Some Directors and executives hold positions within other entities that cause them to have control or exert significant influence over the financial or operating policies of those entities. However, these entities did not transact with the Company during the current and previous reporting periods. Under mutual agreement, certain Directors and Executives agreed to part payment of their remuneration, which was deferred and will be settled in either cash or equity at the Company’s discretion. The balance of outstanding amounts owing to the Directors and Executives as at 30 June 2021 year end is as follows. These amounts are included within Table 2 and Table 3 as remuneration to the respective Director and Executive: Table 4: Key Management Personnel balances payable as at 30 June 2021 and 30 June 2020 Transaction Directors Yongji Duan Deferred remuneration payment William Hobba Deferred remuneration payment 2021 $ 2020 $ 56,841 28,133 25,833 9,600 Other Key Officer Tony Lau (i) Deferred remuneration payment 13,750 - (i) Mr Lau resigned from the Joint Company Secretary role with effect from 19 July 2021. Outstanding remuneration amounts owing to him were settled in cash. END OF AUDITED REMUNERATION REPORT Shares under option Unissued ordinary shares of Group under option at the date of this report are as follows: Date options granted Number of shares under option 9 April 2020 15,000,000 31 December 2020 31 December 2020 31 December 2020 12 February 2021 22 June 2021 4,000,000 4,000,000 4,000,000 1,000,000 5,000,000 Exercise price of option Expiry date of options $0.01 $0.06 $0.08 $0.10 $0.10 8 April 2023 31 December 2023 31 December 2023 31 December 2023 12 February 2024 $0.045 22 June 2024 No option holder has any right under the options to participate in any other share issue of the Company. No shares were issued during or after the reporting period upon the exercise of options, as at the date of this report. Share options held or granted to directors and officers No options over unissued ordinary shares were granted during or since the end of the financial year to directors or officers. Directors’ interests in shares or options Directors’ relevant interests in shares of Brightstar or options over shares in the Group are detailed below. Brightstar Resources Limited Brightstar Resources Limited DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) -15- Shares under option (30 June 2020: NIL). There were no unissued shares under option held by any members of Key Management Personnel as at 30 June 2021 Other transactions and balances with Key Management Personnel Some Directors and executives hold positions within other entities that cause them to have control or exert significant influence over the financial or operating policies of those entities. However, these entities did not transact with the Company during the current and previous reporting periods. Under mutual agreement, certain Directors and Executives agreed to part payment of their remuneration, which was deferred and will be settled in either cash or equity at the Company’s discretion. The balance of outstanding amounts owing to the Directors and Executives as at 30 June 2021 year end is as follows. These amounts are included within Table 2 and Table 3 as remuneration to the respective Director and Executive: Table 4: Key Management Personnel balances payable as at 30 June 2021 and 30 June 2020 2021 $ 2020 $ William Hobba Deferred remuneration payment Deferred remuneration payment 56,841 28,133 25,833 9,600 Transaction Directors Yongji Duan Other Key Officer Tony Lau (i) Deferred remuneration payment 13,750 - (i) Mr Lau resigned from the Joint Company Secretary role with effect from 19 July 2021. Outstanding remuneration amounts owing to him were settled in cash. END OF AUDITED REMUNERATION REPORT Shares under option Unissued ordinary shares of Group under option at the date of this report are as follows: Date options granted Number of shares under Exercise price of option Expiry date of options 9 April 2020 15,000,000 option 31 December 2020 31 December 2020 31 December 2020 12 February 2021 22 June 2021 4,000,000 4,000,000 4,000,000 1,000,000 5,000,000 $0.01 $0.06 $0.08 $0.10 $0.10 8 April 2023 31 December 2023 31 December 2023 31 December 2023 12 February 2024 $0.045 22 June 2024 No option holder has any right under the options to participate in any other share issue of the Company. No shares were issued during or after the reporting period upon the exercise of options, as at the date of this report. Share options held or granted to directors and officers No options over unissued ordinary shares were granted during or since the end of the financial year to directors or officers. Directors’ interests in shares or options Directors’ relevant interests in shares of Brightstar or options over shares in the Group are detailed below. -16- DIRECTORS’ REPORT (continued) Directors’ relevant interests in: William Hobba Yongji Duan Josh Hunt Ordinary shares of Brightstar Resources Limited 68,727,775 31,449,497 3,357,999 Options over shares in Brightstar Resources Limited - - - Directors’ Meetings The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows: Number of meetings held: Number of meetings attended: Mr William Hobba Mr Yongji Duan Mr Josh Hunt Dr Kaiye Shuai Mr Yong Han Mr Fang Lu Directors’ Meetings 6 Eligible to attend 6 - 6 - - - 6 6 6 - - - Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Auditor Independence Section 307C of the Corporations Act 2001 requires our auditors to provide the Directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 16 and forms part of this directors’ report for the year ended 30 June 2021. Non-Audit Services The Company may decide to employ the auditor on assignments in addition to their statutory audit duties where the auditor’s expertise and experience with the Company are important. Non-audit services provided during the financial year by the auditor are detailed below. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Acts 2001. Amount paid/payable to Pitcher Partners BA&A Pty Ltd or related entities for non-audit services Pitcher Partners Accountants & Advisors WA Pty Ltd – Taxation compliance services Total auditors’ remuneration for non-audit services 30-June-21 $ 30-June-20 $ 8,000 8,000 - - 30-June-21 $ 30-June-20 $ Amount paid/payable to Deloitte Touché Tohmatsu or related entities for non-audit services - Taxation compliance services Total auditors’ remuneration for non-audit services 14,700 14,700 13,402 13,402 DIRECTORS’ REPORT (continued) -17- Brightstar Resources Limited The directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the integrity and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Australian Professional and Ethical Standards Board. Rounding of amounts In accordance with ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191, the amounts in the Directors’ report and in the financial report have been rounded to the nearest $1 (where rounding is applicable). Signed in accordance with a resolution of the directors made pursuant to s.298 (2) of the Corporations Act 2001. William Hobba Managing Director 30 September 2021 Brightstar Resources Limited Brightstar Resources Limited -18- DIRECTORS’ REPORT (continued) -17- The directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the integrity and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Australian Professional and Ethical Standards Board. Rounding of amounts In accordance with ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191, the amounts in the Directors’ report and in the financial report have been rounded to the nearest $1 (where rounding is applicable). Signed in accordance with a resolution of the directors made pursuant to s.298 (2) of the Corporations Act 2001. William Hobba Managing Director 30 September 2021 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. AUDITOR'S INDEPENDENCE DECLARATION TO THE DIRECTORS OF BRIGHTSTAR RESOURCES LIMITED AND ITS CONTROLLED ENTITIES 17 In relation to the independent audit for the year ended 30 June 2021, to the best of my knowledge and belief there have been: (i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and (ii) no contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Brightstar Resources Limited and the entities it controlled during the period. PITCHER PARTNERS BA&A PTY LTD PAUL MULLIGAN Executive Director Perth, 30 September 2021 -19- Brightstar Resources Limited CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 June 2021 Other income Remeasurement of Rehabilitation Provision Mine site expenses Exploration expenditure Notes 2(a) 16 2(b) Consolidated 2021 $ 2020 $ 62,060,466 364,749 3,033,794 - (332,002) (554,457) (222,722) (1,079,134) Depreciation and amortisation expense 2(c) (382,456) (379,836) Director fees Impairment expenses Finance costs Administration expenses Consulting expenses Employee benefits expense Other expenses Profit / (loss) before income tax Income tax Net profit / (loss) for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year 2(d) 2(e) 2(f) 2(f) 2(g) (151,367) (130,517) (32,084) (1,075,812) (1,622,983) (3,035,368) (208,962) (648,407) (84,057) (52,075) (702,641) (334,340) (238,776) (257,048) 60,551,860 (6,617,894) 3 - - 60,551,860 (6,617,894) - - 60,551,860 (6,617,894) Total comprehensive income / (loss) for the year 60,551,860 (6,617,894) Basic earnings/(loss) per share per share (cents per share) Diluted earnings/(loss) per share (cents per share) 5 5 10.25 9.89 (0.80) (0.80) The accompanying notes form part of these financial statements Brightstar Resources Limited Brightstar Resources Limited CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE -19- INCOME FOR THE YEAR ENDED 30 June 2021 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 June 2021 -20- Depreciation and amortisation expense 2(c) (382,456) (379,836) Other income Remeasurement of Rehabilitation Provision Mine site expenses Exploration expenditure Director fees Impairment expenses Finance costs Administration expenses Consulting expenses Employee benefits expense Other expenses Profit / (loss) before income tax Income tax Net profit / (loss) for the year Notes 2(a) 16 2(b) 2(d) 2(e) 2(f) 2(f) 2(g) 3 Consolidated 2021 $ 2020 $ 62,060,466 364,749 3,033,794 - (332,002) (554,457) (222,722) (1,079,134) (151,367) (130,517) (32,084) (1,075,812) (1,622,983) (3,035,368) (208,962) (648,407) (84,057) (52,075) (702,641) (334,340) (238,776) (257,048) 60,551,860 (6,617,894) 60,551,860 (6,617,894) - - - - Other comprehensive income for the year, net of tax Total comprehensive loss for the year 60,551,860 (6,617,894) Total comprehensive income / (loss) for the year 60,551,860 (6,617,894) Basic earnings/(loss) per share per share (cents per share) Diluted earnings/(loss) per share (cents per share) 5 5 10.25 9.89 (0.80) (0.80) The accompanying notes form part of these financial statements Current Assets Cash and cash equivalents Trade and other receivables Other financial assets Assets held for sale Other current assets Total Current Assets Non-Current Assets Property, plant and equipment Right-of-use asset Deferred exploration and evaluation expenditure Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Lease liabilities Borrowings Provisions Liabilities held for sale Total Current Liabilities Non-Current Liabilities Lease liabilities Provisions Other financial liabilities Total Non-Current Liabilities Total Liabilities Net Assets/(Liabilities) Equity Issued capital Accumulated losses Reserve Total Equity/(Deficit) The accompanying notes form part of these financial statements Consolidated Notes 2021 $ 2020 $ 6 7 8 10 9 11 12 13 14 15 16 10 14 16 17 18 19 985,036 179 25,000 50,032 35,617 25,000 - 11,172,169 23,051 16,358 1,033,266 11,299,176 454,899 13,574 720,969 32,018 9,313,231 2,686,636 9,781,704 3,439,623 10,814,970 14,738,799 962,968 21,134,121 15,639 17,618 630,000 36,066,134 112,740 111,249 - 3,733,200 1,721,347 61,062,322 - 15,756 3,044,667 3,583,061 3,715,060 - 6,759,727 3,598,817 8,481,074 64,661,139 2,333,896 (49,922,340) 37,857,909 51,541,309 (40,920,635) (101,472,495) 5,396,622 8,846 2,333,896 (49,922,340) -21- CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 June 2021 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Dividends received Interest received Interest on lease liabilities Government grants received Brightstar Resources Limited Consolidated Notes 2021 $ 2020 $ 131,289 291,219 (1,129,956) (844,997) 105,867 633 (1,969) 50,000 - 651 (2,075) 50,000 Net cash used in operating activities 6(ii) (844,136) (503,127) Cash flows from investing activities Proceeds from sale of other financial assets Proceeds from sale of property, plant and equipment Proceeds from sale of exploration assets Payments for property, plant and equipment Payments for exploration and evaluation expenditure Net cash provided by/(used in) investing activities Cash flows from financing activities Proceeds from borrowings Repayment of lease liabilities Payments for share buy-back Net cash (used in)/provided by financing activities Net increase/(decrease) in cash held Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 6(i) The accompanying notes form part of these financial statements 4,628,618 8,000 250,000 (161,907) - 2,000 - - (688,962) (805,025) 4,035,749 (803,025) - 1,273,700 (16,746) (18,224) (2,239,864) - (2,256,610) 1,255,476 935,003 50,032 985,035 (50,676) 100,708 50,032 Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 -13- -22- Brightstar Resources Limited - , ) 9 0 6 6 8 3 3 4 ( , , ) 4 9 8 7 1 6 6 ( , , ) 4 9 8 7 1 6 6 ( , - 1 6 1 7 7 , ) 4 4 8 3 ( , 6 4 8 8 , , ) 0 4 3 2 2 9 9 4 ( , , ) 0 4 3 2 2 9 9 4 ( , , 0 6 8 1 5 5 0 6 , 0 5 8 9 5 5 , , 0 6 8 1 5 5 0 6 , , ) 0 5 2 3 4 2 4 1 ( , - l t a o T $ Granted as remuneration Other Balance at end of period - - - - - - 6 4 8 8 , 6 4 8 8 , 6 4 8 8 , - - - - - - 6 6 0 7 7 4 , 6 6 0 7 7 4 , , 0 1 7 0 1 9 4 , , 6 9 8 3 3 3 2 , , 0 1 7 0 1 9 4 , , 2 2 6 6 9 3 5 , 38,727,775 30,000,000 (i) 31,449,497 - e v r e s e R $ - - 68,727,775 31,449,497 - 3,150,000 (i) 207,999 3,357,999 13,908,219 11,425,436 - - 4,475,178 10,000,000 - - - - - - 109,986,105 33,150,000 - 2 2 - (13,908,219) (11,245,436) l t d e a u m u c c A s e s s o L $ , ) 1 0 6 4 5 8 4 9 ( , - - - - - , ) 4 9 8 7 1 6 6 ( , - , ) 4 9 8 7 1 6 6 ( , - - - - - - - , ) 5 9 4 2 7 4 1 0 1 ( , - , 0 6 8 1 5 5 0 6 , , ) 5 9 4 2 7 4 1 0 1 ( , , 0 6 8 1 5 5 0 6 , , ) 5 3 6 0 2 9 0 4 ( , - - l - 2 9 9 , 7 6 4 , 1 5 (4,475,178) a t i p a C d e u s s I (29,600,834) $ - - - - 1 ) - 4 6 4 1 8 , 7 10,000,000 , 3 7 ( 113,535,271 9 0 3 , 1 4 5 , 1 5 9 0 3 , 1 4 5 , 1 5 - - - 0 5 8 , 9 5 5 ) 0 5 2 , 3 4 2 , 4 1 ( - - - 9 0 9 , 7 5 8 , 7 3 d e t i i m L s e c r u o s e R r a t s t h g i r B Notes 2021 $ 2020 $ Ordinary shares held in Brightstar Resources Limited (number) 30 June 2021 131,289 291,219 (1,129,956) (844,997) Balance at beginning of period CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 June 2021 DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) Consolidated -21- Brightstar Resources Limited Net cash used in operating activities (844,136) (503,127) Proceeds from sale of property, plant and equipment 8,000 2,000 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Dividends received Interest received Interest on lease liabilities Government grants received Cash flows from investing activities Proceeds from sale of other financial assets Proceeds from sale of exploration assets Payments for property, plant and equipment Payments for exploration and evaluation expenditure Net cash provided by/(used in) investing activities Cash flows from financing activities Proceeds from borrowings Repayment of lease liabilities Payments for share buy-back Net cash (used in)/provided by financing activities Net increase/(decrease) in cash held Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 6(i) The accompanying notes form part of these financial statements Directors William Hobba Yongji Duan Josh Hunt 105,867 633 (1,969) 50,000 Yong Han (ii) 6(ii) Kaiye Shuai (ii) Fang Lu (ii) 4,628,618 Other Key Officer Luke Wang Sheng Hui Lu (iii) 250,000 (161,907) Tony Lau (iv) - 651 (2,075) 50,000 - - - (688,962) (805,025) 4,035,749 (803,025) (i) (ii) (iii) (iv) - 1,273,700 (16,746) (18,224) Mr Sheng Lu resigned on 24 November 2020. (2,239,864) - Mr Lau resigned 19 July 2021 (2,256,610) 1,255,476 935,003 50,032 985,035 (50,676) 100,708 50,032 Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These shares were approved for issue at the Group’s AGM on 16 November 2020. Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. e t o N 8 1 8 1 9 1 s t n e m e t a t s I Y T U Q E N I S E G N A H C F O T N E M E T A T S D E T A D L O S N O C I 1 2 0 2 e n u J 0 3 D E D N E R A E Y E H T R O F r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T s e r a h s f o e u s s i n o s t s o c n o i t c a s n a r T r a e y e h t g n i r u d d e u s s i s e r a h S e s n e p x e t n e m y a p d e s a b e r a h S 0 2 0 2 e n u J 0 3 t a e c n a l a B r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T s e r a h s f o e u s s i n o s t s o c n o i t c a s n a r T e s n e p x e t n e m y a p d e s a b e r a h S r a e y e h t g n i r u d k c a b - y u b e r a h S r a e y e h t g n i r u d d e u s s i s e r a h S 0 2 0 2 y l u J 1 t a s a e c n a l a B s s o l i e v s n e h e r p m o c r e h t O r a e y e h t r o f t i f o r P 9 1 0 2 y l u J 1 t a s a e c n a l a B s s o l i e v s n e h e r p m o c r e h t O r a e y e h t r o f s s o L d e t a d i l o s n o C l i a c n a n i f e s e h t f o t r a p m r o f i s e t o n g n y n a p m o c c a e h T 1 2 0 2 e n u J 0 3 t a e c n a l a B n o i t a l l e c n a c d n a k c a b - y u b e r a h s y r a n d r O i NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES -23- Brightstar Resources Limited The following are the significant accounting policies adopted by the group in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (a) Basis of preparation of the financial report This financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board (AASB). The financial report covers Brightstar Resources Limited (“the Company”) and its controlled entities as a group (together referred to as the “Group”). Brightstar Resources Limited is a company limited by shares, incorporated and domiciled in Australia. Brightstar Resources Limited is a for-profit entity for the purpose of preparing the financial report. Compliance with IFRS The financial report also complies with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Historical cost convention The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies. Fair value measurement For financial reporting purposes, ‘fair value’ is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants (under current market conditions) at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. When estimating the fair value of an asset or liability, the entity uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to valuation techniques used to measure fair value are categorised into three levels according to the extent to which the inputs are observable: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 inputs are unobservable inputs for the asset or liability. (b) Going Concern The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the discharge of liabilities in the ordinary course of business. The Group has recorded a net profit of $60,551,860 (2020: $6,617,894 loss) and cash inflows from operating and investing activities of $3,191,613 (2020: outflows of $1,306,152) for the reporting period. As at 30 June 2021, the Group had a cash balance of $985,035 (30 June 2020: $335,205), had net assets of $2,333,896 (30 June 2020: $914,833 net liabilities) and current exploration expenditure commitments of $703,670. The directors have prepared a cash flow forecast for the period ending 30 September 2022. It is recognised that additional funding is required either through the issue of further shares, or convertible notes, or the sale of assets, or a combination of these activities for the Group to continue to actively explore and develop its mineral properties, until recommencement of mining operations. The directors may also look to delay the timing of certain budgeted expenditures in accordance with their three year strategic plan. Subsequent to the financial year end, the Company has signed a Mandate for its first capital raising since completion of recapitalisation in November 2020. The Company also managed to renegotiate the terms of the Great Cortex loan (originally due 30 September 2021) and extended the repayment date by more than 24 months to November 2023. Refer to Note 24 for further information. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -23- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -24- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following are the significant accounting policies adopted by the group in the preparation and presentation of the (b) Going Concern (continued) financial report. The accounting policies have been consistently applied, unless otherwise stated. Brightstar Resources Limited Brightstar Resources Limited The directors have reviewed the business outlook and the assets and liabilities of the Group and are of the opinion that the use of the going concern basis of accounting is appropriate. However, the Group acknowledge that the status of going concern relies on the development of the Company’s projects and subsequent capital raising to support the development. Should the Group be unable to raise further debt or capital, there exists a material uncertainty that the Group may in the future not be able to continue as a going concern. The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. (c) New and revised accounting standards effective at 30 June 2021 The group has applied all new and revised Australian Accounting Standards that apply to annual reporting periods beginning on or after 1 July 2020, including the following: AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business AASB 2018-6 amends AASB 3 Business Combinations to clarify the definition of a business, assisting entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition. The amendments: (a) clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs; (b) remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; (c) add guidance and illustrative examples to help entities assess whether a substantive process has been acquired; (d) narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs; and • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can (e) add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or The application of AASB 2018-6 has not materially impacted the financial statements of the Group. AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material AASB 2018-7 principally amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The amendments refine the definition of material in AASB 101. The amendments clarify the definition of material and its application by improving the wording and aligning the definition across AASB Standards and other publications. The amendment also includes some supporting requirements in AASB 101 in the definition to give it more prominence and clarifies the explanation accompanying the definition of material. The application of AASB 2018-7 has not materially impacted the financial statements of the Group. AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia AASB 2019-5 makes amendments to AASB 1054 Australian Additional Disclosures by adding a disclosure requirement for an entity intending to comply with IFRS Standards to disclose the information required by paragraph 30 of AASB 108 (regarding disclosing the effect of new standards not yet issued) to IFRS Standards that have not yet been issued by the Australian Accounting Standards Board. The application of AASB 2019-5 has not materially impacted the financial statements of the Group. (d) Accounting standards issued but not yet effective At the date of authorisation of the financial statements, the following Australian Accounting Standards and Interpretations have recently been issued or amended but are not yet effective and have not been adopted by the Group for the year ended 30 June 2021: (a) Basis of preparation of the financial report This financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board (AASB). The financial report covers Brightstar Resources Limited (“the Company”) and its controlled entities as a group (together referred to as the “Group”). Brightstar Resources Limited is a company limited by shares, incorporated and domiciled in Australia. Brightstar Resources Limited is a for-profit entity for the purpose of preparing the financial report. Compliance with IFRS International Accounting Standards Board (IASB). Historical cost convention The financial report also complies with the International Financial Reporting Standards (IFRS) issued by the The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies. Fair value measurement technique. For financial reporting purposes, ‘fair value’ is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants (under current market conditions) at the measurement date, regardless of whether that price is directly observable or estimated using another valuation When estimating the fair value of an asset or liability, the entity uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to valuation techniques used to measure fair value are categorised into three levels according to the extent to which the inputs are observable: access at the measurement date. liability, either directly or indirectly. • Level 3 inputs are unobservable inputs for the asset or liability. (b) Going Concern The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the discharge of liabilities in the ordinary course of business. The Group has recorded a net profit of $60,551,860 (2020: $6,617,894 loss) and cash inflows from operating and investing activities of $3,191,613 (2020: outflows of $1,306,152) for the reporting period. As at 30 June 2021, the Group had a cash balance of $985,035 (30 June 2020: $335,205), had net assets of $2,333,896 (30 June 2020: $914,833 net liabilities) and current exploration expenditure commitments of $703,670. The directors have prepared a cash flow forecast for the period ending 30 September 2022. It is recognised that additional funding is required either through the issue of further shares, or convertible notes, or the sale of assets, or a combination of these activities for the Group to continue to actively explore and develop its mineral properties, until recommencement of mining operations. The directors may also look to delay the timing of certain budgeted expenditures in accordance with their three year strategic plan. Subsequent to the financial year end, the Company has signed a Mandate for its first capital raising since completion of recapitalisation in November 2020. The Company also managed to renegotiate the terms of the Great Cortex loan (originally due 30 September 2021) and extended the repayment date by more than 24 months to November 2023. Refer to Note 24 for further information. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -25- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Accounting standards issued but not yet effective (continued) Brightstar Resources Limited AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018 – 2020 and Other Amendments AASB 2020-3 amends AASB 1 First-time Adoption of Australian Accounting Standards, AASB 3 Business Combinations, AASB 9 Financial Instruments, AASB 116 Property, Plant and Equipment, AASB 137 Provisions, Contingent Liabilities and Contingent Assets and AASB 141 Agriculture. The main amendments relate to: (a) AASB 1 – simplifies the application by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences; (b) AASB 3 – updates references to the Conceptual Framework for Financial Reporting; (c) AASB 9 – clarifies the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability; (d) AASB 116 – requires an entity to recognise the sales proceeds from selling items produced while preparing PP&E for its intended use and the related cost in profit or loss, instead of deducting the amounts received from the cost of the asset; (e) AASB 137 – specifies the costs that an entity includes when assessing whether a contract will be loss making; and (f) AASB 141 – removes the requirement to exclude cash flows from taxation when measuring fair value, thereby aligning the fair value measurement requirements in AASB 141 with those in other Australian Accounting Standards. AASB 2020-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will be first applied by the Group in the financial year commencing 1 July 2022. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current, and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. It requires a liability to be classified as current when entities do not have a substantive right to defer settlement at the end of the reporting period. AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2023 instead of 1 January 2023. They will first be applied by the Group in the financial year commencing 1 July 2023. The likely impact of these accounting standard on the financial statements of the Group has not been determined. AASB 2021-2 Amendments to Australian Accounting Standards –Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2020-1 amends AASB 7 Financial Instruments: Disclosures, AASB 101 Presentation of Financial Statements, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 134 Interim Financial Reporting and AASB Practice Statement 2 Making Materiality Judgements. The main amendments relate to: (a) AASB 7 – clarifies that information about measurement bases for financial instruments is expected to be material to an entity’s financial statements; (b) AASB 101 – requires entities to disclose their material accounting policy information rather than their significant accounting policies; (c) AASB 108 – clarifies how entities should distinguish changes in accounting policies and changes in accounting estimates; (d) AASB 134 – to identify material accounting policy information as a component of a complete set of financial statements; and (e) AASB Practice Statement 2 – to provide guidance on how to apply the concept of materiality to accounting policy disclosures. AASB 2021-2 mandatorily applies to annual reporting periods commencing on or after 1 January 2023 and will be first applied by the Group in the financial year commencing 1 July 2023. The likely impact of this accounting standard on the financial statements of the Group has not been determined. Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -25- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Accounting standards issued but not yet effective (continued) AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018 – 2020 and Other Amendments AASB 2020-3 amends AASB 1 First-time Adoption of Australian Accounting Standards, AASB 3 Business Combinations, AASB 9 Financial Instruments, AASB 116 Property, Plant and Equipment, AASB 137 Provisions, Contingent Liabilities and Contingent Assets and AASB 141 Agriculture. The main amendments relate to: (a) AASB 1 – simplifies the application by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences; (b) AASB 3 – updates references to the Conceptual Framework for Financial Reporting; (c) AASB 9 – clarifies the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability; (d) AASB 116 – requires an entity to recognise the sales proceeds from selling items produced while preparing PP&E for its intended use and the related cost in profit or loss, instead of deducting the amounts received from (e) AASB 137 – specifies the costs that an entity includes when assessing whether a contract will be loss making; (f) AASB 141 – removes the requirement to exclude cash flows from taxation when measuring fair value, thereby aligning the fair value measurement requirements in AASB 141 with those in other Australian Accounting the cost of the asset; and Standards. AASB 2020-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2022 and will be first applied by the Group in the financial year commencing 1 July 2022. The likely impact of this accounting standard on the financial statements of the Group has not been determined. AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current, and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. It requires a liability to be classified as current when entities do not have a substantive right to defer settlement at the end of the reporting period. AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2023 instead of 1 January 2023. They will first be applied by the Group in the financial year commencing 1 July 2023. The likely impact of these accounting standard on the financial statements of the Group has not been determined. AASB 2021-2 Amendments to Australian Accounting Standards –Disclosure of Accounting Policies and Definition of Accounting Estimates AASB 2020-1 amends AASB 7 Financial Instruments: Disclosures, AASB 101 Presentation of Financial Statements, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 134 Interim Financial Reporting and AASB Practice Statement 2 Making Materiality Judgements. The main amendments relate to: (a) AASB 7 – clarifies that information about measurement bases for financial instruments is expected to be material to an entity’s financial statements; (b) AASB 101 – requires entities to disclose their material accounting policy information rather than their significant (c) AASB 108 – clarifies how entities should distinguish changes in accounting policies and changes in accounting (d) AASB 134 – to identify material accounting policy information as a component of a complete set of financial (e) AASB Practice Statement 2 – to provide guidance on how to apply the concept of materiality to accounting policy AASB 2021-2 mandatorily applies to annual reporting periods commencing on or after 1 January 2023 and will be first applied by the Group in the financial year commencing 1 July 2023. The likely impact of this accounting standard on the financial statements of the Group has not been determined. accounting policies; estimates; statements; and disclosures. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -26- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Principles of consolidation The consolidated financial statements are those of the consolidated entity (“the group”), comprising the financial statements of the parent entity and all of the entities the parent controls. The group controls an entity where it has the power, for which the parent has exposure or rights to variable returns from its involvement with the entity, and for which the parent has the ability to use its power over the entity to affect the amount of its returns. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist. All inter group balances and transactions, including any unrealised profits or losses have been eliminated on consolidation. Subsidiaries are consolidated from the date on which control is obtained by the group and are de recognised from the date that control ceases. Equity interests in a subsidiary not attributable, directly or indirectly, to the group are presented as non controlling interests. Non controlling interests are initially recognised either at fair value or at the non controlling interests’ proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition by acquisition basis. Non controlling interests in the results of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income and the statement of financial position respectively. (f) Critical accounting judgements and key sources of estimation uncertainty The preparation of the financial statements in accordance with AASB requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. 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 it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. (i) Significant accounting judgements include: Exploration and evaluation costs Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area that has not at reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active Group operations in, or relating to, the area of interest are continuing. (ii) Significant accounting estimates and assumptions include: Impairment of exploration and evaluation assets The ultimate recoupment of the value of exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets. On a regular basis, management consider whether there are indicators as to whether the asset carrying values exceed their recoverable amounts. This consideration includes assessment of the following: (a) expiration of the period for which the entity has the right to explore in the specific area of interest with no plans for renewal; (b) substantive expenditure on further exploration for and evaluation in the specific area is neither budgeted nor planned; (c) exploration for and evaluation activities have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; (d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -27- Brightstar Resources Limited NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Critical accounting judgements and key sources of estimation uncertainty (continued) Where an impairment indicator is identified, the determination of the recoverable amount requires the use of estimates and judgement in determining the inputs and assumptions used in determining the recoverable amounts. The key areas of judgement and estimate include: - Recent exploration and evaluation results and resource estimates; - - Environmental issues that may impact on the underlying tenements; Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities. Recoverability of Mine Property and Plant Certain assumptions are required to be made in order to assess the recoverability of Mine Property and Plant. The recoverable amount of Mine Property and Plant is the higher of fair value less costs of disposal and value in use. Mine Property and Plant values are tested on a “Fair value less costs of disposal” as a basis to determine any impairment. In estimating the fair value of Mine Property and Plant, the Group engages third party qualified valuers to perform the valuation of Mine Property and Plant. The key areas of judgement and estimate include: -- Auction Value of Mine Property and Plant (last performed in July 2017); and -- Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities. Provision for restoration and rehabilitation obligations The estimated costs of future site rehabilitation and restoration, including heritage preservation where required, associated with previous mining and/or exploration activity are provided for as and when an obligation arises and are included in the costs of the related area of interest. These costs include the dismantling and removal of any plant, equipment and building structures and rehabilitation, where such work is deemed appropriate by the relevant government authorities and the cost of making safe any remaining aspects of the previous mining operation. The costs are based on estimates of future costs, current legal requirements and existing technology. The provision is based on the best available information of costs expected to be incurred at the expiry of the respective license agreements. Such costs have been provided for at the present value of future expected expenditure discounted using a rate adjusted for risks specific to the liability. On an ongoing basis the closure liability is remeasured at each reporting period in line with the changes in time value of money (recognised as a finance expense in profit or loss and an increase in provision), and changes in estimates of future costs or methods of rehabilitation. Changes in the closure liability are recognised prospectively. Certain assumptions are required to be made in determining the amount expected to be incurred to settle its obligations in relation to restoration and rehabilitation of the mine site. Key assumptions include the amount and timing of future cash flow estimates. Share-based payments The Group measures the cost of equity-settled transactions with suppliers and employees by reference to the fair value of the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services is determined indirectly by reference to the fair value of the equity instrument granted. The fair value of the equity instruments granted is determined using an appropriate option pricing model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Please refer to Note 19 for further details. Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -27- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -28- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Critical accounting judgements and key sources of estimation uncertainty (continued) (g) Income tax Where an impairment indicator is identified, the determination of the recoverable amount requires the use of estimates and judgement in determining the inputs and assumptions used in determining the recoverable amounts. The key areas of judgement and estimate include: - Recent exploration and evaluation results and resource estimates; Environmental issues that may impact on the underlying tenements; - - liabilities. Fundamental economic factors that have an impact on the operations and carrying values of assets and Recoverability of Mine Property and Plant Certain assumptions are required to be made in order to assess the recoverability of Mine Property and Plant. The recoverable amount of Mine Property and Plant is the higher of fair value less costs of disposal and value in use. Mine Property and Plant values are tested on a “Fair value less costs of disposal” as a basis to determine any impairment. In estimating the fair value of Mine Property and Plant, the Group engages third party qualified valuers to perform the valuation of Mine Property and Plant. The key areas of judgement and estimate include: -- Auction Value of Mine Property and Plant (last performed in July 2017); and -- Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities. Provision for restoration and rehabilitation obligations The estimated costs of future site rehabilitation and restoration, including heritage preservation where required, associated with previous mining and/or exploration activity are provided for as and when an obligation arises and are included in the costs of the related area of interest. These costs include the dismantling and removal of any plant, equipment and building structures and rehabilitation, where such work is deemed appropriate by the relevant government authorities and the cost of making safe any remaining aspects of the previous mining operation. The costs are based on estimates of future costs, current legal requirements and existing technology. The provision is based on the best available information of costs expected to be incurred at the expiry of the respective license agreements. Such costs have been provided for at the present value of future expected expenditure discounted using a rate adjusted for risks specific to the liability. On an ongoing basis the closure liability is remeasured at each reporting period in line with the changes in time value of money (recognised as a finance expense in profit or loss and an increase in provision), and changes in estimates of future costs or methods of rehabilitation. Changes in the closure liability are recognised prospectively. Certain assumptions are required to be made in determining the amount expected to be incurred to settle its obligations in relation to restoration and rehabilitation of the mine site. Key assumptions include the amount and timing of future cash flow estimates. Share-based payments The Group measures the cost of equity-settled transactions with suppliers and employees by reference to the fair value of the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services is determined indirectly by reference to the fair value of the equity instrument granted. The fair value of the equity instruments granted is determined using an appropriate option pricing model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Please refer to Note 19 for further details. Current income tax expense or revenue is the tax payable on the current period's taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets are expected to be recovered or liabilities are settled. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not recognised if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. 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. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. (h) Goods and services tax (GST) Revenues, expenses and purchased assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (i) Cash and cash equivalents Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of three months or less held at call with financial institutions, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. (j) Property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Office furniture and equipment Plant and equipment Motor vehicles 5 - 8 years 3 - 5 years 4 - 5 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. (i) Impairment The carrying values of plant and equipment are reviewed for impairment at each balance date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment is based on the fair value less costs of disposal. An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in the statement of profit or loss as impairment expenses. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -29- Brightstar Resources Limited NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (ii) Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (k) Exploration and evaluation Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met: (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (k) Exploration and evaluation (continued) (b) exploration and evaluation activities in the area of interest have not at the balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. (l) Mine development expenditure Mine development expenditure represents the accumulation of all exploration and evaluation expenditure incurred in respect of areas of interest in which a decision to mine has been made. Plant construction and commissioning costs are included as mine development expenditure until the commissioning phase is completed. Once commission phase is completed and production commences, all assets under mine development expenditure is transferred to mine property and plant. As at the date of the financial report, there are no mine development expenditure recognised by the Group. (m) Mine property and plant Once mine construction is completed, assets from mine development expenditure are transferred to mine property and plant (which is a sub category in property, plant and equipment). Mine property and plant are stated at cost, less accumulated depreciation and accumulated losses. When further development expenditure is incurred in respect of mine property after the commencement of production, such expenditure is carried forward as part of mine development expenditure only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Where mine property and plant is in production, amortisation of mine property and plant is provided on a unit of production basis, which results in a write off of the cost proportional to the depletion of the proven and probable mineral reserves. In accordance with its policy, the Company reviews the estimated useful lives of its mine property and plant on an ongoing basis. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -29- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -30- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Brightstar Resources Limited Brightstar Resources Limited (ii) Derecognition and disposal are expected from its use or disposal. An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (k) Exploration and evaluation Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met: (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (k) Exploration and evaluation (continued) (b) exploration and evaluation activities in the area of interest have not at the balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. (l) Mine development expenditure Mine development expenditure represents the accumulation of all exploration and evaluation expenditure incurred in respect of areas of interest in which a decision to mine has been made. Plant construction and commissioning costs are included as mine development expenditure until the commissioning phase is completed. Once commission phase is completed and production commences, all assets under mine development expenditure is transferred to mine property and plant. As at the date of the financial report, there are no mine development expenditure recognised by the Group. (m) Mine property and plant Once mine construction is completed, assets from mine development expenditure are transferred to mine property and plant (which is a sub category in property, plant and equipment). Mine property and plant are stated at cost, less accumulated depreciation and accumulated losses. When further development expenditure is incurred in respect of mine property after the commencement of production, such expenditure is carried forward as part of mine development expenditure only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. Where mine property and plant is in production, amortisation of mine property and plant is provided on a unit of production basis, which results in a write off of the cost proportional to the depletion of the proven and probable mineral reserves. In accordance with its policy, the Company reviews the estimated useful lives of its mine property and plant on an ongoing basis. Where the Group’s mine property and plant is in care and maintenance, the Group has impaired assets to its fair value less cost of disposal and the Group amortises over a straight-line basis to account for the physical wear and tear while the asset remains idle, over an estimated remaining useful life of 5 years. The net carrying value of each area of interest is reviewed regularly and to the extent to which this value exceeds its recoverable amount, the excess is fully provided against or written off in the financial year in which this is determined. (n) Leases At the commencement date of a lease (other than leases of 12-months or less and leases of low value assets), the group recognises a lease asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. (n) Leases (continued) Lease assets Lease assets are initially recognised at cost, comprising the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date of the lease, less any lease incentives received, any initial direct costs incurred by the group, and an estimate of costs to be incurred by the group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. Subsequent to initial recognition, lease assets are measured at cost (adjusted for any remeasurement of the associated lease liability), less accumulated depreciation and any accumulated impairment loss. Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the underlying asset, consistent with the estimated consumption of the economic benefits embodied in the underlying asset. Lease liabilities Lease liabilities are initially recognised at the present value of the future lease payments (i.e., the lease payments that are unpaid at the commencement date of the lease). These lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or otherwise using the group’s incremental borrowing rate. Subsequent to initial recognition, lease liabilities are measured at the present value of the remaining lease payments (i.e., the lease payments that are unpaid at the reporting date). Interest expense on lease liabilities is recognised in profit or loss (presented as a component of finance costs). Lease liabilities are remeasured to reflect changes to lease terms, changes to lease payments and any lease modifications not accounted for as separate leases. Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when incurred. Leases of 12-months or less and leases of low value assets Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease asset and a lease liability has not been recognised) are recognised as an expense on a straight-line basis over the lease term. (o) Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable, and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -31- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (p) Borrowing costs Borrowing costs include interest expense calculated using the effective interest method, finance charges in respect of lease arrangements, and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Borrowing costs are expensed as incurred, except for borrowing costs incurred as part of the cost of the construction of a qualifying asset, in which case the costs are capitalised until the asset is ready for its intended use or sale. (q) Financial Instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Company commits itself to either the purchase or sale of the assets (i.e. trade date accounting is adopted). Financial assets and liabilities are initially measured at their fair value. Classification and subsequent measurement Financial liabilities Financial instruments are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition. Financial assets Financial assets are subsequently measured at fair value through profit or loss. With respect to trade and other receivables, these are recognised at the consideration that is unconditional which is considered to be fair value. The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables. The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised. Derecognition Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position. Derecognition of financial liabilities A liability is derecognised when it is extinguished (i.e., when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Derecognition of financial assets A financial asset is derecognised when the holder’s contractual rights to its cash flows expire, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All the following criteria need to be satisfied for derecognition of financial assets: - - - the right to receive cash flows from the asset has expired or been transferred; all risk and rewards of ownership of the asset have been substantially transferred; and the Company no longer controls the asset (i.e., the Company has no practical ability to make a unilateral decision to sell the asset to a third party). Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -31- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -32- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (p) Borrowing costs (r) Provisions – Employee benefits Borrowing costs include interest expense calculated using the effective interest method, finance charges in respect of (i) Wages, Salaries and Annual Leave lease arrangements, and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Borrowing costs are expensed as incurred, except for borrowing costs incurred as part of the cost of the construction of a qualifying asset, in which case the costs are capitalised until the asset is ready for its intended use or sale. (q) Financial Instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions to the instrument. For financial assets, this is the date that the Company commits itself to either the purchase or sale of the assets (i.e. trade date accounting is adopted). Financial assets and liabilities are initially measured at their fair value. Classification and subsequent measurement Financial liabilities Financial instruments are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition. Financial assets Financial assets are subsequently measured at fair value through profit or loss. With respect to trade and other receivables, these are recognised at the consideration that is unconditional which is considered to be fair value. The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables. Derecognition of financial position. Derecognition of financial liabilities A liability is derecognised when it is extinguished (i.e., when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Derecognition of financial assets A financial asset is derecognised when the holder’s contractual rights to its cash flows expire, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All the following criteria need to be satisfied for derecognition of financial assets: the right to receive cash flows from the asset has expired or been transferred; all risk and rewards of ownership of the asset have been substantially transferred; and - - - the Company no longer controls the asset (i.e., the Company has no practical ability to make a unilateral decision to sell the asset to a third party). Liabilities for wages and salaries, including non-monetary benefits and annual leave are recognised in respect of employees’ services up to the reporting date. They are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long Service Leave The liability for long service leave is recognised and measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting. Consideration is given to expected future wage and salary levels, experience of employee of departures, and period of service. (s) Provision for restoration and rehabilitation A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas. The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each balance date. The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner unless they are not expected to be recovered over the course of the Groups operation where they are recognised in the Statement of Profit or Loss. The unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset. The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option on initial classification and is irrevocable until the financial asset is derecognised. (t) Share Capital Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (u) Earnings per share Basic earnings per share (‘EPS’) is calculated as net profit or loss attributable to members of the Company for the reporting period, after excluding any costs for servicing equity (other than ordinary shares and converting preference shares classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of the Company, adjusted for any bonus element. Diluted earnings is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary share and the effect on revenues and expenses of conversion, by the weighted average number of ordinary shares and potential dilutive ordinary shares, adjusted for any bonus element. (v) Other revenue and other income Interest revenue is measured in accordance with the effective interest method. Dividend and other distribution revenue is recognised when the right to receive a dividend or other distribution has been established. Dividends and other distributions received from associates and joint ventures are accounted for in accordance with the equity method. All revenue is measured net of the amount of goods and services tax (GST). Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -33- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (w) Government grants The Group recognises stimulus package from the Australian Taxation Office (“ATO”) as a government grant when there is reasonable assurance that the entity will comply with the conditions attached to them, and the grant will be received. The amount is recognised as other income in profit or loss. (x) Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell. These assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than continuing use. The condition is regarded as met only when the sale is highly probably, the asset (or disposal group) is available for immediate sale in its present condition and management is committed to the sale within one year from the date of classification. NOTE 2: PROFIT BEFORE INCOME TAX EXPENSE (a) Other income Sale of sundry product on mine plant Bank interest Shared service income (Note 22) Gain/(Loss) from sale of other financial assets (Note 8) Gain from sale of non-current assets Gain from sale of exploration assets (1) Debt forgiven (2) Creditor Written-Off Dividends Government grant Other Consolidated 2021 $ 2020 $ - 419 96,065 (1,361,246) 7,912 5,872,106 57,252,627 37,500 105,867 50,000 (784) 127,610 590 183,916 590 2,000 - - - - 50,000 633 62,060,466 364,749 (1) Divestment of Ben Hur Project was announced completed on 2 September 2020. The Group received $9,750,000 in Regis Resources Limited shares and $250,000 in cash consideration. A $5,872,106 gain on sale was recognised as other income in the current period. Consideration Fair value of assets held for sale Fair value of liabilities held for sale Net gain from sale of exploration assets $ 10,000,000 (5,365,694) 1,237,800 5,872,106 (2) During the period, $57,252,627 of debt that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”)) was cancelled upon completion of Debit and Equity Compromise Agreement (“DECA”) on 18 November 2020. Refer to Note 15 Borrowings for further information. Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -33- NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (w) Government grants The Group recognises stimulus package from the Australian Taxation Office (“ATO”) as a government grant when there is reasonable assurance that the entity will comply with the conditions attached to them, and the grant will be received. The amount is recognised as other income in profit or loss. (x) Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell. These assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than continuing use. The condition is regarded as met only when the sale is highly probably, the asset (or disposal group) is available for immediate sale in its present condition and management is committed to the sale within one year from the date of classification. -34- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 2: PROFIT BEFORE INCOME TAX EXPENSE (Continued) (b) Mine site expenses Mine site expenditure under care and maintenance (c) Depreciation and amortisation expense Mine property and plant Property, plant and equipment Right-of-use assets Consolidated 2021 $ 2020 $ (d) Impairment expense Impairment of deferred exploration expenditure Alpha Mine Impairment on relinquished tenements (e) Finance costs Interest expenses Unwind of discount – financial liability (refer to Note 10) (f) Share-based payments are included within: Administration expenses (refer to Note 18) Employee benefits expense (refer to Note 18) Consulting expenses (refer to Note 19) (g) Employee benefits expense: Wages and salaries Superannuation Share-based payment expense (refer to Note 18) Other employment related expenses NOTE 2: PROFIT BEFORE INCOME TAX EXPENSE (a) Other income Sale of sundry product on mine plant Bank interest Shared service income (Note 22) Gain/(Loss) from sale of other financial assets (Note 8) Gain from sale of non-current assets Gain from sale of exploration assets (1) Debt forgiven (2) Creditor Written-Off Dividends Government grant Other 127,610 590 183,916 590 2,000 - - - - 50,000 633 - 419 96,065 (1,361,246) 7,912 5,872,106 57,252,627 37,500 105,867 50,000 (784) $ 10,000,000 (5,365,694) 1,237,800 5,872,106 (1) Divestment of Ben Hur Project was announced completed on 2 September 2020. The Group received $9,750,000 in Regis Resources Limited shares and $250,000 in cash consideration. A $5,872,106 gain on sale was recognised as other income in the current period. 62,060,466 364,749 Consideration Fair value of assets held for sale Fair value of liabilities held for sale Net gain from sale of exploration assets (2) During the period, $57,252,627 of debt that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”)) was cancelled upon completion of Debit and Equity Compromise Agreement (“DECA”) on 18 November 2020. Refer to Note 15 Borrowings for further information. Consolidated 2021 $ 2020 $ 332,002 554,457 358,984 6,506 16,966 382,456 358,984 3,347 17,505 379,836 32,084 - 32,084 19,810 1,056,002 1,075,812 1,240,463 3,035,368 382,520 - 1,622,983 3,035,368 59,850 300,000 427,066 786,916 299,028 25,114 300,000 78,499 702,641 - - 50,575 50,575 259,600 24,702 - 50,038 334,340 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -35- NOTE 3: INCOME TAX Brightstar Resources Limited Consolidated 2021 $ 2020 $ (a) Income tax recognised in statement of income Accounting loss before tax from continuing operations 60,551,860 (6,617,894) Income tax expense/(benefit) calculated at an income tax rate of % (2020:27.5%) 18,165,558 (1,819,921) Non-deductible expenses: Non-assessable debt forgiveness income Franking credits converted to losses Utilisation of previously unrecognised losses 468,950 63,342 (17,202,038) (31,760) (1,400,710) - - - Unused tax losses and temporary differences not recognised Income tax expense reported in the statement of comprehensive income - - 1,756,579 - (b) Recognised deferred tax balances 30% (2020: 27.5%) Deferred tax assets comprise: Losses offset against future taxable income – revenue 5,952,417 5,446,545 Provision for doubtful debts Mining assets (plant and equipment) Provision for rehabilitation Other business related costs Other provisions Accrued expenses Deferred tax losses not brought to account Deferred tax liabilities comprise: Prepayments Accrued income Exploration expenditure capitalised 44,041 422,207 906,376 16,130 33,822 29,188 (4,714,184) 2,689,997 - 299,836 1,902,228 - 28,481 34,394 5,446,545 2,552,025 (3,803) - - (102) (2,686,194) (2,551,923) (2,689,997) (2,552,025) The tax rate used in the above reconciliation is the corporate tax rate of 30% (2020: 27.5%) payable by Australian corporate entities on taxable profits under Australian tax law. At 30 June 2021, legislation to reduce the small business tax rate from 27.5% for 2020 financial year to 26% for the 2021 financial year has been enacted. The company does not currently qualify as a Small Business Entity and as such has recognised future deferred tax assets at 30%. The Company has conducted a preliminary review in respect of losses incurred prior to 4 November 2011 and has determined that they are likely able to be used by meeting the Same Business Test (SBT) and Continuity of Ownership Test (COT). Losses incurred between 4 November 2011 and the date of the effectuation of the DECA are able to be utilised under the COT. (c) Unrecognised deferred tax assets The Group has unrecognised deferred assets compromising relating to revenue tax losses of $19,841,391 (2020: $23,232,925), capital tax losses of $287,945 (2020: $7,945) and other deferred tax assets arising from temporary differences of $4,714,184 (2020: $5,446,545). Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -35- NOTE 3: INCOME TAX (a) Income tax recognised in statement of income Accounting loss before tax from continuing operations 60,551,860 (6,617,894) Income tax expense/(benefit) calculated at an income tax rate of % (2020:27.5%) 18,165,558 (1,819,921) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -36- NOTE 4: SEGMENT REPORTING The group has identified its operating segments based on the internal reports that are reviewed and used by the board of directors in assessing performance and determining the allocation of resources. Reportable segments disclosed are based on aggregating operating segments, where the segments have similar characteristics. The group’s sole activity is mineral exploration and resource development wholly within Australia; therefore the Group considers that it has one reportable segment being mineral exploration with the state of Western Australia. The reportable segment is represented by the primary statements forming these financial statements. 468,950 63,342 NOTE 5: EARNINGS PER SHARE Basic and diluted earnings / (loss) per share: Total basic earnings/(loss) per share Total diluted earnings/(loss) per share Basic and diluted earnings / (loss) per share The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings / (loss) per share is as follows: Earnings / (Loss) Consolidated 2021 2020 Cents per share Cents per share 10.25 9.89 (0.80) (0.80) $ $ 60,551,860 (6,617,894) Weighted average number of ordinary shares for the purposes of basic loss per share 590,814,907 829,475,335 Adjusted weighted average number of ordinary shares for the purposes of diluted loss per share 612,302,578 829,475,335 NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and on hand Consolidated 2021 $ 2020 $ 985,036 50,032 985,036 50,032 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. At 30 June 2021, the Group did not have any undrawn committed borrowing facilities. (i) Reconciliation to Cash Flow Statement Cash and cash equivalents as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows: Cash and cash equivalents Consolidated 2021 $ 2020 $ 985,036 50,032 Unused tax losses and temporary differences not recognised 1,756,579 Income tax expense reported in the statement of comprehensive income (b) Recognised deferred tax balances 30% (2020: 27.5%) Deferred tax assets comprise: Losses offset against future taxable income – revenue 5,952,417 5,446,545 Non-deductible expenses: Non-assessable debt forgiveness income Franking credits converted to losses Utilisation of previously unrecognised losses Provision for doubtful debts Mining assets (plant and equipment) Provision for rehabilitation Other business related costs Other provisions Accrued expenses Deferred tax losses not brought to account Deferred tax liabilities comprise: Prepayments Accrued income Exploration expenditure capitalised Consolidated 2021 $ 2020 $ (17,202,038) (31,760) (1,400,710) - - 44,041 422,207 906,376 16,130 33,822 29,188 (4,714,184) 2,689,997 - - - - - - 299,836 1,902,228 28,481 34,394 5,446,545 2,552,025 (3,803) - - (102) (2,686,194) (2,551,923) (2,689,997) (2,552,025) The tax rate used in the above reconciliation is the corporate tax rate of 30% (2020: 27.5%) payable by Australian corporate entities on taxable profits under Australian tax law. At 30 June 2021, legislation to reduce the small business tax rate from 27.5% for 2020 financial year to 26% for the 2021 financial year has been enacted. The company does not currently qualify as a Small Business Entity and as such has recognised future deferred tax assets at 30%. The Company has conducted a preliminary review in respect of losses incurred prior to 4 November 2011 and has determined that they are likely able to be used by meeting the Same Business Test (SBT) and Continuity of Ownership Test (COT). Losses incurred between 4 November 2011 and the date of the effectuation of the DECA are able to be utilised under the COT. (c) Unrecognised deferred tax assets The Group has unrecognised deferred assets compromising relating to revenue tax losses of $19,841,391 (2020: $23,232,925), capital tax losses of $287,945 (2020: $7,945) and other deferred tax assets arising from temporary differences of $4,714,184 (2020: $5,446,545). NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 6: CASH AND CASH EQUIVALENTS (Continued) -37- (ii) Reconciliation of loss for the year to net cash flows used in operating activities Brightstar Resources Limited Profit/(loss) for the year: Depreciation Impairment expenses Exploration expenditure written off Gain / (Loss) from sale of other financial assets Gain / (Loss) from sale of exploration assets (Gain) / Loss from sale of non-current asset Debt forgiven Creditor written-off Unwind on the deferred DECA payment recorded at amortised cost Interest on lease liabilities Other non-cash balance Equity payment to suppliers and key management personnel (Increase)/decrease in assets: Current receivables Other current assets Increase/(decrease) in liabilities: Current payables Current provisions Provision for rehabilitation Net cash used in operating activities Consolidated 2021 $ 2020 $ 60,551,860 (6,617,894) 382,456 32,084 - 1,361,246 (5,872,106) 379,836 1,075,812 1,079,134 - - (7,912) (2,000) (35,436,134) (37,500) 382,520 1,969 35,531 786,916 35,438 (6,693) - - - 2,075 - 50,575 22,272 3,070 (20,021,508) 3,136,883 1,491 (3,033,794) 25,839 341,271 (844,136) (503,127) (iii) Non-cash investing and financing activities The Group issued 4,000,000 fully paid ordinary shares at $0.05 per share to Mining Equities Pty Ltd as consideration for the acquisition of tenement E38/3438. This amount has been capitalised into deferred exploration and evaluation expenditure at 30 June 2021. Refer to Note 12 for further details. The Group also issued 30,000,000 and 3,150,000 fully paid ordinary shares to Mr Hobba and Mr Hunt respectively. These shares were issued for $NIL consideration in lieu of remuneration and reimbursements outstanding to Mr Hobba ($300,000), and in lieu of a portion of Mr Hunt’s remuneration over the next 12 months. These amounts were issued in November 2020 upon receiving approval for their issue at the AGM. Refer to Note 18 for further details. NOTE 7: TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Other receivables Consolidated 2021 $ 2020 $ - 179 179 35,224 393 35,617 Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 8: OTHER FINANCIAL ASSETS -38- Deposit for credit cards Consolidated 2021 $ 2020 $ 25,000 25,000 25,000 25,000 (7,912) (2,000) Reconciliation of the movement in equity instruments at fair value through profit or loss is as follows: During the year, the Group received 1,823,332 fully paid ordinary shares in Regis Resources Limited (“Regis) on 3 September 2020 as consideration for sale of the Ben Hur project. All the Regis shares had been either transferred to SRHKL in accordance with the DECA agreed (refer to Note 15) or sold on market before 30 June 2021. A loss of $1,361,246 was realised on the sale of Regis shares. Balance at the beginning of the year Receipt of shares from Regis Sold on market Transferred to SRHKL in accordance with the DECA Gain/(loss) recognised on sale of financial instruments NOTE 9: PROPERTY, PLANT AND EQUIPMENT Consolidated 2021 $ 2020 $ 9,750,000 (4,628,618) (3,760,136) (1,361,246) - - - - - - Consolidated Office furniture and equipment Plant and equipment Motor vehicles Mine property and plant1 $ $ $ $ Total $ Year ended 30 June 2021 At 1 July 2020, net of accumulated depreciation and impairment Additions Disposal / write-offs 518 1,729 755 717,967 720,969 29,150 (88) - - 70,359 - - - 99,508 (88) Depreciation charge for the year (2,702) (1,090) (2,715) (358,984) (365,491) At 30 June 2021, net of accumulated depreciation and impairment 26,877 639 68,399 358,983 454,899 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 6: CASH AND CASH EQUIVALENTS (Continued) -37- (ii) Reconciliation of loss for the year to net cash flows used in operating activities Profit/(loss) for the year: Depreciation Impairment expenses Exploration expenditure written off Gain / (Loss) from sale of other financial assets Gain / (Loss) from sale of exploration assets (Gain) / Loss from sale of non-current asset Debt forgiven Creditor written-off Interest on lease liabilities Other non-cash balance (Increase)/decrease in assets: Current receivables Other current assets Increase/(decrease) in liabilities: Current payables Current provisions Provision for rehabilitation Net cash used in operating activities Unwind on the deferred DECA payment recorded at amortised cost Equity payment to suppliers and key management personnel Consolidated 2021 $ 2020 $ 60,551,860 (6,617,894) 382,456 32,084 - 1,361,246 (5,872,106) (35,436,134) (37,500) 382,520 1,969 35,531 786,916 35,438 (6,693) 379,836 1,075,812 1,079,134 - - - - - - 2,075 50,575 22,272 3,070 (20,021,508) 3,136,883 1,491 (3,033,794) 25,839 341,271 (844,136) (503,127) (iii) Non-cash investing and financing activities The Group issued 4,000,000 fully paid ordinary shares at $0.05 per share to Mining Equities Pty Ltd as consideration for the acquisition of tenement E38/3438. This amount has been capitalised into deferred exploration and evaluation expenditure at 30 June 2021. Refer to Note 12 for further details. The Group also issued 30,000,000 and 3,150,000 fully paid ordinary shares to Mr Hobba and Mr Hunt respectively. These shares were issued for $NIL consideration in lieu of remuneration and reimbursements outstanding to Mr Hobba ($300,000), and in lieu of a portion of Mr Hunt’s remuneration over the next 12 months. These amounts were issued in November 2020 upon receiving approval for their issue at the AGM. Refer to Note 18 for further details. NOTE 7: TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Other receivables Consolidated 2021 $ 2020 $ - 179 179 35,224 393 35,617 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -39- NOTE 9: PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Brightstar Resources Limited At 1 July 2020 Cost Accumulated depreciation and impairment 67,101 1,161,949 207,197 39,139,173 40,662,208 (66,583) (1,160,220) (206,442) (38,421,206) (39,854,451) Net carrying amount 518 1,729 755 717,967 720,969 At 30 June 2021 Cost Accumulated depreciation and impairment Net carrying amount 95,560 1,161,949 224,228 39,139,173 40,620,910 (68,683) (1,161,310) (155,829) (38,780,190) (40,166,012) 26,877 639 68,399 358,983 454,898 (1) Mine Property and Plant: Since processing of mined ore ceased in January 2012 and toll treatment ceased in August 2012 and pending its reinstatement, an assessment of the recoverable value of non-current assets in compliance with AASB 136 was carried out in accordance with assumptions disclosed in Note 1(f) “Recoverability of mine property and plant” and impairments were recognised. The Board considered and approved the value of mine property and plant as at 30 June 2021 of $358,983 (2020: $717,967) and the total impairment value recognised of $14,941,733 remains unchanged. The Board recognise that the previously impairment value of $14,941,733 can be written back in future periods. NOTE 10: ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE On 25 March 2020, the Group announced the proposed of selling its northern tenements. These operations, which were expected to be sold within 12 months, had been classified as held for sale and presented separately in the statement of financial position in the previous report for the year ended 30 June 2020. Following the completion of divestment announced on 2 September 2020, the balance of the assets and liabilities relating to the operations classified as held for sale were either transferred to Profit & Loss or reclassified to their respective classification. Tenements held for sale (1) Total assets classified as held for sale Provision for rehabilitation (1) Total liabilities associated with assets classified as held for sale Net assets of disposal group Consolidated 2021 $ 2020 $ - - - - - 11,172,169 11,172,169 3,733,200 3,733,200 7,438,969 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -39- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -40- NOTE 9: PROPERTY, PLANT AND EQUIPMENT (CONTINUED) NOTE 10: ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (CONTINUED) Brightstar Resources Limited Brightstar Resources Limited At 1 July 2020 Cost Accumulated depreciation and impairment 67,101 1,161,949 207,197 39,139,173 40,662,208 (66,583) (1,160,220) (206,442) (38,421,206) (39,854,451) Net carrying amount 518 1,729 755 717,967 720,969 At 30 June 2021 Cost impairment Net carrying amount Accumulated depreciation and (68,683) (1,161,310) (155,829) (38,780,190) (40,166,012) 95,560 1,161,949 224,228 39,139,173 40,620,910 26,877 639 68,399 358,983 454,898 (1) Mine Property and Plant: Since processing of mined ore ceased in January 2012 and toll treatment ceased in August 2012 and pending its reinstatement, an assessment of the recoverable value of non-current assets in compliance with AASB 136 was carried out in accordance with assumptions disclosed in Note 1(f) “Recoverability of mine property and plant” and impairments were recognised. The Board considered and approved the value of mine property and plant as at 30 June 2021 of $358,983 (2020: $717,967) and the total impairment value recognised of $14,941,733 remains unchanged. The Board recognise that the previously impairment value of $14,941,733 can be written back in future periods. NOTE 10: ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE On 25 March 2020, the Group announced the proposed of selling its northern tenements. These operations, which were expected to be sold within 12 months, had been classified as held for sale and presented separately in the statement of financial position in the previous report for the year ended 30 June 2020. Following the completion of divestment announced on 2 September 2020, the balance of the assets and liabilities relating to the operations classified as held for sale were either transferred to Profit & Loss or reclassified to their respective classification. Tenements held for sale (1) Total assets classified as held for sale Provision for rehabilitation (1) Total liabilities associated with assets classified as held for sale Net assets of disposal group Consolidated 2021 $ 2020 $ - - - - - 11,172,169 11,172,169 3,733,200 3,733,200 7,438,969 (1) Assets and liabilities that were classified as held for sale at 30 June 2020 comprised the northern tenements (see below) and the associated amount recognised as their cost for rehabilitation: M38/346 M38/339 M38/917 M38/918 M38/160 M38/1241 E38/2894 E38/2452 E38/3198 E38/3199 E38/3234 L38/206 P38/4114 P38/4115 P38/4108 P38/4364 Only tenements E38/3199, E38/3234, M38/1241, M38/160, M38/339, P38/4114, P38/4115, P38/4364 and L38/206 were sold in the current reporting period and the remaining northern tenements retained by the Group have been reclassified from held for sale to their respective classification. The divestment of Ben Hur Project was announced completed on 2 September 2020. The Group received $9,750,000 in Regis Resources Limited shares (1,823,332 fully paid ordinary shares) and $250,000 in cash consideration. A $5,872,106 gain on sale was recognised as other income in the current period. Consideration (cash and Regis shares) Fair value of assets held for sale Fair value of liabilities held for sale Net gain from sale of exploration assets Reconciliation of movement in assets and liabilities classified as held for sale: Assets classified as held for sale Balance at beginning of period Additions Sale of Ben Hur Project Transferred back to evaluation and exploration expenditure Balance at end of financial year Liabilities classified as held for sale Balance at beginning of period Additions Sale of Ben Hur Project Transferred back to evaluation and exploration expenditure Balance at end of financial year NOTE 11: RIGHT-OF-USE ASSETS Cost Accumulated depreciation Net carrying amount $ 10,000,000 (5,365,694) 1,237,800 5,872,106 Consolidated 2021 $ 2020 $ 11,172,169 - 12,537 11,172,169 (5,365,694) (5,819,012) - - - 11,172,169 (3,733,200) - - (3,733,200) 1,237,800 2,495,400 - - - (3,733,200) Consolidated 2021 $ 2020 $ 48,044 (34,471) 13,573 49,523 (17,505) 32,018 -41- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 11: RIGHT-OF-USE ASSETS (CONTINUED) Reconciliation of movement in Right-of-Use Assets Year ended 30 June 2021 At 1 July 2020, net of accumulated depreciation Discount received Depreciation charge for the year Net carrying amount Brightstar Resources Limited Office premises $ 32,018 (1,479) (16,965) 13,574 Total $ 32,018 (1,479) (16,966) 13,573 (1) The Group has one lease relating to its office premises in Perth. The right of use assets do not have an option to purchase at the end of the term. NOTE 12: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE Costs carried forward in respect of: Exploration and evaluation expenditure Balance at beginning of year Expenditure incurred Expenditure written off Impairment of Alpha and Beta mines (2) Impairment of relinquished tenements Tenements transferred from/(to) held-for-sale (3) Acquisition of tenement E38/3438 (4) Balance at end of financial year Consolidated 2021 $ 2020 $ 2,686,636 14,966,010 621,887 (32,220) (32,084) 735,739 (767,132) (19,810) - (1,056,002) 5,819,012 (11,172,169) 250,000 - 9,313,231 2,686,636 (1) The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is dependent upon the successful development and commercial exploitation or sale of the respective areas. (2) Mining in Beta and Alpha reached its designed pit depth in prior periods and evaluation is currently underway to determine the future viability of these areas of interest. Notwithstanding, the balance of expenditure for Beta and Alpha mines has been treated as impaired until recommencement of mining in these tenements. (3) Capitalised expenditure relating to retained North tenements were transferred from/(to) assets from held-for-sale. (4) As announced on 8 February 2021, the Group acquired a prospective exploration licence within Western Australia, E38/3438, from Mining Equities Pty Ltd. Pursuant to the acquisition agreement, Mining Equities Pty Ltd received: - - - $50,000 in unlisted options over the Group, exercisable at 20 cents with a term of 3 years; and A 1% net smelter royalty with respect of the tenement. $200,000 in fully paid ordinary shares of the Group priced at the 5-day VWAP prior to their issue; -41- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 11: RIGHT-OF-USE ASSETS (CONTINUED) Reconciliation of movement in Right-of-Use Assets Year ended 30 June 2021 At 1 July 2020, net of accumulated depreciation Discount received Depreciation charge for the year Net carrying amount Costs carried forward in respect of: Exploration and evaluation expenditure Balance at beginning of year Expenditure incurred Expenditure written off Impairment of Alpha and Beta mines (2) Impairment of relinquished tenements Tenements transferred from/(to) held-for-sale (3) Acquisition of tenement E38/3438 (4) Balance at end of financial year Office premises $ 32,018 (1,479) (16,965) 13,574 Total $ 32,018 (1,479) (16,966) 13,573 Consolidated 2021 $ 2020 $ 2,686,636 14,966,010 621,887 (32,220) (32,084) 735,739 (767,132) (19,810) - (1,056,002) 5,819,012 (11,172,169) 250,000 - 9,313,231 2,686,636 (1) The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is dependent upon the successful development and commercial exploitation or sale of the respective areas. (2) Mining in Beta and Alpha reached its designed pit depth in prior periods and evaluation is currently underway to determine the future viability of these areas of interest. Notwithstanding, the balance of expenditure for Beta and Alpha mines has been treated as impaired until recommencement of mining in these tenements. (3) Capitalised expenditure relating to retained North tenements were transferred from/(to) assets from held-for-sale. (4) As announced on 8 February 2021, the Group acquired a prospective exploration licence within Western Australia, E38/3438, from Mining Equities Pty Ltd. Pursuant to the acquisition agreement, Mining Equities Pty Ltd received: - - - $200,000 in fully paid ordinary shares of the Group priced at the 5-day VWAP prior to their issue; $50,000 in unlisted options over the Group, exercisable at 20 cents with a term of 3 years; and A 1% net smelter royalty with respect of the tenement. Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -42- NOTE 13: TRADE AND OTHER PAYABLES (CURRENT) Trade payables (1) Other payables and accruals (2) Interest accrual – SRL and SRHKL (refer Note 22) Consolidated 2021 $ 178,001 784,967 - 962,968 2020 $ 206,390 839,052 20,088,679 21,134,121 (1) The Group has one lease relating to its office premises in Perth. The right of use assets do not have an option to purchase at the end of the term. has been fully paid by 31 July 2021. (2) Other payables include (1) Trade payables are non-interest bearing and are normally settled on 30-day terms. Balance disclosed under this item - $550,347 interest accrued on a related party loan (Great Cortex International Ltd) (2020: $491,697) (refer Note 22). - $135,309 outstanding and payable to Directors, Executives, and employees who mutually agreed with the Group to defer the payment of a portion of their remuneration, which will be settled in either cash or equity at the Company’s discretion NOTE 12: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE NOTE 14: LEASE LIABILITIES Current Non-current 2021 $ 2020 $ 15,639 17,618 - 15,756 15,639 33,374 The Group does not face a significant liquidity risk with regards to its lease liabilities. Lease liabilities are monitored within the Group’s treasury function. The lease liabilities relate to the Group’s office premise lease and is unsecured. NOTE 15: BORROWINGS Current Loan from related party (1) Convertible loan from related party (1) Loan from related party (2) Consolidated 2021 $ 2020 $ - - 630,000 630,000 34,936,134 500,000 630,000 36,066,134 (1) During the period, $57,252,627 debt (being opening 1 July 2020: $55,524,813, interest: $1,179,844, additional payments made on behalf of Brightstar: $547,970, closing at 18 November 2020: $57,252,267), which was accruing interest at 8.53% per annum, that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”)) was cancelled upon completion of DECA on 18 November 2020. Both SRL and SRHKL are related parties by virtue of Mr. Yongji Duan, Non-Executive Chairman of the Company, being a director of SRL and SRHKL. (2) Great Cortex International Ltd was a related party by virtual of Mr. Yongji Duan, Non-executive Chairman of the Company, being a director of Great Cortex International Ltd (Mr. Duan ceased to be a Director of Great Cortex before 30 June 2021). This related party provided a loan of $630,000 which accrues interest at 9.31% per annum to the Company on 15 February 2012. Accrued interest, totalling $550,347, is included within trade and other payables. Subsequent to year end, the Company has signed a settlement deed with Great Cortex to extend the repayment of the principal amount to 18 November 2023 and waive all accrued interest owing. Refer to Note 24 for further details. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 16: PROVISIONS -43- Brightstar Resources Limited At 1 July 2020 Current Non-current At 30 June 2021 Current Non-current Rehabilitation Employee benefits $ $ Total $ - 3,583,061 3,583,061 - 3,044,667 3,044,667 111,249 - 111,249 112,740 - 112,740 111,249 3,583,061 3,694,310 112,740 3,044,667 3,157,407 The provision for rehabilitation represents the present value of estimated costs of site and pit rehabilitation based upon costs of rehabilitation expected to be incurred at the date the rehabilitation is required and the area of currently disturbed ground subject to rehabilitation as at balance date. The Group recently completed an annual review and determined that it appropriate to reduce the current provision level based on two major findings: (1) some of the costs being accounted no longer exist and/or were rehabilitated in prior periods, and (2) unit rate prices and domain sizes used in previous calculation are overestimated. Adjustment of the rehabilitation provision has been recognised in the Profit & Loss for the year ended 30 June 2021. Reconciliation of movement in provision for rehabilitation: Balance at beginning of financial year Addition Utilised Transferred from/(to) Liabilities held for sale (Note 10) Adjustment based on reassessment Balance at end of financial year NOTE 17: OTHER FINANCIAL LIABILITIES Amounts payable under share buy-back (1) Total other financial liabilities Consolidated 2021 $ 3,583,061 - - 2020 $ 6,974,990 341,271 - 2,495,400 (3,733,200) (3,033,794) - 3,044,667 3,583,061 Consolidated 2021 $ 3,715,060 3,715,060 2020 $ - - (1) During the year, upon completion of DECA on 18 November 2020, the buy-back consideration for shares bought back included a deferred payment of $5,400,000 to be paid in cash or shares under the Company’s election by 10 August 2023. As at this date, and 30 June 2021, the remaining buy-back consideration represents a financial instrument measured at fair value on day one, then subsequently at amortised cost. At initial recognition, with no influence over whether shareholders would approve the issue of shares, the Group valued the liability portion at $3,332,530 (measured first) at net present value, with the residual $2,067,460 being attributed to the equity component. The remaining liability is initially accounted for at fair value and subsequently measured at amortised cost. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 16: PROVISIONS -43- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 17: OTHER FINANCIAL LIABILITIES (CONTINUED) -44- Brightstar Resources Limited Brightstar Resources Limited At 1 July 2020 Current Non-current At 30 June 2021 Current Non-current Rehabilitation Employee benefits $ $ Total $ 3,583,061 3,583,061 - - 3,044,667 3,044,667 111,249 - 111,249 112,740 - 112,740 111,249 3,583,061 3,694,310 112,740 3,044,667 3,157,407 The provision for rehabilitation represents the present value of estimated costs of site and pit rehabilitation based upon costs of rehabilitation expected to be incurred at the date the rehabilitation is required and the area of currently disturbed ground subject to rehabilitation as at balance date. The Group recently completed an annual review and determined that it appropriate to reduce the current provision level based on two major findings: (1) some of the costs being accounted no longer exist and/or were rehabilitated in prior periods, and (2) unit rate prices and domain sizes used in previous calculation are overestimated. Adjustment of the rehabilitation provision has been recognised in the Profit & Loss for the year ended 30 June 2021. Reconciliation of movement in provision for rehabilitation: Transferred from/(to) Liabilities held for sale (Note 10) 2,495,400 (3,733,200) Balance at beginning of financial year Addition Utilised Adjustment based on reassessment Balance at end of financial year NOTE 17: OTHER FINANCIAL LIABILITIES Amounts payable under share buy-back (1) Total other financial liabilities Consolidated 2021 $ 3,583,061 - - (3,033,794) 2020 $ 6,974,990 341,271 - - 3,044,667 3,583,061 Consolidated 2020 $ 2021 $ 3,715,060 3,715,060 - - (1) During the year, upon completion of DECA on 18 November 2020, the buy-back consideration for shares bought back included a deferred payment of $5,400,000 to be paid in cash or shares under the Company’s election by 10 August 2023. As at this date, and 30 June 2021, the remaining buy-back consideration represents a financial instrument measured at fair value on day one, then subsequently at amortised cost. At initial recognition, with no influence over whether shareholders would approve the issue of shares, the Group valued the liability portion at $3,332,530 (measured first) at net present value, with the residual $2,067,460 being attributed to the equity component. The remaining liability is initially accounted for at fair value and subsequently measured at amortised cost. The periodic unwinding of the discount, at 19.37%, will be recognised in the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income as finance costs. For the year ended 30 June 2021, a finance loss of $382,520 has been recognised. NOTE 18: ISSUED CAPITAL Ordinary shares issued and fully paid Consolidated 2021 $ 2020 $ 37,857,909 51,541,309 Consolidated 2021 Consolidated 2020 No. $ No. $ Movement in ordinary shares on issue Balance at beginning of financial year 836,053,708 51,541,309 811,646,126 51,467,992 Share issues (1)(2)(3) 37,150,000 559,850 24,407,582 77,161 Shares repurchase and cancellation (4) (433,452,944) (14,243,250) Costs associated with issue of shares - - - - - (3,844) Balance at end of financial year 439,750,764 37,857,909 836,053,708 51,541,309 (1) On 18 November 2020, the Company issued 30,000,000 ordinary fully paid shares to a director in lieu of remuneration and reimbursements for carrying out their duties as directors of the Company. The shares were issued at a deemed price of $0.0098 per share for a total value of $300,000. (2) On 18 November 2020, the Company issued 3,150,000 ordinary fully paid shares to a director in lieu of remuneration. The shares were issued at a deemed price of $0.019 per share for a total of $59,850. (3) On 12 February 2021, the Company issued 4,000,000 ordinary fully paid shares as part consideration for purchase of an exploration asset. The shares were issued at a 5-day volume weighted average price (VWAP) of $0.050 per share for a total of $200,000. (4) On 18 November 2020, upon the completion of the DECA, the Group bought back 433,452,944 fully paid ordinary shares from SRL and SRHKL at a gross cost of $11,400,000. The net fair value of the consideration which includes adjustment for the deferred consideration was $9,332,540. These shares have been subsequently cancelled. The difference between the historical capital amount relating to these shares of $14,243,250 and the fair value of the consideration, amounting to $4,910,910 has been recognised as an equity reserve. NOTE 19: RESERVES Balance at beginning of financial year Share-based payments reserve (1) Equity reserve (2) Balance at end of financial year Consolidated 2021 $ 8,846 477,066 4,910,710 5,396,622 2020 $ - 8,846 - 8,846 Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 19: RESERVES (CONTINUED) -45- (1) During the year, the Company issued 12,000,000 Options exercisable on or before 31 December 2023 to Canaccord Genuity (3 tranches of 4,000,000) for services rendered in relation to the provision of on-going capital markets strategy. The Options vested immediately. The fair value of these Options granted was calculated by using the Black Scholes Option Pricing Model by applying the following inputs. The total expense recognised for the period in respect of this issue was $274,174. Number of instruments Date of grant Expiry date Share price at grant date Volatility factor Risk free rate Expected life of instrument (years) Exercise price per instrument Valuation per instrument Total expense Tranche 1 4,000,000 Tranche 2 4,000,000 Tranche 3 4,000,000 1 Sep 2020 1 Sep 2020 1 Sep 2020 31 Dec 2023 31 Dec 2023 31 Dec 2023 $0.024 241.79% 0.27% 3 years $0.06 $0.0230 $91,936 $0.024 241.79% 0.27% 3 years $0.08 $0.0228 $91,363 $0.024 241.79% 0.27% 3 years $0.10 $0.0227 $90,875 On 8 September 2020, the Company agreed to issue 5,000,000 options exercisable on or before three years from the issue date to PCF Capital Pty Ltd for services rendered in relation to the provision of on-going capital markets strategy. The options were issued on 22 June 2021 and the fair value of these options was calculated by using the Black Scholes Option Pricing Model by applying the following inputs. The total expense recognised for the period in respect of this issue was $152,892. Number of instruments Date of grant Expiry date Share price at grant date Volatility factor Risk free rate Expected life of instrument (years) Exercise price per instrument Valuation per instrument Total expense PCF Options 5,000,000 22 June 2021 22 June 2024 $0.032 239.84% 0.28% 3 years $0.045 $0.0306 $152,892 On 12 February 2021, the Company issued 1,000,000 Options exercisable on or before 12 February 2024 as part consideration for the acquisition of an exploration licence tenement. The total expense recognised for the period in respect of this issue was $50,000. Share-based payments reserve Balance at beginning of financial year Options issued (refer above) Balance at end of financial year Consolidated 2021 $ 2020 $ 8,846 477,066 485,912 - 8,846 8,846 Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 19: RESERVES (CONTINUED) -45- (1) During the year, the Company issued 12,000,000 Options exercisable on or before 31 December 2023 to Canaccord Genuity (3 tranches of 4,000,000) for services rendered in relation to the provision of on-going capital markets strategy. The Options vested immediately. The fair value of these Options granted was calculated by using the Black Scholes Option Pricing Model by applying the following inputs. The total expense recognised for the period in respect of this issue was $274,174. On 8 September 2020, the Company agreed to issue 5,000,000 options exercisable on or before three years from the issue date to PCF Capital Pty Ltd for services rendered in relation to the provision of on-going capital markets strategy. The options were issued on 22 June 2021 and the fair value of these options was calculated by using the Black Scholes Option Pricing Model by applying the following inputs. The total expense recognised for the period in respect of this issue was $152,892. Number of instruments Date of grant Expiry date Volatility factor Risk free rate Share price at grant date Expected life of instrument (years) Exercise price per instrument Valuation per instrument Total expense Number of instruments Date of grant Expiry date Volatility factor Risk free rate Share price at grant date Expected life of instrument (years) Exercise price per instrument Valuation per instrument Total expense Share-based payments reserve Balance at beginning of financial year Options issued (refer above) Balance at end of financial year Tranche 1 4,000,000 Tranche 2 4,000,000 Tranche 3 4,000,000 1 Sep 2020 1 Sep 2020 1 Sep 2020 31 Dec 2023 31 Dec 2023 31 Dec 2023 $0.024 241.79% 0.27% 3 years $0.06 $0.0230 $91,936 $0.024 241.79% 0.27% 3 years $0.08 $0.0228 $91,363 $0.024 241.79% 0.27% 3 years $0.10 $0.0227 $90,875 PCF Options 5,000,000 22 June 2021 22 June 2024 $0.032 239.84% 0.28% 3 years $0.045 $0.0306 $152,892 Consolidated 2021 $ 2020 $ 8,846 477,066 485,912 - 8,846 8,846 On 12 February 2021, the Company issued 1,000,000 Options exercisable on or before 12 February 2024 as part consideration for the acquisition of an exploration licence tenement. The total expense recognised for the period in respect of this issue was $50,000. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -46- NOTE 19: RESERVES (continued) (2) Equity reserve Balance at beginning of financial year Ordinary shares buy-back and cancellation Balance at end of financial year Consolidated 2021 $ 2020 $ - 4,910,710 4,910,710 - - - Nature and Purpose of Reserves Share-based payments reserve This reserve is used to record the value of equity benefits provided to employees and unrelated parties for services or acquisition. Equity reserve This reserve was created to record the difference between the fair value of the buy-back consideration and the historical issue value of the buy-back shares upon completion of the DECA. NOTE 20: FINANCIAL INSTRUMENTS (a) Capital risk management The capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. (b) Categories of financial instruments Financial assets Cash and cash equivalents (Note 6) Trade and receivables (Note 7) Financial liabilities Trade and other payables (Note 13) Lease liabilities (Note 14) Borrowings (Note 15) Other financial liabilities (Note 17) (c) Market risk Consolidated 2021 $ 2020 $ 985,036 179 50,032 35,617 962,698 15,639 630,000 3,715,060 21,134,121 33,374 36,066,134 - The Group’s mining operations were under care and maintenance throughout the current year and therefore not exposed to market risk. (d) Foreign currency risk management The Group does not have any material exposure to foreign currency risk, other than its impact on the economy and commodity price generally. -47- Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 NOTE 20: FINANCIAL INSTRUMENTS (CONTINUED) (e) Credit risk management Credit risk is the risk that one party to a financial instrument will cause a financial loss for the counterparty by failing to discharge an obligation. The maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date of recognised financial assets is the carrying amount of those assets, net of any allowance for credit losses, as disclosed in consolidated statement of financial position and notes to the consolidated financial statements. The carrying amount of the Group’s financial assets represents the maximum credit exposure. The credit risk on liquid funds is limited because the counterparties are banks with a minimum credit rating of AA assigned by reputable credit rating agencies. The Group’s maximum exposure to credit risk at the reporting date was. The Group does not have any other material credit risk exposure to any single counterparty or group of counterparties under financial instruments entered into by the group. (f) Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following table details the company’s and the Group’s expected maturity for its non-derivative financial liabilities. These have been drawn up based on undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Group anticipates that the cash flow will occur in a different period. Consolidated 2021 Weighted Average Interest rate Less than 1 month 1 – 3 Months 3 months – 1 year 1 – 2 years 2 – 5 years % $ $ $ $ $ Non-interest bearing 962,968 Interest bearing loans 9.31% 630,000 (1) - - - - Lease liabilities Other financial liabilities 4.91% 19.37% 1,348 2,696 11,595 - - - - 5,400,000 (2) 1,594,316 2,696 11,595 - 5,400,000 - - - - - - 2020 Non-interest bearing 21,134,121 Interest bearing loans 8.49% 35,436,134 Lease liabilities 4.91% 1,523 56,571,778 - - 3,027 3,027 - - - 630,000 13,068 15,756 - - - 13,068 645,756 - (1) Subsequent to year end, the Company has signed a settlement deed with Great Cortex to extend the repayment of the principal amount to 18 November 2023 and waive all accrued interest (repayable on demand and included in trade and other payables classified under non-interest bearing above) owing. Refer to Note 24 for further details. (2) During the year, upon completion of DECA on 18 November 2020, the buy-back consideration for shares bought back included a deferred payment be paid in cash or shares under the Company’s election by 10 August 2023 (see Note 17 for further information). Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -47- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -48- NOTE 20: FINANCIAL INSTRUMENTS (CONTINUED) NOTE 20: FINANCIAL INSTRUMENTS (continued) Credit risk is the risk that one party to a financial instrument will cause a financial loss for the counterparty by failing to (g) Commodity price risk The Group’s mining operations were under care and maintenance throughout the current year and therefore not exposed to commodity risk. (h) Fair values Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments recognised in the financial statements. Carrying Amount Fair Value 2021 $ 2020 $ 2021 $ 2020 $ Financial Assets Cash and cash equivalents Trade and other receivables - current 985,036 179 50,032 35,617 985,036 179 50,032 35,617 Financial Liabilities Trade and other payables Lease liabilities Borrowings 962,968 21,134,121 15,639 33,374 630,000 36,066,134 962,968 15,639 630,000 21,134,121 33,374 36,066,134 Other financial liabilities 3,715,060 - 3,715,060 - NOTE 21: COMMITMENTS AND CONTINGENCIES Capital expenditure commitments The Directors are not aware of any other commitments from the Group’s operations as at 30 June 2021. Exploration commitments The Group has an expenditure commitment of $703,670 (exc. GST) for the year 2021-22 to sustain current tenements under lease from the Department of Mines, Industry Regulation and Safety (DMIRS). The expenditure commitment includes annual tenement rentals of $124,702 (2020: $86,274). Contingencies The Company will pay SRHKL 3% net smelter return (“NSR”) royalty on gold produced from the tenements listed in the Tenement Schedule in the Company’s 2020 Annual Report, less those sold to Regis Resources Limited during the period, per Note 10. Subsequent to year end, the Group entered into a Royalty Sales agreement to buyback the above 3% NSR royalty before 31 March. Refer to Note 24 for further information. As announced on 8 February 2021, the Group acquired a prospective exploration licence within Western Australia, E38/3438, from Mining Equities Pty Ltd. Pursuant to the acquisition agreement, Mining Equities Pty Ltd is entitled to a 1% net smelter royalty with respect of the tenement The maximum exposure to credit risk, excluding the value of any collateral or other security, at the reporting date of recognised financial assets is the carrying amount of those assets, net of any allowance for credit losses, as disclosed in consolidated statement of financial position and notes to the consolidated financial statements. The carrying amount of the Group’s financial assets represents the maximum credit exposure. The credit risk on liquid funds is limited because the counterparties are banks with a minimum credit rating of AA assigned by reputable credit rating agencies. The Group’s maximum exposure to credit risk at the reporting date was. The Group does not have any other material credit risk exposure to any single counterparty or group of counterparties under financial instruments entered (e) Credit risk management discharge an obligation. into by the group. (f) Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following table details the company’s and the Group’s expected maturity for its non-derivative financial liabilities. These have been drawn up based on undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Group anticipates that the cash flow will occur in a different period. Consolidated 2021 2020 Weighted Average Interest rate % Less than 1 3 months – 1 month 1 – 3 Months year 1 – 2 years 2 – 5 years $ $ $ $ $ Non-interest bearing 962,968 Interest bearing loans 9.31% 630,000 (1) Lease liabilities Other financial liabilities 4.91% 19.37% 1,348 2,696 11,595 - - 5,400,000 (2) 1,594,316 2,696 11,595 5,400,000 - - - - - 3,027 3,027 - - - - - - - - - - - - - - - - - Non-interest bearing 21,134,121 Interest bearing loans 8.49% 35,436,134 Lease liabilities 4.91% 1,523 56,571,778 13,068 13,068 630,000 15,756 645,756 (1) Subsequent to year end, the Company has signed a settlement deed with Great Cortex to extend the repayment of the principal amount to 18 November 2023 and waive all accrued interest (repayable on demand and included in trade and other payables classified under non-interest bearing above) owing. Refer to Note 24 for further details. (2) During the year, upon completion of DECA on 18 November 2020, the buy-back consideration for shares bought back included a deferred payment be paid in cash or shares under the Company’s election by 10 August 2023 (see Note 17 for further information). Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -49- NOTE 22: RELATED PARTY DISCLOSURE (a) Subsidiaries Brightstar Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group. The consolidated financial statements include the financial statements of Brightstar Resources Limited and the subsidiaries listed in the following table. Name Country of % Equity Interest Incorporation 2021 2020 Desertex Resources Pty Ltd (1) Desert Exploration Pty Ltd Australia Australia - 100% 100% 100% (1) Desertex Resources Pty Ltd was deregistered during the year. (b) Transactions with related parties The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year. Income from Related Parties $’000 Interest expense to Related Parties $’000 Amounts Owed by Related parties $’000 Amounts Owed to Related parties (Loan) $’000 Interest Accrual to Related parties $’000 Related party Stone Resources (H.K.) Ltd (1) 2021 Stone Resources (H.K.) Ltd 2020 Great Cortex International Ltd (2) 2021 - - - - 2,974,484 58,650 - - - - - 35,436,134 20,088,679 630,000 550,347 Great Cortex International Ltd 2020 - 58,811 - 630,000 491,697 Australia Stonefood Pty Ltd (3) 2021 96,065 Australia Stonefood Pty Ltd 2020 183,916 - - - - - - - - (1) $57,252,627 debt that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”)), including interest expense, was cancelled upon completion of DECA on 18 November 2020. Both SRL and SRHKL are related parties by virtue of Mr. Yongji Duan, Non-Executive Chairman of the Company, being a director of SRL and SRHKL. Interest expense of $58,650 at 9.31% per annum was recorded for the year on a related party loan of $630,000 from Great Cortex International Limited (2020: $58,811) in which Mr. Yongji Duan was a director (Mr. Duan ceased to be a Director of Great Cortex before 30 June 2021). The Company has signed a settlement deed with Great Cortex to extend the repayment to 18 November 2023. Subject to full repayment of loan principal, all other expenses relating to this Loan including interest will be waived. (2) (3) Service fee income of $96,065 (net of GST) was derived for the provision of office space, motor vehicle and administration services to Australian Stonefood Pty Ltd during the financial year (2020: 183,916). Australian Stonefood Pty Ltd is a subsidiary of an entity in which Mr. Yongji Duan is a substantial shareholder. This arrangement was terminated as at 31 December 2020. (c) Key management personnel Details relating to key management personnel are included in Note 26. Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -49- NOTE 22: RELATED PARTY DISCLOSURE (a) Subsidiaries Brightstar Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group. The consolidated financial statements include the financial statements of Brightstar Resources Limited and the subsidiaries listed in the following table. Name Country of % Equity Interest Incorporation 2021 2020 Desertex Resources Pty Ltd (1) Desert Exploration Pty Ltd Australia Australia - 100% 100% 100% (1) Desertex Resources Pty Ltd was deregistered during the year. (b) Transactions with related parties financial year. The following table provides the total amount of transactions that were entered into with related parties for the relevant Income from Related Parties $’000 Interest expense to Related Parties $’000 Amounts Owed by Related parties $’000 Amounts Owed to Related parties (Loan) $’000 Interest Accrual to Related parties $’000 Related party Stone Resources (H.K.) Ltd (1) 2021 Stone Resources (H.K.) Ltd 2020 Great Cortex International Ltd (2) 2021 - - - 2,974,484 58,650 35,436,134 20,088,679 630,000 550,347 Great Cortex International Ltd 2020 - 58,811 - 630,000 491,697 - - - - - - - - - - - - - - Australia Stonefood Pty Ltd (3) 2021 96,065 Australia Stonefood Pty Ltd 2020 183,916 (1) $57,252,627 debt that the Company owed to its previous major shareholder and major debt provider (Stone Resources Limited (“SRL”) and Stone Resources (HK) Limited (“SRHKL”)), including interest expense, was cancelled upon completion of DECA on 18 November 2020. Both SRL and SRHKL are related parties by virtue of Mr. Yongji Duan, Non-Executive Chairman of the Company, being a director of SRL and SRHKL. (2) Interest expense of $58,650 at 9.31% per annum was recorded for the year on a related party loan of $630,000 from Great Cortex International Limited (2020: $58,811) in which Mr. Yongji Duan was a director (Mr. Duan ceased to be a Director of Great Cortex before 30 June 2021). The Company has signed a settlement deed with Great Cortex to extend the repayment to 18 November 2023. Subject to full repayment of loan principal, all other expenses relating to this Loan including interest will be waived. (3) Service fee income of $96,065 (net of GST) was derived for the provision of office space, motor vehicle and administration services to Australian Stonefood Pty Ltd during the financial year (2020: 183,916). Australian Stonefood Pty Ltd is a subsidiary of an entity in which Mr. Yongji Duan is a substantial shareholder. This arrangement was terminated as at 31 December 2020. (c) Key management personnel Details relating to key management personnel are included in Note 26. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -50- NOTE 23: PARENT ENTITY DISCLOSURES Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Accumulated losses Reserves Total equity Financial performance Total profit and other comprehensive income for the year 30 June 2021 $ 30 June 2020 $ 1,033,266 11,299,176 9,901,812 3,426,788 10,935,078 14,725,964 1,721,347 61,062,322 6,759,727 3,598,817 8,481,074 64,661,139 37,857,909 51,541,309 (40,933,470) (101,485,330) 5,396,622 8,846 2,321,061 (49,935,175) 30 June 2021 $ 30 June 2020 $ 60,551,860 (6,617,894) Commitments and Contingencies of the parent entity Commitments and contingencies of the parent entity are the same as those of the group (refer Note 21). Reconciliation of Accumulated Losses Balance at beginning of financial year Income for the year Balance at end of financial year 30 June 2021 $ 30 June 2020 $ (101,485,330) (94,867,436) 60,551,860 (6,617,894) (40,933,470) (101,485,330) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -51- NOTE 24: EVENTS AFTER THE BALANCE DATE Brightstar Resources Limited Drilling over the Company’s Cork Tree Well project commenced from in the 3rd week of September 2021. This is the first drilling campaign since BTR completed recapitalisation in November 2020. It is expected that the results may assist in developing a revised Mineral Resource Estimate for the project and used to plan future exploration drilling at Cork Tree Well and surrounding areas. On 27 September 2021, the Company signed a Call Option Deed with Stone Resources (HK) Limited (SRHKL), under which SRHKL agreed to grant BTR or its nominee an option to purchase the 3% net smelter royalty (NSR) which is applicable to a substantial portion of BTR’s tenements holdings. This Call Option Deed is expected to be settled seven days after BTR’s 2021 Annual General Meeting, however this may be as late as 31 March 2022 depending upon the nature of shareholder approval required. The exercise price of this Call Option is US$25 million, and the expiry is 5 calendar years since settlement date of this Call Option Deed. An Option Fee of $300,000 is payable to SRHKL on the settlement date. Both the exercise price, if exercised, and the Option Fee can be settled in cash and/or BTR shares at the discretion of the Board. SRHKL has no rights to compel or demand exercise of the Call Option. Purchase of part of the NSR is allowed by the Call Option. On 27 September 2021, the Company also executed two Settlement Deeds in relation to an outstanding liability owing to Great Cortex International Limited (“Great Cortex”) and amounts owed to its former Company Secretary Mr Tony Lau. Under the Settlement Deeds: i. ii. iii. i. The Company will repay the loan principal of $630,000 in cash to Great Cortex on or before 18 November 2023. All related expenses and amounts owing, including accrued interest payments, will be waived once Brightstar meets its obligations under the Settlement Deed. A settlement sum of $300,000 will be paid to Mr Tony Lau, in cash and/or shares at the Company’s discretion, on the earlier of seven days after BTR’s 2021 Annual General Meeting or 7 December 2021. Mr Duan will step down from the Chairman role and remain on the Board as a Non-Executive Director. The deferred remuneration payment of $63,218 will be paid to Mr Duan in cash and/or shares at Brightstar’s election on the same settlement date under Call Option Deed above. All claims between the Parties relating to the past conduct of the Parties are settled in accordance with the terms of the Deeds. ii. The DECA remains in force and effect. On 28 September 2021, the Company signed a mandate with Canaccord Genuity (Australia) Limited to act as Lead Manager with regards to a placement. The placement is expected to be completed within the 1st week of October 2021. There were no other significant events occurring after balance sheet date requiring disclosure other than already disclosed. NOTE 25: AUDITOR’S REMUNERATION The auditor of Brightstar Resources Limited was changed from Deloitte Touché Tohmatsu to Pitcher Partners during the year. Amounts paid and payable to Pitcher Partners BA&A Pty Ltd for: An audit or review of the financial report of the parent entity and any other entity in the group Taxation services - - Consolidated 2021 $ 2020 $ 39,500 8,000 - - 47,500 - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -51- NOTE 24: EVENTS AFTER THE BALANCE DATE Drilling over the Company’s Cork Tree Well project commenced from in the 3rd week of September 2021. This is the first drilling campaign since BTR completed recapitalisation in November 2020. It is expected that the results may assist in developing a revised Mineral Resource Estimate for the project and used to plan future exploration drilling at Cork Tree Well and surrounding areas. On 27 September 2021, the Company signed a Call Option Deed with Stone Resources (HK) Limited (SRHKL), under which SRHKL agreed to grant BTR or its nominee an option to purchase the 3% net smelter royalty (NSR) which is applicable to a substantial portion of BTR’s tenements holdings. This Call Option Deed is expected to be settled seven days after BTR’s 2021 Annual General Meeting, however this may be as late as 31 March 2022 depending upon the nature of shareholder approval required. The exercise price of this Call Option is US$25 million, and the expiry is 5 calendar years since settlement date of this Call Option Deed. An Option Fee of $300,000 is payable to SRHKL on the settlement date. Both the exercise price, if exercised, and the Option Fee can be settled in cash and/or BTR shares at the discretion of the Board. SRHKL has no rights to compel or demand exercise of the Call Option. Purchase of part of the NSR is allowed by the Call Option. Under the Settlement Deeds: On 27 September 2021, the Company also executed two Settlement Deeds in relation to an outstanding liability owing to Great Cortex International Limited (“Great Cortex”) and amounts owed to its former Company Secretary Mr Tony Lau. i. The Company will repay the loan principal of $630,000 in cash to Great Cortex on or before 18 November 2023. All related expenses and amounts owing, including accrued interest payments, will be waived once Brightstar meets its obligations under the Settlement Deed. ii. A settlement sum of $300,000 will be paid to Mr Tony Lau, in cash and/or shares at the Company’s discretion, on the earlier of seven days after BTR’s 2021 Annual General Meeting or 7 December 2021. iii. Mr Duan will step down from the Chairman role and remain on the Board as a Non-Executive Director. The deferred remuneration payment of $63,218 will be paid to Mr Duan in cash and/or shares at Brightstar’s election on the same settlement date under Call Option Deed above. i. All claims between the Parties relating to the past conduct of the Parties are settled in accordance with the terms of the Deeds. ii. The DECA remains in force and effect. On 28 September 2021, the Company signed a mandate with Canaccord Genuity (Australia) Limited to act as Lead Manager with regards to a placement. The placement is expected to be completed within the 1st week of October 2021. Brightstar Resources Limited Brightstar Resources Limited NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -52- NOTE 25: AUDITOR’S REMUNERATION (CONTINUED) Amounts paid and payable to Deloitte Touché Tohmatsu for: An audit or review of the financial report of the parent entity and any other entity in the group Taxation services - - NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES Consolidated 2021 $ 2020 $ 45,884 14,700 62,762 13,402 60,584 76,164 Directors (a) Details of Key Management Personnel (i) William Hobba Yongji Duan Josh Hunt Yong Han Fang Lu Kaiye Shuai Managing Director (appointed on 3 December 2020, formerly Executive Director) Non-Executive Chairman Non-Executive Director (appointed on 18 November 2020) Executive Director (resigned on 18 November 2020) Executive Director (resigned on 18 November 2020) Non-Executive Director (resigned on 18 November 2020) Other Key Officer (ii) Luke Wang Tony Lau Sheng Hui Lu Company Secretary (appointed on 19 July 2021, formerly Joint Company Secretary) Joint Company Secretary (resigned on 19 July 2021) Deputy Executive Officer / Joint Company Secretary (resigned on 24 November 2020) There were no other significant events occurring after balance sheet date requiring disclosure other than already disclosed. (b) Other transactions and balances with Key Management Personnel Some Directors and executives hold positions within other entities which cause them to have control or exert significant influence over the financial or operating policies of those entities. NOTE 25: AUDITOR’S REMUNERATION The auditor of Brightstar Resources Limited was changed from Deloitte Touché Tohmatsu to Pitcher Partners during the year. The following balances were payable at balance sheet date: Transaction 2021 $ 2020 $ Amounts paid and payable to Pitcher Partners BA&A Pty Ltd for: An audit or review of the financial report of the parent entity and any other - - entity in the group Taxation services Consolidated 2021 $ 2020 $ 39,500 8,000 - - 47,500 - Directors Yongji Duan William Hobba Other Key Officer Tony Lau (2) Deferred remuneration payment (1) Deferred remuneration payment (1) 56,841 28,133 25,833 9,600 Deferred remuneration payment (1) 13,750 - (1) Under mutual agreement, part payment of the remuneration has been deferred and will be settled in either cash or equity at the Company’s discretion. (2) Mr Lau resigned from the Joint Company Secretary role with effect from 19 July 2021. Outstanding remuneration was settled in cash. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -53- Brightstar Resources Limited NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES (CONTINUED) (c) Key Management Personnel Compensation Refer to the Remuneration Report contained in the directors’ report for details of the remuneration paid or payable to each member of the Group’s Key Management Personnel (KMP) for the year ended 30 June 2021.The totals of remuneration paid to key management personnel of the Company and the group during the year are as follows: Short term employee benefits Post-employment benefits Share-based payments Deferred remuneration payment 2021 $ 2020 $ 662,250 217,685 18,909 360,000 63,292 10,375 11,728 35,433 Total key management personnel compensation 1,104,451 275,221 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2021 -53- NOTE 26: DIRECTORS AND EXECUTIVES DISCLOSURES (CONTINUED) (c) Key Management Personnel Compensation Refer to the Remuneration Report contained in the directors’ report for details of the remuneration paid or payable to each member of the Group’s Key Management Personnel (KMP) for the year ended 30 June 2021.The totals of remuneration paid to key management personnel of the Company and the group during the year are as follows: Short term employee benefits Post-employment benefits Share-based payments Deferred remuneration payment 2021 $ 2020 $ 662,250 217,685 18,909 360,000 63,292 10,375 11,728 35,433 Total key management personnel compensation 1,104,451 275,221 Brightstar Resources Limited Brightstar Resources Limited -54- DIRECTORS’ DECLARATION 1. In the opinion of the directors of Brightstar Resources Limited (the ‘Company’): a. the accompanying financial statements, notes and the additional disclosures of the Group are in accordance with the Corporations Act 2001 including: i. ii. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year then ended; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; 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. c. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. 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 2021. This declaration is signed in accordance with a resolution of the Board of Directors pursuant to S.295 (5) of the Corporations Act 2001. William Hobba Managing Director Dated this 30th day of September, 2021 Brightstar Resources Limited -55- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� � Report�on�the�Audit�of�the�Financial�Report� Opinion We�have�audited�the�financial�report�of�Brightstar�Resources�Limited�(the�“Company”)�and�its� controlled�entities�(the�“Group”),�which�comprises�the�consolidated�statement�of�financial� position�as�at�30�June�2021,�the�consolidated�statement�of�comprehensive�income,�the� consolidated�statement�of�changes�in�equity�and�the�consolidated�statement�of�cash�flows�for� the�year�then�ended,�and�notes�to�the�financial�statements,�including�a�summary�of�significant� accounting�policies,�and�the�Directors’�declaration.�� In�our�opinion,�the�accompanying�financial�report�of�the�Group�is�in�accordance�with�the� Corporations Act 2001,�including:� (a)� (b)� giving�a�true�and�fair�view�of�the�Group’s�financial�position�as�at�30�June�2021�and�of� its�financial�performance�for�the�year�then�ended;�and�� 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.�� Material Uncertainty Related to Going Concern We�draw�attention�to�Note�1(b)�in�the�financial�report�for�the�year�ended�30�June�2021�which� indicates�that�the�Group�had�cash�and�cash�equivalents�of�$985,035�(2020:�$335,205)�and� exploration�commitments�of�$703,670.�These�conditions,�along�with�other�matters�as�set�forth� in�Note�1(b),�indicate�the�existence�of�a�material�uncertainty�that�may�cast�significant�doubt� about�the�Group’s�ability�to�continue�as�a�going�concern.��Our�opinion�is�not�modified�in� respect�of�this�matter. Key Audit Matters Key�audit�matters�are�those�matters�that,�in�our�professional�judgement,�were�of�most� significance�in�our�audit�of�the�financial�report�of�the�current�period.�These�matters�were� addressed�in�the�context�of�our�audit�of�the�financial�report�as�a�whole,�and�in�forming�our� opinion�thereon,�and�we�do�not�provide�a�separate�opinion�on�these�matters.�� � � 54� -55- Brightstar Resources Limited Brightstar Resources Limited -56- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� � Key�Audit�Matter� How�our�audit�addressed�the�key�audit� matter� Deferred�exploration�and�evaluation� expenditure�� Refer�to�Note�1(f),�1(k)�and�12�to�the�financial� report.� � Our�procedures�included,�amongst�others:� Obtaining�an�understating�of�and� evaluating�the�design�and�implementation� of�the�relevant�processes�and�controls� associated�with�the�capitalisation�of� exploration�and�evaluation�expenditure,� and�those�associated�with�the� assessment�of�impairment�indicators.� Examining�the�Group’s�right�to�explore�in� the�relevant�area�of�interest,�which� included�obtaining�and�assessing� supporting�documentation.��We�also� considered�the�status�of�the�exploration� licences�as�it�related�to�tenure.� Considering�the�Group’s�intention�to�carry� out�significant�exploration�and�evaluation� activity�in�the�relevant�area�of�interest,� including�an�assessment�of�the�Group’s� cash-flow�forecast�models,�discussions� with�senior�management�and�Directors�as� to�the�intentions�and�strategy�of�the� Group.� transactions� by� Testing� a� sample� of� sighting� evidence� of� signed� contracts,� related� the� amount� deferred� exploration� and� evaluation� assets� is� in� accordance�with�AASB�6.� Reviewing�management’s�evaluation�and� judgement�as�to�whether�the�exploration� activities�within�each�relevant�area�of� interest�have�reached�a�stage�where�the� commercial�viability�of�extracting�the� resource�could�be�determined.� Assessing�the�adequacy�of�the� disclosures�included�within�the�financial� report.� invoices� and� comparing� recognised� as� As�at�30�June�2021,�the�Group�held� capitalised�exploration�and�evaluation� expenditure�of�$9,313,231.�This�included� $5,819,012�transferred�back�from�assets�held� for�sale�as�at�30�June�2020.� The�carrying�value�of�deferred�exploration�and� evaluation�expenditure�is�assessed�for� impairment�by�the�Group�when�facts�and� circumstances�indicate�that�the�capitalised� exploration�and�evaluation�expenditure�may� exceed�its�recoverable�amount.� The�determination�as�to�whether�there�are�any� indicators�to�require�the�deferred�exploration� and�evaluation�expenditure�to�be�assessed�for� impairment�involves�a�number�of�judgements� including�but�not�limited�to:� •� Whether�the�Group�has�tenure�of�the� relevant�area�of�interest;� •� Whether�the�Group�has�sufficient�funds�to� meet�the�relevant�area�of�interest� minimum�expenditure�requirements;�and�� •� Whether�there�is�sufficient�information�for� a�decision�to�be�made�that�the�relevant� area�of�interest�is�not�commercially�viable.� During�the�year,�the�Group�determined�that� there�had�been�no�indicators�of�impairment.�� Given�the�size�of�the�balance�and�the� judgemental�nature�of�the�impairment�indicator� assessments�associated�with�exploration�and� evaluation�assets,�we�consider�this�is�a�key� audit�matter.� � � 55� Brightstar Resources Limited -57- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� Share-based�payments�� Refer�to�Note�1(f)�and�18�and�19�to�the� financial�report.� � During�the�year�ended�30�June�2021,�the� Group�has�issued�shares�and�options�to� advisors,�suppliers,�directors�and�employees,� totalling�$1,036,916.�� Under�Australian�Accounting�Standards,� equity�settled�awards�for�employees�are� measured�at�fair�value�of�goods�or�services� received,�or�on�the�measurement�(grant)�date� taking�into�consideration�the�probability�of�the� vesting�conditions�(if�any)�attached.�This� amount�is�recognised�as�an�expense�either� immediately�if�there�are�no�vesting�conditions,� or�over�the�vesting�period�if�there�are�vesting� conditions.�� In�calculating�the�fair�value�there�are�a� number�of�judgements�management�must� make,�including�but�not�limited�to:� •� estimating�expected�future�share�price� volatility;� •� expected�dividend�yield;�and� •� risk-free�rate�of�interest.� Due�to�the�significance�to�the�Group’s� financial�report�and�the�level�of�judgment� involved�in�determining�the�valuation�of�the� share-based�payments,�we�consider�the� Group’s�calculation�of�the�share-based� payment�expense�to�be�a�key�audit�matter.� Our�procedures�included,�amongst�others:� Obtaining�an�understanding�and� evaluating�the�design�and�implementation� of�the�relevant�controls�associated�with� the�preparation�of�the�valuation�model� used�to�assess�the�fair�value�of�share� based�payments,�including�those�relating� to�volatility�of�the�underlying�security�and� the�appropriateness�of�the�model�used�for� valuation.� Critically�evaluating�and�challenging�the� methodology�and�assumptions�of� management�in�their�preparation�of� valuation�model,�including�management’s� assessment�of�volatility,�expected� dividend�yield,�risk-free�rate,�and�other� inputs,�including,�agreeing�these�to� internal�and�external�sources�of� information�as�appropriate.� Assessing�the�adequacy�of�the� disclosures�included�in�the�financial� report.� � � 56� Brightstar Resources Limited Brightstar Resources Limited -57- -58- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� � Rehabilitation�provision�� Refer�to�Note�1(1),1(s)�and�16�to�the�financial� report.� � Our�procedures�included,�amongst�others:� Obtaining�an�understanding�and� evaluating�the�design�and�implementation� of�the�relevant�controls�associated�with� the�estimation�of�costs�and�other�inputs� utilised�within�the�rehabilitation�estimate� model.� Obtaining�the�Group’s�assessment�of�its� obligations�to�rehabilitate�disturbed�areas� and�the�estimated�future�cost�of�that�work,� which�forms�the�basis�for�the�rehabilitation� provision�calculations�for�the�Brightstar� Beta�Project.��� Evaluating�and�testing�key�assumptions� including�economic�assumptions�through� the�performance�of�the�following� procedures:� •� considering�the�appropriateness�of�the� qualifications�and�experience�of�the� management�consultant�appointed�as� the�preparer�and�an�expert�in�his�field� •� examining�supporting�information�for� significant�changes�in�future�costs� estimates�from�the�prior�year� considering�the�appropriateness�of�the� discount�rate�and�inflation�rates� applied�to�future�cash�outflows�used�in� calculating�the�provision�� Assessing�the�adequacy�of�the� disclosures�included�in�the�financial�report.� •� The�Group�is�liable�to�rehabilitate�the� environment�disturbed�by�the�historical� operations�at�the�Brightstar�Beta�Project.�� Rehabilitation�activities�are�governed�by�a� combination�of�legislative�and�licence� requirements.���� At�30�June�2021,�the�consolidated�statement� of�financial�position�included�a�provision�for� such�obligations�of�$3,044,667.� This�was�a�key�audit�matter�given�the� determination�of�this�provision�requires� evaluating�the�key�assumptions�used�by� management�and�judgement�in�the� assessment�of�the�nature�and�extent�of�future� works�to�be�performed,�the�future�cost�of� performing�the�works,�the�timing�of�when�the� rehabilitation�will�take�place�and�the�economic� assumptions�such�as�the�discount�and� inflation�rates�applied�to�future�cash�outflows� associated�with�rehabilitation�activities�to� bring�them�to�their�present�value.�� 57� Brightstar Resources Limited -59- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� � Treatment�and�impact�of�the�Debt�and� Equity�Compromise�Agreement� Refer�to�Note�15,�17,�18�and�19�to�the�financial� report.� � On�16�March�2020,�the�Group�entered�into�a� Debt�and�Equity�Compromise�Agreement� (“DECA”)�with�Stone�Resources�Limited�and� its�related�entities�(“SRL”).�As�a�result�of�the� DECA,�the�Group�has�recognised:� -� Forgiveness�of�$57,252,627�in�debt� owing�to�SRL� -� The�buy-back�and�cancellation�of� 433,452,944�fully�paid�ordinary�shares� for�total�consideration�of�$11,400,000� payable�in�cash�and�via�in-kind� transfers�of�financial�assets�held�by� the�Group.�$5,400,000�of�this�total� considered�will�also�be�paid�in�cash�or� through�the�issue�of�fully�paid�shares� in�the�Group,�at�the�Group’s�election� by�10�August�2023.� Due�to�the�significance�of�the�treatment�and� impact�to�the�Group’s�financial�report,�we� consider�the�DECA�to�be�a�key�audit�matter� � Our�procedures�included,�amongst� others:� Obtaining�an�understanding�and� evaluating�the�design�and�implementation� of�the�relevant�controls�associated�with� the�accounting�treatment�for�the�DECA.� Examining�and�reviewing�the�relevant� agreements�entered�into�in�order�to� implement�the�DECA.� Reviewing�and�testing�the�accounting� entries�recorded�in�order�to�implement�the� DECA,�including�assessing�if�these�are� consistent�with�the�relevant�agreements� AASB�132�and�AASB�9.� Considering�the�appropriateness�of�the� effective�interest�rate�applied�to�the� amortised�cost�calculation�for�amounts� payable�under�the�share�buy-back,�and� the�mathematical�accuracy�of�the�excel� model.� Assessing�the�adequacy�of�the� disclosures�included�in�the�financial� report.� Other Information� The�directors�are�responsible�for�the�other�information.�The�other�information�comprises�the� information�included�in�the�Group’s�annual�report�for�the�year�ended�30�June�2021,�but�does� not�include�the�financial�report�and�our�auditor’s�report�thereon.�� Our�opinion�on�the�financial�report�does�not�cover�the�other�information�and�accordingly�we� do�not�express�any�form�of�assurance�conclusion�thereon.�� In�connection�with�our�audit�of�the�financial�report,�our�responsibility�is�to�read�the�other� information�and,�in�doing�so,�consider�whether�the�other�information�is�materially�inconsistent� with�the�financial�report�or�our�knowledge�obtained�in�the�audit�or�otherwise�appears�to�be� materially�misstated.�� If,�based�on�the�work�we�have�performed,�we�conclude�that�there�is�a�material�misstatement� of�this�other�information,�we�are�required�to�report�that�fact.�We�have�nothing�to�report�in�this� regard.�� � � 58� -59- Brightstar Resources Limited Brightstar Resources Limited -60- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� � Responsibilities of the Directors for the Financial Report The�directors�of�the�Company�are�responsible�for�the�preparation�of�the�financial�report�that� gives�a�true�and�fair�view�in�accordance�with�Australian�Accounting�Standards�and�the� Corporations Act 2001 and�for�such�internal�control�as�the�directors�determine�is�necessary�to� enable�the�preparation�of�the�financial�report�that�gives�a�true�and�fair�view�and�is�free�from� material�misstatement,�whether�due�to�fraud�or�error.�� In�preparing�the�financial�report,�the�directors�are�responsible�for�assessing�the�ability�of�the� Group�to�continue�as�a�going�concern,�disclosing,�as�applicable,�matters�related�to�going� concern�and�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.� As�part�of�an�audit�in�accordance�with�the�Australian�Auditing�Standards,�we�exercise� professional�judgement�and�maintain�professional�scepticism�throughout�the�audit.�We�also:�� •� Identify�and�assess�the�risks�of�material�misstatement�of�the�financial�report,�whether�due� to�fraud�or�error,�design�and�perform�audit�procedures�responsive�to�those�risks,�and� obtain�audit�evidence�that�is�sufficient�and�appropriate�to�provide�a�basis�for�our�opinion.� The�risk�of�not�detecting�a�material�misstatement�resulting�from�fraud�is�higher�than�for� one�resulting�from�error,�as�fraud�may�involve�collusion,�forgery,�intentional�omissions,� misrepresentations,�or�the�override�of�internal�control.�� •� Obtain�an�understanding�of�internal�control�relevant�to�the�audit�in�order�to�design�audit� procedures�that�are�appropriate�in�the�circumstances,�but�not�for�the�purpose�of� expressing�an�opinion�on�the�effectiveness�of�the�Group’s�internal�control.�� •� Evaluate�the�appropriateness�of�accounting�policies�used�and�the�reasonableness�of� accounting�estimates�and�related�disclosures�made�by�the�directors.�� •� Conclude�on�the�appropriateness�of�the�directors’�use�of�the�going�concern�basis�of� accounting�and,�based�on�the�audit�evidence�obtained,�whether�a�material�uncertainty� exists�related�to�events�or�conditions�that�may�cast�significant�doubt�on�the�Group’s�ability� to�continue�as�a�going�concern.�If�we�conclude�that�a�material�uncertainty�exists,�we�are� required�to�draw�attention�in�our�auditor’s�report�to�the�related�disclosures�in�the�financial� report�or,�if�such�disclosures�are�inadequate,�to�modify�our�opinion.�Our�conclusions�are� based�on�the�audit�evidence�obtained�up�to�the�date�of�our�auditor’s�report.�However,� future�events�or�conditions�may�cause�the�Group�to�cease�to�continue�as�a�going� concern.�� •� Evaluate�the�overall�presentation,�structure�and�content�of�the�financial�report,�including� the�disclosures,�and�whether�the�financial�report�represents�the�underlying�transactions� and�events�in�a�manner�that�achieves�fair�presentation.� � 59� Brightstar Resources Limited -61- � � � � � BRIGHTSTAR�RESOURCES�LIMITED� ABN�44�100�727�491� INDEPENDENT�AUDITOR’S�REPORT� TO�THE�MEMBERS�OF� BRIGHTSTAR�RESOURCES�LIMITED� � •� 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.�� From�the�matters�communicated�with�the�directors,�we�determine�those�matters�that�were�of� most�significance�in�the�audit�of�the�financial�report�of�the�current�period�and�are�therefore�the� key�audit�matters.�We�describe�these�matters�in�our�auditor’s�report�unless�law�or�regulation� precludes�public�disclosure�about�the�matter�or�when,�in�extremely�rare�circumstances,�we� determine�that�a�matter�should�not�be�communicated�in�our�report�because�the�adverse� consequences�of�doing�so�would�reasonably�be�expected�to�outweigh�the�public�interest� benefits�of�such�communication.�� Report�on�the�Remuneration�Report� Opinion on the Remuneration Report We�have�audited�the�Remuneration�Report�included�in�pages�8�to�14�of�the�directors’�report� for�the�year�ended�30�June�2021.�In�our�opinion,�the�Remuneration�Report�of�Brightstar� Resources�Limited,�for�the�year�ended�30�June�2021,�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.�� � � � � PITCHER�PARTNERS�BA&A�PTY�LTD� � � � � PAUL�MULLIGAN� Executive�Director� Perth,�30�September�2021� 60� Brightstar Resources Limited Brightstar Resources Limited -61- CORPORATE GOVERNANCE STATEMENT -62- The Company’s charters, policies and procedures are regularly reviewed and updated to comply with law and best practice. These charters and policies as well as the Company’s Corporate Governance Statement can be viewed on the Company’s website located at www.brightstarresources.com.au. The Company is committed to applying the ASX Corporate Governance Council’s Corporate Governance Principles (4th Edition) (ASX Principles and Recommendations) and the Corporate Governance Statement discloses the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the financial year ended 30 June 2021. ASX ADDITIONAL INFORMATION Additional information required by the Australian Stock Exchange Limited and not disclosed elsewhere in this report is set out below. This information is effective as at 1 October 2021. -63- Brightstar Resources Limited Distribution of Shares Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 over Rounding Total Number of Holders Securities Held 157 222 250 803 300 1,732 19,244 696,134 2,060,119 30,655,279 406,319,988 439,750,764 There are 777 shareholders holding unmarketable parcels represented by 4,722,179 shares. Top 20 Largest Shareholders Shareholder Ms Sandra Wheeler Mr Yongji Duan Chen Yingliu Mr Lieven Bert Frans Bouckaert + Mrs Priscilla Lee Bouckaert Scorpius Holdings Pty Ltd Mr Yong Han HSBC Custody Nominees (Australia) Limited Mr Guofu Zu Mr Kaiye Shuai Citywest Corp Pty Ltd Ms Esma Eileen Barker Mr Wenhua Shan Mr Wayne Richard Lonergan (LDS Account) Mr Quansheng Wang Mr Yongqi Jing Mrs Linda Teresa Hotker + Mr Wayne David Hotker Mr Sheng Hui Lu Mr Ianaki Semerdziev NYG Pty Ptd Citicorp Nominees Pty Limited Total Top 20 Holders Total Remaining Holders Total Ordinary Shares on Issue Substantial Shareholders Shareholder Ms Sandra Wheeler Mr Yongji Duan Chen Yingliu Mr Lieven Bert Frans Bouckaert + Mrs Priscilla Lee Bouckaert Shares Held % of Issued Capital 68,727,775 31,449,497 30,303,030 23,855,118 15,040,000 13,908,219 10,740,384 8,256,201 7,351,035 6,273,221 5,762,938 5,000,400 4,765,624 4,501,591 4,500,591 4,408,333 4,175,178 3,500,000 3,150,000 3,054,683 258,723,818 181,026,946 439,750,764 15.63 7.15 6.89 5.42 3.42 3.16 2.44 1.88 1.67 1.43 1.31 1.14 1.08 1.02 1.02 1.00 0.95 0.80 0.72 0.69 58.83 41.17 100.00 Shares Held % of Issued Capital 68,727,775 31,449,497 30,303,030 23,855,118 15.63 7.15 6.89 5.42 Brightstar Resources Limited Brightstar Resources Limited ASX ADDITIONAL INFORMAITON (Continued) -64- Voting Rights One vote for each ordinary share held in accordance with the Company’s Memorandum and Articles of Association. Unlisted options do not carry any voting rights. On-Market Buy-Back There is no current on-market buy-back. Restricted Securities At the end of the financial year there were no ordinary fully paid shares subject to restriction agreements. Unquoted Securities The number of equity securities that are on issue and the number of holders for each class of unquoted equity securities are as follows: Unlisted Options Number of Holders Substantial Holders 15000,000 Unlisted options expiring on 09/04/2023 @ $0.01 4,000,000 Unlisted options expiring on 31/12/2023 @ $0.06 4,000,000 Unlisted options expiring on 31/12/2023 @ $0.08 4,000,000 Unlisted options expiring on 31/12/2023 @ $0.10 1,000,000 Unlisted options expiring on 12/02/2024 @ $0.10 5,000,000 Unlisted options expiring on 22/06/2024 @ $0.045 1 1 1 1 1 1 Scorprius Holdings Pty Ltd CG Nominees (Australia) Pty Ltd CG Nominees (Australia) Pty Ltd CG Nominees (Australia) Pty Ltd Mining Equities Pty Ltd PCF Capital Pty Ltd ASX ADDITIONAL INFORMATION -63- Additional information required by the Australian Stock Exchange Limited and not disclosed elsewhere in this report is set out below. This information is effective as at 1 October 2021. There are 777 shareholders holding unmarketable parcels represented by 4,722,179 shares. Distribution of Shares Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 over Rounding Total Top 20 Largest Shareholders Shareholder Ms Sandra Wheeler Mr Yongji Duan Chen Yingliu Mr Lieven Bert Frans Bouckaert + Mrs Priscilla Lee Bouckaert Scorpius Holdings Pty Ltd HSBC Custody Nominees (Australia) Limited Mr Yong Han Mr Guofu Zu Mr Kaiye Shuai Ms Esma Eileen Barker Mr Wenhua Shan Mr Quansheng Wang Mr Yongqi Jing Mr Sheng Hui Lu Mr Ianaki Semerdziev Citywest Corp Pty Ltd Mr Wayne Richard Lonergan (LDS Account) Mrs Linda Teresa Hotker + Mr Wayne David Hotker NYG Pty Ptd Citicorp Nominees Pty Limited Total Top 20 Holders Total Remaining Holders Total Ordinary Shares on Issue Substantial Shareholders Shareholder Ms Sandra Wheeler Mr Yongji Duan Chen Yingliu Mr Lieven Bert Frans Bouckaert + Mrs Priscilla Lee Bouckaert Number of Holders Securities Held 157 222 250 803 300 1,732 19,244 696,134 2,060,119 30,655,279 406,319,988 439,750,764 Shares Held % of Issued Capital 68,727,775 31,449,497 30,303,030 23,855,118 15,040,000 13,908,219 10,740,384 8,256,201 7,351,035 6,273,221 5,762,938 5,000,400 4,765,624 4,501,591 4,500,591 4,408,333 4,175,178 3,500,000 3,150,000 3,054,683 258,723,818 181,026,946 439,750,764 68,727,775 31,449,497 30,303,030 23,855,118 15.63 7.15 6.89 5.42 3.42 3.16 2.44 1.88 1.67 1.43 1.31 1.14 1.08 1.02 1.02 1.00 0.95 0.80 0.72 0.69 58.83 41.17 100.00 15.63 7.15 6.89 5.42 Shares Held % of Issued Capital ASX ADDITIONAL INFORMAITON (Continued) -65- Brightstar Resources Limited Tenement Schedule as at 1 October 2021 Reporting Group Lease Brightstar (South Laverton) Brightstar North (North Laverton) M38/968 M38/1056 M38/1057 M38/1058 M38/9 E38/2316 E38/2364 E38/2365 E38/2411 E38/3034 E38/3108 E38/3293 E38/3331 E38/3438 M38/241 M38/549 M38/984 P38/4377 P38/4385 P38/4431 P38/4432 P38/4433 P38/4444 P38/4445 P38/4446 P38/4447 P38/4448 P38/4449 P38/4450 P38/4508 E38/2452 E38/2894 M38/346 M38/917 M38/918 P38/4108 E38/3198 Standalone (Laverton) E38/2233 Status Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Lease Manager Total Shares Desert Exploration Pty Ltd Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Brightstar Resources Limited Brightstar Resources Limited ASX ADDITIONAL INFORMAITON (Continued) Tenement Schedule as at 1 October 2021 -66- Reporting Group Hawks Nest (West Laverton) Miscellaneous Licences Lease M38/94 M38/95 M38/314 M38/381 L38/100 L38/123 L38/168 L38/169 L38/171 L38/185 L38/188 L38/154 L38/205 Status Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Lease Manager Total Shares Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited 100 100 100 100 100 100 100 100 100 100 100 100 100 * Transfer of Tenement E38/3279 is underway as of 1 October 2021. ASX ADDITIONAL INFORMAITON (Continued) -65- Tenement Schedule as at 1 October 2021 Reporting Group Lease Brightstar (South M38/968 Laverton) Lease Manager Total Shares M38/1056 M38/1057 M38/1058 M38/9 E38/2316 E38/2364 E38/2365 E38/2411 E38/3034 E38/3108 E38/3293 E38/3331 E38/3438 M38/241 M38/549 M38/984 P38/4377 P38/4385 P38/4431 P38/4432 P38/4433 P38/4444 P38/4445 P38/4446 P38/4447 P38/4448 P38/4449 P38/4450 P38/4508 E38/2452 E38/2894 M38/346 M38/917 M38/918 P38/4108 E38/3198 Status Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Desert Exploration Pty Ltd Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited Brightstar Resources Limited 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Brightstar North (North Laverton) Standalone (Laverton) E38/2233 DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 Ordinary shares held in Brightstar Resources Limited (number) -13- -67- Brightstar Resources Limited 30 June 2021 Directors William Hobba Yongji Duan Josh Hunt Yong Han (ii) Kaiye Shuai (ii) Fang Lu (ii) Other Key Officer Luke Wang Sheng Hui Lu (iii) Tony Lau (iv) (i) (ii) (iii) (iv) Balance at beginning of period Granted as remuneration Other Balance at end of period 38,727,775 30,000,000 (i) 31,449,497 - - - 68,727,775 31,449,497 - 3,150,000 (i) 207,999 3,357,999 13,908,219 11,425,436 - - 4,475,178 10,000,000 - - - - - - (13,908,219) (11,245,436) - - (4,475,178) - - - This page left blank intentionally. - - - 10,000,000 109,986,105 33,150,000 (29,600,834) 113,535,271 Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These shares were approved for issue at the Group’s AGM on 16 November 2020. Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. Mr Sheng Lu resigned on 24 November 2020. Mr Lau resigned 19 July 2021 DIRECTORS’ REPORT (continued) Remuneration report (audited) – (continued) Table 3: Key Management Personnel Shareholdings for the years ended 30 June 2021 and 30 June 2020 Ordinary shares held in Brightstar Resources Limited (number) -13- -68- Brightstar Resources Limited 30 June 2021 Directors William Hobba Yongji Duan Josh Hunt Yong Han (ii) Kaiye Shuai (ii) Fang Lu (ii) Other Key Officer Luke Wang Sheng Hui Lu (iii) Tony Lau (iv) (i) (ii) (iii) (iv) Balance at beginning of period Granted as remuneration Other Balance at end of period 38,727,775 30,000,000 (i) 31,449,497 - - - 68,727,775 31,449,497 - 3,150,000 (i) 207,999 3,357,999 13,908,219 11,425,436 - - 4,475,178 10,000,000 - - - - - - (13,908,219) (11,245,436) - - (4,475,178) - - - This page left blank intentionally. - - - 10,000,000 109,986,105 33,150,000 (29,600,834) 113,535,271 Mr Hobba was issued 30,000,000 fully paid ordinary shares at $NIL consideration as reimbursement for fulfilling duties and in lieu of remuneration as a Director of the Group over the prior 7 years. Mr Hunt was issued shares at $NIL consideration in lieu of $60,000 of his remuneration as a Director. These shares were approved for issue at the Group’s AGM on 16 November 2020. Mr Han, Mr Shuai and Mr Fang Lu resigned on 18 November 2020. Mr Sheng Lu resigned on 24 November 2020. Mr Lau resigned 19 July 2021 REGISTERED AND PRINCIPAL OFFICE 3/25 Belgravia Street Belmont WA 6104 Telephone: (618) 9277 6008 Facsimile: (618) 9277 6002 Email: info@brightstarresources.com.au www.brightstarresources.com.au/

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