Canyon Resources Limited ABN 13 140 087 261 Annual Report 30 June 2021 Canyon Resources Limited Corporate directory 30 June 2021 Directors Cliff Lawrenson Phillip Gallagher David Netherway Steve Zaninovich Peter Su Company secretary Matt Worner Registered office Principal place of business Share register Auditor Solicitors Level 9, 863 Hay Street Perth, Western Australia, 6000 T: +61 8 6382 3342 F: +61 8 9324 1502 Level 9, 863 Hay Street Perth, Western Australia, 6000 T: +61 8 6382 3342 F: +61 8 9324 1502 Computershare Limited Level 11, 172 St Georges Terrace Perth, Western Australia, 6000 T: +61 8 9323 2000 F: +61 9323 2033 www.computershare.com.au HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth, Western Australia, 6000 Allion Partners Level 9, 863 Hay Street Perth, Western Australia, 6000 Stock exchange listing Canyon Resources Limited shares are listed on the Australian Securities Exchange (ASX code: CAY) Website www.canyonresources.com.au 1 Canyon Resources Limited Chairman’s Letter 30 June 2021 Dear Shareholder, It is my pleasure to present Canyon Resources Limited’s Annual Report for the year ended 30 June 2021. It has been a very challenging year for everyone, but particularly for a relatively early stage mining project in West Africa. However, I am very pleased to report that despite the challenges presented by the COVID-19 pandemic, Canyon has not only fulfilled, but exceeded its minimum work requirements in Cameroon and completed the year with no positive COVID-19 outbreaks within its Cameroon workforce and with an enviable safety record overall. The Company’s flagship Minim Martap Bauxite Project was advanced throughout the year and major milestones were achieved. A key milestone was the announcement of a maiden bauxite reserve, positioning the Minim Martap Project as one of the highest grade, lowest contaminant bauxite projects in the world. The Minim Martap Project will export bauxite at greater than 50% Al2O3 with 2.6% total SiO2 for 20 years of mining and beyond. The initial exploration permits over the Minim Martap Project expired in July 2021 with the Company having completed all required works and submitting a Mining License application in June of this year. Management are now working with the Government of Cameroon to complete the Mining Convention and Mining License for the Project. These are the final steps before the project will go into the construction phase. During the year, the Company made key appointments in Cameroon adding proven bauxite and infrastructure expertise to the team. Mr Rick Smith was announced as the Director General of Camalco Cameroon SA and Mr Andre Henry was appointed as Director of Port and Rail. The addition of these two experienced and successful bauxite professionals will assist the Camalco team to optimise the outcomes for the Project. We look forward to completing the next phase of the project development, as we complete the negotiation of a Mining Convention with the Government of Cameroon and finalise the Mining License. Recent regional events, particularly in Guinea, have highlighted the need for an alternative supply of high grade West African bauxite, and we are confident that the Minim Martap Project can be a strong alternative supplier of bauxite from within the region. I thank all Canyon shareholders for their ongoing support as the development of Minim Martap has progressed. Thank you to my fellow Directors and the Management as well as the Canyon Resources and Camalco team in Australia and Cameroon for their efforts in making these difficult past twelve months a success and delivering the significant outcomes for the Minim Martap Project over this period. Regards Cliff Lawrenson Non-Executive Chairman 2 Canyon Resources Limited Contents 30 June 2021 Directors' report Auditor's independence declaration Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Directors' declaration Independent auditor's report to the members of Canyon Resources Limited Shareholder information Interest in mineral permits 4 27 28 29 30 32 33 57 58 62 64 3 Canyon Resources Limited Directors' report 30 June 2021 The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as 'the Group') consisting of Canyon Resources Limited (referred to hereafter as 'the Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2021. Directors The following persons were Directors of Canyon Resources Limited during the whole of the financial period and up to the date of this report, unless otherwise stated: Cliff Lawrenson - Non Executive Chairman (appointed 10 December 2020) Phillip Gallagher - Managing Director David Netherway - Non-Executive Director Steven Zaninovich - Non-Executive Director Peter Su - Non-Executive Director (appointed 16 September 2020) Dimitri Bacopanos - Non-Executive Director (appointed 21 October 2020 - resigned 26 March 2021) Emmanuel Correia - Non-Executive Director (resigned 10 December 2020) Principal activities The principal activities of the entities within the Group during the year were continued bauxite exploration and engineering studies. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the Group after providing for income tax amounted to $4,751,302 (30 June 2020: $8,520,515). Minim Martap Project During the year, Canyon’s focus was on the finalisation of the exploration and feasibility study phases of its 100% owned Minim Martap Bauxite Project (The Project). The Project is situated adjacent to the Camrail rail line linking the region to the accessible and available Atlantic port of Douala. The rail line is currently underutilised and coupled with the existing port of Douala, supports a low capex, low opex solution for the delivery of very high grade, low contaminant, seaborne bauxite to market to fuel the large and growing aluminium industry. The Company was granted three, three year non-renewable exploration permits for the Minim Martap, Makan and Nagouandal permits on 18 July 2018. Canyon has completed all the prescribed work and studies as required by the minimum work commitments within the exploration permits. The Company has submitted all the required documentation to finalise the Mining Convention and to convert the exploration permits to a mining permit. Canyon has recently received written confirmation of the commencement of the negotiations for the Mining Convention for the Project. These negotiations are due to commence in October 2021. 4 Canyon Resources Limited Directors' report 30 June 2021 Figure 1: Location map of the Minim Martap Bauxite Project A summary of the highlights of the past year's operations is provided below. Bauxite Ore Reserve On 25 May 2021, Canyon announced that it had completed its updated JORC (2012) Ore Reserve Estimate for the Minim Martap Project. The update to the Ore Reserve Estimate followed the completion of detailed mine scheduling and de-risking of mining costs and reinforces the ability of the Project to produce one of the highest grade, lowest contaminant bauxite products of any mine globally for at least 20 years and provides increased confidence in the deposit. The updated JORC (2012) Ore Reserve Estimate was presented as follows: Mineral Resource Upgrade In May 2021 Canyon announced an updated Mineral Resource Estimate for the Minim Martap Project, which included 382Mt in the Measured Category with very low silica. The upgrade brought over one third of the Company’s resource into the Measured Category and provides Canyon with significant confidence in its resource definition, further de-risking an already robust project and underpinning the production profile for the first 20 years of operation. 5 Canyon Resources Limited Directors' report 30 June 2021 The JORC 2012 compliant Mineral Resource estimate for Canyon’s high-grade Minim Martap Project in Cameroon was presented as: Execution of Cahier de Charges Agreement On 31 May 2021, the Company announced it had executed a Cahier de Charges Agreement with the State of Cameroon (“Agreement”). The Agreement confirms Canyon’s major obligations and rights in relation to the Project exploration permits and stabilises the Company’s position in relation to the Project until the completion of the Mining Convention for the Minim Martap Project. A Mining Convention is the definitive agreement between Canyon and the State of Cameroon regarding all the key rights and obligations for the development of the Project, including the taxation, legal, fiscal, social and environmental obligations of the Project. Key terms within the Agreement: ● ● ● ● ● ● Confirmation of the rights and obligations of the Minim Martap, Makan and Ngaoundal exploration permits regarding the financial commitments, work requirements and reporting requirements etc. All the requirements are consistent with the Cameroon Mining Code and the obligations within the permit granting documents. Stability of legal regime during the exploration phase until the signing of the Mining Convention and stability of the fiscal, customs and foreign exchange regulations during the exploration and exploitation phases in relation to the Project and Canyon’s work on the Project. A commitment by Canyon to present one or more technical and financial partners to the State of Cameroon prior to the execution of the Mining Convention. An agreement between Canyon and the State of Cameroon to negotiate an agreed amount as a payment to the State for the value of the previous studies completed on the Project, which payment will be subject to the creation of a law to enable Canyon to make that payment. The amount and terms of the payment are to be included in the Mining Convention. Both parties have the right to call Force Majeure and claim extended time to fulfill obligations, if required. The parties have agreed that if a dispute cannot be solved amicably, the parties will refer the dispute to the International Centre for the Settlement of Investment Disputes (ICSID). Completion and Submission of ESIA On 9 June 2021, the Company announced the completion and submission of the Environmental and Social Impact Assessment (ESIA) for the Minim Martap Project and its submission on 1 June 2021 to the Ministry of Mines, Industry and Technology Development (MINMIDT). 6 Canyon Resources Limited Directors' report 30 June 2021 The ESIA is a critical component of the mining permit application process and was undertaken in line with national legislation, the International Finance Corporation Performance Standards and other key international standards, frameworks and guidelines. The scope of the ESIA covers the three exploration tenements (Minim Martap, Makan and Ngaoundal), and includes the haul route between the mine and the inland rail facility at Makor, the rail line itself between Makor and Douala, infrastructure at the port of Douala, as well as the transhipment route and deep-water anchorage location. Key impacts that the ESIA addresses through aspect specific socio-environmental management plans (SEMP) include land acquisition and compensation, air quality, noise, water resources and limited biodiversity impacts. The ESIA contains a fully costed management plan for how the Project will mitigate each impact, including with respect to mine closure and rehabilitation. The costs are consistent with those forecast in the Pre-Feasibility Study (PFS). Appointments of Mr Rick Smith and Mr André Henry On 19 February 2021, the Company announced the appointment of Mr Rick Smith as Director General of Camalco. Mr Smith has been working with Canyon since March 2020 as Chief Development Officer and has agreed to accept the role of DG of Camalco and base himself in Cameroon for the crucial periods of the end of the feasibility studies and the commencement of construction of the Project. Mr Smith was previously a senior executive at Guinea Alumina Corporation (GAC), who successfully commissioned the USD$1.4 billion CAPEX, GAC Project. The bauxite mine is in Tinguilinta, Guinea and is West Africa’s newest bauxite mine and will export 12 million tonnes per annum through its Kamsar bauxite port facilities which were commissioned in Q3 2019. The Company appointed Mr André Henry as Director of Port and Rail, Camalco. Camalco SA (Camalco) is the 100% owned of the Cameroonian entity which holds the permits for Canyon’s Minim Martap Bauxite Project. Mr Henry is based within the Camrail offices near the port of Douala. This gives him daily access to key management in the Camrail organisation. Mr Henry has had a highly successful, rail and logistics focussed career for over 35 years and has led billion-dollar international railway initiatives for AECOM’s West African, Middle East and North American businesses, Etihad Rail and Emirates Global Aluminium’s bauxite project in Guinea. His experience spans the project development cycle from government negotiations, financing, construction, operational readiness, operations, and operational optimisation. Minister of Mines Project Site Visit On Monday 25 January 2021, Canyon Resources Managing Director, Mr Phillip Gallagher and the new Camalco Director General, Mr Rick Smith hosted a visit to the Minim Martap Project site by His Excellency Gabrielle Ndoko, the Minister of Mines, the Secretary of State to the Minister of Mines, the Governor of the Adamoua Region and other dignitaries. 7 Canyon Resources Limited Directors' report 30 June 2021 Figure 2: Local news media reporting the Minister of Mines visit to the Minim Martap Project The purpose of the site visit was for Camalco to present the results of the extensive exploration and geological research completed by the company on the Project and to discuss the development plans for the Project. The presentation and meetings at the towns of Martap and Minim were chaired by the Minister of Mines and attended by local dignitaries and people from the local villages. The meetings were overwhelmingly positive, and the Minister of Mines announced publicly that the Minim Martap Project would now be transitioning to the mining phase of the Project. Metallurgical Testwork On 1 October 2020, Canyon provided a summary of the outcomes of the Advanced Metallurgical Programme designed to further understand the digestion properties of the high-grade bauxite at Minim Martap Project. The outcomes of the testing confirmed the very high-grade of the Minim Martap Bauxite and the high rates of conversion from total alumina to available alumina at low temperature digestion conditions, with all tests achieving at least 90% alumina conversion or greater. The results from the Advanced Metallurgical Programme supported the properties detailed in the previously released Bauxite Technical Specification data sheet, and reflected excellent conversion results of greater than 90% in all cases. The Advanced Metallurgical Programme complemented the previously completed Basic Metallurgical Programme. The Physical Properties Programme Samples for the Advanced Metallurgical Programme were randomly selected across bauxite within the ore specifications as defined within the Ore Reserve estimate, with a focus on the priority plateaux featured within the PFS. In addition, bulk samples were collected from an ultra-high-grade region and work is now underway to determine if there are additional large zones of the ultra-high grade bauxite to integrate within mine scheduling and product profiling. The programmes, conducted during 2020, largely aimed to define the refining properties of various plateaux from the Minim Martap Bauxite Project, with a particular focus on the priority plateaux which underpin the Minim Martap PFS and the modelled 20-year mine life. 8 Canyon Resources Limited Directors' report 30 June 2021 The metallurgical test work programmes were sourced in three phases with a small sample set prepared initially from the Alice and Beatrice Plateaux (Basic Metallurgical Programme), a larger sample set from the Beatrice and Raymonde Plateaux (Advanced Metallurgical Programme), and a sample obtained from a high-grade location within the Raymonde Plateau. Additionally, the Physical Properties Programme, which was also used for bulk density and bulk sampling, was completed, and complimented the results. Advanced Metallurgical Programme On 1 October 2020 Canyon provided a summary of the testing that underpins the Bauxite Technical Specification data sheet which is providing a basis for ongoing offtake and strategic partnership negotiations. The testing was completed as part of a broad range of chemical, metallurgical and physical test work to inform the Minim Martap Pre-Feasibility Study and resulting Ore Reserve Estimate. Chemical properties of the bauxite product are an average of the chemical profile of the direct shipping ore derived from the mining schedule and the resource block model. The physical and metallurgical properties are a combination of interpretations from a number of different relevant and representative tests and investigations. The direct shipping ore (DSO) bauxite properties of chemical, digestion and physical/handleability as presented in the product technical specifications (ASX release 08 July 2020) are based on underpinning investigations set out in Figure 3 below and are supported by the PFS mine scheduling and the Mineral Resource estimate (ASX release 27 September 2019). 9 Canyon Resources Limited Directors' report 30 June 2021 Figure 3: Product Specification Sheet from the Minim Martap Bauxite Project Rail upgrades In September 2020, the Company reported on ongoing rail upgrades underway in Cameroon as part of a five-year infrastructure renewal programme agreed between the Cameroon Government and Camrail SA (Camrail), a subsidiary of Bolloré Transport & Logistics. Camrail operates the existing rail network that passes approximately 50km from Canyon’s Minim Martap project. Under the programme, and with the contribution of the World Bank, Camrail upgraded 12 steel bridges on the line between Yaoundé and Ngaoundéré and the Edéa railway bridge between Douala and Yaoundé. 10 Canyon Resources Limited Directors' report 30 June 2021 As part of the projects implemented by the transport ministry, in February 2020 Camrail also launched upgrade work on 55 further railway bridges (metal bridges and reinforced-concrete slab bridges) across the rail network. In addition, 330km of track (Ka’a-Belabo, Batchenga and Ka’a, Douala-Yaoundé entrances and exits) has been renewed. Reinforcement work has been carried out on 500km of track and 1,671 hydraulic structures have been refurbished. With the support of development partners including the World Bank, the European Investment Bank, the French Development Agency and the European Union, the Cameroon Government and Camrail are currently finalising the projects to renew the track between Douala and Yaoundé and between Belabo and Ngaoundéré, for a total estimated length of about 585km. Figure 4: An upgraded rail bridge on the Camrail rail line. MOU with Port of Douala In September 2020, Canyon announced the execution of a Memorandum of Understanding (MoU) with the Port Authority of Douala (PAD), Cameroon. During the process of completing the PFS, Canyon has established a positive working relationship with the executive team of the PAD. The execution of the MoU formalises many of the discussions and meetings and creates a pathway for the finalisation of required operating and logistics solutions as well as timely completion of access and operating agreements between Canyon and the PAD. The objective of the MoU is to establish an agreed framework by which the PAD and Canyon will cooperate effectively to ensure the success of the Project by way of a mutually beneficial partnership. Under the terms of the MoU, Canyon and PAD will cooperate regarding the port logistic considerations of the feasibility studies of the Project, and to develop efficient technical and commercial solutions for the use of port facilities at the Port of Douala. This cooperation framework aims to help both Parties effectively fulfil their responsibilities for the development of the Project, including through structured information sharing and collaborative milestones. Competent Person’s Statement – Ore Reserves The information in this report that relates to Ore Reserves is based on information compiled or reviewed by Mr John Battista, a Competent Person who is a Member and Chartered Professional (Mining) of the Australasian Institute of Mining and Metallurgy and is currently employed by Mining Plus (UK) Ltd. Mr Battista has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for the Reporting of Exploration Results, Mineral Resources, and Ore Reserves (JORC Code). 11 Canyon Resources Limited Directors' report 30 June 2021 Competent Person’s Statement – Mineral Resources The information in this report that relates to mineral resources is based on information compiled or reviewed by Mr Mark Gifford, an independent Geological expert consulting to Canyon Resources Limited. Mr Mark Gifford is a Fellow of the Australian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mineral Resource Estimate The data in this report that relates to the Mineral Resource estimates for the Minim Martap Bauxite Project is based on information in the Resources announcement of 11 May 2021 and available to view on the Company’s website and 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 announcement and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the original market announcement continue to apply and have not materially changed. The Company confirms that the form and the context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Pre-Feasibility Study The data in this report that relates to the Pre-Feasibility Study for the Minim Martap Bauxite Project and associated production targets and forecast financial information, is based on information in the PFS announcement of 01 July 2020, and available to view on the Company’s website and ASX. The Company confirms that all the material assumptions underpinning the production target and forecast financial information derived from the production target continue to apply and have not materially changed. Ore Reserve estimate The data in this report that relates to the Ore Reserve estimate estimates for the Minim Martap Bauxite Project is based on information in the maiden Ore Reserve announcement of 25 May 2021 and available to view on the Company’s website and 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 announcement and, in the case of estimates of Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the original market announcement continue to apply and have not materially changed. The Company confirms that the form and the context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. 12 Canyon Resources Limited Directors' report 30 June 2021 Forward-looking statements All statements other than statements of historical fact included in this report including, without limitation, statements regarding future plans and objectives of Canyon, are forward-looking statements. When used in this report, forward-looking statements can be identified by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “future”, “intend”, “may”, “opportunity”, “plan”, “potential”, “project”, “seek”, “will” and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, its directors and management of Canyon that could cause Canyon’s actual results to differ materially from the results expressed or anticipated in these statements. Canyon cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this report will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. Canyon does not undertake to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this report, except where required by applicable law and stock exchange listing requirements. CORPORATE Placement completed In August 2020, Canyon announced it had agreed to place a total of 100 million new fully paid ordinary shares at $0.10 per share to institutional and sophisticated and strategic investors to raise a total of $10m, before costs. The placement introduced Mr Peter Su as a new strategic investor in Canyon who agreed to subscribe for approximately $5.6m at $0.10 per Share as part of the Placement (representing a 9.4% shareholding in Canyon post-Placement). Mr Su’s investment was made in two equal tranches, with the first tranche of $2.8 million issued on 7 September 2020 and the second tranche of $2.8m issued on 29 September 2020. Board Changes and Restructure Following the completion of the first tranche of his investment pursuant to the placement in August 2020, on 7 September 2020, Mr Peter Su joined the Board as a Non-Executive Director. On 21 October 2020, Mr Dimitri Bacopanos was appointed a Non-Executive Director as a nominee of Mr Su, following the successful completion of the placement announced in August 2020. Mr Bacopanos resigned from the board on 26 March 2021. On 10 December 2020, The Company announced the appointment of Mr Cliff Lawrenson as Non-Executive Chairman, the resignation of Mr David Netherway as Non-Executive Chairman, (continuing as a Non-Executive Director) and the resignation of Mr Emmanuel Correia as a Non-Executive Director. Mr Nick Allan resigned as Chief Financial Officer and Company Secretary on 28 May 2021, and Mr Matt Worner was appointed as Company Secretary on 16 June 2021. Matters subsequent to the end of the financial year A $6.2m placement to institutional and sophisticated investors was announced on 2 August 2021, with the issue of 77,257,157 shares at $0.08 per share. The majority of the placement was completed on 9 August 2021 with the issue of 70,485,675 shares at $0.08 per share raising $5,638,854 before costs. 13 Canyon Resources Limited Directors' report 30 June 2021 The balance of the placement is in relation to Canyon's largest shareholder and Non-executive Director, Mr Su who subscribed for his pro-rata amount under the Placement (being an amount of 6,771,482 shares at $0.08 per share raising $541,719) and therefore continues to hold more than 9% of the Company. Mr Su’s participation in the Placement was approved by shareholders at a General Meeting held on 20 September 2021. Likely developments and expected results of operations Information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group. Environmental regulation With respect to its environmental obligations regarding its exploration activities the consolidated entity endeavours to ensure that it complies with all regulations when carrying out any exploration work and is not aware of any breach at this time. Information on Directors Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Name: Title: Qualifications: Experience and expertise: Cliff Lawrenson Non-Executive Chairman (Appointed 10 December 2020) Hons. BComm Mr Lawrenson is an experienced mining professional who was previously the Managing Director of Atlas Iron Ltd from 2017 until its acquisition by Hancock Prospecting Pty Ltd. Prior to Atlas Iron, Mr Lawrenson was Managing Director of a number of ASX listed companies in the mining and mining services sectors. Mr Lawrenson was a senior executive of CMS Energy Corporation in the United States of America and Singapore and this was preceded by an investment banking career. Paladin Energy Limited (ASX: PDN) - appointed 29 October 2019 Australian Vanadium Limited (ASX: AVL) - appointed 12 October 2020 Caspin Resources Limited (ASX: CPN) - appointed 1 October 2020 Non-Executive Chairman of private companies, Pacific Energy Limited (acquired by QIC) and Onsite Rental Group. Altas Iron Limited (ASX:AGO) - appointed 17 January 2017 - resigned 15 October 2018 Pacific Energy Limited (ASX:PEA) - appointed 23 August 2010 - resigned 18 November 2019 Primero Group Limited (ASX:PGX) - appointed 25 October 2019 - resigned 9 March 2020. None Phillip Gallagher Managing Director (Appointed 19 October 2009) B.Bus Mr Gallagher has had extensive experience in senior commercial and operational roles in both private and public companies. Other current directorships: Former directorships (last 3 years): Interests in shares: Mr Gallagher is the founder of Canyon Resources, has been the Company’s Managing Director since inception. None None 15,460,016 ordinary shares 14 Canyon Resources Limited Directors' report 30 June 2021 Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Name: Title: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: David Netherway Non-Executive Director (Appointed 17 March 2014) B.Eng (Mining), CDipAF, F.Aus.IMM Mr Netherway is a mining engineer with over 40 years of experience in the mining industry and until the takeover by Gryphon Minerals Limited, was CEO of Shield Mining Limited, an ASX listed exploration company. He was involved in the construction and development of the New Liberty, Iduapriem, Siguiri and Kiniero gold mines in West Africa and has extensive mining experience in Africa, Australia, China, Canada, India and the former Soviet Union. Mr Netherway was the Chairman of Afferro Mining, a UK listed iron ore exploration and development company in Cameroon until December 2013 when Afferro was subject to a US$200 million takeover by AIM listed IMIC plc. Chairman of Altus Strategies plc (ALS:AIM & ALTS:TSX-V), Canyon’s joint venture partner on the Birsok Project in Cameroon - appointed 9 May 2017. Non-executive Director of Kore Potash Ltd (K2P:AIM, ASX & JSE) - appointed 14 December 2017. Chairman of Kilo Goldmines Inc (KGL:TSX-V) appointed 7 July 2011 - resigned 16 March 2020. Non-Executive Director of Avesoro Resources Inc.(ASO:AIM & TSX) appointed 1 February 2011 - resigned 8 January 2020. 14,413,015 ordinary shares Emmanuel Correia Non-Executive Director (Appointed 20 July 2016 - resigned 10 December 2020) B. Bus CA Mr Correia is a Chartered Accountant and founding director of Peloton Capital and Peloton Advisory and has over 25 years public company and corporate finance experience in Australia, North America and the United Kingdom. He has held various senior positions with Deloitte and other accounting firms and boutique corporate finance houses specialising in corporate finance, corporate strategy, mergers and acquisitions and capital raising activities. n/a n/a n/a 15 Canyon Resources Limited Directors' report 30 June 2021 Name: Title: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in rights: Name: Title: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Name: Title: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Steven Zaninovich Non-Executive Director (Appointed 30 January 2019) Mr Zaninovich has spent more than 20 years in project development, maintenance and operational readiness in the mining industry including, most recently, as Project Director of Tawana Resources, responsible for the delivery of the Bald Hill Lithium Project. Prior to that, he served as Chief Operating Officer with Gryphon Minerals (“Gryphon”) before assuming the role of Vice President of Major Projects, and becoming part of the Executive Management Team, at Teranga Gold Corporation (“Teranga”) following its acquisition of Gryphon Minerals. During his time with Teranga and Gryphon, and also earlier in his career, Mr Zaninovich gained specific expertise in the development of multiple mining operations across various commodities and jurisdictions in West Africa. He has also taken on consultant project management roles for companies including BHP Billiton, Newmont Mining and Gold Fields. Mr Zaninovich’s responsibilities during previous senior executive roles have included operational running of companies, business and strategic planning, feasibility studies and project development, site exploration operations, health and safety, environmental and social responsibility, human resources, risk management, project generation, strategic direction and procurement and contracts. Non-Executive Director of Maximus Resources Limited (ASX: IDA) appointed on 14 July 2020 and appointed as Non-Executive Chairman on 22 March 2021, Non-Executive Director of Sarama Resources Limited (TSX-V: SWA) appointed on 24 June 2020, and Non-Executive Director of Mako Gold Limited (ASX: MXR) appointed on 2 October 2020. Non-Executive Director of Indiana Resources Ltd (ASX: IDA) resigned on 28 February 2021. 1,200,000 ordinary shares 600,000 performance rights Peter Su Non-Executive Director (Appointed 16 September 2020) Mr Su is actively involved in property investment and development in Australia and overseas, he is a strategic investor with a diverse range of business interests in Australia and overseas. The Su family have historically held commercial interest in bauxite and alumina refining in China. None None 60,431,506 ordinary shares Dimitri Bacopanos Non-Executive Director (Appointed 21 October 2020 - Resigned 26 March 2021) Mr Bacopanos is a Chartered Accountant and Fellow of the Securities Institute of Australia with more than thirty years of experience in a wide range of industries, geographies and roles. He was previously an Executive Director with Ernst & Young in their Transaction Advisory Services division and has held executive director roles in public and private operating entities in China. n/a n/a n/a 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 16 Canyon Resources Limited Directors' report 30 June 2021 Company secretary Matt Worner LLB, B.Bus Appointed 16 June 2021 Mr Worner is a former lawyer, with a broad experience in IPOs, capital raising, ASX Listing Rules and Corporations Act issues. He has held management, company secretarial and board positions with various ASX and AIM listed companies. He maintains strong connections with brokers in both Australia and London and is currently a director of Talon Petroleum Limited (ASX:TPD). Nick Allan B. Com, CA Appointed 17 April 2020 - Resigned 28 May 2021 Mr Allan is a Chartered Accountant with over 25 years’ experience in commerce, corporate advisory and public practice. Mr Allan has previously held several senior finance positions including Chief Financial Officer and Company Secretary of a number of ASX- listed public companies. Meetings of Directors The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2021, and the number of meetings attended by each Director were: Cliff Lawrenson Phillip Gallagher David Netherway Steven Zaninovich Peter Su Dimitri Bacopanos Emmanuel Correia Full Board Attended Held Audit and Risk Committee Attended Held 2 4 4 4 3 1 2 2 4 4 4 3 1 2 2 - 2 2 - - - 2 2 2 2 2 2 2 Held: represents the number of meetings held during the time the Director held office. Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all Directors. The remuneration report is set out under the following main headings: ● ● ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional disclosures relating to key management personnel 17 Canyon Resources Limited Directors' report 30 June 2021 Principles used to determine the nature and amount of remuneration This report outlines the remuneration arrangements in place for the key management personnel of Canyon for the financial year ended 30 June 2021. The information provided in this remuneration report has been audited as required by Section 308 (3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the Company, and includes the executives in the Group. In accordance with best practice corporate governance, the structure of non-executive Director and executive Director remuneration is separate. Remuneration Philosophy The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in determining remuneration levels is to: - set competitive remuneration packages to attract and retain high calibre employees; - link executive rewards on sustained growth and key non-financial drivers of value. Remuneration and nomination committee Due to the size of the Company the entire Board are members of the Remuneration and Nomination Committee. The Committee assesses the appropriateness of the nature and amount of remuneration of directors and executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board and executive team. Non-executive Director's remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. The maximum aggregate payable to non-executive directors approved by shareholders is $300,000 per annum. Executive remuneration The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has four components: ● ● ● ● base pay and non-monetary benefits short-term performance incentives share-based payments other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. Fixed Remuneration Fixed remuneration is reviewed annually by the Board. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, obtaining external advice on policies and practices. The Board has access to external, independent advice where necessary. Directors and executives are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. 18 Canyon Resources Limited Directors' report 30 June 2021 Variable Remuneration The objective of the short term incentive program is to link the achievement of the Company's operational targets with the remuneration received by the executives charged with meeting those targets. The total potential short-term incentive available is to be set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and such that the cost to the Company is reasonable in the circumstances. Actual payments which may be granted to each executive depend on the extent to which specific operating targets set at the beginning of the financial year are met. For the year to 30 June 2021, and to the date of this report, the Company made $25,000 payments to key management personnel (2020: $nil). The Company may also make long term incentive payments to reward senior executives in a manner that aligns this element of remuneration with the creation of shareholder wealth. Employee Share Plan On 25 November 2019 Shareholders approved a new employee incentive scheme titled the Canyon Long Term Incentive Plan. As a result of this Shareholder approval the Company will be able to issue options, performance rights or performance shares under the Plan to eligible participants over a period of 3 years without impacting on the Company’s ability to issue up to 15% of its total ordinary securities without Shareholder approval in any 12-month period. The objective of the Plan is to attract, motivate and retain key employees and it is considered by the Company that the adoption of the Plan and the future issue of Plan Securities under the Plan will provide selected employees with the opportunity to participate in the future growth of the Company. Any future issues of Plan Securities to a related party or a person whose relationship with the company or the related party is, in ASX’s opinion, such that approval should be obtained will require additional Shareholder approval under ASX Listing Rule 10.14 at the relevant time. Voting and comments made at the Company's Annual General Meeting ('AGM') At the 30 November 2020 AGM, 73.1% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2020, which constitutes a first strike pursuant to s250U of the Corporations Act 2001. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. The key management personnel of the Group consisted of the following Directors of Canyon Resources Limited: ● ● ● ● ● ● ● Cliff Lawrenson (Non-Executive Chairman) - appointed 10 December 2020 Phillip Gallagher (Managing Director) David Netherway (Non-Executive Director) Steven Zaninovich (Non-Executive Director) Peter Su (Non-Executive Director) - appointed 16 September 2020 Dimitri Bacopanos (Non-Executive Director) - appointed 21 October 2020 - resigned 26 March 2021 Emmanuel Correia (Non-Executive Director) - resigned 10 December 2020 And the following persons: ● ● ● James Durrant (Director of Projects) Rick Smith (Chief Development Officer) - appointed 19 February 2021 Nick Allan (CFO & Company Secretary) - appointed 17 April 2020 - resigned 28 May 2021 19 Canyon Resources Limited Directors' report 30 June 2021 30 June 2021 Non-Executive Directors: Cliff Lawrenson David Netherway Emmanuel Correia Steven Zaninovich Peter Su Dimitri Bacopanos Executive Directors: Phillip Gallagher ** Other Key Management Personnel: James Durrant *** Rick Smith Nick Allan Short-term benefits Post- employment benefits Long-term benefits Share-based payments Cash salary and fees $ Cash bonus $ Other Super- services * annuation $ $ Long service leave $ Equity- settled $ Total $ 83,468 90,000 35,525 79,992 - 33,333 - 12,500 - 12,500 - - - - 75,000 15,273 - - - - - - - - - - - - - - - - - 107,450 - - 83,468 102,500 110,525 215,215 - 33,333 394,976 - - 21,694 5,283 - 421,953 264,465 252,618 203,455 1,437,832 - - - 25,000 - - - 90,273 21,694 - 18,138 61,526 - - - 5,283 225,419 511,578 - 252,618 179,786 401,379 512,655 2,132,569 Refer to note 20 * Includes annual leave accrual $11,509 ** *** Includes annual leave accrual $6,132 Short-term benefits Post- employment benefits Long-term benefits Share-based payments Cash salary and fees $ Cash bonus $ Other services $ Super- annuation $ Long service leave $ Equity- settled $ Total $ 30 June 2020 Non-Executive Directors: David Netherway Emmanuel Correia Steven Zaninovich Executive Directors: Phillip Gallagher* Other Key Management Personnel: James Durrant Nick Allan John Lewis ** 90,000 80,000 79,992 313,777 241,667 37,981 198,559 1,041,976 * ** Includes accrued annual leave of $13,777 Resigned 17 April 2020 - - - - - - 151,067 151,067 253,990 241,067 231,067 333,982 21,003 50,872 241,707 627,359 20,669 3,608 13,847 59,127 - - - 50,872 - - - 262,336 41,589 212,406 797,831 1,949,806 - - - - - - - - - - - - - - - - 20 Canyon Resources Limited Directors' report 30 June 2021 The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Cliff Lawrenson David Netherway Emmanuel Correia Steven Zaninovich Peter Su Dimitri Bacopanos Executive Directors: Phillip Gallagher Other Key Management Personnel: James Durrant Rick Smith Nick Allan John Lewis Fixed remuneration Performance related 30 June 2021 30 June 2020 30 June 2021 30 June 2020 100% 88% 100% 44% - 100% - 37% 35% 7% - - - 12% - 56% - - 100% 61% - 56% 100% 55% - 100% - 100% 100% 44% - 45% - - 63% 65% 93% - - 39% - - - - Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Title: Details: Name: Title: Details: Name: Title: Details: Name: Title: Details: Mr Phillip Gallagher Managing Director Remuneration of $300,000 per annum plus superannuation. The agreement may be terminated by the Company giving 6 months’ notice. Mr Gallagher can terminate the agreement by giving 3 months’ written notice. Mr James Durrant Director of Projects Remuneration of $250,000 per annum plus superannuation. The agreement may be terminated by either the Company or Mr Durrant upon the giving of 3 months’ notice. Mr Nick Allan Company Secretary & CFO Remuneration of $225,000 per annum plus superannuation. The agreement may be terminated by either the Company or Mr Allan upon the giving of 3 months’ notice. Mr Rick Smith Chief Development Officer Mr Smith will provide services for the agreed hours of 0.5 times of a full-time equivalent role. Additional hours will be agreed in writing. Remuneration of $200,000 per annum (being $400,000 full time equivalent). The agreement may be terminated by either party with one month's written notice. 21 Canyon Resources Limited Directors' report 30 June 2021 Share-based compensation On 25 November 2019 Shareholders approved a new employee incentive scheme titled the Canyon Long Term Incentive Plan. As a result of this Shareholder approval the Company will be able to issue options, performance rights or performance shares under the Plan to eligible participants over a period of 3 years without impacting on the Company’s ability to issue up to 15% of its total ordinary securities without Shareholder approval in any 12 month period. The objective of the Plan is to attract, motivate and retain key employees and it is considered by the Company that the adoption of the Plan and the future issue of Plan Securities under the Plan will provide selected employees with the opportunity to participate in the future growth of the Company. Any future issues of Plan Securities to a related party or a person whose relationship with the company or the related party is, in ASX’s opinion, such that approval should be obtained will require additional Shareholder approval under ASX Listing Rule 10.14 at the relevant time. Issue of shares There were no shares issued to Directors and other key management personnel as part of compensation during the year ended 30 June 2021. Options There were no options over ordinary shares granted to or vested by Directors and other key management personnel as part of compensation during the year ended 30 June 2021. Performance rights The terms and conditions of each grant of performance 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 Grant date Vesting condition * Number Fair value per right at grant date James Durrant Nick Allan 21 August 2020 21 August 2020 21 August 2020 21 August 2020 21 August 2020 21 August 2020 21 August 2020 21 August 2020 1 2 3 4 1 2 3 4 333,333 333,333 666,667 666,667 266,667 266,667 533,333 533,333 $0.134 $0.134 $0.134 $0.134 $0.134 $0.134 $0.134 $0.134 * Performance Rights are subject to the following Vesting Conditions: (1) 12 months continuous employment following completion of 3 month probation period (2) 24 months continuous employment following completion of 3 month probation period (3) Completion of a successful PFS, as determined by the Board of Directors (4) Completions of successful Feasibility Study, as determined by the Board of Directors 22 Canyon Resources Limited Directors' report 30 June 2021 The number of performance rights over ordinary shares granted to and vested by Directors and other key management personnel as part of compensation during the year ended 30 June 2021 are set out below: Number of Number of Number of Number of Name Phillip Gallagher David Netherway Emmanuel Correia Steven Zaninovich James Durrant Nick Allan rights granted during the during the year ended year ended 30 June 2021 30 June 2020 30 June 2021 30 June 2020 rights granted during the year ended during the year ended rights vested rights vested - - - - 2,000,000 1,600,000 - - - 1,800,000 - - 5,333,333 3,333,333 3,333,334 1,200,000 1,000,000 533,333 - - - - - - For performance rights granted during the year ended 30 June 2021, refer to note 30 to the financial report for details of the methodology used to value those rights. Additional disclosures relating to key management personnel Shareholding The number of shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below: Ordinary shares Cliff Lawrenson Phillip Gallagher David Netherway Emmanuel Correia Steven Zaninovich Peter Su Dimitri Bacopanos James Durrant Rick Smith Nick Allan Balance at Performance the start of the year rights converted Additions Disposals/ other Balance at the end of the year - 10,126,683 11,079,682 5,427,780 - - - - - - 26,634,145 - 5,333,333 3,333,333 3,333,334 1,200,000 - - 1,000,000 - 533,333 14,733,333 - - - - - 56,330,024 - - - - 56,330,024 - - - (8,761,114) - - - - - (533,333) (9,294,447) - 15,460,016 14,413,015 - 1,200,000 56,330,024 - 1,000,000 - - 88,403,055 23 Canyon Resources Limited Directors' report 30 June 2021 Performance rights holding The number of performance rights over ordinary shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below: Performance rights over ordinary shares Cliff Lawrenson Phillip Gallagher David Netherway Emmanuel Correia Steven Zaninovich Peter Su Dimitri Bacopanos James Durrant Rick Smith Nick Allan Balance at the start of the year Granted Converted Expired/ forfeited/ other Balance at the end of the year - 5,333,333 3,333,333 3,333,334 1,800,000 - - - - - 13,800,000 - - - - - - - 2,000,000 - 1,600,000 3,600,000 - (5,333,333) (3,333,333) (3,333,334) (1,200,000) - - (1,000,000) - (533,333) (14,733,333) - - - - - - - - - (1,066,667) (1,066,667) - - - - 600,000 - - 1,000,000 - - 1,600,000 This concludes the remuneration report, which has been audited. Shares under option Unissued ordinary shares of Canyon Resources Limited under option at the date of this report are as follows: Expiry date 7 September 2023 Exercise price Number under option $0.200 4,000,000 No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the Company or of any other body corporate. Shares under performance rights Unissued ordinary shares of Canyon Resources Limited under performance rights at the date of this report are as follows: Grant Date 27 November 2019 21 August 2020 Number 600,000 2,066,667 2,666,667 Shares issued on the exercise of options There were no ordinary shares of Canyon Resources Limited issued on the exercise of options during the year ended 30 June 2021 and up to the date of this report. 24 Canyon Resources Limited Directors' report 30 June 2021 Shares issued on the exercise of performance rights The following ordinary shares of Canyon Resources Limited were issued during the year ended 30 June 2021 and up to the date of this report on the exercise of performance rights granted: Date performance rights converted 22 October 2020 22 October 2020 22 October 2020 Valuation per share Number of shares issued $0.227 $0.201 $0.134 12,000,000 1,200,000 1,533,333 14,733,333 Indemnity and insurance of officers The Company has indemnified the Directors and executives of the Company for costs incurred, in their capacity as a Director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the Directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Non-audit services There were no non-audit services provided during the financial year by the auditor. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' report. Auditor HLB Mann Judd (WA Partnership) continues in office in accordance with section 327 of the Corporations Act 2001. 25 Canyon Resources Limited Directors' report 30 June 2021 This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the Directors ___________________________ Phillip Gallagher Managing Director 30 September 2021 Perth 26 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Canyon Resources Limited for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 30 September 2021 L Di Giallonardo Partner 27 Canyon Resources Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2021 Other income Interest received Expenses: Foreign exchange loss Employee expense Consultants and contractors Depreciation and amortisation expense Impairment of exploration Loss on disposal of plant and equipment Directors' fees Travel expenses Compliance and regulatory Legal and professional fees Share based payments Interest expense Occupancy Administration Loss before income tax expense Income tax expense Loss after income tax expense for the year Other comprehensive income Items that will not be reclassified subsequently to profit or loss Change in fair value of equity instruments Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive loss for the year Basic loss per share Diluted loss per share Note 30 June 2021 30 June 2020 $ $ 5 67,110 6,780 62,500 14,679 - (1,177,653) (320,300) (99,961) (232,257) (150) (737,591) (88,928) (121,439) (84,699) (1,634,786) (741) (125,879) (200,808) (7,397) (1,551,555) (402,381) (110,156) (526,155) (1,141) (549,992) (356,991) (128,541) (140,559) (4,300,699) (3,048) (162,731) (356,348) (4,751,302) (8,520,515) - - (4,751,302) (8,520,515) 12 30 6 17 92,321 25,493 (141,997) 5,977 (49,676) 31,470 (4,800,978) (8,489,045) Cents Cents 31 31 (0.80) (0.80) (1.83) (1.83) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 28 Canyon Resources Limited Consolidated statement of financial position As at 30 June 2021 Assets Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Financial assets Plant and equipment Capitalised exploration expenditure Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Provisions Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Note 30 June 2021 30 June 2020 $ $ 7 8 9 10 11 12 2,684,012 203,794 391,464 3,279,270 1,610,466 69,688 296,566 1,976,720 - 345,756 16,760,341 17,106,097 46,207 426,892 12,144,907 12,618,006 20,385,367 14,594,726 13 14 1,040,082 203,727 1,243,809 1,434,170 184,376 1,618,546 1,243,809 1,618,546 19,141,558 12,976,180 15 16 17 66,543,010 1,886,952 (49,288,404) 52,441,940 5,380,176 (44,845,936) 19,141,558 12,976,180 The above consolidated statement of financial position should be read in conjunction with the accompanying notes 29 Canyon Resources Limited Consolidated statement of changes in equity For the year ended 30 June 2021 Issued capital $ Fair value reserve $ Foreign currency reserve $ Share based payments reserve $ Accumulated losses $ Total equity $ Balance at 1 July 2019 41,462,717 11,235 141,544 5,000,420 (36,325,421) 10,290,495 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Share-based payments (note 30) Shares issued for exploration and evaluation acquisition Shares issued for cash Share issue costs Value of performance rights expensed - - - - - 25,493 5,977 25,493 5,977 - - - (8,520,515) (8,520,515) - 31,470 (8,520,515) (8,489,045) 2,775,000 1,360,000 7,343,000 (498,777) - - - - - - - - - - - 727,869 (1,330,192) - - 797,830 - - - - - 3,502,869 29,808 7,343,000 (498,777) 797,830 Balance at 30 June 2020 52,441,940 36,728 147,521 5,195,927 (44,845,936) 12,976,180 Issued capital $ Fair value reserve $ Foreign currency reserve $ Share based payments reserve $ Accumulated losses $ Total equity $ Balance at 1 July 2020 52,441,940 36,728 147,521 5,195,927 (44,845,936) 12,976,180 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Share-based payments (note 30) Transfer from reserve on issue of shares for acquisition of Birsok Share issued for cash Share issue costs Value of performance rights expensed Performance shares converted Transfer balance of reserve - - - - 1,850,000 10,000,000 (914,097) - - 92,321 (141,997) 92,321 (141,997) - - - (4,751,302) (4,751,302) - (49,676) (4,751,302) (4,800,978) - - - - - - - - - - - 1,122,132 (1,850,000) - 245,666 512,655 (3,165,167) (179,785) - - - - 1,122,132 - 10,000,000 (668,431) - - 308,834 512,655 - - - 3,165,167 - - - (129,049) Balance at 30 June 2021 66,543,010 - 5,524 1,881,428 (49,288,404) 19,141,558 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 30 Canyon Resources Limited Consolidated statement of cash flows For the year ended 30 June 2021 Cash flows from operating activities Payments to suppliers and employees Interest received Interest and other finance costs paid Government grants received Net cash used in operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and evaluation Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Note 30 June 2021 30 June 2020 $ $ (3,335,751) 6,780 - 50,000 (3,015,023) 14,679 (3,048) 50,000 28 (3,278,971) (2,953,392) 11 12 (2,035) (5,021,369) 68 (37,577) (4,416,715) 5,184 (5,023,336) (4,449,108) 15 10,000,000 (668,432) 7,343,000 (498,777) 9,331,568 6,844,223 1,029,261 1,610,466 44,285 (558,277) 2,219,716 (50,973) Cash and cash equivalents at the end of the financial year 7 2,684,012 1,610,466 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 31 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 1. General information The financial statements cover Canyon Resources Limited as a Group consisting of Canyon Resources Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Canyon Resources Limited's functional and presentation currency. Canyon Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 9, 863 Hay Street Perth, Western Australia, 6000 T: +61 8 6382 3342 F: +61 8 9324 1502 A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 September 2021. The Directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. In the Directors' opinion, none of the new or amended Accounting Standards and Interpretations have had, or will have a material effect on the Group's financial performance or position. Going concern This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and realisation of assets and the settlement of liabilities in the normal course of business. The Group has incurred a comprehensive loss for the year ended 30 June 2021 of $4,751,302 (2020: $8,520,515). As at 30 June 2021, the Group's current assets exceeded is current liabilities by $2,035,461 (30 June 2020: $358,174). Net cash used in operating activities was $3,278,971 for the year ended (2020: $2,953,392). Subsequent to year end 77,257,157 shares were issued at a price of $0.08 raising a total of $6,180,573 before costs. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments. 32 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 2. Significant accounting policies (continued) Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 25. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Canyon Resources Limited ('Company' or 'parent entity') as at 30 June 2021 and the results of all subsidiaries for the year then ended. Canyon Resources Limited and its subsidiaries together are referred to in these financial statements as 'the Group'. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Foreign currency translation The financial statements are presented in Australian dollars, which is Canyon Resources Limited's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. 33 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 2. Significant accounting policies (continued) Revenue recognition The Group recognises revenue as follows: Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non- current. Deferred tax assets and liabilities are always classified as non-current. 34 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 2. Significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 3-7 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. 35 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 2. Significant accounting policies (continued) An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Exploration and evaluation assets Exploration and evaluation costs are either expensed as incurred or capitalised where the capitalised expense meets the requirements for capitalisation. Exploration and evaluation costs are carried forward only if the rights to tenure of the area of interest are current and either: ● ● The costs are expected to be recouped through successful development and exploitation of the area of interest or; The activities in the area of interest at the reporting date have not 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. Accumulated acquisition costs in relation to an abandoned area are written off in full to the statement of profit or loss and other comprehensive income in the year in which the decision to abandon the area is made. The carrying values of acquisition costs are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Where a decision has been made to proceed with development in respect of an area of interest the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. The Group has elected to capitalise all acquisition costs for its areas of interest and to expense all ongoing exploration and evaluation expenditure with the exception of the Minim Martap project where all expenditure that meets the recognition criteria is being capitalised. Impairment of non-financial assets Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Employee benefits Short-term employee benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees. 36 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 2. Significant accounting policies (continued) Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows: ● during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period. from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date. ● All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Issued capital Ordinary shares are classified as equity. 37 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 2. Significant accounting policies (continued) Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value. Earnings per share Basic earnings/loss per share Basic earnings per share is calculated by dividing the profit/loss attributable to the owners of Canyon Resources Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings/loss per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2021. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. 38 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 3. Critical accounting judgements, estimates and assumptions (continued) 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 consolidated entity based on known information. This consideration extends to supply chain, staffing and geographic regions in which the consolidated entity operates. The Company has assessed that there has been no material impact on the Company’s ability to undertake the necessary exploration activities in respect of the Minim Martap Project and to satisfy its exploration expenditure commitments under its exploration licences, and further the Company does not anticipate there will be any material impact in the current financial year. 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. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees and consultants where the fair value of the services provided cannot be estimated by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black and Scholes model and is based on assumptions disclosed in periods disclosed when the equity instruments are granted. Fair value measurement hierarchy The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective. The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs. Employee benefits provision The liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account. Exploration and evaluation costs The recoverability of the carrying amount of exploration and evaluation costs carried forward have been reviewed by the directors. In conducting the review, the recoverable amount has been assessed by reference to the higher of “fair value less costs to sell” and “value in use”. In determining value in use, future cash flows are based on various parameters. Variations to expected future cash flows and timing thereof, could result in significant changes to the impairment test results, which in turn could impact future financial results. Note 4. Operating segments The Group is managed primarily on the basis of its exploration projects. Operating segments are therefore determined on the same basis. Reportable segments disclosed are based on aggregating tenements and permits where the tenements and permits are considered to form a single project. This is indicated by: ● ● ● ● having the same ownership structure; exploration being focused on the same mineral or type of mineral; exploration programs targeting the tenements and permits as a group, indicated by the use of the same exploration team, and shared geological data, knowledge and confidence across the areas; and shared mining economic considerations such as mineralisation, metallurgy, marketing, legal, environmental, social and government factors. 39 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 4. Operating segments (continued) Basis of accounting for purposes of reporting by operating segments Accounting policies adopted Unless stated otherwise, all amounts reported to the Board of Directors as the chief operating decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets and intangible assets have not been allocated to operating segments. The following table presents the profit & loss and assets & liabilities information by segment provided to the Board of Directors: 30 June 2021 Segment revenue Expenses Loss before income tax expense Income tax expense Loss after income tax expense Material items include: Depreciation Share-based payments Interest revenue Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities Exploration Unallocated (Corporate) $ (Africa) $ Total $ - (1,079,894) (1,079,894) 73,890 (3,745,298) (3,671,408) 73,890 (4,825,192) (4,751,302) - (4,751,302) (96,577) - - (3,384) (1,634,786) 6,780 (99,961) (1,634,786) 6,780 17,539,255 2,846,112 123,535 1,120,274 20,385,367 20,385,367 1,243,809 1,243,809 40 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 4. Operating segments (continued) 30 June 2020 Segment revenue Expenses Loss before income tax expense Income tax expense Loss after income tax expense Material items include: Depreciation Share-based payments Interest revenue Assets Segment assets Total assets Total assets includes: Acquisition of non-current assets Liabilities Segment liabilities Total liabilities Note 5. Other income Net foreign exchange gain Subsidies and grants Other income Note 6. Income tax benefit Numerical reconciliation of income tax benefit and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 30% (2020: 30%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Sundry items Movement in unrecognised temporary differences Tax effect of current year tax losses for which no deferred tax asset has been recognised Income tax benefit 41 Exploration Unallocated (Corporate) $ (Africa) $ Total $ - (1,783,234) (1,783,234) 77,179 (6,814,460) (6,737,281) 77,179 (8,597,694) (8,520,515) - (8,520,515) (105,004) - - (5,152) (4,300,699) 14,679 (110,156) (4,300,699) 14,679 12,853,475 1,741,251 14,594,726 14,594,726 67,385 - 67,385 70,174 1,548,372 1,618,546 1,618,546 30 June 2021 30 June 2020 $ $ 29,610 37,500 - 62,500 67,110 62,500 30 June 2021 30 June 2020 $ $ (4,751,302) (8,520,515) (1,425,391) (2,556,155) 3,071 1,168 (1,422,320) (147,289) 1,569,609 (2,554,987) (184,378) 2,739,365 - - Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 6. Income tax benefit (continued) Deferred tax assets not recognised Deferred tax assets not recognised comprises temporary differences attributable to: Provisions Accrued expenses Capital raising costs Carry forward tax losses Total deferred tax assets not recognised Unrecognised temporary differences Deferred tax liabilities at 30% Exploration expenditure 30 June 2021 30 June 2020 $ $ 61,118 8,100 233,268 21,703,982 56,395 8,100 233,268 14,216,442 22,006,468 14,514,205 30 June 2021 30 June 2020 $ $ 1,895,376 2,155,034 The potential deferred tax benefit of tax losses has not been recognised as an asset because recovery of tax losses is not considered probable in the context of AASB 112. The benefit of these tax losses will only be realised if: (a) The Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction for the losses to be realised. (b) The Company complies with the conditions for deductibility imposed by the law; and (c) No changes in tax legislation adversely affect the Company in realising the benefit from the deduction for the loss. Note 7. Current assets - cash and cash equivalents Cash on hand Cash at bank Note 8. Current assets - trade and other receivables Trade receivables Other receivables BAS receivable 30 June 2021 30 June 2020 $ $ 53,403 2,630,609 54,501 1,555,965 2,684,012 1,610,466 30 June 2021 30 June 2020 $ $ - 147,397 56,397 21,216 38,395 10,077 203,794 69,688 Included in other receivables is an amount of $138,528 receivable from the sale of the Rumble Resources Ltd (ASX:RTR) shares sold during the year (see note 10). 42 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 9. Current assets - other assets Prepayments Other deposits Other current assets 30 June 2021 30 June 2020 $ $ 70,144 282,679 38,641 62,621 217,047 16,898 391,464 296,566 Other deposits includes surety bonds paid to the Cameroon Ministry of Mines in relation to the 3 Minim Martap Licences. Note 10. Non-current assets - financial assets Financial assets carried at fair value through other comprehensive income: Shares in Rumble Resources Ltd Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous financial year are set out below: Opening fair value Disposals Changes in the fair value of equity investment Closing fair value 30 June 2021 30 June 2020 $ $ - 46,207 46,207 (138,528) 92,321 20,714 - 25,493 - 46,207 The shares held in Rumble Resources Ltd (ASX: RTR) are categorised as Level 1 securities and designated as fair value through Other Comprehensive Income. The shares held in Rumble Resources Ltd (ASX: RTR) were disposed of during the year at an average sale price of $0.4347 per share. The funds from the sale had not be received by the Company at balance date (see note 8). 43 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 11. Non-current assets - plant and equipment Plant and equipment - at cost Less: Accumulated depreciation Computer equipment - at cost Less: Accumulated depreciation Office equipment - at cost Less: Accumulated depreciation 30 June 2021 30 June 2020 $ $ 561,607 (270,126) 291,481 628,846 (240,348) 388,498 77,297 (44,581) 32,716 65,977 (44,418) 21,559 58,238 (22,215) 36,023 3,699 (1,328) 2,371 345,756 426,892 Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Balance at 1 July 2019 Additions Disposals Exchange differences Depreciation expense Balance at 30 June 2020 Additions Disposals Exchange differences Transfers in/(out) Depreciation expense Balance at 30 June 2021 Office equipment Computer equipment Field equipment $ $ $ Total $ 2,963 - - - (592) 2,371 1,611 - (127) 33,517 (15,813) 55,934 - (6,325) 360 (13,946) 36,023 425 (218) (583) 12,446 (15,377) 442,797 37,577 - 3,742 (95,618) 388,498 - - 17,718 (45,963) (68,772) 501,694 37,577 (6,325) 4,102 (110,156) 426,892 2,036 (218) 17,008 - (99,962) 21,559 32,716 291,481 345,756 Note 12. Non-current assets - capitalised exploration expenditure Exploration and evaluation phase - Minim Martap Exploration and evaluation phase - Birsok 30 June 2021 30 June 2020 $ $ 16,210,341 11,594,907 550,000 550,000 16,760,341 12,144,907 44 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 12. Non-current assets - capitalised exploration expenditure (continued) Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Balance at 1 July 2019 Acquisition of tenements Capitalised expenditure - Minim Martap Exchange differences Impairment of assets Balance at 30 June 2020 Expenditure during the year Exchange differences Impairment of assets 1 Balance at 30 June 2021 $ 8,179,090 29,808 4,416,715 45,449 (526,155) 12,144,907 5,021,369 (173,678) (232,257) 16,760,341 The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phase is dependent on successful development and commercial exploitation or sale of the respective areas. 1 As the Birsok tenements are still in the process of being renewed, all additional expenditure recognised is being expensed. Until such time that the renewals are finalised, any further acquisition costs are unable to be capitalised in accordance with the Company's accounting policy. Shares Issued for the Acquisition of the Minim Martap Project In August 2018 Canyon announced that it had been granted the licences for the Minim Martap Project. The Company had engaged Mr Serge Asso’o to assist it in its negotiations with the Government and to navigate the many levels of Government involved in the acquisition. The Company agreed to pay Mr Asso’o a success fee comprised of Canyon shares upon the successful granting of the Project to Canyon and the satisfaction of a number of project related milestones: Subject to shareholder approval, Mr Asso’o will be issued: (1) 30,000,000 ordinary Canyon shares following approval of grant of Minim Martap project from the Cameroon Government. 50% of the shares will be voluntarily escrowed for 6 months after their issue. (2) 20,000,000 ordinary Canyon shares 12 months after the granting of permits. 50% of the shares will be voluntarily escrowed for 6 months after their issue. (3) 20,000,000 ordinary Canyon shares upon the completion and execution of a final detailed Mining Convention with the Government of Cameroon for the mine and infrastructure related to the Minim Martap project. A final Mining Convention includes all rail, port, other infrastructure and land access agreements for the Project, all taxation agreements and other duties relating to the Project, commitments regarding local employment, environmental and community agreements and all other agreements with the Government of Cameroon that relate to the long term operation of the Project. (4) 30,000,000 ordinary Canyon shares following the issuing of a Mining Permit, the securing and confirmation of full mine funding and the Final Investment Decision by the Board to commence mine construction. A mining permit can only be issued by the Government of Cameroon upon the execution of the Mining Convention, a detailed Bankable Feasibility Study (BFS) being accepted by the Government and the securing of full funding for the mine construction. After receiving shareholder approval, Canyon issued the first Tranche of Shares to Mr Asso’o in December 2018. As a result, the company recorded an amount of $2,040,000 as a cost of Acquisition of the Minim Martap Project being the fair value (market price) of the first tranche of shares (30,000,000) at the measurement date being 15 August 2017, the date the agreement was entered into. The second tranche vested 12 months from granting of the permits and shareholder approval to issue the shares was granted at the AGM on 27 November 2019. On 10 February 2020, the Company issued 20,000,000 shares to Mr Asso’o in relation to Tranche 2. As a result, the Company has recorded a total amount of $1,360,000 in relation to the second tranche. 45 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 12. Non-current assets - capitalised exploration expenditure (continued) As of balance date the full amount of the value of each of Tranche 1 and 2 has been recognised. No amounts have been recognised in relation to tranches 3 or 4. This will be reassessed by the directors as the Project progresses. Note 13. Current liabilities - trade and other payables Trade payables Other payables Note 14. Current liabilities - provisions Annual leave Long service leave Note 15. Equity - issued capital 30 June 2021 30 June 2020 $ $ 419,779 620,303 1,051,888 382,282 1,040,082 1,434,170 30 June 2021 30 June 2020 $ $ 147,572 56,155 133,504 50,872 203,727 184,376 Ordinary shares - fully paid 623,903,552 499,170,219 66,543,010 52,441,940 30 June 2021 30 June 2020 30 June 2021 30 June 2020 Shares Shares $ $ Movements in ordinary share capital Details Balance Shares issued for cash Shares issued in lieu of payment Cost of share issues Balance Shares issued for cash Conversion of performance rights Shares issued in lieu of payment Cost of share issues Date 1 July 2019 30 June 2020 Shares $ 418,276,469 45,893,750 35,000,000 - 41,462,717 7,343,000 4,135,000 (498,777) 499,170,219 100,000,000 14,733,333 10,000,000 - 52,441,940 10,000,000 3,165,167 1,850,000 (914,097) Balance 30 June 2021 623,903,552 66,543,010 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. 46 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 15. Equity - issued capital (continued) On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Capital risk management The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the 30 June 2020 Annual Report. Note 16. Equity - reserves Financial assets at fair value through other comprehensive income reserve Foreign currency reserve Share-based payments reserve 30 June 2021 30 June 2020 $ $ - 5,524 1,881,428 36,728 147,521 5,195,927 1,886,952 5,380,176 Financial assets at fair value through other comprehensive income reserve The reserve is used to recognise increments and decrements in the fair value of financial assets at fair value through other comprehensive income. Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their remuneration, and other parties as part of their compensation for services. 47 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 16. Equity - reserves (continued) Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Balance at 1 July 2019 Foreign currency translation Amortisation of shares issued in lieu of payment Shares issued in lieu of payment Performance rights issued to directors/employees Movement in fair value of equity instruments Balance at 30 June 2020 Foreign currency translation Amortisation of shares issued in lieu of payment Shares issued in lieu of payment Performance rights issued to directors/employees Movement in fair value of equity instruments Performance shares converted Issue of options Transfer balance to accumulated losses Fair value reserve $ Share based payment reserve $ Foreign currency translation $ 11,235 - - - - 25,493 36,728 - - - - 92,321 - - (129,049) 5,000,420 - 757,677 (1,360,000) 797,830 - 5,195,927 - 1,122,132 (1,850,000) 512,655 - (3,165,167) 245,666 (179,785) 141,544 5,977 - - - - 147,521 (141,997) - - - - - - - Total $ 5,153,199 5,977 757,677 (1,360,000) 797,830 25,493 5,380,176 (141,997) 1,122,132 (1,850,000) 512,655 92,321 (3,165,167) 245,666 (308,834) Balance at 30 June 2021 - 1,881,428 5,524 1,886,952 Note 17. Equity - accumulated losses Accumulated losses at the beginning of the financial year Loss after income tax expense for the year Transfer from fair value reserve Transfer from share-based payments reserve Accumulated losses at the end of the financial year Note 18. Equity - dividends 30 June 2021 30 June 2020 $ $ (44,845,936) (4,751,302) 129,049 179,785 (36,325,421) (8,520,515) - - (49,288,404) (44,845,936) There were no dividends paid, recommended or declared during the current or previous financial year. Note 19. Financial instruments This note provides information about how the Group determines fair values of various financial assets and liabilities. Fair value of Group's financial assets and liabilities that are measured at fair value on a recurring basis Some of the Group's financial assets and liabilities are measured at fair value at the end of the reporting period. The following table gives information about how the fair value of these financial assets and liabilities are determined (in particular, the valuation technique(s) and key input(s) used). 48 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 19. Financial instruments (continued) Fair value as at Financial assets/ liabilities Equity investments designated as fair value through other comprehensive income Fair value hierarchy Valuation technique(s) and key input(s) Significant unobservable input(s) Relationship of unobservable input(s) to fair value 30 June 2021 $ 30 June 2020 $ - 46,207 Level 1 Share price None None There have been no transfers between the levels of the fair hierarchy during the six months to 30 June 2021. The methods and valuation used for the purpose of measuring the fair value are unchanged compared to the previous reporting period. Fair value of Group's financial assets and liabilities that are not measured at fair value on a recurring basis The Directors consider that the carrying value of the financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values. Note 20. Key management personnel disclosures Directors The following persons were Directors of Canyon Resources Limited during the financial year: Cliff Lawrenson Phillip Gallagher David Netherway Emmanuel Correia Steven Zaninovich Peter Su Dimitri Bacopanos Non-Executive Chairman (appointed 10 December 2020) Managing Director Non-Executive Director Non-Executive Director (resigned 10 December 2020) Non-Executive Director Non-Executive Director (appointed 16 September 2020) Non-Executive Director (appointed 21 October 2020 - resigned 26 March 2021) Other key management personnel The following persons also had the authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, during the financial year: James Durrant Rick Smith Nick Allan John Lewis Project Director Chief Development Officer CFO & Company Secretary (appointed 17 April 2020 - resigned 28 May 2021) CFO & Company Secretary (resigned 17 April 2020) 49 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 20. Key management personnel disclosures (continued) Compensation The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments Included in Short-term benefits were payments to directors for additional services: Cardrona Energy Pty Ltd (1) - Advisory Fees Zivvo Pty Ltd (2) - Consulting Fees (1) Cardrona Energy Pty Ltd - Emmanuelle Correia is a director and shareholder (2) Zivvo Pty Ltd - Steve Zaninovich is a director and shareholder Note 21. Remuneration of auditors 30 June 2021 30 June 2020 $ $ 1,553,105 61,526 5,283 512,655 1,041,976 59,127 50,872 797,831 2,132,569 1,949,806 30 June 2021 30 June 2020 75,000 15,273 90,273 - - - During the financial year the following fees were paid or payable for services provided by HLB Mann Judd (WA Partnership), the auditor of the Company: Audit services - HLB Mann Judd (WA Partnership) Audit or review of the financial statements Note 22. Contingent liabilities There are no contingencies outstanding as at 30 June 2021. Note 23. Commitments Capital commitments Committed at the reporting date but not recognised as liabilities, payable: Exploration and evaluation Committed at the reporting date but not recognised as liabilities, payable: Within one year 50 30 June 2021 30 June 2020 $ $ 42,025 41,513 30 June 2021 30 June 2020 $ $ - 5,382,711 - 5,382,711 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 24. Related party transactions Parent entity Canyon Resources Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 26. Key management personnel Disclosures relating to key management personnel are set out in note 20 and the remuneration report included in the Directors' report. Note 25. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Other comprehensive income for the year, net of tax Total comprehensive loss Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Fair value reserve Share-based payments reserve Accumulated losses Total equity 51 Parent 30 June 2021 30 June 2020 $ $ (9,266,903) (15,544,833) 92,321 (9,174,582) 25,493 (15,519,340) Parent 30 June 2021 30 June 2020 $ $ 2,832,391 1,679,755 8,857,934 7,494,259 1,120,274 1,548,373 1,120,274 1,548,373 66,543,010 - 1,881,428 (60,686,778) 52,441,940 36,728 5,195,927 (51,728,709) 7,737,660 5,945,886 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 26. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name Neufco Pty Ltd Canyon West Africa Pty Ltd Askia Sarl Pty Ltd Canyon Derosa Pty Ltd Canyon Cameroon Pty Ltd Askia Minerals Sarl Canyon West Africa Sarl CSO Sarl Deorsa Sarl Camalco SA Camalco Holdings Ltd Principal place of business / Country of incorporation Ownership interest 30 June 2021 30 June 2020 % % Australia Australia Australia Australia Australia Burkina Faso Burkina Faso Burkina Faso Burkina Faso Cameroon British Virgin Islands 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Canyon Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group. Note 27. Events after the reporting period A $6.2m placement to institutional and sophisticated investors was announced on 2 August 2021, with the issue of 77,257,157 shares at $0.08 per share. The majority of the placement was completed on 9 August 2021 with the issue of 70,485,675 shares at $0.08 per share raising $5,638,854 before costs. The balance of the placement is in relation to Canyon's largest shareholder and Non-executive Director, Mr Su who subscribed for his pro-rata amount under the Placement (being an amount of 6,771,482 shares at $0.08 per share raising $541,719) and therefore continues to hold more than 9% of the Company. Mr Su’s participation in the Placement was approved by shareholders at a General Meeting held on 20 September 2021. No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 52 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 28. Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year Adjustments for: Depreciation and amortisation Net loss on disposal of property, plant and equipment Share-based payments Foreign exchange differences Impairment of exploration and evaluation Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Decrease/(increase) in other operating assets Increase/(decrease) in trade and other payables Increase in employee benefits Net cash used in operating activities Note 29. Non-cash investing and financing activities Issue of performance rights to directors and employees (refer note 30) Options issued to advisors for capital raising costs Issue of shares on acquisition of exploration project (refer note 30) Issue of ordinary shares Note 30. Share-based payments Performance rights 30 June 2021 30 June 2020 $ $ (4,751,302) (8,520,515) 99,961 150 1,634,786 (29,610) 232,257 110,156 1,141 4,300,699 7,397 526,155 4,422 (94,898) (394,088) 19,351 (55,746) 3,482 596,744 77,095 (3,278,971) (2,953,392) 30 June 2021 30 June 2020 $ $ 512,655 245,666 1,122,131 - 797,830 - 29,808 3,502,869 1,880,452 4,330,507 (a) On 27 November 2019 shareholders approved the issue of 1.8 million Performance Rights to Non-executive Director Steve Zaninovich. The Performance Rights were issued for nil cash consideration and are convertible into fully paid ordinary shares in the capital of the Company on the terms and conditions under the Canyon Long Term Incentive Plan and subject to the following Vesting Conditions: (1) one third vest upon the completion of 12 months tenure as a Non-executive director of the Company from the date of the AGM; (2) one third vest upon the Company completing a capital raising of a minimum $10 million within the next 24 months; and (3) one third vest upon the Company completing a PFS, over the Minim Martap Bauxite Project, from which a maiden Bauxite ore reserve can be calculated. During the period vesting conditions 2 and 3 have been satisfied in respect of the Performance Rights issued to Mr Zaninovich and have been converted into ordinary shares. Vesting condition 1 has been satisfied but is pending Board approval to be converted into ordinary shares. 53 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 30. Share-based payments (continued) These performance rights were valued, using a valuation methodology based on the guidelines set out in AASB 2 Share based payment. The 10-day VWAP was used given the fluctuations in the Company's share price on and around the grant date. Assumptions: Valuation date 10-day VWAP Indicative value per Performance Right - Mr Steve Zaninovich 27 November 2019 $0.2008 $0.2008 $361,440 The value of the Performance Rights is being expensed over the deemed life of the Rights. During the period $107,450 (2020: $253,990), was recognised as an expense in relation to the rights. (b) On 21 August 2020 the Directors approved the issue of 3.6 million Performance Rights to key management personnel, being 2 million to Mr James Durrant and 1.6 million to Mr Nick Allan. The Performance Rights were issued for nil cash consideration and are convertible into fully paid ordinary shares in the capital of the Company on the terms and conditions under the Canyon Long Term Incentive Plan and subject to the following Vesti (1) 12 months continuous employment following completion of 3-month probation period (16.67%) (2) 24 months continuous employment following completion of 3-month probation period (16.67%) (3) Completion of a successful PFS, as determined by the Board of Directors (33.33%) (4) Completion of a successful Feasibility Study, as determined by the Board of Directors (33.33%) These performance rights were valued, using a valuation methodology based on the guidelines set out in AASB 2 Share based payment. The 10 day VWAP was used given the fluctuations in the Company's share price on and around the grant date. Assumptions: Valuation date 10 day VWAP Indicative value per Performance Right - Mr James Durrant - Mr Nick Allan 21 August 2020 $0.1337 $0.1337 $267,400 $213,920 During the period, vesting conditions 1 and 2 have been satisfied in respect of the Performance Rights issued to Mr Durrant whilst vesting condition 3 has been satisfied in relation of the Performance Rights issued to Mr Allan and have been converted into ordinary shares. The value of the Performance Rights is being expensed over the deemed life of the Rights. During the period $405,205, was recognised as an expense in relation to the rights. The resignation of Mr Allan on 28 May 2021 forfeits his right to any unvested Performance Rights. Ordinary Shares Acquisition of Birsok On 12 October 2018 the Company Announced that it signed a Letter of Intent (“LoI”) with Altus Strategies Plc (Altus), to transfer to Canyon a 100% interest in the Birsok and Mandoum licences (the “Birsok project”) and to terminate its existing bauxite Joint Venture Agreement (“JVA”) with Altus. The Terms of the LoI are: Part A: In lieu of the termination of the JVA, Canyon will issue to Altus: (1) 15,000,000 ordinary free trading Canyon shares (the "Initial Issue shares" or "Tranche 1"); (2) 10,000,000 ordinary Canyon shares to be issued 12 months following the Initial Issue shares and subject to a 12 month voluntary escrow ("Tranche 2") 54 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 30. Share-based payments (continued) Part B: In lieu of the transfer of the Birsok project: (1) 5,000,000 ordinary Canyon shares, to be issued to Altus upon the execution of a mining convention on the Minim Martap project and subject to a 12 month voluntary escrow ("Tranche 3"); (2) a US$1.50 per tonne royalty on ore mined and sold from the Birsok project. After receiving shareholder approval, Canyon issued Tranche 1 Shares on 10 February 2020 to Altus pursuant to the agreement to terminate the JVA. As a result, the company recorded an amount of $2,775,000 as a cost of a Acqusition of the Birsok Project being the fair value (market price) of the first tranche of shares (15,000,000) at the measurement date being 12 October 2018, the date the agreement was entered into. The Tranche 2 shares are vesting 12 months following the initial share issue, and the total value of this tranche namely $1,850,000, is being brought to account over the vesting period. As at the balance date $1,850,000 has been recognised in relation to Tranche 2, of which an amount of $1,122,131 was recognised during the current period. All amounts recognised are being expensed, as the Birsok tenements are still in the process of being renewed. Until such time that the renewals are finalised, any further acquisition costs are unable to be capitalised in accordance with the Company's accounting policy. The Tranche 2 shares vested and 10,000,000 ordinary shares were issued on 11 February 2021. The value of Tranche 3 shares has not been brought to account as the Directors do not believe that it can be considered probable at this stage that the vesting condition will be met. Options Weighted average exercise price 30 June 2021 30 June 2021 30 June 2020 30 June 2020 Weighted average exercise price Number of options Number of options Outstanding at the beginning of the financial year Granted 5,000,000 4,000,000 $0.200 $0.200 5,000,000 - $0.200 $0.000 Outstanding at the end of the financial year 9,000,000 $0.200 5,000,000 $0.000 Exercisable at the end of the financial year 9,000,000 $0.200 5,000,000 $0.200 Advisor options On 7 September 2020, the Company issued 4,000,000 unlisted options to Ashanti Capital and arranging parties to the placement which completed on the same day. The unlisted options have an exercise price of $0.20 per share and an expiry date of 7 September 2023. $245,666 was recognised as capital raising costs during the period. For these options, the valuation model inputs used to determine the fair value at the grant date, are as follows: Grant date Expiry date Share price at grant date Exercise price Expected volatility Dividend yield Risk-free Fair value interest rate at grant date 07/09/2020 07/09/2023 $0.130 $0.200 90.32% - 0.28% $0.061 55 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2021 Note 30. Share-based payments (continued) Total value expensed in profit and loss 18,000,000 performance rights issued to Messrs Netherway, Gallagher and Correia 1,800,000 performance rights issued to Mr Zaninovich 3,600,000 performance rights issued to employees Shares issued on acquisition of Birsok: Tranche 1 Tranche 2 Note 31. Loss per share Loss after income tax 30 June 2021 30 June 2020 $ $ - 107,450 405,205 512,655 543,840 253,990 - 797,830 - 1,122,131 1,122,131 2,775,000 727,869 3,502,869 1,634,786 4,300,699 30 June 2021 30 June 2020 $ $ (4,751,302) (8,520,515) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 592,508,401 465,000,564 Weighted average number of ordinary shares used in calculating diluted earnings per share 592,508,401 465,000,564 Basic loss per share Diluted loss per share Cents Cents (0.80) (0.80) (1.83) (1.83) 56 Canyon Resources Limited Directors' declaration 30 June 2021 In the Directors' opinion: ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements; the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the Directors ___________________________ Phillip Gallagher Managing Director 30 September 2021 Perth 57 INDEPENDENT AUDITOR’S REPORT To the members of Canyon Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Canyon Resources Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. We have determined the matters described below to be the key audit matters to be communicated in our report. 58 Key Audit Matter How our audit addressed the key audit matter Carrying amount of capitalised exploration expenditure Note 12 in the financial report In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group capitalises acquisition costs for its areas of interest and then expenses evaluation exploration expenditure as incurred, with the exception of the Minim Martap project where all expenditure that meets the capitalisation criteria is being capitalised. The cost model is applied after recognition. further and Our audit focussed on the Group’s assessment of the carrying amount of the capitalised exploration expenditure, as this is one of the most significant assets of the Group. Going concern Note 1 in the financial report The Group recorded a loss of $4.75 million for the year ended 30 June 2021 As at 30 June 2021 the Group had cash and cash equivalents of $2.68 million. The Company raised $6.2 million subsequent to balance date via a placement to professional and sophisticated investors. If the going concern basis of preparation of the financial statements was inappropriate, the carrying amount of certain assets and liabilities may have significantly differed. In addition, management and the auditor must consider whether a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Disclosure is required in the financial report should significant doubt exist. The going concern basis of accounting was a key audit matter due to the significance to users of the financial report and the significant judgement involved with forecasting cash flows. Our procedures included but were not limited to the following: • We obtained an understanding of the key processes with management’s review of the carrying values of each area of interest; associated • We considered the Directors’ assessment of potential indicators of impairment; • We obtained evidence that the Group has current rights to tenure of its areas of interest; • We examined the exploration budget for the year ending 30 June 2022 and discussed with management the nature of planned ongoing activities; • We substantiated a sample of exploration and evaluation transactions; and • We examined the disclosures made in the financial report. the evaluating Our procedures included but were not limited to the following: • We considered the appropriateness of the going concern basis of accounting underlying by assumptions in cash flow projections prepared by including sensitivity analysis and subsequent events, in particular the $6.2 million placement subsequent to balance date; • We agreed the receipt of the proceeds to from balance date to bank statements; and the placement subsequent the Group • We examined the disclosures made in the financial report. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon. 59 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 have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - - - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. - 60 We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Canyon Resources Limited for the year ended 30 June 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HLB Mann Judd Chartered Accountants Perth, Western Australia 30 September 2021 L Di Giallonardo Partner 61 Canyon Resources Limited Shareholder information 30 June 2021 Additional information required by the ASX Limited and no shown elsewhere in this report is as follows. This is current as at 22 September 2021. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Ordinary shares Number of holders Number of shares % 77 204 306 1,157 6,368 773,351 2,519,366 51,019,885 816 646,841,739 - 0.11 0.36 7.28 92.25 2,560 701,160,709 100.00 Holding less than a marketable parcel 318 981,478 - Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Ordinary shares % of total Number held shares issued AUSGLOBAL BAUXITE PTY LTD ALTUS STRATEGIES LTD CANYON INCENTIVE SCHEME PTY LTD (THE CANYON RESO LTI PLAN A/C) IBT DIRECTIONS PTY LTD (IBT PROPERTY A/C) MR CHRISTOPHER JOHN SQUIERS + MR ADRIAN CHRISTOPHER SQUIERS + MR SASCHA TROY SQUIERS PONDEROSA INVESTMENTS (WA) PTY LTD (THE PONDEROSA INVESTMENT A/C) SISU INTERNATIONAL PTY LTD TREASURY SERVICES GROUP PTY LTD (NERO RESOURCE FUND A/C) ZERO NOMINEES PTY LTD DC & PC HOLDINGS PTY LTD (DC & PC NEESHAM SUPER A/C) IBT HOLDINGS PTY LTD (IBT HOLDINGS PTY LTD FAM A/C) MR MICHAEL ARTHUR PARISH HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 CITICORP NOMINEES PTY LIMITED GONDWANA INVESTMENT GROUP PTY LTD (KUMOVA FAMILY SUPER FUND A/C) WELLCRAFT PTY LTD (BLENKINSHIP FAMILY A/C) WIDERANGE CORPORATION PTY LTD SHIRLEE DOWNS NOMINEES PTY LTD (CJ & FO SQUIERS S/F A/C) EASTSIDE (WA) PTY LTD ALITIME NOMINEES PTY LTD (HONEYHAM FAMILY A/C) 63,101,506 25,000,000 18,417,982 16,665,647 11,140,731 9,650,000 8,551,652 8,125,000 7,558,848 6,657,510 6,450,000 6,300,000 6,192,808 5,970,764 5,776,210 5,042,373 5,000,000 4,760,919 4,572,659 4,500,000 9.00 3.57 2.63 2.38 1.59 1.38 1.22 1.16 1.08 0.95 0.92 0.90 0.88 0.85 0.82 0.72 0.71 0.68 0.65 0.64 229,434,609 32.73 62 Canyon Resources Limited Shareholder information 30 June 2021 Unquoted equity securities Options expiring 7 September 2023 exercisable at $0.20 Substantial holders There are no substantial holders in the Company. Voting rights The voting rights attached to ordinary shares are set out below: Number on issue 4,000,000 Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. Corporate Governance Statement The Company's 2021 Corporate Governance Statement has been released as a separate document and is located on our website at http://www.canyounresources.com.au/about-us/corporate-governance 63 Canyon Resources Limited Interest in mineral permits 30 June 2021 Interest in Mineral Permits Interest in, situation of and percentage interest in mineral permits held are: Permits Location Interest at 30 June 2021 Own 100% Agreement to earn up to 75%. Agreement to earn up to 75%. Own 100% Own 100% Rights to 100% Cameroon Cameroon Cameroon Cameroon Cameroon Cameroon Cameroon Burkina Faso Burkina Faso Burkina Faso Burkina Faso MINIM MARTAP PROJECT Ngaoundal Minim Martap Makan BIRSOK BAUXITE PROJECT Birsok Mandoum Mambal (application) Ndjimom (Mayouom Project) TAPARKO NORTH PROJECT Karga 2 Bani Diobou Tigou TAO PROJECT Tao PINARELLO PROJECT Sokarani Niofera Baniera Sokarani 2 Soukoura 2 Burkina Faso Own 100% Burkina Faso Burkina Faso Burkina Faso Burkina Faso Burkina Faso Own 49% (sale of 51% to Acacia Mining plc) KONKOLIKAN PROJECT Konkolikan Burkina Faso Own 49% (sale of 51% to Acacia Mining plc) DEROSA PROJECT Bompela Sapala Burkina Faso Burkina Faso 15% interest in joint venture with Rumble Resources Ltd 64
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