Calidus Resources Limited
Annual Report 2020

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ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Corporate directory ANNUAL REPORT 30 June 2020 Managing Director Non-executive Chairman Non-executive Director Non-executive Director (resigned) Current Directors David Reeves Mark Connelly Keith Coughlan Adam Miethke Company Secretary Julia Beckett Registered Office Street: Suite 12, 11 Ventnor Avenue Share Registry Automic Group WEST PERTH WA 6005 Street: Level 5, 126 Phillip Street SYDNEY NSW 2000 Telephone: +61 (0)8 6245 2050 Postal: GPO Box 5193 Email: info@calidus.com.au SYDNEY NSW 2001 Website: http://www.calidus.com.au Telephone: 1300 288 664 Email: hello@automicgroup.com.au Website: http://automicgroup.com.au Securities Exchange Australian Securities Exchange Solicitors HWL Ebsworth Level 40, Central Park, 152-158 St Georges Terrace Level 20, 240 St Georges Terrace Perth WA 6000 Telephone: 131 ASX (131 279) (within Australia) Telephone: +61 (0)2 9338 0000 Facsimile: Website: ASX Code +61 (0)2 9227 0885 www.asx.com.au CAI Perth WA 6000 Auditors Moore Australia Level 15, Exchange Tower, 2 Esplanade Perth WA 6000 Telephone: +61 (0)8 9225 5355 Website: www.moorestephens.com.au P a g e | 1 ANNUAL REPORT 30 June 2020 Contents CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ◼ Chairman’s Letter ...................................................................................................................................................................3 ◼ Operations Review .................................................................................................................................................................4 ◼ Mineral Resource and Ore Reserve Statement ....................................................................................................................15 ◼ Directors' report ...................................................................................................................................................................18 ◼ Remuneration report ...........................................................................................................................................................24 ◼ Auditor's independence declaration ....................................................................................................................................33 ◼ Consolidated statement of profit or loss and other comprehensive income .......................................................................34 ◼ Consolidated statement of financial position ......................................................................................................................35 ◼ Consolidated statement of change in equity ........................................................................................................................36 ◼ Consolidated statement of cash flows..................................................................................................................................37 ◼ Notes to the consolidated financial statements ...................................................................................................................38 ◼ Directors' declaration ...........................................................................................................................................................72 ◼ Independent auditor's report ...............................................................................................................................................73 ◼ Additional ASX Information ..................................................................................................................................................77 P a g e | 2 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Chairman’s Letter Dear Shareholder ANNUAL REPORT 30 June 2020 I am delighted to present to you the 2019-2020 Annual Report for your Company. The report illustrates the immense success Calidus has enjoyed over the past year, ranging from the results of the Updated Pre- Feasibility Study on our Warrawoona gold project and securing key project approvals through to the imminent start of early construction works and our share price, which has doubled. At the time of writing, we have just secured approval for Warrawoona from the Western Australian Minister for the Environment. We have also just received indicative term sheets for project funding from potential lenders and we have almost completed the Feasibility Study. These milestones highlight the extent to which we are running parallel processes to accelerate the development of Warrawoona. As part of this approach, are about to commence construction works, including an access road and a 240-person accommodation camp. These works will pave the way for main construction to start early 2021. We have been able to adopt a multi-pronged approach to the development of Warrawoona, including the start of the early works, thanks in part to the $25 million capital raising completed shortly after the end of the financial year. The success of this raising reflected the strong outlook for Warrawoona. On behalf of the Board, I would like to thank those who supported us in this capital raising. The underlying technical and economic strength of Warrawoona was highlighted by the results of the Updated Pre-Feasibility Study completed towards the end of the financial year. This study indicated Warrawoona was set to produce ~85,000oz a year at an all-in sustaining cost of A$1,251/oz. This prospect is particularly enticing given that the gold price at the time of writing was around A$2,650/oz. The Updated Pre-Feasibility Study included a 24 per cent increase in Reserves to 519,000oz. Based on a gold price of A$2,500/oz, Warrawoona will generate a post-tax internal rate of return of 77 per cent and have a payback period of just 13 months. The study also took into account several significant changes that are designed to minimise risk, maximise initial cash generation and ensure a simple and robust operation to maximise value to shareholders. These strong findings and the current gold price were key factors in the Board’s decision to accelerate the development timetable. With the Feasibility Study almost complete, the key approvals in place and early construction works about to start, Calidus is firmly on track for first production in early 2022. While we are working furiously to advance Warrawoona as quickly as practicable, your Board and Management are also eager to identify opportunities which may enable us to grow Warrawoona and the wider Company. As part of this strategy, Calidus executed a Heads of Agreement during the year under which it can earn an interest of up to 70% in tenements that host the Otways Project and Reedies porphyry prospect, 50km from Warrawoona. Exploration undertaken in the 1960s and in the 1980s highlighted strong potential for copper and gold at Otways, though the area has not been subjected to any modern exploration techniques. At the time of writing, our first drilling program was underway. The Otways deal reflects the Company’s plan to continue growing our asset base in the Pilbara. We believe we are well placed to leverage the infrastructure we are developing at Warrawoona, whether it be through projects that form part of Warrawoona or become standalone operations. The past year has seen your Company successfully transition to an emerging gold producer, with momentum building at Warrawoona on several fronts. I would like to thank our management team, staff and contractors for their hard work and dedication, which has been integral to our strong progress. I also thank our shareholders for their support over the past year and I look forward to reporting to you as construction advances at Warrawoona. Mark Connelly Non-executive Chairman P a g e | 3 ANNUAL REPORT 30 June 2020 Operations Review CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Calidus Resources is pleased to present its key operating results for the year to 30 June 2020. HIGHLIGHTS • Updated Pre-Feasibility Study completed on Warrawoona Project in WA’s Pilbara o o o o o o o Study confirms Warrawoona will generate strong margins and cashflow which underpins strong financial returns Pre-Tax Project Cashflow of $648M, average EBITDA of $97M pa, NPV8% $423M, IRR 88% and payback of 13 months (assuming gold price of A$2,500/oz) Post-Tax Project Cashflow of $468M, NPV8% $303M, IRR 77% and payback of 13 months Pre-production capital cost of $116M including contingency of $6M and pre-production mining costs of $13M Average gold production of 85koz a year over first 6 years with 90koz in year one Life of Mine All-In Sustaining Costs (AISC) of $1,251/oz Total gold production of 623kozs over eight-year life of mine based on current minable inventory • Ore Reserves increased by 24% to 519,000oz, including 502koz at the main Klondyke mining area o Maiden Proven Ore Reserve of 2Mt @ 1.0g/t for 66koz in the Klondyke Open Pit Resources increased by 20% to 1.5Moz o Measured and Indicated Resources (inclusive of Reserves) total 32.7Mt @ 1.0g/t for 1.05Moz, including 1Moz at the main Klondyke mining area Environmental Protection Authority recommended approval of Warrawoona Gold Project Acquisition of Otways Project near Warrawoona Strengthened the Group’s management team with the appointment of Richard Hill as Chief Financial Officer • • • • Warrawoona Gold Project Overview Calidus Resources (ASX:CAI) (Company) is an ASX-listed gold development company which controls the entire Warrawoona Gold Project (Project) in the East Pilbara district of Western Australia. The Project site is located 28km South East of Marble Bar accessed by an all-weather road. Marble Bar is two hours travel by road from Port Hedland, Australia’s largest Port and provides ease of access to logistic routes, major suppliers and relevant skills base (Figure 1). Figure 1: Location of the Warrawoona Gold Project P a g e | 4 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 Calidus’ landholding at the Project consists of approximately 780 square kilometres of prospective tenements covering the entire greenstone belt within the Pilbara Craton. The Project area contains over 200 historic workings and hosts the flagship Klondyke Prospect and a further three satellite prospects at Fieldings Gully, Copenhagen and Coronation (Figure 2). The Project is located on granted mining leases which have been recently renewed for 30 years. Gold was first discovered in the Marble Bar area in 1896 and was mined for around 15 years during that period. The majority of the Project is located on the Warrawoona Mining Common which is excised from the surrounding pastoral lease. Figure 2: Warrawoona Gold Project Location and tenements Updated Pre-Feasibility Study and Maiden Reserve Calidus announced results of the Updated Pre-Feasibility Study (Updated PFS) and a JORC Reserve for its Warrawoona Project in June 20201. The Updated PFS Study highlighted the strong cashflow, outstanding financial returns and short payback of Warrawoona. The Updated PFS included a 24 per cent increase in Reserves to 519,000oz. This underpins forecast production averaging 85,000 ounces a year in the first six years, including 90,000oz in year one, at an average AISC of A$1251/oz. Based on a gold price of A$2,500/oz, the average gold price for the last six months prior to release of the Updated PFS, Warrawoona will generate a post-tax internal rate of return of 77 per cent and have a payback period of just 13 months. Considering these strong findings and the current gold price, Calidus is committed to accelerating its development timetable, with Project construction planned to start in the March quarter of next year. 1 See ASX Announcement “Updated PFS Delivers Increased Reserves and Robust Financials” dated 29 June 2020. P a g e | 5 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 The Updated PFS reflects several significant changes that are aimed to minimise risk, maximise initial cash generation and ensure a simple and robust operation to maximise value to shareholders. These changes include the modelling technique used in the Mineral Resource that includes greater inherent dilution than the initial PFS, delaying the underground development until year three to minimise construction capital and allow a single focus on the low risk Klondyke Open Pit and installation of a ball mill to ensure grind size and operational flexibility. With a Feasibility Study planned for the September quarter and construction planned in early 2021, the Updated PFS provides a clear, simple, lower capital and lower risk road map to near term gold production for Calidus. Production Summary Initial Mine Life Total Ore Mined Gold Recovered Processing Rate Average LOM CIL Metallurgical Recovery Project Development Capital Processing Plant Non-Processing Infrastructure and Owners Cost Contingency Project Development Capital Pre-Production Mining Costs Total Pre-Production Capital Project Economics Gold Price Gold Revenue All-In Sustaining Cost (AISC)2 Project Cashflow (Pre-tax) NPV8% (Pre-tax) IRR (Pre-tax) Project Cashflow (Post-tax) NPV8% (Post-tax) IRR (Post tax) Payback Period3 Units Years oz oz Mtpa % A$M A$M A$M A$M A$M A$M A$/oz A$M A$/oz A$M A$M % p.a. A$M A$M % p.a. Years Updated PFS 8.0 16.9Mt @ 1.22g/t for 663koz 623,086 Oxide/Transition 2.4Mtpa and Fresh 2.0Mtpa 94.3% 75 22 6 103 13 116 2,500 1,558 1,251 648 423 88% 468 303 77% 1.1 2,200 1,371 1,241 467 295 64% 337 209 54% 1.5 2,800 1,745 1,260 829 552 112% 598 398 100% 0.8 Table 1: Key Project Statistics 2 All-In Sustaining Cost includes mining, processing, site administration, royalty costs and sustaining capital. It does not include exploration, corporate costs and non-sustaining capital. 3 Payback period is calculated from the month of first gold production. 3 Calidus is estimated to have carried forward tax losses of $40M at 31 December 2020. 4 All figures are presented in nominal Australian Dollars unless otherwise specified. Rounding errors may occur. P a g e | 6 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 Costs of Production Open Pit Mining Underground Mining Total Mining Processing and Maintenance Business Services Total Cash Cost (C1) Royalties Sustaining Capital LOM Unit Cost (A$/t) LOM Unit Cost (A$/oz) $18 /t OP Ore $423 /oz $56 /t UG Ore $228 /oz $24 /t $15 /t $2 /t $41 /t $3 /t $2 /t $652 /oz $413 /oz $49 /oz $1,113 /oz $77 /oz $60 /oz Total All-In Sustaining Cost (AISC) $46 /t $1,251 /oz Table 2: Production Costs A$2,000/oz A$2,250/oz A$2,500/oz A$2,750/oz A$3,000/oz 346 209 48% 497 316 68% 648 423 88% 798 530 108% 949 638 128% A$2,000/oz A$2,250/oz A$2,500/oz A$2,750/oz A$3,000/oz 252 147 40% 359 225 58% 468 303 77% 2.0 Table 3: Gold Price Sensitivity Analysis 1.4 1.1 577 382 96% 0.9 685 461 116% 0.8 Pre-tax Project Cashflow NPV8% IRR Post-tax Project Cashflow NPV8% IRR Unit A$M A$M % Unit A$M A$M % Payback Period Years P a g e | 7 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Environmental Protection Authority Recommends Approval of Warrawoona Gold Project The WA Office of the Environmental Protection Authority (EPA) recommended approval of Warrawoona for both the State and Federal governments under an Accredited Assessment as part of the approval required under the Commonwealth’s Environment Protection and Biodiversity Conservation Act (EPBC Act). This is the penultimate stage in the permitting process, with final approval vesting with the Minister for Environment and anticipated in the September Quarter. The EPA’s report is available on the EPA website.4 Tenure Finalised for Project Development The Company completed the purchase of tenement E45/5172, which covers most of the historic Marble Bar Goldfield located just 25km from Warrawoona. The Company also purchased the remaining 50% of tenement E45/4843, which covers the historic Salgash mining area of the Warrawoona Goldfield. In addition, the Company earned 70% of the Novo Resources Corporation tenements, which comprise tenements E45/3381, E45/4666, E45/4622, E45/4194, P45/2781 and E45/4934. Calidus was granted a General Purpose Lease (G45/345). This lease will encompass the processing plant, tails dam and waste dump for the Project. With the grant of this lease, Warrawoona now has all the Mining Leases, Miscellaneous Leases and General Purpose Lease tenure required to commence construction (Figure 3) Figure 3: Granted Leases over the Warrawoona Gold Project 4 See ASX Announcement “EPA Recommends Approval of Warrawoona Gold Project” dated 25 June 2020. P a g e | 8 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Marble Bar Airport Upgrade ANNUAL REPORT 30 June 2020 During the year, Calidus announced that it has entered into a Non-Binding Heads of Agreement with the Shire of East Pilbara for an upgrade to the Marble Bar Airport. The upgrade is expected to facilitate 100 seater jets with an all-weather sealed surface. The capital cost of the upgrade has been estimated at approximately $7 million with Calidus expected to contribute $2 million. The Non-Binding Heads of Agreement anticipates the design of the airport being undertaken jointly by the parties. Calidus and the Shire of East Pilbara will now progress with preparing binding formal agreements in order to fund, construct and operate the airport with construction anticipated to commence in 2021. Purchase of Camp Calidus took advantage of compelling commercial terms to purchase a 240-room accommodation village located in the Pilbara. The village’s location minimises relocation costs and is a further step forward in the development of Warrawoona. Calidus has applied for an Early Works Permit providing the option to install the village prior to receiving full Project Development approval. The village is being stored at Marble Bar with tenders issued for initial installation. Figure 4: Calidus Village being offloaded at Marble Bar P a g e | 9 ANNUAL REPORT 30 June 2020 Project Development Timeline CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 As announced on 29 June 2020, in light of the strong findings of its Updated PFS, Calidus will start construction at Warrawoona in the March quarter of 2021. This will enable the Company to capitalise on a strong gold price outlook and robust forecast cashflow at Warrawoona. The project timeline is shown the table below. By the end of the 2020 calendar year, Calidus anticipates being fully permitted and Project Finance discussions to be well advanced. Exploration Activities Drilling Results During the year Calidus announced a host of outstanding results at the Warrawoona Gold Project5. RC drilling and diamond filling results demonstrate the strong grade continuity of gold mineralisation along-strike, down-dip and within the planned Klondyke pit at Warrawoona. Significant intersections include: • • • • • • • • 35m @ 2.84 g/t Au from surface in hole 19KLRC218 10m @ 6.81g/t Au from 47m, incl 1m @ 50.77g/t Au from 49m in hole 19KLRC192 12m @ 5.58 g/t Au from 12m in hole 19KLRC270 15m @ 4.33 g/t Au from 6m in hole 19KLRC266 23m @ 2.55 g/t Au from 15m in hole 19KLRC241 15m @ 3.70 g/t Au from 30m in hole 19KLRC288 1m @ 55.21 g/t Au from 278m in hole 19KLDD061 36m @ 1.53 g/t Au from 12m in hole 19KLRC247 5 The information is extracted from the Company’s ASX Announcements entitled “Intercepts of up to 107g/t to underpin Resource Upgrade” dated 30 July 2019, “Shallow gold intercepts adjacent to Klondyke Open Pit” dated 11 September 2019, “Outstanding shall drill intersections from Klondyke” dated 2 October 2019, “More wide, shallow intercepts confirm robustness of open pit” dated 22 October 2019, “Drilling hits more shallow, high grade gold at Klondyke” dated 4 November 2019, “Robust infill drilling results to underpin open-pit resource” dated 25 November 2019, “High-grade gold intersected outside Klondyke Resource” dated 18 December 2019. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. P a g e | 10 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 • • • • • • • • • • • • • • • • • 14m @ 3.80 g/t Au from 1m in hole 19KLRC233 23m @ 2.30 g/t Au from 37m in hole 19KLRC232 26m @ 2.00 g/t Au from 1m in hole 19KLRC227 14m @ 3.51 g/t Au from 2m in hole 19KLRC249 11.78m @ 4.11 g/t Au from 28.95m in hole 19KLDD112 12m @ 3.93 g/t Au from 19m in hole 19KLRC284 22m @ 2.13g/t Au from 19m n hole 19KLRC201 23m @ 2.06 g/t Au from 1m in hole 19KLRC243 9.08m @ 5.11 g/t Au from 24.1m in hole 19KLDD107 2.52m @ 18.02 g/t Au from 232.78m in hole 19KLDD070 1m @ 40.59 g/t Au from 156m in hole 19KLDD083 20m @ 1.97 g/t Au from 25m in hole 19KLRC245 16m @ 2.47 g/t Au from 4m in hole 19KLRC253 20m @ 1.96 g/t Au from 20m in hole 19KLRC271 11m @ 3.41 g/t Au from surface in hole 19KLRC306 12m @ 3.05 g/t Au from 43m in hole 19KLRC283 26m @ 1.37 g/t Au from 9m in hole 19KLRC281 11 RC holes were drilled into the St George deposit to assist in converting resources to an indicated category with outstanding assays received including: • • • 13m @ 11.1g/t Au from 30m, incl 1m @ 107.16g/t Au from 36m in hole 19SGRC078 13m @ 5.58g/t Au from 46m in hole 19SGRC081 12m @ 1.73g/t Au from 23m in hole 19SGRC075 An infill RC drill programme was undertaken 300m east of the planned Klondyke pit at the Klondyke East deposit. Significant intersections included: • • • 14m @ 3.38 g/t Au from 67m in hole 19KLRC523 5m @ 6.69 g/t Au from 62m in hole 19KLRC500 13m @ 2.18 g/t Au from 31m in hole 19KLRC522 Wide-spaced drilling at Klondyke West intersected high-grade areas. Best results included: • • 4m @ 3.97 g/t Au from 40m in hole 19KLRC333 1m @ 9.90 g/t Au from 41m in hole 19KLRC325 Klondyke Drilling On 4 June 2020 Calidus announced that it has resumed drilling at Warrawoona following the opening of regional borders in Western Australia. The drilling at Klondyke will target the main Klondyke structure 300m directly below the existing Resource and is expected to be completed in the September Quarter 2020. Calidus is planning to drill two holes, each with a wedge “daughter” hole drilled off it, beneath the centre of the Klondyke Resource to test the continuity of mineralisation at a depth of 300m below the existing 250m deep resource. RC pre- collars will be undertaken to a depth of 400m to 450m before swapping to diamond drilling. The programme is designed to prove continuity of the Klondyke Structure as a long-term source of ore for the upcoming development. P a g e | 11 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Otways Project Earn-In and Drilling Figure 5: Klondyke Drilling As announced on 27 May 2020, Calidus had entered into a Heads of Agreement with Rugby Mining to earn up to 70% interest in the Otways Project North Eastof Nullagine. In the late 1960s, shallow (<60m depth) percussion drilling of coincident soil and IP anomalies by Conwest identified copper mineralisation in metabasalts at or near surface (refer Figure 7). In addition, several holes contain Cu mineralisation that is open at depth. Historic drilling was never assayed for gold but nearby costean samples returned values of up to 13g/t Au. Recent site visits identified the locations of previous drill holes and have confirmed visual occurrences of copper mineralisation at surface and in shallow workings. Figure 6: Tenements at the Otways Project with the GSWA 500k geology and prospect locations P a g e | 12 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 Figure 7: Cross section at the Otways Project showing the results of shallow percussion drilling by Conwest in the 1960s Figure 8: Map of the Otways–Malachite Flats area showing the locations of the planned drill holes on a horizontal conductivity slice at 100m depth from a HoistEM survey flown by Hazelwood Resources. P a g e | 13 ANNUAL REPORT 30 June 2020 Corporate Financial Results CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 At 30 June 2020, Calidus and its subsidiaries held $5.7 million in cash and $1.4m in listed investments. Capital Raising On 15 August 2019, the Company announced the successful placement of $9M to institutional investors. The placement received strong support from new and existing institutional investors for the continued advancement of Warrawoona. During the year Company also received $1,302,500 from the exercise of previously issued options. Consolidation of Share Capital At the Annual General Meeting held on 25 November 2019, shareholders approved to consolidate the Company’s issued capital through the conversion of every ten (10) existing shares into one (1) share. The number of the Company’s shares on issue was reduced from 2,146,887,024 existing shares to 214,689,064 shares. Appointment of Chief Financial Officer On 25 November 2019, the Company announced the appointment of Mr Richard Hill as Chief Financial Officer. Mr Hill is an accomplished finance professional with more than 20 years of experience in the resources sector, primarily in the gold industry. Mr Hill brings direct experience with respect to feasibility studies, construction and development, mine operations as well as corporate combination and integration activities. Community Relations As part of the Project Permitting process, and wider stakeholder engagement, Calidus staff and representatives have held meetings and project updates with Traditional Owners, Pastoralists, surrounding mines and tenure holders, the Marble Bar Community, Shire of East Pilbara, State Government Agencies - DMIRS (Department of Mines, Industry Regulation and Safety), DWER (Department of Water and Environment Regulation), DBCA (Department of Biodiversity, Conservation and Attractions) and Federal Government Agency DoEE (Department of Environment and Energy). Calidus is proud to sponsor the Indigenous Art and Literacy Program at the Marble Bar School and Warralong Community School. The Indigenous Youth Art program is designed to consist of high quality arts and cultural workshops that are focused on the education, health and wellbeing of Indigenous youth. It will also promote the artistic talents of Indigenous children across Australia with a program which is designed to capture the interests of those Indigenous children in regional and remote areas. Investor Relations The Managing Director presented and attended numerous investor conferences throughout the year including RIU Fremantle Diggers and Deals and Resource Risings Stars Gold Coast. Physical roadshows were completed in Sydney, Melbourne and Perth for meetings with investors. Due to COVID 19 restrictions and border closures roadshows and interstate and international investor meetings were limited to online meeting conferences for the majority of the first half of 2020. P a g e | 14 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Mineral Resources and Reserves ANNUAL REPORT 30 June 2020 Table 4 Mineral Resources (inclusive of Reserves; rounded to nearest 100,000t; 0.01g/t; 1,000oz) Deposit Cut-Off (g/t) kt Proven Au (g/t) koz kt Probable Au (g/t) Klondyke Open Pit Klondyke Underground St George Open Pit Copenhagen Open Pit 0.33 0.36 2.0 0.36 0.39 1.88 2,057 1.0 66 10,014 1,199 244 95 Total 2,057 1.0 66 11,552 1.0 2.4 1.2 5.5 1.2 Table 5 Ore Reserves (rounded to nearest 1,000t; 0.1g/t; 1,000oz) koz kt 335 12,071 92 9 17 453 1,199 244 95 13,609 Total Au (g/t) 1.0 2.4 1.2 5.5 1.2 koz 401 92 9 17 519 COMPETENT PERSONS STATEMENT The information in this announcement that relates to exploration targets and exploration results is based on and fairly represents information compiled by Mr. Steve Sheppard a competent person who is a member of the AusIMM. Mr. Steve Sheppard is employed by Calidus Resources Limited. Steve has sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Steve Sheppard consents to the inclusion in this announcement of the matters based on his work in the form and context in which it appears. The information in this report that relates to Klondyke Underground and Coronation Mineral Resources is based on and fairly represents information compiled or reviewed by Mr. Lynn Widenbar, Principal Consultant of Widenbar and Associates Pty Ltd., who is a Member of the AusIMM and the AIG. Mr. Lynn Widenbar is a full-time employee of Widenbar and Associates Pty Ltd. and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Lynn Widenbar consents to the inclusion of the report of the matters based on the information in the form and context in which it appears. The information in this report that relates to Copenhagen and Fieldings Gully Mineral Resources is based on and fairly represents information compiled or reviewed by Mr. Ben Playford, who is a Member of the AIG. Mr. Ben Playford is a full-time employee of Calidus Resources Limited. and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Ben Playford consents to the inclusion of the report of the matters based on the information in the form and context in which it appears. The information in this report that relates to Klondyke Mineral Resources is based on and fairly represents information compiled or reviewed by Mr. Jani Kalla, Senior Consultant of Optiro Ltd., who is a Member of the AusIMM and the AIG. Mr. Jani Kalla is a full-time employee of Optiro Ltd. and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Jani Kalla consents to the inclusion of the report of the matters based on the information in the form and context in which it appears. The information in this report that relates to the Open Pit Ore Reserves is based on and fairly represents information compiled or reviewed by Mr. Steve O’Grady. Mr O’Grady has confirmed that he has read and understood the requirements of the 2012 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. He is a Competent Person as defined by the JORC Code 2012 Edition, having more than five years experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity for which he is accepting responsibility. Mr O’Grady is a Member of the AusIMM and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. P a g e | 15 Cut-Off(g/t)MtAu (g/t)KOzMtAu (g/t)KOzMtAu (g/t)KOzMtAu (g/t)KOzKlondyke Open Pit0.32.30.9872290.908448.30.8121739.60.891,133including0.51.61.216420.31.127335.01.0917627.01.12973Klondyke UG1.51.02.87891.83.311622.72.83250including2.00.73.36721.24.081301.93.33202Copenhagen0.50.25.58330.12.6590.34.5442Coronation0.50.52.19340.52.1934Fieldings Gully0.50.31.80160.331.87200.61.8436Total2.30.987230.41.0098211.01.3344243.71.061,494TotalDepositMeasuredIndicatedInferred ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 The information in this report that relates to the Underground Ore Reserves is based on and fairly represents information compiled or reviewed by Mr. Alastair King. Mr King has confirmed that he has read and understood the requirements of the 2012 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. He is a Competent Person as defined by the JORC Code 2012 Edition, having more than five years experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity for which he is accepting responsibility. Mr King is a Member of the AusIMM and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Forward looking Statements and Disclaimers This announcement does not constitute investment advice. Neither this announcement nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. This announcement does not take into account any person's particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations in this announcement are not intended to represent recommendations of particular investments to particular persons. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments. To the fullest extent permitted by law, Calidus Resources Limited (the Company or Calidus) does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this announcement. No responsibility for any errors or omissions from this announcement arising out of negligence or otherwise is accepted. This announcement may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Calidus. These risks, uncertainties and assumptions include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this announcement. Given these uncertainties, readers are cautioned not to place reliance on forward looking statements. Any forward looking statements in this announcement speak only at the date of issue of this announcement. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Calidus does not undertake any obligation to update or revise any information or any of the forward looking statements in this announcement or any changes in events, conditions or circumstances on which any such forward looking statement is based. Compliance Statement The information in this announcement that relates to Exploration Results and Mineral Resources released previously on the ASX. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that, in the case of mineral resources estimates, all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements. P a g e | 16 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 TENEMENT SCHEDULE AS AT 30 JUNE 2020 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES & SUBSIDAIRIES TENEMENT SCHEDULE Tenement ID Holder Size (ha) Renewal Ownership/ Interest Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd 2,554.05 6,704.61 3,513.73 958.25 638.86 319.46 18.11 17.72 9.71 242.05 101.95 113.10 118.65 116.20 121.30 235.95 6.07 Keras (Pilbara) Gold Pty Ltd 1,917.75 20/05/2023 20/05/2023 22/11/2020 19/10/2024 29/11/2022 29/11/2022 10/03/2034 2/05/2035 18/01/2035 28/12/2037 28/12/2037 29/12/2037 29/11/2037 1/08/2037 8/04/2038 17/04/2038 17/11/2028 1/03/2022 Keras (Pilbara) Gold Pty Ltd Keras (Pilbara) Gold Pty Ltd 251.51 194.57 APPLICATION APPLICATION Epminex WA Pty Ltd 4,307.32 30/05/2024 Beatons Creek Gold Pty Ltd Beatons Creek Gold Pty Ltd Beatons Creek Gold Pty Ltd Beatons Creek Gold Pty Ltd Beatons Creek Gold Pty Ltd Beatons Creek Gold Pty Ltd Beatons Creek Gold Pty Ltd Beckton Gledhill Pty Ltd Beckton Gledhill Pty Ltd 7,965.63 3,163.98 4,222.07 1,596.99 2.42 439.05 1,376.89 7,961.50 5,414.50 16/03/2021 23/11/2021 4/05/2022 22/01/2023 10/06/2020 11/05/2041 APPLICATION 04/07/2022 01/08/2022 Earning 70% Earning 70% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 70% 70% 70% 70% 70% 70% 70% GRANTED E45/4856 E45/4857 E45/3615 E45/4236 E45/4905 E45/4906 M45/0521 M45/0547 M45/0552 M45/0668 M45/0669 M45/0670 M45/0671 M45/0672 M45/0679 M45/0682 M45/0240 E45/4555 Applications L45/0527 P46/1972 Option to Acquire E45/5172 Joint Venture E45/3381 E45/4666 E45/4622 E45/4934 P45/2781 G45/345 E45/5706 E45/4704 E45/4706 P a g e | 17 ANNUAL REPORT 30 June 2020 Directors' report CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Your directors present their report on the consolidated entity, consisting of Calidus Resources Limited (Calidus or the Company) and its controlled entities (collectively the Group), for the financial year ended 30 June 2020. 1. Directors The names of Directors in office at any time during or since the end of the year are: • • • • Mr David Reeves Mr Mark Connelly Mr Keith Coughlan Mr Adam Miethke Managing Director Non-executive Chairman Non-executive Director Non-executive Director (Resigned on 27 July 2020) Directors have been in office since the start of the year to the date of this report unless otherwise stated. 2. Company secretary Ms Julia Beckett was appointed Company Secretary of the Company on 24 September 2018. Ms Beckett holds a Certificate in Governance Practice and Administration and is an Affiliated Member of the Governance Institute of Australia. 3. Dividends paid or recommended There were no dividends paid or recommended during the financial year ended 30 June 2020. 4. Significant changes in the state of affairs Please refer to the operations review for the significant changes in the state of affairs of the Group that occurred during the financial year. 5. Significant changes in principal activities There were no significant changes to the Group’s principal activities during the financial year. 6. Operating and financial review 6.1 Nature of Operations Principal Activities Calidus is a gold exploration and development company that controls the Warrawoona Gold Project in the East Pilbara district of the Pilbara Goldfields in Western Australia. 6.2 Operations review (refer Operations Review on page 4) 6.3 Financial review a. b. Operating results For the 2020 financial year the Group delivered a loss before tax of $2,094,345 (2019: $1,242,718 loss). The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. Financial position The net assets of the Group have increased from 30 June 2019 by $9,037,777 to $31,023,260 at 30 June 2020 (2019: $21,985,483). P a g e | 18 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report ANNUAL REPORT 30 June 2020 As at 30 June 2020, the Group's cash and cash equivalents increaseddecreased from 30 June 2019 by $1 ,545,292 to $5,690,661 at 30 June 2020 (2019: $4,145,369) and had working capital of $4,614,250 (2019: $2,576,540 working capital), as noted in Note 14f. 6.4 Events subsequent to reporting date • On 1 July 2020 Calidus announced that tenders for the major contracts, comprising a schedule of rates mining contract, tailings dam construction, EPC for the processing plant construction and a build, own, operate (BOO) model for the power station, have been let to the market. • On 1 July 2020 Calidus announced specialist natural resources investment house Argonaut had been appointed to act as the Company’s exclusive debt advisor. • On 13 July 2020 Calidus announced that drilling was to commence at the Otways project. • On 17 July 2020 the company announced that it had received firm commitments to raise $25 million (before costs) via a share placement to professional and sophisticated investors through the issue of 49,019,608 shares at a price of $0.51. • On 27 July 2020 that Mr Adam Miethke resigned as Non-Executive Director of the Company. • On 5 August 2020 the company announced that experienced mining executive Don Russell had commenced in the role of General manager operations • On 5 August 2020 Calidus announced that Environmental Permits had been granted for early works at Warrawoona which provided the Company with the option to commence installation the mine access road and accommodation village prior to receiving full project development approval. • On 5 August 2020 and 12 August 2020, Calidus announced the issuance of 600,000 and 170,000 unlisted • options to Donald Russell and an employee respectively. 0n 13 August 2020, Calidus announced that it has issued and allotted 200,000 shares upon the exercise of 200,000 unquoted options, exercise price of nil, expiring 27 December 2023. • On 24 August 2020. Calidus announced that it had Environmental approval for the Warrawoona Gold Project granted by the Western Australian Minister for Environment and that and the debt finance process was progressing with indicative debt term sheets received. 6.5 Future developments, prospects and business strategies PLANNED WORK FOR 2020/2021 The Company is focussed on advancing the Warrawoona Gold Project under the following timeline: 6.6 Environmental regulations The consolidated entity will comply with its obligations in relation to environmental regulation on its projects when it undertakes exploration. The Directors are not aware of any breaches of any environmental regulations during the year covered by this Report. P a g e | 19 ANNUAL REPORT 30 June 2020 Directors' report 7. Information relating to the Directors CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ◼ Mr David Reeves Qualifications Experience Special responsibilities Interest in Shares and Options     Directorships held in other listed entities Past directorships in the last 3 years   ◼ Mr Mark Connelly Qualifications Experience   Special responsibilities Interest in Shares and Options Directorships held in other listed entities    Past directorships in the last 3 years  Managing Director Mining Engineer Bachelor of Engineering (1st Class honours), Grad Dip Applied Finance, WA Mine Managers Certificate Mr Reeves is a Perth-based, qualified mining engineer with 30 years of experience in the mining industry and was the Non-executive Chairman of European Metals Holdings Limited (ASX and AIM). Mr Reeves has extensive experience in international capital markets through his involvement with various listed London and Australia companies. Mr Reeves was the Project Manager of Zimplats and Afplats prior to their sale for a combined US$1 billion and prior to this, worked with Delta Gold in Zimbabwe and various gold companies in Western Australia in which he assumed various roles, including the position of Mine Manager. None 17,155,004 Fully Paid Ordinary Shares 150,000 Unlisted options, nil exercise price, exp 27 December 2021 3,000,000 Unlisted Option, nil exercise price, exp 27 December 2024 Non-executive Director of Keras Resources Plc (AIM) Non-executive Chairman of European Metals Holdings Limited (ASX & AIM) – resigned 30 June 2020 Independent Non-executive Chairman Bachelor of Business, ECU, MAICD, AIMM, Member of SME Mr Connelly was previously Managing Director of Papillion Resources and was instrumental in the US$570m takeover of Papillion by B2Gold Corp in October 2014. Prior to Papillon, Mr Connelly was Chief Operating Officer of Endeavour Mining Corporation, following its merger with Adamus Resources Limited where he was Managing Director and CEO. Mark was instrumental in not only the merger, but procurement of project finance and the development of the Nzema Mine in Ghana into a +100Koz pa mining operation. Member of Audit and Risk Committee and the Remuneration and Nomination Committee 526,786 Fully Paid Ordinary Shares 300,000 NED Options, nil exercise price, exp 27 December 2023 Non-executive Chairman of Chesser Resources Limited (ASX) Non-executive Chairman of Oklo Resources Limited (ASX) Non-executive Chairman of Tao Commodities Ltd (ASX) Non-executive Chairman of Primero Group Limited (ASX) Non-executive Chairman of West African Resources Ltd (ASX) from 23 June 2015 to 29 May 2020 Non-executive director of Ausdrill Limited, (ASX) from July 2012 to June 2018 Non-executive director of Tiger Resources Ltd (ASX) from December 2015 to June 2018 Non-executive director of Saracen Mineral Holdings Limited (ASX) from May 2015 to November 2017 Non-executive Chairman of Cardinal Resources Ltd (ASX) from September 2015 to October 2017 ◼ Mr. Keith Coughlan Qualifications Experience   Special responsibilities Interest in Shares and Options Directorships held in other listed entities    Past directorships in the last 3 years  Non-executive Director BA Mr Coughlan has almost 30 years’ experience in stockbroking and funds management. He has been largely involved in the funding and promoting of resource companies listed on ASX, AIM and TSX, has advised various companies on the identification and acquisition of resource projects and was previously employed by one of Australia’s then largest funds. Chairman of the Audit and Risk Committee and the Remuneration and Nomination Committee 944,000 Fully Paid Ordinary Shares 200,000 NED Options, nil exercise price, exp 27 December 2023 Executive Chairman of European Metals Holdings Limited (ASX & AIM) Non-executive Chairman of Doriemus plc (ASX) Non-executive Director of Southern Hemisphere Mining Limited (ASX) N/A P a g e | 20 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report ANNUAL REPORT 30 June 2020 ◼ Mr Adam Miethke Qualifications Experience Special responsibilities Interest in Shares and Options Directorships held in other listed entities Non-executive Director (resigned on 27 July 2020) Bachelor of Applied Science with First Class Honours in Geology & Master of Business Administration Mr Miethke is a geologist with over extensive experience in the metals and mining industry, funds management and as a corporate advisor. Mr Miethke initially worked for Rio Tinto’s iron ore division before joining Snowden Mining Consultants where he worked across all commodities in Australia, Africa, Eastern Europe and South America. After completing an MBA in 2008, he joined Regent Pacific Group in Hong Kong as technical director, overseeing the group’s investment portfolio. Between 2011 and 2016, Mr Miethke was a director of a corporate finance team at Argonaut Capital Limited and led Argonaut’s metals and mining division. Chairman of Audit & Risk Committee prior to resignation on 27 July 2020 206,429 Fully Paid ordinary Shares      None 8. Meetings of directors and committees The number of Directors’ Meetings (including meetings of Committees of Directors) held during the year, and the number of meetings attended by each Director is as follows: DIRECTORS' MEETINGS AUDIT COMMITTEE REMUNERATION COMMITTEE Number eligible to attend 4 4 4 4 Number Attended 4 4 4 4 Number eligible to attend - - - - Number Attended - - - - Number eligible to attend - - - - Number Attended - - - - Dave Reeves Mark Connelly Keith Coughlan Adam Miethke 9. Indemnifying officers or auditor During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: • • The Company has entered into agreements to indemnify all Directors and provide access to documents, against any liability arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be awarded against the Directors. The Company has paid premiums to insure each of the Directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the Company, other than conduct involving a willful breach of duty in relation to the Company. Under the terms and conditions of the insurance contract, the nature of the liabilities insured against and the premium paid cannot be disclosed. • No indemnity has been paid to auditors. P a g e | 21 ANNUAL REPORT 30 June 2020 Directors' report 10. Options 10.1 Unissued shares under option CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 At the date of this report, the un-issued ordinary shares of Calidus Resources Limited under option (listed and unlisted) are as follows: Grant Date Date of Expiry Exercise Price Number under Option 18 April 2017 18 April 2021 $0.20 25 November 2019 25 November 2019 25 November 2019 25 November 2019 25 November 2019 4 June 2020 5 August 2020 27 Dec 2021 27 Dec 2023 27 Dec 2024 30 Jan 2022 30 Jan 2025 4 June 2025 5 August 2025 12 August 2020 12 August 2025 Nil Nil Nil Nil Nil Nil Nil Nil 4,200,000 388,500 500,000 7,150,000 150,000 2,700,000 500,000 600,000 170,000 16,358,500 No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of any other body corporate. P a g e | 22 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report 10.2 Shares issued on exercise of options ANNUAL REPORT 30 June 2020 During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options as follows (there were no amounts unpaid on the shares issued): Grant Date Issued price of the shares Number of shares issued Prior to 10:1 share consolidation: 21-Aug-19 22-Aug-19 10-Sep-19 Post 10:1 share consolidation: 1-May-20 14-May-20 26-May-20 26-May-20 26-May-20 27-May-20 27-May-20 4-June-20 4-June-20 12-June-20 12-June-20 12-June-20 13-Aug-20 $0.025 $0.020 $0.025 $0.25 $0.25 $0.25 $0.20 $0.30 $0.30 $0.25 $0.25 $0.20 $0.25 $0.20 $0.30 Nil 4,000,000 2,000,000 750,000 25,000 100,000 1,175,000 200,000 600,000 500,000 425,000 700,000 200,000 150,000 200,000 500,000 200,000 11. Non-audit services No non-audit services were provided to the Company during or since the end of the financial year. 12. Proceedings on behalf of company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. 13. Auditor’s independence declaration The lead auditor's independence declaration under section 307C of the Corporations Act 2001 (Cth) for the year ended 30 June 2020 has been received and can be found on page 33 of the annual report. P a g e | 23 ANNUAL REPORT 30 June 2020 Directors' report 14. Remuneration report (audited) CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 The information in this remuneration report has been audited as required by s308(3C) of the Corporations Act 2001. 14.1 Key management personnel (KMP) KMP have authority and responsibility for planning, directing and controlling the activities of the Group. KMP comprise the directors of the Company and key executive personnel: • • • • • • Mr David Reeves Mr Mark Connelly Mr Keith Coughlan Mr Adam Miethke Mr Paul Brennan Mr Richard Hill Managing Director Non-executive Chairman Non-executive Director Non-executive Director (Resigned on 27 July 2020) Chief Operating Officer Chief Financial Officer (Appointed on 25 November 2019) 14.2 Principles used to determine the nature and amount of remuneration The remuneration policy of the Company has been designed to ensure reward for performance is competitive and appropriate to the result delivered. The framework aligns executive reward with the creation of value for shareholders and conforms to market best practice. The Board ensures that director and executive reward satisfies the following key criteria for good reward government practices: • • • • • Competitiveness and reasonableness; Acceptability to the shareholder; Performance; Transparency; and Capital management. The remuneration policy has been tailored to increase the direct positive relationship between shareholders' investment objectives and directors' and executives' performance. Currently, this is facilitated through the issues of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. The Board's policy for determining the nature and amount of remuneration for Board members and senior executive of the Company is as follows: a. Executive Directors and other Senior Executives The Company’s remuneration policy for executive directors and senior management is designed to promote superior performance and long-term commitment to the Company. Executives receive a base remuneration which is market related, and may receive performance based remuneration. The Board reviews executive packages annually by reference to the Company's performance, executive performance, and comparable information from industry sectors and other listed companies in similar industries. Executives are also entitled to participate in employee share and option schemes. Given the developments in, and evolvement of the Company to date, the Board appointed a firm of independent remuneration advisors to review the Company’s remuneration and incentive plans in October 2019. The review was undertaken to ensure appropriateness of performance conditions (over the short and long term), vesting scales, targets and gates to the circumstances that are anticipated to prevail over the measurement period and the expectations of shareholders. i. Fixed Remuneration Correction Plan In October 2019, the Company engaged BDO (WA) Pty Ltd, independent remuneration consultants, to conduct a market review of the total fixed remuneration (TFR) packages of the Board and senior executives. The market review identified the Company Total Fixed Remuneration (TFR) packages to be at a discount to the market median. In order for the Company to conserve cash as it progresses its activities from the development of its asset to commercial production, the Company will utilise a 'once-off' equity allocation in the form of zero exercise price options (i.e. options with a nil exercise price) to ensure that the TFR package is market appropriate i.e. median. The equity allocation represents equity in lieu of additional salary. P a g e | 24 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report ANNUAL REPORT 30 June 2020 For senior executives, the only vesting condition is that the executive must remain employed with the Company for a period of 12 months at which time the options will vest (Exec Options). A good leaver policy will apply to fixed remuneration options and the options are to be issued under the Company's Employee Securities Incentive Plan (ESIP), the terms of which are summarised in the Company's 2017 notice of annual general meeting, announced on ASX on 29 September 2017. The fixed remuneration correction plan therefore has a retentive benefit as well as ensuring that senior executives and non- executive directors are remunerated at market related rates. ii. Discretionary Salary Reduction in return for Shares Rights During the financial year, the Company initiated various cash preservation measures in March at the start of the COVID-19 pandemic to ensure it was funded through to a final investment decision on the Warrawoona Gold Project. This includes various directors, senior staff and consultants electing to take part of their pay in the form of securities. The Company has invited director David Reeves (subject to shareholder approval), Paul Brennan and Richard Hill to participate in a discretionary salary reduction in return for rights to acquire shares (Share Rights) to be granted under the ESIP, whereby they may elect to accrue up to 50% of their salary (Reduced Amount) from 1 April to 30 June 2020. The number of rights was determined with reference to the VWAP for the month of April 2020. The rationale for inviting the director and executives to participate in a discretionary salary reduction in return for Share Rights is to preserve cash within the Company, strengthen the Company's balance sheet, align directors' remuneration with the Company's and shareholders' objectives, and to provide directors and executives with an incentive to enhance shareholder value. b. Non-Executive Directors The Company's Constitution provides that directors are entitled to be remunerated for their services as follows: • The total aggregate fixed sum per annum to be paid to the directors (excluding salaries of executive directors) from time to time will not exceed the sum determined by the shareholders in general meeting and the total aggregate fixed sum will be divided between the directors as the directors shall determine and, in default of agreement between them, then in equal shares. The directors' remuneration accrues from day to day. • The directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred by them respectively in or about the performance of their duties as directors. Notwithstanding the aforementioned, and based on advice from an independent remuneration expert, the remuneration structure for Non-Executive Directors represents the following structure: • • • Annual board fees; Committee fees; and Equity based fees (in lieu of fixed fees). The equity-based fees to be considered for non-executive directors will not be subject to performance conditions. This will be in-line with best practice governance standards, including the ASX Corporate Governance Council’s Principles. i. Fixed Remuneration Correction Plan In October 2019, the Company engaged an independent remuneration expert to conduct a market review of the TFR packages of the Board and senior executives. The market review identified the Company TFR packages to be at a discount to the market median. P a g e | 25 ANNUAL REPORT 30 June 2020 Directors' report CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 In order for the Company to conserve cash as it progresses its activities from the development of its asset to commercial production, the Company will utilise a 'once-off' equity allocation in the form of zero exercise price options (i.e. options with a nil exercise price) to ensure that the TFR package is market appropriate i.e. median. The equity allocation represents equity in lieu of additional salary. For non-executive directors, the only vesting condition is that the non-executive director must remain with the Company for a period of 3 years, with a third of the options vesting each year (NED Options). A good leaver policy will apply to NED Options and the options are to be issued under the Company's Employee Securities Incentive Plan (ESIP), the terms of which are summarised in the Company's 2017 notice of annual general meeting, announced on ASX on 29 September 2017. The fixed remuneration correction plan therefore has a retentive benefit as well as ensuring that non-executive directors are remunerated at market related rates. ii. Discretionary Fees Reduction in return for Shares Rights During the financial year, the Company initiated various cash preservation measures in March at the start of the COVID-19 pandemic to ensure it was funded through to a final investment decision on the Warrawoona Gold Project. This includes various directors, senior staff and consultants electing to take part of their pay in the form of Securities. The Company has, subject to Shareholder approval, invited Mark Connelly and former director Adam Miethke to participate in a discretionary salary reduction in return for rights to acquire Shares (Share Rights) to be granted under the ESIP, whereby they may elect to accrue up to 50% of their salary (Reduced Amount) from 1 April to 30 June 2020. The rationale for inviting the directors to participate in a discretionary salary reduction in return for Share Rights is to preserve cash within the Company, strengthen the Company's balance sheet, align directors' remuneration with the Company's and shareholders' objectives, and to provide directors with an incentive to enhance shareholder value. c. Fixed Remuneration Other than statutory superannuation contribution, no retirement benefits are provided for executive and non-executive directors of the Company. To align directors' interests with shareholder interests, the directors are encouraged to hold shares in the company. d. Incentive Plan Arrangements for Executive Directors and Senior Executives The Company does not have a defined cash-based incentive plan. As the Company is a non-producer, and in order to limit its outgoings, the Board wishes to conserve and utilise its cash holdings in the most effective manner possible. In addition, to ensure the executive directors and senior executives have the ability to participate in the value that is being created and delivered an allocation of zero exercise price options are issued under the terms of the ESIP (Incentive Options). The Incentive Options will expire 5 years from the date of grant and will vest subject to the relevant executive director or senior executive remaining employed by the Company at the date of vesting, and: (i) half of the Incentive Options will vest upon the latter of the following: (a) the Company announcing successful completion of a positive definitive feasibility study for the Warrawoona Gold Project (DFS); and (b) the Company announcing that it has acquired the approvals and permits required to commence construction of the mine on the Warrawoona Gold Project from the Environmental Protection Authority, the Department of Mines, Industry Regulation and Safety, and the Department of the Environment and Energy; and (ii) subject to the vesting of the first half of the Incentive Options, the second half of the Incentive Options will vest upon the Company announcing that first gold pour has been achieved at the Warrawoona Gold Project. P a g e | 26 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report e. Service Contracts ANNUAL REPORT 30 June 2020 Remuneration and other terms of employment for the directors and KMP are formalised in contracts of service. f. Engagement of Remuneration Consultants During the financial year, the Company engaged BDO (WA) Pty Ltd, independent remuneration consultants, to review its existing remuneration policies and provide recommendations on how to improve both the fixed remuneration and performance based remuneration (both short term and long term incentive) programs. BDO (WA) Pty Ltd was paid $12,500 for these services. g. Relationship between Remuneration of KMP and Earnings The Board does not consider earnings during the current and previous financial years when determining the nature and amount of remuneration of KMP as the Company is a non-producer. 14.3 Directors and KMP remuneration Details of the remuneration of the directors and KMP of the Group (as defined in AASB 124 Related Party Disclosures) are set out in the following table. The amounts disclosed for the 2020 financial year in the table represents remuneration paid to the Group over the financial year ended 30 June 2020 and 30 June 2019. 2020 – Group Group KMP David Reeves Mark Connelly Keith Coughlan Adam Miethke Paul Brennan (i) Richard Hill (ii) Short-term benefits Post-employment benefits Share-based payments Total % of Remunera- tion as equity-based payments Salary, fees and leave Other Super- annuation Other Share Rights(iii) Options and Performance Rights(vi) $ 240,278 $ $ 36,830(iv) $ 517,733 $ 240,625 52,500 24,000 22,200 210,000 101,625 650,950 $ - - - - - - - $ - 5,700 - - 22,800 12,504 41,004 - - - - - - - 8,170(iv) 12,531 78,901 - 8,354 32,354 2,539(iv) 8,354 33,093 37,500(v) 324,914 595,214 31,071(v) 235,544 380,744 116,110 829,975 1,638,039 54% 26% 26% 33% 61% 70% (i) (ii) (iii) (iv) (v) (vi) Appointed on 12 March 2019 Appointed on 25 November 2019 In return for their agreement to reduce their salary, the Company has agreed to grant each of the senior executives and directors (or their respective nominees) Share Rights under the ESIP. Each Share Right will entitle the holder to acquire one Share in the Company. The deemed issue price for the Share Rights is $0.28 each, which represents the VWAP for the month of April 2020 and which is the same deemed issue price of Shares issued to other unrelated staff and service providers of the Company. The Share Rights immediately vest on the grant date and expire 24 months from the grant date. The shareholders approved the share issuance on 1 September 2020. Shares were issued on 2 September. Refer to ASX Announcement dated 2 September 2020. Shares were issued on 1 July 2020. Refer to ASX Announcement dated 1 July 2020. Only Paul Brennan was granted performance rights. P a g e | 27 ANNUAL REPORT 30 June 2020 Directors' report CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 2019 – Group Group KMP Short-term benefits Post-employment benefits Share-based payments Total Salary, fees and leave Other Super- annuation Other David Reeves Mark Connelly Keith Coughlan $ 275,000 60,000 24,000 Peter Hepburn-Brown (vii) 4,200 Adam Miethke James Carter(viii) Paul Brennan 24,000 27,500 74,286 488,986 $ - - - - - - - - $ - 5,700 - - - - 7,057 12,757 (vii) (viii) (ix) Deceased 2 September 2018 Resigned 21 September 2018 Only Paul Brennan was granted performance rights. $ - - - - - - - - Equity- settled shares $ - Equity - settled options and rights(ix) $ 15,556 290,556 133,818 - 199,518 - - - 21,653 12,963 36,963 - 15,556 - 4,200 39,556 49,153 - 20,175 101,518 155,471 64,250 721,464 % of Remunera- tion as equity-based payments $ 5.0% 67.0% 35.0% -% 39.0% 44.0% 20% 14.4 Service agreements Name Mr David Reeves Employing Company Calidus Resources Limited Base Salary/Fees Terms of Agreement Termination Notice Period Consultancy fees of $275,000 per annum plus GST(a) Until terminated. Mr Paul Brennan Keras (Pilbara) Gold Pty Ltd(b) Base salary of $240,000 per annum plus superannuation of 9.5% Until terminated. Mr Richard Hill (c) Calidus Resources Limited 25 November 19 to 31 January 20: A day rate of $1,150 per day plus superannuation of 9.5% Until terminated. Following 31 January 20: Base salary of $240,000 per annum plus superannuation of 9.5% 3 months in writing by either party or termination payment equal to 3 months consultancy fees. 3 months in writing by either party or termination payment equal to 3 months of the base salary. 6 months in writing by either party or termination payment equal to 6 months of the base salary. (a) In the event of a change in control (which occurs when a person’s voting power in the Company increases above 50%), Mr Reeves will receive a bonus payment equal to 12 months Consultancy Fee. However, this bonus will not be payable if, within 6 months after the change of control, either the Consultant or the Company terminates the consultancy in accordance with the ECA. (b) A wholly owned subsidiary of Calidus Resources Limited. Refer to Note 18. (c) Appointed on 21 November 2019. In the event of a change in control (which occurs when a person’s voting power in the Company increases above 50%), the employee will receive a bonus payment equal to 6 months base salary. However, this bonus will not be payable if, within 6 months after the change of control, either the employee or the Company terminates the agreement in accordance with the agreement. P a g e | 28 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report a. Non-executive Director Agreements ANNUAL REPORT 30 June 2020 The Company entered into separate Non-executive Director letter agreement with each of Mr Connelly, Mr Coughlan and Mr Miethke. The Company has agreed to pay Mr Connelly a director fee of $60,000 plus superannuation per year for services provided to the Company as Non-executive Chairman. The Company has agreed to pay Mr Coughlan and Mr Miethke director fees of $24,000 each including superannuation per year for services provided to the Company as Non-executive Director. 14.5 Share-based compensation Issue of shares No shares were issued to directors and other key management personnel as part of compensation during the year ended 30 June 2020. Share Rights In return for their agreement to reduce their salary, the Company has agreed to grant each of the senior executives and directors (or their respective nominees) Share Rights under the ESIP. Each Share Right will entitle the holder to acquire one Share in the Company. The deemed issue price for the Share Rights is $0.28 each, which represents the VWAP for the month of April 2020 and which is the same deemed issue price of Shares issued to other unrelated staff and service providers of the Company. The Share Rights immediately vest on the grant date and expire 24 months from the grant date. Share rights granted carry no dividend or voting rights. The terms and conditions of each grant of share rights over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Name Number of share rights granted Deemed grant date Share price at grant date Expiry date David Reeves1 Mark Connelly1 Keith Coughlan Adam Miethke1 Paul Brennan2 Richard Hill2 7-May 20 5-May-20 - 26-May-20 20-May-20 8-May-20 1 The shareholders approved the share issuance on 1 September 2020. Shares were issued on 2 September. Refer to ASX Announcement dated 2 September 2020. 2 Shares were issued on 1 July. Refer to ASX Announcement dated 1 July 2020. 7-May 22 5-May-22 - 26-May-22 20-May-22 8-May-22 122,768 26,786 - 6,429 107,143 107,143 $0.300 $0.305 - $0.395 $0.350 $0.290 Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: NED Options and Exec Options Name Number of options granted Grant date Vesting date and exercisable date Expiry date Exercise price David Reeves Mark Connelly Keith Coughlan Adam Miethke1 Paul Brennan Richard Hill 1 On 27 July 2020, the Board resolved that it will permit all of the NED Options issued to Adam Miethke will vest under a good leaver exception and that Adam Miethke will have one month to exercise these options. 25-Nov-19 25-Nov-19 25-Nov-19 25-Nov-19 25-Nov-19 29-Jan-20 24-Nov-20 24-Nov-22 24-Nov-22 27-Jul-20 24-Nov-20 28-Jan-21 27-Dec-21 27-Dec-23 27-Dec-23 27-Aug-20 27-Dec-21 30-Jan-22 150,000 300,000 200,000 200,000 150,000 150,000 Nil Nil Nil Nil Nil Nil Fair value per option at grant date $0.21 $0.21 $0.21 $0.21 $0.21 $0.26 P a g e | 29 ANNUAL REPORT 30 June 2020 Directors' report Incentive options CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Name Number of options granted Grant date Vesting date1 and exercisable date Expiry date Exercise price David Reeves David Reeves Paul Brennan Paul Brennan Richard Hill Richard Hill 1,500,000 1,500,000 1,350,000 1,350,000 1,350,000 1,350,000 25-Nov-19 25-Nov-19 25-Nov-19 25-Nov-19 29-Jan-20 29-Jan-20 30-Sep-20 - 30-Sep-20 - 30-Sep-20 - 27-Dec-24 27-Dec-24 27-Dec-24 27-Dec-24 30-Jan-25 30-Jan-25 Nil Nil Nil Nil Nil Nil Fair value per option at grant date $0.21 $0.21 $0.21 $0.21 $0.26 $0.26 1As at reporting date, the probability of achievement of the milestones (detailed in Section 14.2d) and the first of the options are deemed to be 100% with estimated achievement date on 30 September 2020. No value was expensed for second half of the options during the year as the probability of achievement of the milestone as at 30 June 2020 was less than 50%. Options granted carry no dividend or voting rights. All options were granted over unissued fully paid ordinary shares in the company. The number of options granted was determined having regard to the satisfaction of performance measures and weightings as described above in the section 'Note 17: Share based payments'. Options vest based on the provision of service over the vesting period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their potential exercise. 14.6 Additional disclosures relating to the key management personnel a. Fully paid ordinary shares of Calidus Resources Limited held by each KMP 2020 – Group Group KMP David Reeves Mark Connelly Keith Coughlan Adam Miethke Paul Brennan Richard Hill Balance at start of year No. 17,757,903 5,000,000 4,440,000 - 5,000,000 - 32,197,903 Received during the year as compensation No. - - - - - - - Received during the year on the exercise of options No. 500,000 - 500,000 - - - 1,000,000 Other changes during the year No. 143,895,735 - - - Consolidation No. (145,159,439) (4,500,000) (3,996,000) - (2,150,000) (2,700,000) - 141,745,735 - (156,355,439) Balance at end of year No. 16,994,200 500,000 944,000 - 150,000 - 18,588,200 b. Share rights in Calidus Resources Limited held by each KMP 2020 – Group Group KMP David Reeves Mark Connelly Keith Coughlan Adam Miethke Paul Brennan Richard Hill Balance at start of year No. - - - - - - - Received during the year as compensation No. 122,768 26,786 - 6,429 107,143 107,143 370,269 Other changes during the year No. - - - - - - Consolidation No. - - - - - - - - Balance at end of year No. 122,768 26,786 - 6,429 107,143 107,143 370,269 P a g e | 30 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Directors' report ANNUAL REPORT 30 June 2020 c. Options in Calidus Resources Limited held by each KMP 2020 – Group Group KMP David Reeves Mark Connelly Keith Coughlan Adam Miethke Paul Brennan Richard Hill Balance at start of year No. 5,000,000 - 5,000,000 6,000,000 - - 16,000,000 Granted as Remuneration during the year No. 150,000 300,000 200,000 200,000 150,000 150,000 1,150,000 Exercised during the year No. (500,000) - (500,000) - (1,000,000) Other changes during the year No. 3,000,000 (600,000) 2,700,000 2,700,000 7,800,000 Consolidation No. (4,500,000) (4,500,000) (5,400,000) - - (14,400,000) Balance at end of year No. 3,150,000 300,000 200,000 200,000 2,850,000 2,850,000 9,550,000 Vested and Exercisable No. - - - - - - - Not Vested No. 3,150,000 300,000 200,000 200,000 2,850,000 2,850,000 9,550,000 d. Performance rights in Calidus Resources Limited held by each KMP 2020 – Group Group KMP Paul Brennan Balance at start of year No. 9,000,000 9,000,000 Granted as Remuneration during the year No. - - Exercised during the year No. - - Other changes during the year No. - - Consolidation No. (8,100,000) (8,100,000) Balance at end of year No. 900,000 900,000 Vested and Exercisable No. 900,000 900,000 Not Vested No. - - 14.7 Other transactions with KMP and or their related parties During the 2020 financial year, the Group incurred the following amounts to related parties: • Office Rent Wilgus Investments Pty Ltd and Wild West Enterprises Pty Ltd $81,961* (30 June 2019: $62,300) Calidus and Wilgus Investments Pty Ltd entered into a sub-lease agreement in respect of a portion of the office space at 12/11 Ventnor Avenue, West Perth (Office Lease Agreement). Mr Reeves (Managing Director of the Company) is a director of Wilgus Investments Pty Ltd and Wild West Enterprises Pty Ltd. The rent payable by Calidus under the Office Lease Agreement is: a. From July – August 2019: $6,100 per month payable in advance; and b. From Sept to June 2020: $7,100 per month payable in advance. * During the financial year, the Company initiated various cash preservation measures in March at the start of the COVID-19 pandemic to ensure it was funded through to a final investment decision on the Warrawoona Gold Project. This includes various directors, senior staff and consultants electing to take part of their pay or fees in the form of Securities. The Company has, subject to Shareholder approval, invited Wild West Enterprises Pty Ltd to participate in a fee reduction in return for fully paid ordinary shares (Shares), whereby Wild West Enterprises has accrued 50% of its monthly office rental fee for a period of 3 months from 1 April to 30 June 2020 (Reduced Amount). In return for the agreed Reduced Amount, the Company has agreed to issue Wild West Enterprises (or its nominees) 38,036 Shares. The value of the shares was $11,411 at the valuation date. The shares were approved by Shareholder on 1 September 2020. P a g e | 31 ANNUAL REPORT 30 June 2020 Directors' report CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 • Consulting Fees - Discovery Capital Partners Pty Ltd $119,679** (30 June 2019: $170,000) The Group paid Corporate Advisory and Capital Raising fees to Discovery Capital Partners Pty Ltd of $119,679 during the year ended 30 June 2020 (30 June 2019: $170,000). Mr Miethke is a director of Discovery Capital. The Board considers that the Discovery Capital engagement to be on arms’ length and commercial terms. ** During the financial year, the Company initiated various cash preservation measures in March at the start of the COVID-19 pandemic to ensure it was funded through to a final investment decision on the Warrawoona Gold Project. This includes various directors, senior staff and consultants electing to take part of their pay in the form of Securities. The Company has, subject to Shareholder approval, invited Discovery Capital Partners Pty Ltd to participate in a fee reduction in return for fully paid ordinary shares (Shares), whereby Discovery Capital Partners Pty Ltd has accrued 50% of its monthly office rental and outgoings fee for a period of 3 months from 1 April to 30 June 2020 (Reduced Amount). In return for the agreed Reduced Amount, the Company has agreed to issue Discovery Capital Partners Pty Ltd 32,143 Shares. The value of the shares was $8,679 at the valuation date. The shares were approved by Shareholder on 1 September 2020. Refer also Note 20 Related party transactions. END OF REMUNERATION REPORT This Report of the directors, incorporating the Remuneration Report, is signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001 (Cth). MARK CONNELLY Non-executive Chairman Dated this Friday, 11 September 2020 P a g e | 32 Moore Australia Audit (WA) Level 15, Exchange Tower, 2 The Esplanade, Perth, WA 6000 PO Box 5785, St Georges Terrace, WA 6831 T +61 8 9225 5355 F +61 8 9225 6181 www.moore-australia.com.au AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF CALIDUS RESOURCES LIMITED As lead auditor of Calidus Resources Limited, I declare, that to the best of my knowledge and belief, during the financial year ended 30 June 2020, there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Calidus Resources Limited and the entities it controlled during the financial year. SL TAN PARTNER MOORE AUSTRALIA AUDIT (WA) CHARTERED ACCOUNTANTS Signed at Perth this 11th day of September 2020. Moore Australia Audit (WA) – ABN 16 874 357 907. An independent member of Moore Global Network Limited - members in principal cities throughout the world. Liability limited by a scheme approved under Professional Standards Legislation. P a g e | 33 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2020 Note 30 June 2020 $ 30 June 2019 $ Continuing operations Revenue Other income Compliance costs Depreciation and amortisation Employment costs Exploration and evaluation expenditure Finance costs Insurance fees Exploration expenditure written off Legal and consulting fees Occupancy costs Share-based payments Share registry and listing fees Travel and accommodation Other expenses Unrealised profit / (loss) on Pacton shares Foreign exchange loss Profit / (loss) before tax Income tax benefit / (expense) Net profit / (loss) for the year Other comprehensive income, net of income tax 3a 3b 4a 11b 363,917 234,381 3,691,174 84,980 598,298 3,776,154 (421,947) (62,560) (703,694) (25,453) (1,503) (75,075) (163,643) (160,918) (74,316) (580,035) (60,200) (512,401) (2,320) (21,615) (41,983) (15,000) (83,705) (65,224) (634,532) (100,625) (84,825) (408,566) 17 (1,129,850) (102,132) (52,895) 236,041 4b 45,368 (2,405,866) (66) (1,974) (2,094,345) (1,242,718) 5 - - (2,094,345) (1,242,718) - - Other comprehensive income for the year, net of tax (2,094,345) (1,242,718) Total comprehensive income attributable to members of the parent entity (2,094,345) (1,242,718) Earnings per share: Basic and loss per share (cents per share) ₵ ₵ 6c (0.01) (0.09) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes. P a g e | 34 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Consolidated statement of financial position as at 30 June 2020 Current assets Cash and cash equivalents Trade and other receivables Financial assets Other Total current assets Non-current assets Plant and equipment Exploration and evaluation assets Other non-current assets Total non-current assets Total assets Current liabilities Trade and other payables Short-term provisions Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity ANNUAL REPORT 30 June 2020 Note 30 June 2020 $ 30 June 2019 $ 7 8 9a 9b 10 11 5,690,661 4,145,369 261,695 307,782 1,362,119 1,275,245 43,669 - 7,358,144 5,728,396 696,763 114,309 24,329,686 18,145,519 24,993 24,993 25,051,442 18,284,821 32,409,586 24,013,217 12 13 1,338,107 1,876,611 48,219 151,123 1,386,326 2,027,734 1,386,326 2,027,734 31,023,260 21,985,483 14a 16 39,714,679 29,712,407 1,910,237 780,387 (10,601,656) (8,507,311) 31,023,260 21,985,483 The consolidated statement of financial position is to be read in conjunction with the accompanying notes. P a g e | 35 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Consolidated statement of changes in equity for the year ended 30 June 2020 Note Issued Capital $ Employee Shares $ Reserve $ Accumulated Losses $ Total $ Balance at 1 July 2018 21,712,043 414,029 170,855 (7,264,593) 15,032,334 Loss for the year attributable owners of the parent Other comprehensive income for the year attributable owners of the parent Total comprehensive income for the year attributable owners of the parent - - - Transaction with owners, directly in equity Shares issued during the year Share based payments 7,820,047 - 17 - - - - - - Employee shares issued during the year 14e/15 439,029 (414,029) 14a (258,712) Transaction costs Balance at 30 June 2019 Balance at 1 July 2019 29,712,407 29,712,407 - - - Loss for the year attributable owners of the parent Other comprehensive income for the year attributable owners of the parent Total comprehensive income for the year attributable owners of the parent , Transaction with owners, directly in equity Shares issued during the year Share based payments Transaction costs Balance at 30 June 2020 17 14a 10,557,000 - (554,728) 39,714,679 - (1,242,718) (1,242,718) - - - 609,532 - - - - (1,242,718) (1,242,718) - - - - 7,820,047 609,532 25,000 (258,712) 780,387 (8,507,311) 21,985,483 780,387 (8,507,311) 21,985,483 - - - 1,129,850 - (2,094,345) (2,094,345) - - - (2,094,345) (2,094,345) - 10,557,000 - - 1,129,850 (554,728) 1,910,237 (10,601,656) 31,023,260 - - - - - - - - - - - The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes. P a g e | 36 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Consolidated statement of cash flows for the year ended 30 June 2020 Cash flows from operating activities Receipts from customers Payments for suppliers and employees Interest received ANNUAL REPORT 30 June 2020 Note 30 June 2020 $ 30 June 2019 $ 33,500 10,063 (1,865,629) (2,837,498) 74,071 84,980 Net cash used in operating activities 7c (1,758,058) (2,742,455) Cash flows from investing activities Payments for exploration expenditure Proceeds from Pacton share sales Purchase of plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payments for capital raising costs Net cash provided by financing activities (6,240,149) (6,851,690) 322,410 - (645,014) (14,131)- (6,562,753) (6,865,821) 10,402,500 7,786,687 (536,397) (175,289) 9,866,103 7,611,398 Net (decrease)/increase in cash held 1,545,292 (1,996,878) Cash and cash equivalents at the beginning of the year 4,145,369 6,142,247 Cash and cash equivalents at the end of the year 7b 5,690,661 4,145,369 The consolidated statement of cash flows is to be read in conjunction with the accompanying notes. . P a g e | 37 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Statement of significant accounting policies Note 1 These are the consolidated financial statements and notes of Calidus Resources Limited (Calidus or the Company) and controlled entities (collectively the Group). Calidus is a company limited by shares, domiciled and incorporated in Australia. The separate financial statements of Calidus, as the parent entity, have not been presented with this financial report as permitted by the Corporations Act 2001 (Cth). The financial statements were authorised for issue on 11 September 2020 by the directors of the Company. a. Basis of preparation The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. Material accounting policies adopted in the preparation of these financial statements are presented below. They have been consistently applied unless otherwise stated. i. Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board (AASB) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and the Corporations Act 2001 (Cth). Australian Accounting Standards (AASBs) set out accounting policies that the AAS Board has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with AASBs ensures that the financial statements and notes also comply with IFRS as issued by the IASB. ii. Use of estimates and judgments The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 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 and in any future period affected. iii. Comparative figures Where required by AASBs comparative figures have been adjusted to conform with changes in presentation for the current financial year. Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statements is presented. b. Accounting Policies Except where stated below, the Group has consistently applied the following accounting policies to all period presented in the financial statements. The Group has considered the implications of new and amended Accounting Standards applicable for annual reporting period beginning after 1 July 2019 as per (d) below. c. Principles of consolidation As at the reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the Consolidated Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased). i. Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control exists when the Group is exposed to variable returns from another entity and has the ability to affect those returns through its power over the entity. P a g e | 38 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 1 Statement of significant accounting policies Notes to the consolidated financial statements for the year ended 30 June 2020 1 Statement of significant accounting policies c. Principles of consolidation (continued) The Group measures goodwill at the acquisition date as: ◼ the fair value of the consideration transferred; plus ◼ the recognised amount of any non-controlling interests in the acquired entity; plus ◼ if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less ◼ the net recognised amount of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. ii. Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. A list of controlled entities is contained in Note 18 Controlled Entities of the financial statements. iii. Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. iv. Transactions eliminated on consolidation All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. P a g e | 39 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 1 Statement of significant accounting policies d. Application of New and Revised Accounting Standards The Group has considered the implications of new or amended Accounting Standards which have become applicable for the current financial reporting year and the group had to change its accounting policies as a result of adopting the following standard: AASB 16: Leases The Group as lessee At inception of a contract, the Group assesses if the contract contains a lease or is a lease. If there is a lease present, a right-of- use asset and a corresponding lease liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows: fixed lease payments less any lease incentives; • • variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; • • • • payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. the amount expected to be payable by the lessee under residual value guarantees; the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; lease payments under extension options, if the lessee is reasonably certain to exercise the options; and The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before the commencement date and any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset. Initial Application of AASB 16: Leases Based on director’s assessment, the adoption of AASB 16 did not have any impact on the Group as its existing lease contract is short-term in nature. ii. Other standards not yet applicable Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the company. There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting period and on foreseeable future transactions. P a g e | 40 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 1 Statement of significant accounting policies ANNUAL REPORT 30 June 2020 e. Critical Accounting Estimates and Judgments Management discusses with the Board the development, selection and disclosure of the Group's critical accounting policies and estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. i. Key Estimate – Exploration and evaluation expenditure Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. Refer to accounting policy stated in note 11 Exploration and evaluation assets. The carrying value of capitalised expenditure at reporting date is $24,329,686 (30 June 2019: $18,145,519). The ultimate recoupment of the value of the exploration and evaluation assets and mine properties is dependent on successful development and commercial exploitation or alternatively, sale, of the underlying mineral exploration properties. The Group undertakes at least on an annual basis a comprehensive review for indicators of impairment of these assets. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts. The key areas of estimation and judgement that are considered in this review include: • • • • • • Recent drilling results and reserves and resource estimates; Environmental issues that may impact the underlying tenements; The estimated market value of assets at the review date; Independent valuations of underlying assets that may be available; Fundamental economic factors such as gold prices, exchange rates and current and anticipated operating costs in the industry; and The Group’s market capitalisation compared to its net assets. Information used in the review process is rigorously tested to externally available information as appropriate. ii. Key Estimate —Environmental Issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the company’s development and its current environment impact, the directors believe such treatment is reasonable and appropriate. iii. Key judgements and estimates – Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates of directors. These estimates take into account both the financial performance and position of the company as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that directors' best estimate, pending an assessment by tax authorities in relevant jurisdictions. Refer Note 5 Income Tax. iv. Key judgements and estimates – Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. v. Share based payment transactions The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Sholes model, applying the assumptions detailed in Note 17. P a g e | 41 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 2 Company details The registered office of the Company is: Address: Street: Postal: Telephone: Suite 12, 11 Ventnor Avenue, WEST PERTH WA 6005 PO Box 1240, WEST PERTH WA 6872 +61 (8) 6245 2050 Note 3 Revenue and other income a. Revenue Revenue – disposal of conglomerate gold rights Revenue – additional Pacton shares received b. Other income Other Interest income 2020 $ 2019 $ - 3,691,174 363,917 - 363,917 3,691,174 160,310 74,071 234,381 - 84,980 84,980 Included in Other are Cash Flow Boosts received from ATO of $88,588 (2019: Nil). Revenue Revenues represent revenue generated from external customers. There were no inter-segment revenues in the current year. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances. Revenue is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or there is a risk of return of goods or there is continuing management involvement with the goods. All revenue is stated net of the amount of value added taxes. Interest income Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be reliably measured. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Note 4 Profit / (loss) before income tax The following significant revenue and expense items are relevant in explaining the financial performance: a. Employment costs: ◼ Directors fees ◼ Superannuation expenses / (reimbursement) ◼ Wages and salaries ◼ Other employment related costs 2020 $ 2019 $ 339,325 24,068 247,396 92,905 703,694 386,890 7,202 94,350 23,959 512,401 P a g e | 42 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 4 Profit / (loss) before income tax (continued) b. Other expense: ◼ (Reversal)/Accruals of stamp duty due to settlement ◼ Receipt of fuel tax credit ◼ Other Note 5 Income tax a. Income tax expense / (benefit) Current tax Deferred tax Relating the origination and reversal of temporary differences Deferred tax expense (benefit) not recognised Income tax expense (benefit) reported in income statement b. Reconciliation of income tax expense to prima facie tax payable The prima facie tax payable / (benefit) on loss from ordinary activities before income tax is reconciled to the income tax expense as follows: ANNUAL REPORT 30 June 2020 2020 $ 2019 $ (251,939) 363,406 (43,537) 59,435 (9,639) 54,799 (236,041) 408,566 2020 $ 2019 $ (2,117,838) (2,152,075) 2,117,838 2,152,075 139,044 (1,858,671) (139,044) 1,856,671 - - Accounting profit (loss) before tax from continuing operations Prima facie tax on operating loss at 27.5% (2019: 30%) (2,094,345) (1,242,718) (575,945) (372,816) Add / (Less) Tax effect of:  Non-deductible share-based payments  Non-deductible expenses  Deferred tax asset not brought to account Income tax expense / (benefit) attributable to operating loss c. The applicable weighted average effective tax rates attributable to operating profit are as follows d. Balance of franking account at year end of the legal parent 310,709 (22,326) 287,562 190,360 1,698 180,758 - % - $ nil - % - $ nil P a g e | 43 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 5 Income tax (continued) e. Deferred tax assets Tax losses Financial assets Plant and equipment Provisions and accruals Capital raising costs Unrealised foreign exchange Note 2020 $ 2019 $ 10,135,309 8,634,670 500,197 2,314 20,042 435,446 (13) 721,760 16,408 12,801 255,957 592 11,093,296 9,642,188 Set-off deferred tax liabilities 5f (4,358,471) (2,768,320) Net deferred tax assets Less deferred tax assets not recognised Net tax assets f. Deferred tax liabilities Exploration expenditure g. Tax losses and deductible temporary differences Unused tax losses and deductible temporary differences for which no deferred tax asset has been recognised: 6,734,824 6,873,868 (6,734,824) (6,873,868) - - 4,358,471 4,358,471 2,768,320 2,768,320 36,251,877 28,720,041 36,251,877 28,720,041 Potential deferred tax assets attributable to tax losses have not been brought to account at 30 June 2020 because the directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time. These benefits will only be obtained if: the company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised; (a) (b) the company continues to comply with the conditions for deductibility imposed by law; and (c) no changes in income tax legislation adversely affect the company in utilising the benefits. The corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2022 providing certain turnover thresholds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that is expected to apply in the future income year when the asset is realised or the liability is settled. The directors have determined that the deferred tax balances be measured at the tax rates stated. Current tax assets and liabilities for the current and prior period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: P a g e | 44 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 5 Income tax (continued) ANNUAL REPORT 30 June 2020 • when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included. • The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. P a g e | 45 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 6 Earnings per share (EPS) a. Reconciliation of earnings to profit or loss (Loss) / profit for the year 2020 $ 2019 $ (2,094,345) (1,242,718) (Loss) / profit used in the calculation of basic and diluted EPS (2,094,345) (1,242,718) b. Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS c. Earnings per share Basic EPS (cents per share) 2020 $ 2019 $ 191,358,195 1,394,677,575 2020 $ 2019 $ (0.01) (0.09) d. At the end of the 2020 financial year, the Group has 15,788,500 unissued shares under options (2019: 166,500,000 [Pre 10:1 Shares Consolidation]), 2,100,000 performance rights on issue (2019: 12,000,000 [Pre 10:1 Shares Consolidation]), 497,903 share rights (2019: nil) and nil performance shares on issue (2019: 275,000,000 [Pre 10:1 Shares Consolidation]). The Group does not report diluted earnings per share on annual losses generated by the Group. During the 2020 financial year the Group's unissued shares under option and partly-paid shares were anti-dilutive. Basic profit/(loss) per share is calculated as net profit or loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted profit/(loss) per share is calculated as net profit or loss attributable to members of the parent, adjusted for: • • • costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. P a g e | 46 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 7 Cash and cash equivalents a. Current Cash at bank ANNUAL REPORT 30 June 2020 Note 2020 $ 2019 $ 5,690,661 4,145,369 5,690,661 4,145,369 Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Cash at bank earns interest at floating rates based on daily bank deposit rates. The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note 23 Financial risk management. b. Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows: ◼ Cash and cash equivalents Note 2020 $ 2019 $ 5,690,661 4,145,369 5,690,661 4,145,369 c. Cash Flow Information i. Reconciliation of cash flow from operations to (loss)/profit after income tax Loss after income tax (2,094,345) (1,242,718) Cash flows excluded from (loss)/profit attributable to operating activities Non-cash flows in (loss)/profit from ordinary activities: ◼ Depreciation and amortisation ◼ Other ◼ Share-based payments ◼ Exploration write off/Impairment expense ◼ Pacton revaluation 17 62,560 (15,693) 1,129,849 163,643 (409,285) - 60,200 - 634,532 15,000 - Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: ◼ (Increase)/decrease in receivables ◼ (Increase)/decrease in other assets ◼ Increase/(decrease) in trade and other payables ◼ Increase/(decrease) in provisions Cash flow from operations 2,418 (48,010) (86,874) (2,591,983) (527,523) 17,192 669,957 (239,432) (1,758,058) (2,742,455) P a g e | 47 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 7 Cash and cash equivalents (cont) d. Credit standby facilities The Group has no credit standby facilities. e. Non-cash financing activities 016 014 $ There were no non-cash financing activities during the financial year ended 30 June 2020 or the prior year. Note 8 Trade and other receivables a. Current Trade receivables GST receivable Expected credit losses 2020 $ 36,575 225,120 2019 $ - 307,782 261,695 307,782 The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. Where applicable, in measuring the expected credit losses, the trade receivables are assessed on a collective basis as they possess shared credit risk characteristics. They are grouped based on the days past due and also according to the geographical location of customers. The expected loss rates are based on the payment profile for past sales (where applicable) as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding. Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangement amongst others is considered indicators of no reasonable expectation of recovery. Note 9 Other assets a. Financial assets – fair value through profit or loss Shares in Pacton Gold Inc. - at fair value b. Other assets Prepayments 2020 $ 2019 $ 1,362,119 1,362,119 1,275,245 1,275,245 43,669 43,669 - - P a g e | 48 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 10 Property, plant, and equipment a. Non-current Motor vehicles Accumulated depreciation Computer and software BAccumulated depreciation Mining equipment BAccumulated depreciation BBuildings Total plant and equipment b. Movements in Carrying Amounts Motor Vehicles $ Computer and software $ Mining equipment $ ANNUAL REPORT 30 June 2020 2020 $ 76,104 (65,834) 10,270 48,056 (36,000) 12,056 87,951 (52,635) 35,316 639,121 696,763 Buildings $ - 639,121 2019 $ 76,104 (40,466) 35,638 44,725 (20,746) 23,979 84,696 (30,004) 54,692 - 114,309 Total $ 114,309 645,707 Carrying amount at the beginning of year Additions ◼ ◼ 35,638 - 23,979 3,331 54,692 3,255 Depreciation expense (25,368) (15,255) (22,630) - (63,253) Carrying amount at the end of year 10,270 12,056 35,316 639,121 696,763 Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. P a g e | 49 0 1 1 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 10 Property, plant, and equipment (continued) Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located, and appropriate proportion of production overheads. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” in profit or loss. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Depreciation rates and methods are reviewed annually for appropriateness. The depreciation rates used for the current and comparative year are: 2020 $ Plant and equipment 33%-66% Motor vehicles 33%-66% 2019 $ 33%-66% 33%-66% The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value. 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 with the impairment loss recognised in the statement of profit or loss and other comprehensive income. Derecognition and disposal An item of 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. P a g e | 50 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 11 Exploration and evaluation assets a. Non-current Exploration expenditure capitalised: Exploration and evaluation phase at cost Net carrying value b. Movements in carrying amounts Balance at the beginning of year Expenditure during the year Exploration expenditure write off Carrying amount at the end of year ANNUAL REPORT 30 June 2020 2020 $ 2019 $ 24,329,686 18,145,519 24,329,686 18,145,519 18,145,519 6,347,810 9,985,029 8,175,490 (163,643) (15,000) 24,329,686 18,145,519 The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases are dependent on the successful development and commercial exploitation or sale of the respective areas. 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: • • the rights to tenure of the area of interest are current; and at least one of the following conditions is also met: i) ii) the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or 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 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. The Group’s exploration properties may be subjected to claim(s) under Native Title (or jurisdictional equivalent), or contain sacred sites, or sites of significance to the indigenous people of Australia. As a result, exploration properties or areas within the tenement may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum to such claims. P a g e | 51 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the period ended 30 June 2020 Note 12 Trade and other payables a. Current Unsecured Trade payables Accruals Employment related payables Note 13 Provisions a. Current Provision for stamp duty Provision for payroll tax Provision for annual leave 2020 $ 2019 $ 1,211,870 1,316,700 21,000 105,237 462,119 97,792 1,338,107 1,876,611 2020 $ 2019 $ - 120,096 8,972 39,247 48,219 - 31,027 151,123 Trade payables and provisions are non-interest bearing and usually settled within the lower of terms of trade or 30 days. Trade payables, other payables and provisions are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement. Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting year. If the effect of the time value of money is material, provisions are discounted using a current pre- tax rate that reflects the risks specific to the liability. Short-term benefits: Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees' services provided to the reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay at the reporting date including related on-costs, such as workers compensation insurance and payroll tax. P a g e | 52 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 14 Issued capital ANNUAL REPORT 30 June 2020 Fully paid ordinary shares at no par value 219,464,064 1,578,887,024 39,714,679 29,712,407 2020 No. 2019 No. 2020 $ 2019 $ a. Ordinary shares At the beginning of the year Shares issued during the year: Balance before reverse acquisition ESIP Shares issued Placement to Alkane Resources Directors Shares cancelled Directors Shares issued Issue of shares to Epminex Exercise of options ESIP Shares issued Placement to Alkane Resources Exercise of options Exercise of options Exercise of options Exercise of options Exercise of options Underwriting fee Shares issued for tenement purchase Performance shares conversion Placement Exercise of options Exercise of options Exercise of options Share consolidation (One for ten) Exercise of options Exercise of options Exercise of options Exercise of options Exercise of options Exercise of options Transaction costs relating to share issues At reporting date Terms of Ordinary Shares Voting Rights 1,578,887,024 1,276,453,495 29,712,407 21,712,043 - - - - - - - - - - - - - - - - 17,500,000 125,000,000 (5,000,000) 5,000,000 120,000 555,556 1,046,025 80,000,000 600,000 80,000 1,110,000 32,821,948 42,400,000 1,200,000 - - - - - - - - - - - - - - - - - - - - - 154,500 - 9,000,000 40,000 100,000 18,750 - 414,029 3,687,500 - - 3,360 13,889 25,000 2,160,000 15,000 2,000 27,750 820,549 1,060,000 30,000 - - - - - - 1,578,887,024 39,025,657 29,971,120 - - - - - - - - - - - 6,250 25,000 513,750 256,250 215,000 227,500 (554,728) (258,712) 5,000,000 275,000,000 281,250,000 2,000,000 4,000,000 750,000 2,146,887,024 214,689,064 25,000 100,000 1,975,000 925,000 900,000 850,000 - 219,464,064 1,578,887,024 39,714,679 29,712,407 Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held and in proportion to the amount paid up on the shares held. At shareholders meetings, each ordinary share is entitled to one vote in proportion to the paid-up amount of the share when a poll is called, otherwise each shareholder has one vote on a show of hands. P a g e | 53 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 14 Issued capital (continued) 2020 No. 2019 No. 2020 $ 2019 $ b. Options At the beginning of the year 166,500,000 187,000,000 734,396 Issue of options to directors/employees - - Options exercised Options expired/cancelled Placement to Alkane Resources Share consolidation (One for ten) Issue of options Options exercised At reporting date c. Share Rights and Performance Rights At the beginning of the year Issue of Performance Rights Share consolidation (One for ten) Issue of Share Rights At reporting date d. Performance shares - - - - 145,039 589,357 - - - (6,750,000) (87,500,000) (70,000,000) (3,000,000) - 70,000,000 89,750,000 166,500,000 734,396 734,396 8,975,000 11,588,500 (4,775,000) - - - - 870,200 - - - - 15,788,500 166,500,000 1,604,596 734,396 21,000,000 12,000,000 - 9,000,000 21,000,000 21,000,000 2,100,000 497,903 - - 2,597,903 21,000,000 45,991 106,788 152,779 - 152,862 305,641 At the beginning of the year 275,000,000 275,000,000 Performance shares converted (275,000,000) - At reporting date e. Employee shares At the beginning of the year ESIP share issued ESIP converted At reporting date - - - - - 275,000,000 17,500,000 1,046,025 (18,546,025) - - - - - - - - 25,816 20,175 45,991 - - 45,991 - - - 414,029 25,000 (439,029) - P a g e | 54 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 14 Issued capital (continued) f. Capital Management ANNUAL REPORT 30 June 2020 The directors' objectives when managing capital are to ensure that the Group can maintain a capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the availability of liquid funds in order to meet its short term commitments. The focus of the Group's capital risk management is the current working capital position against the requirements of the Group in respect to its operations, software developments programmes, and corporate overheads. The Group's strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Group were as follows: Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position Note 7 8 12 2020 $ 2019 $ 5,690,661 4,145,369 261,695 307,782 (1,338,107) (1,876,611) 4,614,249 2,576,540 P a g e | 55 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 15 Employee Shares Balance at the beginning of the financial year ESIP shares issued Conversion of employee shares Balance at the end of the financial year 2020 $ 2019 $ - - - - 414,029 25,000 (439,029) - The Employee Shares note records items recognised as expenses on the value of employee shares issued under the Employee Shares Incentive Plan. Note 16 Reserves Options Share rights and Performance Rights a. Options Reserve Balance at the beginning of the financial year Share based payments Balance at the end of the financial year 2020 $ 2019 $ 14b 14c 1,604,596 305,641 734,396 45,991 1,910,237 780,387 2020 $ 734,396 870,200 1,604,596 2019 $ 145,039 589,357 734,396 17 The option reserve records items recognised as expenses on the value of directors and employee equity issues. At 30 June 2020, the following options are outstanding: ▪ ▪ ▪ ▪ ▪ ▪ ▪ 4,200,000 unlisted options exercisable at 20.0 cents expiring on or before 18 April 2021 388,500 unlisted options issued to senior executives exercisable at nil price expiring on or before 27 December 2021 700,000 unlisted options issued to non-executive directors exercisable at nil price expiring on or before 27 December 2023 7,150,000 unlisted options issued to senior executives exercisable at nil price expiring on or before 27 December 2024 150,000 unlisted options issued to senior executives exercisable at nil price expiring 30 June 2022 2,700,000 unlisted options issued to senior executives exercisable at nil price expiring 30 January 2025 500,000 unlisted options issued to senior executives exercisable at nil price expiring 4 June 2025 P a g e | 56 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 16 Reserves (continued) ANNUAL REPORT 30 June 2020 b.i. Share Rights Balance at the beginning of the financial year Shae based payments Balance at the end of the financial year 2020 $ 2019 $ 14c/17 - 152,862 152,862 - - - At 30 June 2020, the following share rights are outstanding: ▪ ▪ ▪ ▪ ▪ ▪ 122,768 and 38,036 share rights for David Reeves and Wild West Enterprises Pty Ltd respectively; 26,786 share rights for Mark Connelly; 6,429 and 32,143 share rights for Adam Miethke and Discovery Capitals Pty Ltd; 107,143 share rights each for Paul Brennan and Richard Hill; 23,973 share rights for an employee; and 33,482 share rights for a contractor. Please refer to Note 17(e) and remuneration report for further details on share rights issued to Key Management Personnel. b.ii. Performance Rights Balance at the beginning of the financial year Share based payments Balance at the end of the financial year At 30 June 2020, the following performance rights are outstanding: ▪ ▪ 1,200,000 performance rights for employees expiring 13 June 2021; 900,000 performance rights for Paul Brennan expiring 3 May 2022. 2020 $ 45,991 106,788 152,779 2019 $ 25,816 20,175 45,991 14c/17 P a g e | 57 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 17 Share-based payments Options: Share based payments – Key Management Personnel Share based payments – Employee Subtotal – Share based payments (Options) Performance rights: Note 17b 17b Share based payments – Key Management Personnel 17a.iii Subtotal – Share based payments (Employee Shares) Share Rights: Share based payments – Key Management Personnel Share based payments – Related Party Transactions Share based payments – Employee and Contractor Subtotal – Share based payments (Share Rights) ESIP Shares issued Gross share-based transactions 17e 17e 17e 15 2020 $ 723,187 147,013 870,200 106,788 106,788 116,110 20,090 16,662 152,862 2019 $ 589,357 - 589,357 20,175 20,175 - - - - - 25,000 1,129,850 634,532 Equity-settled compensation The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognised is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to market conditions not being met. a. Share-based payment arrangements in effect during the year i. Employee Securities Incentive Plan – Non Executive and Executive Options During the year, the Company issued the following options with the terms and summaries below: Number of Options Date of Expiry Exercise Price Vesting Terms 700,000* 27 December 2023 388,500* 27 December 2021 150,000 30 January 2022 Nil Nil Nil 1/3 each year for continuous service from grant date 12 months from continuous service from grant date 12 months from continuous service from grant date * On 25 November 2019, the Company’s shareholders approved the issuance of 700,000 and 150,000 Options to Non- Executives and Executives respectively under ESIP with terms. P a g e | 58 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 ii. Employee Securities Incentive Plan – Incentive Options ANNUAL REPORT 30 June 2020 In consideration for retaining key quality employees of Calidus, the Company has issued the following Incentive Options under the Employee Securities Incentive Plan: Number of Options Date of Expiry Exercise Price 7,150,000* 27 December 2024 2,700,000 500,000 30 January 2025 4 June 2025 Nil Nil Nil Vesting Terms: 1. 50% of options will vest upon announcing a positive definitive feasibility study for Warrawoona Gold Project and the Company announcing that it has acquired the approvals and permits required to commence construction of the mine on the Warrawoona Gold Project from the Environmental Protection Authority, the Department of Mines, Industry Regulation and Safety, and the Department of the Environment and Energy; and 2. Subject to the vesting of the first half of the incentive options, the remaining 50% options will vest upon the Company announcing that first gold pour has been achieved at the Warrawoona Gold Project. * On 25 November 2019, the Company’s shareholders approved the issuance of 3,000,000 options to David Reeves based on the above terms. iii. Employee Securities Incentive Plan – Employee Performance Shares In consideration for retaining key quality employees of Calidus, the Company has issued 9,000,000 (Pre 10:1 shares consolidation) under the Employee Securities Incentive. Number of Options Date of Expiry Exercise Price Vesting Terms 9,000,000 27 December 2022 $0.03 12 months from issue date Subsequent to the issue of the options the company performed a ten (10) to one (1) consolidation of the share capital including all options on issue. The options that were issued under Employee Securities Incentive Plan were valued using the Black-Scholes option pricing model, applying the following inputs to determine the fair value at the grant date: Share price at grant date ($) Exercise Price ($) Number of options issued Term (Years) Expected volatility (%) Risk free interest rate (%) Fair value at grant date ($) Grant Date 25 Nov 2019 25 Nov 2019 25 Nov 2019 29 Jan 2020 29 Jan 2020 $0.21 $0.21 $0.21 $0.26 $0.26 Nil Nil Nil Nil Nil Nil 700,000 388,500 7,150,000 150,000 2,700,000 500,000 5 4 2 2 5 5 3 90.24% 90.24% 90.24% 90.24% 90.24% 90.24% 90.24% 0.81% 0.81% 0.76% 0.70% 0.76% 0.39% 1.28% $0.21 $0.21 $0.21 $0.26 $0.26 $0.45 $0.014 2 June 2020 $0.495 3 May 2019 $0.026 $0.03 900,000* * Represent post 10:1 share consolidation (Pre 10:1 share consolidation; 9,000,000 performance rights) P a g e | 59 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 17 Share-based payments (continued) b. Summary of number of options and its value A summary of number of company options issued to Key Management Personnel and Employees as share-based payments are as follows: Number of shares Executive Options David Reeves Mark Connelly Keith Coughlan Adam Miethke Paul Brennan Richard Hill Employees a. 388,500 options 150,000 b. 150,000 options - N/A N/A N/A N/A N/A N/A 150,000 - 88,500 - 150,000 NED Options a. 700,000 options N/A 300,000 200,000 200,000 N/A N/A N/A Incentive options a. 7,150,000 options 3,000,000 b. 2,700,000 options c. 500,000 options - - N/A N/A N/A N/A N/A N/A N/A N/A N/A 2,700,000 - 1,450,000 - - 2,700,000 - - 500,000 A summary of share based expense payments issued to Key Management Personnel and Employees are as follows: Key Management Personnel Employees David Reeves Mark Connelly Keith Coughlan Adam Miethke Paul Brennan Richard Hill A$ Executive Options a. 388,500 options 18,762 b. 150,000 options - N/A N/A N/A N/A N/A N/A 18,762 - 11,070 - 16,348 - NED Options a. 700,000 options N/A 12,531 8,354 8,354 N/A N/A N/A Incentive options1 a. 7,150,000 options 221,516 b. 2,700,000 options c. 500,000 options - - N/A N/A N/A N/A N/A N/A N/A N/A N/A 199,364 - 107,068 - - 219,196 - - 28,875 Total – Key Management Personnel (A$) Total – Employees (A$) 723,187 147,013 1 As at reporting date, the probability of achievement of the milestones and the first of the options are deemed to be 100% with estimated achievement date on 30 September 2020. No value was expensed for second half of the options during the year as the probability of achievement of the milestone as at 30 June 2020 was less than 50%. P a g e | 60 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 Notes to the consolidated financial statements for the year ended 30 June 2020 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 17 Share-based payments (continued) c. Movement in share-based payment arrangements during the year A summary of the movements of all company options issued to Key Management Personnel as share-based payments is as follows: 2020 2019 Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding at the beginning of the year Granted Exercised Expired/cancelled Consolidation Granted Outstanding at year-end Exercisable at year-end Number of Options 16,000,000 1,150,000 (1,000,000) (600,000) $0.03 $0.00 $0.30 $0.10 (14,400,000) - 8,400,000 9,550,000 $0.00 $0.00 19,000,000 $0.03 - - - - (3,000,000) $0.03 - - - - 16,000,000 $0.03 - $0.00 16,000,000 $0.03 i. The weighted average exercise price of outstanding options at the end of the reporting year was nil. ii. The fair value of the options granted is deemed to represent the value of the employee services received over the vesting period. d. A summary of the movements of all company options (excluding performance rights) on issue is as follows: 2020 2019 Number of Options Number of Options Weighted Average Exercise Price Weighted Average Exercise Price Outstanding at the beginning of the year 166,500,000 (6,750,000) (70,000,000) - (80,775,00) 11,588,500 (4,775,000) 15,788,500 $0.280 $0.024 $0.035 - - $0.00 $0.25 $0.01 187,000,000 (87,500,000) (3,000,000) 70,000,000 - - - $0.024 $0.025 $0.025 $0.035 - - - 166,500,000 $0.028 - - 166,500,000 $0.028 Exercised [Pre 10:1 consolidation] Expired/cancelled Granted [Pre 10:1 consolidation] Consolidation Issue of options Exercised Outstanding at year-end Exercisable at year-end P a g e | 61 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 17 Share-based payments (continued) e. A summary of share rights issued during the year: Deemed grant date Share price at grant date ($) Name Key Management Personnel Number of share rights Fair value at grant date ($) 7 May 2020 5 May 2020 26 May 2020 20 May 2020 8 May 2020 Related Party Transaction 4 May 2020 13 May 2020 Employees and Contractor 8 May 2020 4 May 2020 Total $0.30 $0.305 $0.395 $0.35 $0.29 $0.30 $0.27 $0.29 $0.29 David Reeves Mark Connelly Adam Miethke Paul Brennan Richard Hill 122,768 26,786 6,429 107,143 107,143 Wild West Enterprises Pty Ltd Discovery Capital Partners Pty Ltd 38,036 32,143 Employee Contractor 23,973 33,482 497,903 36,830 8,170 2,539 37,500 31,071 116,110 11,411 8,679 20,090 6,952 9,710 16,662 152,862 As stated in the Company's March 2020 Quarterly Report, the Company initiated various cash preservation measures in March at the start of the COVID-19 pandemic to ensure it was funded through to a final investment decision on the Warrawoona Gold Project. This includes various directors, senior staff and consultants electing to take part of their pay in the form of Securities. The Company has invited directors senior staff and consultants electing to participate in a discretionary salary reduction in return for rights to acquire Shares (Share Rights) to be granted under the Employee Securities Incentive Plan (ESIP), whereby they may elect to accrue up to 50% of their salary (Reduced Amount) from 1 April to 30 June 2020. In return for their agreement to reduce their salary, the Company has agreed to grant each of the participant Share Rights under the ESIP. Each Share Right will entitle the holder to acquire one Share in the Company. The deemed issue price for the Share Rights is $0.28 each, which represents the VWAP for the month of April 2020 and which is the same deemed issue price of Shares issued to other unrelated staff and service providers of the Company. The Share Rights immediately vest on the grant date and expire 24 months from the grant date. The rationale for inviting the participants to participate in a discretionary salary reduction in return for Share Rights is to preserve cash within the Company, strengthen the Company's balance sheet, align directors' remuneration with the Company's and Shareholders' objectives, and to provide directors with an incentive to enhance Shareholder value. P a g e | 62 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 18 Controlled entities a. Legal parent entity ANNUAL REPORT 30 June 2020 Calidus Resources Limited is the ultimate parent of the Group (refer to note 1c). i. Legal subsidiaries ◼ Keras (Gold) Australia Pty Limited ◼ Keras (Pilbara) Gold Pty Limited ◼ Calidus Otways Pty Limited Country of Incorporation Australia Australia Australia Class of Shares Ordinary Ordinary Ordinary Percentage Owned 2020 100.0 100.0 100.0 2019 100.0 100.0 100.0 b. Investments in subsidiaries are accounted for at cost. Note 19 Key Management Personnel compensation (KMP) The names are positions of KMP are as follows: Managing Director ◼ Mr David Reeves ◼ Mr Mark Connelly ◼ Mr Keith Coughlan ◼ Mr Adam Miethke Non-executive Director (resigned 27 July 2020) ◼ Mr Paul Brennan ◼ Mr Richard Hill Non-executive Chairman Non-executive Director Chief Operating Officer Chief Financial Officer Information regarding individual directors and executives’ compensation and some equity instruments disclosures as required by the Corporations Regulations 2M.3.03 is provided in the Remuneration Report. Short-term employee benefits Post-employment benefits Share-based payments Total 2020 $ 650,950 41,004 946,085 2019 $ 414,700 5,700 199,546 1,638,039 619,946 P a g e | 63 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 20 Related party transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. ◼ Wilgus Investments Pty Ltd and Wild West Enterprises Pty Ltd - Office Rent ◼ Discovery Capital – Corporate Advisory and Capital Raising Fees 2020 $ 2019 $ 81,961 119,679 62,300 170,000 Refer to the Remuneration Report point 14.8 for further information regarding the terms of the related party transactions. Note 21 Commitments Exploration expenditure commitments payable: Not later than 12 months Between 12 months and five years Later than five years Total Exploration tenement minimum expenditure requirements Operating lease commitments for premises due: Not later than 12 months Between 12 months and five years Later than five years Total operating lease commitments Note 22 Operating segments 2020 $ 2019 $ 572,780 1,046,789 1,864,078 3,483,647 565,077 1,400,211 2,156,710 4,121,998 42,600 34,200 - - - - 42,600 34,200 For management purposes, the Group’s operations are organised into one operating segment domiciled in the same country, which involves the exploration and exploitation of Gold minerals in Australia. All of the Group’s activities are inter-related, and discrete financial information is reported to the Managing Director as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the statement of comprehensive income. The accounting policies applied for internal reporting purposes are consistent with those applied in preparation of these financial statements. P a g e | 64 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 23 Financial risk management a. Financial Risk Management Policies ANNUAL REPORT 30 June 2020 This note presents information about the Group's exposure to each of the above risks, its objectives, policies and procedures for measuring and managing risk, and the management of capital. The Group's financial instruments consist mainly of deposits with banks, short-term investments, and accounts payable and receivable. The Group does not speculate in the trading of derivative instruments. A summary of the Group's Financial Assets and Liabilities is shown below: Floating Interest Rate $ Fixed Interest Rate $ Non- interest Bearing $ 2020 Total $ Floating Interest Rate $ Fixed Interest Rate $ Non- interest Bearing $ 2019 Total $ Financial Assets Cash and cash equivalents 5,690,661 Trade and other receivables Financial assets - - Total Financial Assets 5,690,661 Financial Liabilities Financial liabilities at amortised cost Trade and other payables Short-term financial liabilities Long-term financial liabilities Total Financial Liabilities - - - - Net Financial Assets/(Liabilities) 5,690,661 - - - - - - - - - - 5,690,661 4,145,369 261,695 261,695 1,362,119 1,362,119 - - 1,623,814 7,314,475 4,145,369 1,338,107 1,338,107 - - - - 1,338,107 1,338,107 - - - - 285,707 5,976,368 4,145,369 - - - - - - - - - - 4,145,369 307,782 307,782 1,275,245 1,275,245 1,583,027 5,728,396 1,876,611 1,876,611 - - - - 1,876,611 1,876,611 (293,584) 3,851,785 P a g e | 65 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 23 Financial risk management (continued) b. Specific Financial Risk Exposures and Management The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate, foreign currency risk and equity price risk. The Board of directors has overall responsibility for the establishment and oversight of the risk management framework. The Board adopts practices designed to identify significant areas of business risk and to effectively manage those risks in accordance with the Group's risk profile. This includes assessing, monitoring and managing risks for the Group and setting appropriate risk limits and controls. The Group is not of a size nor is its affairs of such complexity to justify the establishment of a formal system for risk management and associated controls. Instead, the Board approves all expenditure, is intimately acquainted with all operations and discuss all relevant issues at the Board meetings. The operational and other compliance risk management have also been assessed and found to be operating efficiently and effectively. i. Credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group. The Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Group. The objective of the Group is to minimise the risk of loss from credit risk. Although revenue from operations is minimal, the Group trades only with creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is insignificant. The Group's maximum credit risk exposure is limited to the carrying value of its financial assets as indicated on the statement of financial position. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. ◼ Credit risk exposures The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with approved Board policy. Such policy requires that surplus funds are only invested with financial institutions residing in Australia, where ever possible. ◼ Impairment losses The ageing of the Group's trade and other receivables at reporting date was as follows: P a g e | 66 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 23 Financial risk management (continued) ANNUAL REPORT 30 June 2020 Gross 2020 $ 36,575 - - - - - 225,120 261,695 Impaired 2020 $ Past due but not impaired 2020 $ Net 2020 $ - - - - - - - - 36,575 - - - - - 240,206 276,781 - - - - - - - - Trade receivables Not past due Past due up to 15 days Past due 15 days to 3 months Past due over 3 months Less intra-Group balances Other receivables Not past due Total ii. Liquidity risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Group. Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Typically the Group ensures that it has sufficient cash to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. P a g e | 67 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 23 Financial risk management (continued) Other than the trust account insurer liabilities, the financial liabilities of the Group are confined to trade and other payables as disclosed in the statement of financial position. All trade and other payables are non-interest bearing and due within 30 days of the reporting date. ◼ Contractual Maturities The following are the contractual maturities of financial liabilities of the Group: Within 1 Year Greater Than 1 Year 2020 $ 2019 $ 2020 $ 2019 $ Total 2020 $ 2019 $ Financial liabilities due for payment Trade and other payables Borrowings 1,338,107 - 1,876,611 - Total contractual outflows 1,338,107 1,876,611 Financial assets Cash and cash equivalents Trade and other receivables Financial assets 5,690,661 261,695 1,362,119 4,145,369 307,782 1,275,245 Total anticipated inflows 7,314,475 5,728,396 Net (outflow)/inflow on financial instruments 5,976,368 3,851,785 - - - - - - - - - - - - - - - - 1,338,107 - 1,876,611 - 1,338,107 1,876,611 5,690,661 261,695 1,362,119 4,145,369 307,782 1,275,245 7,314,475 5,728,396 5,976,368 3,851,785 It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts. iii. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Board meets on a regular basis and considers the Group's interest rate risk. (1) Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting year whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. Due to the low amount of debt exposed to floating interest rates, interest rate risk is not considered a high risk to the Group. Movement in interest rates on the Group's financial liabilities and assets is not material. (2) Foreign exchange risk Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the AUD functional currency of the Group. The Group has no material exposure to foreign exchange risk. (3) Price risk Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group holds a material amount (Pacton Gold Inc shares) subject to price risk. P a g e | 68 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 23 Financial risk management (continued) iv. Sensitivity Analyses ANNUAL REPORT 30 June 2020 The following table illustrates sensitivities to the Group's exposures to changes in interest rates. The table indicates the impact on how profit and equity values reported at balance sheet date would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables. (1) Interest rates Year ended 30 June 2020 ±50 basis points change in interest rates Year ended 30 June 2019 ±50 basis points change in interest rates (2) Price Year ended 30 June 2020 ±10% change in market price of shares Year ended 30 June 2019 ±10% change in market price of shares v. Net Fair Values (1) Fair value estimation Profit $ Equity $ ± 28,453 ± 28,453 ± 22,707 ± 22,707 Profit $ Equity $ ± 136,211 ± 136,211 ± 127,245 ± 127,245 Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: • • • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly Level 3: unobservable inputs for the asset or liability The Pacton Gold Inc shares valued at $1,362,119 are measured under level 1 in the fair value hierarchy. Cash and cash equivalents, trade and other receivables, trade creditors, other creditors and employee entitlements have been excluded from the above analysis as their fair values are equal to their carrying values. P a g e | 69 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 24 Events subsequent to reporting date • On 1 July 2020 Calidus announced that tenders for the major contracts, comprising a schedule of rates mining contract, tailings dam construction, EPC for the processing plant construction and a build, own, operate (BOO) model for the power station, have been let to the market. • On 1 July 2020 Calidus announced specialist natural resources investment house Argonaut had been appointed to act as the Company’s exclusive debt advisor. • On 13 July 2020 Calidus announced that drilling was to commence at the Otways project. • On 17 July 2020 the company announced that it had received firm commitments to raise $25 million (before costs) via a share placement to professional and sophisticated investors through the issue of 49,019,608 shares at a price of $0.51. • On 27 July 2020 that Mr Adam Miethke resigned as Non-Executive Director of the Company. • On 5 August 2020 the company announced that experienced mining executive Don Russell had commenced in the role of General manager operations • On 5 August 2020 Calidus announced that Environmental Permits had been granted for early works at Warrawoona which provided the Company with the option to commence installation the mine access road and accommodation village prior to receiving full project development approval. • On 5 August 2020 and 12 August 2020, Calidus announced the issuance of 600,000 and 170,000 unlisted • options to Donald Russell and an employee respectively. 0n 13 August 2020, Calidus announced that it has issued and allotted 200,000 shares upon the exercise of 200,000 unquoted options, exercise price of nil, expiring 27 December 2023. • On 24 August 2020. Calidus announced that it had Environmental approval for the Warrawoona Gold Project granted by the Western Australian Minister for Environment and that and the debt finance process was progressing with indicative debt term sheets received. Apart from the matters discussed above, no other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Note 25 Contingent liabilities b. Royalties and Joint Ventures Keras (Pilbara) Gold Pty Ltd has an obligation to pay royalties, based on minerals produced from various tenements, to third parties as disclosed in the Section 8 of the Company’s prospectus dated 8 May 2017. The royalties will only become due and payable when and if mining commences. On 27 May 2020 the Company announced that it may earn up to a 70% interest in the Otways tenements by spending $1.2 million on the tenements over 30 months (Expenditure Commitment). At the completion of the Expenditure Commitment, each party will be subject to a fund or dilute obligation in the respective proportions on the Otways Tenements with any interest diluting below 10% converting to a 1% net smelter royalty. Calidus has completed earning a 70% interest in the Novo tenements. Following the earn-in a JV has been formed, with each party subject to a fund or dilute obligation in the respective proportions on the Novo Tenements with any interest diluting below 10% converting to a 1% net smelter royalty. Note 26 Auditor’s remuneration Remuneration of the auditor of the company for: Auditing or reviewing the financial reports Other services provided by a related practice of the auditor 2020 $ 40,000 - 40,000 2019 $ 35,800 190 35,990 P a g e | 70 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Notes to the consolidated financial statements for the year ended 30 June 2020 Note 27 Parent entity disclosures ANNUAL REPORT 30 June 2020 The following information has been executed from the books and records of the legal parent Calidus Resources Limited have been prepared in accordance with Australian Accounting Standards and the accounting policies as outlined in Note 1. b. Financial Position of Calidus Resources Limited (legal parent) Current assets Non-current assets Total assets Current liabilities Non-current assets Total liabilities Net assets Equity Issued capital Options and Share Rights reserve Employee shares Accumulated losses Total equity c. Financial performance of Calidus Resources Limited Profit / (loss) for the year Other comprehensive income Total comprehensive income June 2020 $ June 2019 $ 31,742,750 21,604,674 2,107 1,745 31,744,857 21,606,419 161,486 7,799 706,593 - 169,285 706,593 31,575,573 20,899,826 65,193,087 53,444,699 1,783,274 126,963 760,212 20,175 (35,527,762) (33,325,260) 31,575,573 20,899,826 (2,202,502) (2,524,347) - - (2,202,502) (2,524,347) d. Guarantees entered into by Calidus Resources Limited for the debts of its subsidiaries There are no guarantees entered into by Calidus Resources Limited for the debts of its subsidiaries as at 30 June 2020 (2019: none). e. Comparatives The financial position of Calidus Resources Limited is as at 30 June 2020 for the current year and 30 June 2019 for the comparative year. The financial performance of Calidus Resources Limited is for the period between 1 July 2019 to 30 June 2020 and for the comparative period between 1 July 2018 to 30 June 2019. P a g e | 71 ANNUAL REPORT 30 June 2020 DIRECTORS' DECLARATION CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 1. In the opinion of the Directors of Calidus Resources Limited (the ‘Company’): a. the financial statements, notes and the additional disclosures 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; 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; and 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 reviewing 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 2020. MARK CONNELLY Non-executive Chairman Dated this Friday, 11 September 2020 P a g e | 72 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CALIDUS RESOURCES LIMITED REPORT ON THE AUDIT OF THE FINANCIAL REPORT Opinion Moore Australia Audit (WA) Level 15, Exchange Tower, 2 The Esplanade, Perth, WA 6000 PO Box 5785, St Georges Terrace, WA 6831 T +61 8 9225 5355 F +61 8 9225 6181 www.moore-australia.com.au We have audited the financial report of Calidus Resources Limited (the Company) and its subsidiaries (the “Group”), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended 30 June 2020, 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: i. ii. giving a true and fair view of the Group’s financial position as at 30 June 2020 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 (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. Moore Australia Audit (WA) – ABN 16 874 357 907. An independent member of Moore Global Network Limited - members in principal cities throughout the world. Liability limited by a scheme approved under Professional Standards Legislation. P a g e | 73 Share Based Payments – Remuneration Refer to Note 17 Share Based Payments & Remuneration Report During the year ended 30 June 2020, the Group transacted with Key Management Personnel and other parties via the award of share-based remuneration payments (SBP) amounting to $1,129,850 in the form of equity settled share-based payments. The value of the SBP is a key audit matter due to it being a key material transaction with members of key management and other personnel, the valuation of which involves significant judgement and accounting estimation. We therefore identified such expenses as a key area of focus. Our procedures included, amongst others: • Enquiring and obtaining confirmations from Key SBP regarding their Management Personnel remuneration during the period. • Reviewing minutes of directors and shareholder meetings and ASX announcements relating to the approval of such arrangements undertaken during the financial year. • Reviewing remuneration documents & assessing the valuation methodology used by management to estimate the fair value of SBP, including testing the information provided, assessing the integrity of appropriateness of the key assumptions input into the valuation model and recalculating the valuation using the Black Scholes Model. • Assessing whether the SBP have been appropriately financial the for in classified and accounted statements. We also assessed the adequacy of other related disclosures in the financial statements. Accounting for Capitalised Exploration & Evaluation Assets Refer to Note 11 Exploration & Evaluation Assets At 30 June 2020, the Group’s statement of financial position includes capitalised exploration and evaluation assets of approximately $24.3 million, representing the Group’s single largest asset or 75% of total assets. The ability to recognise and to continue to defer exploration and evaluation assets under AASB 6: Exploration for and Evaluation of Mineral Resource is impacted by the Group’s ability, and intention, to continue to explore the tenements or its ability to realise this value through development or sale. Due to the significance of these assets and the subjectivity involved in assessing the ability to continue to defer these assets, this is considered a key audit matter. We addressed the Group’s assessment of the ability to continue to defer the exploration and evaluation assets under AASB 6 by specifically ensuring that: • the Group has the ongoing right to explore in the interests which relevant exploration areas of relevant and obtaining included documentation such as tenement registers (via Department of Mines WA) & other agreements. assessing • Tested a sample of exploration & evaluation to expenditures capitalised during supporting documentation. the year • the Group is committed to continue exploration and evaluation activity in the relevant exploration areas of interest including assessing their exploration and future development expenditures that have been and discussions with either budgeted management as to the intentions and strategy of the We also reviewed the Group’s ASX Group. announcements and the Pre-Feasibility Study (PFS) report for the Warrawoona Gold Project. for • Assessing the carrying value of these assets for any in AASB 6) impairment (set out indicators of including comparing against the Company’s market capitalisation at balance date and the PFS valuation. We also assessed disclosures contained in the financial report. the appropriateness of the P a g e | 74 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 2020 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and 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. 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 has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our audit report. P a g e | 75 REPORT ON THE REMUNERATION REPORT Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Calidus Resources Limited, for the financial year ended 30 June 2020 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. SL TAN PARTNER Signed at Perth on the 11th day of September 2020 MOORE AUSTRALIA AUDIT (WA) CHARTERED ACCOUNTANTS P a g e | 76 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 Additional ASX Information as at 8 September 2020 The following additional information is required by the Australian Securities Exchange in respect of listed public companies. As at 8 September 2020 there were 3,268 holders of Ordinary Fully Paid Shares. Voting Rights The voting rights attached to each class of equity security are as follows: ◼ Ordinary shares: Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. ◼ Listed Options, Unlisted Options and Performance Shares: Options and performance shares do not entitle the holders to vote in respect of that equity instrument, nor participate in dividends, when declared, until such time as the options are exercised or performance shares convert and subsequently registered as ordinary shares. 20 Largest Shareholders — Ordinary Shares as at as at 8 September 2020 Ran k 1 2 Name ALKANE RESOURCES LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 3 MRS ELEANOR JEAN REEVES 4 CITICORP NOMINEES PTY LIMITED 5 6 7 8 9 10 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED HEDGEHOG MANAGEMENT PTY LTD NATIONAL NOMINEES LIMITED BNP PARIBAS NOMINEES PTY LTD BEATONS CREEK GOLD PTY LTD CS THIRD NOMINEES PTY LIMITED 11 MR BRIAN MICHAEL MORITZ 12 NARNIA HOLDINGS LIMITED 13 MR SIMON PATRICK BOWMAN 14 MR STACEY RADFORD 15 CF FOURTH NOMINEES PTY LIMITED 16 MR PHILLIP RICHARD PERRY 17 MRS WINSOME MARY SANTA MARIA 18 PROCUREMENT SOLUTIONS LIMITED 19 20 NEWECONOMY COM AU NOMINEES LIMITED <900 ACCOUNT> DISCOVERY SERVICES PTY LTD Number of Ordinary Fully Paid Shares % Held of Ordinary Issued Capital 34,118,584 27,153,643 16,819,044 11,487,511 10,967,053 9,246,474 7,335,804 6,354,989 5,138,537 5,025,731 2,946,456 2,762,587 2,500,000 2,472,576 2,326,566 1,941,762 1,910,344 1,815,135 1,563,995 1,535,000 12.67% 10.09% 6.25% 4.27% 4.07% 3.44% 2.73% 2.36% 1.91% 1.87% 1.09% 1.03% 0.93% 0.92% 0.86% 0.72% 0.71% 0.67% 0.58% 0.57% Total 155,421,791 57.74% P a g e | 77 ANNUAL REPORT 30 June 2020 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 Substantial Ordinary Shareholders as at 8 September 2020 Name ALKANE RESOURCES LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MRS ELEANOR JEAN REEVES Number of Ordinary Fully Paid Shares Held % Held of Ordinary Issued Capital 34,118,584 27,153,643 16,819,044 12.67% 10.09% 6.25% Distribution of Ordinary Shareholders as at 8 September 2020 Holding Range Holders Total Units 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over 297 1,074 588 1,093 216 3,268 134,378 3,121,652 4,916,380 37,482,896 223,526,269 269,181,575 % Issued Ordinary Capital 0.05% 1.16% 1.83% 13.92% 83.04% 100.00% Unmarketable Parcels – as at 8 September 2020 there were 167 holders with less than a marketable parcel of shares. On-Market Buy-Back There is no current on-market buy-back. Unquoted Securities As at 8 September 2020 the following unquoted securities are on issue: 1,200,000 Performance Rights – 3 Holders Holders with more than 20% Holder Name HADREY PTY LTD STEPHEN SHEPPARD GRANT MCEWEN Holding % 900,000 42.86% 600,000 600,000 28.57% 28.57% 7,150,000 Incentive Options Expiring 27 December 2021 @ Nil – 2 Holders Holders with more than 20% Holder Name ELEANOR JEAN REEVES HADREY PTY LTD Holding % 3,000,000 41.96% 2,700,000 37.76% 2,700,000 Incentive Options Expiring 30 January 2025 @ Nil – 1 Holder Holders with more than 20% Holder Name RICHARD W S HILL Holding 2,700,000 % 100% 500,000 Incentive Options Expiring 4 June 2025 @ Nil – 1 Holder Holders with more than 20% Holder Name BENJAMIN G PLAYFORD Holding 500,000 % 100% P a g e | 78 CALIDUS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 98 006 640 553 ANNUAL REPORT 30 June 2020 600,000 Incentive Options Expiring 5 August 2025 @ Nil – 1 Holder Holders with more than 20% Holder Name DONALD R RUSSELL Holding 600,000 % 100% 170,000 Incentive Options Expiring 12 August 2025 @ Nil – 1 Holder Holders with more than 20% Holder Name DEAN A VALLVE Holding 170,000 % 100% 388,500 Executive Options Expiring 27 December 2021 @ Nil – 2 Holders Holders with more than 20% Holder Name ELEANOR JEAN REEVES HADREY PTY LTD Holding % 150,000 38.61% 150,000 38.61% 500,000 NED Options Expiring 27 December 2023 @ Nil – 2 Holders Holders with more than 20% Holder Name MARCON INVESTMENTS (WA) PTY LTD KADAJE INVESTMENTS PTY LTD Holding 300,000 % 60% 200,000 40% 150,000 Executive Options Expiring 30 January 2022 @ Nil Holders with more than 20% Holder Name MR RICHARD W S HILL Holding 150,000 % 100% 4,200,000 Options Expiring 18 April 2021 @ $0.02 escrowed for a period of 24 months from quotation – 4 Holders Holders with more than 20% Holder Name ATTOLLO INVESTMETNS PTY LTD BUZZ CAPITAL PTY LTD < ZI VESTMENT A/C > SUNSET TIDAL PTY LTD ROMFAL SIFAT PTY LTD ASX Listing Rule 4.10.19 Holding 1,000,000 %IC 23.810% 1,000,000 23.81% 1,000,000 23.81% 1,000,000 23.81% The Company has used its cash and net assets in a form readily convertible to cash in hand at the time of reinstatement of the Company’s securities to quotation in a way consistent with its business objectives. 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