Canyon Resources
Annual Report 2022

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Canyon Resources Limited ABN 13 140 087 261 Annual Report 30 June 2022 Canyon Resources Limited Corporate directory 30 June 2022 Directors Mark Hohnen - Non-executive Chairman David Netherway - Non-executive Director Peter Su - Non-executive Director Scott Phegan - Non-exeuctive Director Company secretary Matt Worner Registered office Principal place of business Share register Auditor Solicitors 945 Wellington Street West Perth, Western Australia, 6005 T: +61 8 9322 7600 945 Wellington Street West Perth, Western Australia, 6005 T: +61 8 9322 7600 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, 200 St Georges Terrace 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 Contents 30 June 2022 Chairman's Letter 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 Corporate governance statement Shareholder information Interest in mineral permits 3 4 26 27 28 29 30 31 57 58 62 63 65 2 Canyon Resources Limited Chairman's Letter 30 June 2022 Dear Shareholder, It is my pleasure to present Canyon Resources Limited’s Annual Report for the year ended 30 June 2022. The past year has been one of progress and change for your Company. In terms of progress, Canyon reached a major milestone in June 2022 with the delivery of the impressive Bankable Feasibility Study (BFS) for the Company’s flagship Minim Martap Bauxite Project in Cameroon. The completion of the BFS confirms the robust nature of the Minim Martap Project as well as the significance of this Tier 1 asset to both Canyon shareholders and the country of Cameroon. In addition to the BFS, the Company completed the negotiation of the key terms of the Mining Convention for the Minim Martap Project, a significant undertaking by both Canyon management and representatives of the Government of Cameroon. The Company continues to work with the Cameroon Government with a view to obtaining formal execution of the Mining Convention as expeditiously as possible. In terms of change, your Company has, over the course of 2022, looked to position itself for its next stage of development with the appointment of highly experienced and well-regarded Chief Executive Officer, Mr Jean-Sebastien Boutet. Jean-Sebastien is an accomplished leader and boasts a very strong background in bauxite project development, commodity marketing, operations, international negotiations, business and corporate development and international supply chain logistics. Additionally, the Company welcomed Mr Scott Phegan to the Board as a Non-Executive Director. Scott has significant experience in bauxite and alumina industries over a 30-year career with Alcoa. In this time, Scott has been responsible for the design and commissioning of multibillion-dollar refining expansions and refining projects the world over, including West Africa. I look forward to working with Jean-Sebastien and Scott along with the rest of the Canyon team both here in Australia and in Cameroon in moving the Company to its next stage of development. I would also like to acknowledge the contributions of former directors Cliff Lawrenson, Steven Zaninovich and Phil Gallagher, without whom the Company would not be in the position it is in today. To have progressed the Minim Martap Project to the point of Bankable Feasibility Study and formal Mining Convention, particularly over the last few years working in an environment of COVID-19 and the restrictions that the pandemic placed on us all, is truly commendable. We look forward to completing the next phase of the project development and working alongside the Government of Cameroon with a view to providing a genuine alternative supply of high-grade West African bauxite. I thank all Canyon shareholders for their ongoing support and look forward to the continuing growth and development of your Company. Regards Mark Hohnen Non-Executive Chairman 3 Canyon Resources Limited Directors' report 30 June 2022 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 2022. 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: Mark Hohnen - Non Executive Chairman (appointed 8 August 2022) Cliff Lawrenson - Non Executive Chairman (resigned 8 August 2022) Phillip Gallagher - Managing Director (resigned 11 July 2022) David Netherway - Non-Executive Director Peter Su - Non-Executive Director Scott Phegan - Non-Executive Director (appointed 8 August 2022) Steven Zaninovich - Non-Executive Director (resigned 8 August 2022) 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 $12,775,411 (30 June 2021: $4,751,302). Minim Martap Project During the year, Canyon’s focus was on the negotiation of the key terms of a Mining Convention and bankable feasibility study for its 100% owned Minim Martap Bauxite Project (The Project). Both key objectives were achieved during the course of the year, thereby providing significant milestones in the ongoing movement of the Project towards the construction and production phases. The Company continues to work alongside the Government of Cameroon for the execution of the Mining Convention. 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. A summary of the highlights of the past year's operations is provided below. Positive Bankable Feasibility Study for the Project On 21 June 2022, Canyon completed a major milestone through the delivery of the Minim Martap Bankable Feasibility Study (BFS). Importantly, results from the BFS confirmed Minim Martap as a robust long-term project, producing some of the highest-grade bauxite in the world for an initial 20 years of mining. 4 Canyon Resources Limited Directors' report 30 June 2022 Key BFS Highlights ● ● ● ● ● ● ● ● ● The Project will produce up to 6.4Mt of high-grade bauxite per annum over 20 years, representing a 28% increase from the Pre-Feasibility Study. The Project will produce high grade bauxite averaging 51.1% Total Alumina and 2.0% average Total Silica for the first 20 years of operation. Updated Proved Ore Reserve of 108.9Mt at 51.1% Al2O3 and 2.0% total SiO2. Total Mineral Resource (JORC 2012) estimate of 1,027Mt at 45.3% total Al2O3 and 2.7% total SiO2. Optimised rolling stock configuration and scheduling increased rail capacity, substantially reducing OPEX from the PFS phase and resulted in improved project economics. The 20-year mining schedule represents only 10.6% of the current Minim Martap Resource and technical studies have identified opportunities for a significant future increase in production tonnages. The ESIA submission over the Project has been submitted to the Ministry of Environment for final review and approval. The Company’s application for a Mining Permit is progressing well with the administrative period for objecting to the processing of the Mining Permit application having passed. The next step is the signing of a Mining Convention with the Government of Cameroon, which is being progressed by the Company. The required documentation has been forwarded by the Minister of Mines to the Prime Minister of Cameroon for approval before signing. Key BFS Financial Outcomes ● ● ● ● ● ● ● Project pre-tax NPV of US$452M (on a gross joint venture basis). Project IRR of 22%. Initial mine life of 20 years, with project payback in 4.1 years. NPV based on life of mine average bauxite price of US$45.22/t FOB for Minim Martap’s high grade bauxite averaging 51.1% Al2O3. Project development capital expenditure of US$253M, which includes the capital cost of the initial fleet of Company acquired rail rolling stock. C1 operating costs US$23.95/t for a 51.1% Al2O3 export product, making Minim Martap very competitive supplying some of the world's highest-grade bauxite. Updated Proved Ore Reserve of 108.91Mt at 51.1% Al2O3 and 2.0% total SiO2completed by Resolve Mining Solutions. Key BFS Metrics Financial evaluation of the Project highlights the potential for a robust project leveraging existing infrastructure and a very high-quality product. 5 Canyon Resources Limited Directors' report 30 June 2022 Key economic modelling outcomes are shown in Table 1 below: Table 1: Canyon Resources BFS LOM: Key Metrics Project Summary The BFS defines the first stage of the Minim Martap Bauxite Project and draws on the key learnings from the PFS, delivering a BFS at an accuracy of +/- 15% for the export of metallurgical grade bauxite. The BFS achieved the primary objective of defining an effective, standalone project, utilising existing infrastructure constraints by optimising what is currently available, whilst identifying upgrade potential in partnership with the Government and rail and port operators. Stand-alone economic feasibility was demonstrated, and product scheduling highlighted the ability of the Project to deliver long term, stable, high-grade bauxite. Canyon believes this product quality profile provides a unique catalyst for securing joint venture and strategic partner agreements, which have been in discussion for several months. Interest has been shown by refinery operators requiring long term, stable, high-grade product and the Project offers a hedge against market and political volatility. The Company expects to commence formal process of negotiations with potential partners, including off-take and strategic funding or equity partners on the back of the robust BFS. 6 Canyon Resources Limited Directors' report 30 June 2022 Next Steps Camalco Cameroon SA (Camalco), Canyon’s wholly owned subsidiary in Cameroon, has completed the application process for the grant of the Mining Permit for development of the Project. Notably, the period for the Government of Cameroon to object to the processing and approval of the Mining Permit application has passed. The decree of the President awaits the Government of Cameroon entering into the Mining Convention, negotiations for which have been concluded. In June 2021, the Company made a valid application for a Mining Permit over the Minim Martap Bauxite Project and applications for the extensions of the Makan and Ngaoundal exploration licenses for a further two years (the extensions over Makan and Ngaoundal were granted in February 2022). These applications were made after Camalco and the Government of Cameroon entered into a Cahier de Charge which confirmed the process for the extension of the exploration licences and process for the grant of the Mining Permit. In June 2021, the Company also submitted a completed Environmental and Social Impact Assessment (ESIA) to the Ministry of Mines and Ministry of Environment. The report has received an initial review with requests made for minor additional information. All requested information has been provided to the Ministry of Environment. In August 2021, His Excellency the Minister of Mines, Industry and Technological Development accepted Camalco’s Mining Permit application, and its capacity to develop the Project, and announced the commencement of negotiations for the Mining Convention for the Project. In accordance with the Mining Code of the Republic of Cameroon, the applicant for a Mining Permit must enter into a Mining Convention prior to the Mining Permit being granted. In January 2022, Camalco completed all negotiations with the relevant Government Ministries to finalise the terms of the Project Mining Convention. The terms of the Mining Convention were signed off by the 15 relevant Ministries who attended the negotiation meetings. The Mining Convention was reviewed by the Ministry of Mines and forwarded to the office of the Prime Minister of Cameroon for approval before execution. Figure 1: Canyon and Cameroon ministry negotiation teams at the Hotel Sawa, Douala Cameroon, January 2022 Following completion of the Mining Convention, the Company will be officially permitted to enter into binding agreements with the Port of Douala, Camrail and the Ministry of Transport of Cameroon regarding the final operational contracts for Camalco’s access and utilisation of state-owned infrastructure. Prior to commencing construction and making a Final Investment Decision (FID), Camalco requires a Mining Permit which is granted by a decree of the President of the Republic of Cameroon. 7 Canyon Resources Limited Directors' report 30 June 2022 Upon the grant of a Mining Permit for the Minim Martap mining areas, in accordance with Section 59 of the Mining Code, an entity of the State will be granted 10% ownership of the special purpose Joint Venture Company formed for that purpose, free of charge. The Mining Permit is, upon grant, transferred by Camalco to this new company. Up to an additional 25% ownership of the new company may be acquired via direct investment by the entity of the State under terms and conditions mutually agreed by the parties, and with the same rights and obligations as the other shareholders. The BFS study determined the existing port and rail facilities are suitable for the Minim Martap Bauxite Project. The operating charges for both the port and rail are based on industry standard costs and expert analysis by Vecturis SA (rail consultants) and MCC-CIE (port study). Canyon has signed a Heads of Agreement with the operator of the Cameroon railway, Bollore Africa Railways/CAMRAIL, to organise the negotiations of, and agree on the commercial terms of, the railway contract. Camalco entered into a Memorandum of Understanding with the Port of Douala with respect to finalising of commercial negotiations for Port access after the completion of the BFS. Finalisation of the formal agreements for access to both of these key infrastructure items will therefore commence immediately after the Mining Convention has been executed. The Project will be funded through a combination of equity and debt financing. Canyon is working with its strategic partners regarding its equity and debt strategies. Following FID, the Engineering, Procurement and Construction (EPC) contractor will be selected, and the front-end engineering design (FEED) is expected to commence within three months from FID. Critical long lead time equipment such as the rail locomotives and wagons will be prioritised. Several opportunities to improve capital costs and operating expenses have been identified in the BFS. Optimisation work will be undertaken to conclude these cost saving opportunities prior to commencing the FEED. Detailed engineering and procurement activities are expected to commence in early 2023, with construction in second quarter of 2024, subject to regulatory approvals and financing. Table 2: Project Development Timeline Extensions received for Makan and Ngaoundal Bauxite Research Permits On 28 February 2022, the Company announced that Camalco, received confirmation from the Minister for Mines, Industry and Technological Development (Minister) of the extension of the Makan and Ngaoundal research permits for an additional two years. 8 Canyon Resources Limited Directors' report 30 June 2022 Prior to the expiry of the term of the Makan and Ngaoundal research permits in July 2021, Camalco had applied for extensions to the term of those permits, and concurrently for an exploitation license over the Minim Martap research permit, which remains outstanding. On 18 February 2022, La Société Nationale des Mines (Sonamines) and China Railway No. 5 Engineering Group Cooperation Limited_Cameroon (CREC 5) announced their entry into a Memorandum of Understanding (MOU) with respect to carrying out research work on the area of the Makan and Ngaoundal research permits. Camalco was not a party to the MOU, nor was it aware of Sonamines and CREC 5 attempting to negotiate an agreement over Camalco’s research permits. The announcement by CREC5 was also in direct contravention of a valid Confidentiality Agreement between Canyon and CREC5. On 21 February 2022, the Minister issued a decision to the effect that the actions of Sonamines and CREC 5 were null and void and that those actions were not in accordance with the Mining Code of Cameroon and the extensions to Camalco’s permits were extended shortly thereafter. Execution of Strategic Partnership Agreement and MOU with MCC On 26 August 2021, the Company announced that it had entered into a Strategic Partnership Agreement and MOU with Zhongye Changtian International Engineering Corporation of MCC (MCC-CIE), the mining engineering division of global mining giant Metallurgical Corporation of China (MCC). Post the signing of the Strategic Partnership and MOU, MCC representatives alongside the Canyon team met with officials from the Government of Cameroon to present the merits of the Strategic Partnership, with positive feedback having been received. Key details of the MOU and Strategic Partnership Agreement are: ● ● ● ● The parties have commenced a Comprehensive Strategic Partnership and will immediately hold regular meetings to promote the financing and execution of the Project. MCC-CIE will provide Canyon with all necessary support within its capacity to assist Canyon in technical, business, off- taking and financing related issues. The Strategic Partnership Agreement and MOU remains in force until 31 December 2022 unless extended. The parties agree to reach a more comprehensive legally binding agreement for the implementation of the Project to replace the non-binding relationship established through the MOU and Strategic Partnership Agreement. Canyon receives strong community support of the Minim Martap Project On 30 August 2021, the Company announced that it had received letters of support from the traditional leaders and elders of the region local to the Project. This included the Governor of the Adamaoua Region, Lamido of Ngaoundere, Sous-Prefet of Martap and Chiefs of the villages of Haleo, Makor, Minim and Martap. This written recognition of support for and acknowledgement of the significance of the Project to the local communities indicates Canyon’s strong social licence to operate and develop the Project. This is significant for the Company and demonstrates the positive impact Canyon continues to have with local communities and key stakeholders, confirming an overwhelming support for development of the Project. 9 Canyon Resources Limited Directors' report 30 June 2022 Figure 2: Camalco management team with the Lamido of Ngaoundere at his traditional Palace 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 Mr Andrew Hutson, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy and is currently employed by Resolve Mining Solutions Mr Battista and Mr Hutson have sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which is being undertaken 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). 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. 10 Canyon Resources Limited Directors' report 30 June 2022 Bankable Feasibility Study The data in this report that relates to the Bankable Feasibility Study for the Minim Martap Bauxite Project and associated production targets and forecast financial information, is based on information in the BFS announcement of 21 June 2022, 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. 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 Successful share placements completed $6.2 million placement In August 2021 Canyon announced a successful placement of 77,257,157 new shares to institutional and sophisticated investors at $0.08 per share to raise approximately $6.2 million (before costs). This included a pro-rata participation in the Placement by the Company’s major shareholder, Mr Peter Su. Funds from the Placement were used for: ● ● ● delivery of the Minim Martap Project Feasibility Study and other Project deliverables; advancing strategic Project and off-take discussions; and corporate overheads and general working capital. 11 Canyon Resources Limited Directors' report 30 June 2022 $5.0 million placement to institutional and sophisticated and strategic investors. On 21 June 2022, Canyon announced a placement of shares to be issued in two tranches. The first tranche of 104,636,355 fully paid ordinary shares at $0.045 per share with a free attaching option with an exercise price of $0.07 each and an expiry of 10 August 2024 were issued on 28 June 2022, raising $4,708,636 before costs. The second tranche of 5,444,443 fully paid ordinary shares were issued on 7 September 2022 as discussed below. Management changes Jean-Sebastien Boutet was appointed as Chief Executive Officer commencing 1 January 2022. Matters subsequent to the end of the financial year Managing Director Phillip Gallagher resigned as a Director on 11 July 2022. 10,000,000 Performance Rights were issued to CEO Jean-Sebastien Boutet on 18 July 2022 with the following vesting conditions: * 1,000,000 - achievement of a 10-day Volume Weighted Average Price ('VWAP') of $0.10 * 1,000,000 - achievement of a 10-day VWAP of $0.15 * 1,000,000 - achievement of a 10-day VWAP of $0.20 * 1,000,000 - achievement of a 10-day VWAP of $0.25 * 1,000,000 - after 12 months of continuous employment * 1,000,000 - after 24 months of continuous employment * 1,000,000 - after 36 months of continuous employment * 1,000,000 - announcement of a fully approved mining licence * 1,000,000 - announcement of a completed rail access agreement * 1,000,000 - executed binding off take agreement for a minimum 2MT for a 12 month period. On 8 August 2022 Non-executive Chairman Cliff Lawrenson and Non-executive Director Steven Zaninovich resigned whilst Mark Hohnen was appointed as Non-executive Chairman and Scott Phegan as Non-Executive Director. 5,444,443 ordinary fully paid shares were issued on 7 September 2022 at an issue price of $0.045 raising $245,000 before costs. The shares issued were Tranche 2 of the Placement announced on 21 June 2022, and were entitled to one free attaching option. 104,636,355 unlisted options exercisable at $0.07 each on or before 10 August 2024 were issued on 7 September 2022. The options were part of the placement announced on 21 June 2022 where each share was entitled to one free attaching option. 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 Group 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. 12 Canyon Resources Limited Directors' report 30 June 2022 Information on Directors Name: Title: Experience and expertise: Mark Hohnen Non-Executive Chairman (appointed 8 August 2022) Mr Hohnen has been involved in the mineral resource sector since the late 1970s and has extensive international business experience in a wide range of industries including mining and exploration, property, investment, software and agriculture. Mr Hohnen has served as Non-executive Chairman of Boss Resources Ltd (ASX:BOE), and was also a director of Kalahari Minerals and Extract Resources, having successfully negotiated the sale of both companies to Taurus Minerals Ltd. Non-Executive Chairman of Parabellum Resources Ltd (ASX:PBL) - appointed 1 July 2021 Other current directorships: Former directorships (last 3 years): Bacanora Lithium Plc (LSE: BCN) – resigned in December 2021 450,000 ordinary shares Interests in shares: Nil Interests in options: Name: Title: Qualifications: Experience and expertise: Scott Phegan Non-Executive Director (appointed 8 August 2022) BE Chem Mr Phegan has held multiple technical, project, strategic and executive roles within the bauxite and alumina industries over a 30-year international career with Alcoa. In his capacity as Global Director for Process Design and Development, he was responsible for design and commissioning of multibillion-dollar refining expansions and refining development projects in Australia, Middle East, Brazil, Guinea, Ghana, Jamaica and Vietnam. Mr Phegan is intimately familiar with the bauxite industry supply lines, customers, and mining practices in relation to alumina refining and project development, as well as the bauxite business development pathway having supported customer development activities in China and Vietnam over several years. His experience extends across the full project execution lifecycle from study phases through to construction, commissioning and operations. None Other current directorships: Former directorships (last 3 years): None Interests in shares: Interests in options: Nil Nil 13 Canyon Resources Limited Directors' report 30 June 2022 Name: Title: Qualifications: Experience and expertise: Other current directorships: 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 Elemental Altus Royalties Corp. (ELE: TSX-V), Canyon’s joint venture partner on the Birsok Project in Cameroon - appointed 1 July 2007. Non-executive Director of Kore Potash Ltd (K2P:AIM, ASX & JSE) - appointed 14 December 2017. Former directorships (last 3 years): Chairman of Kilo Goldmines Inc (KGL:TSX-V) appointed 7 July 2011 - resigned 16 March Interests in shares: Interests in options: 2020. Non-Executive Director of Avesoro Resources Inc.(ASO:AIM & TSX) appointed 1 February 2011 - resigned 8 January 2020. 14,968,570 ordinary shares 555,555 unlisted options exercisable at $0.07 each on or before 10 August 2024 Name: Title: Qualifications: Experience and expertise: Peter Su Non-Executive Director (Appointed 16 September 2020) Hons. B.Comm 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 Other current directorships: Former directorships (last 3 years): None Interests in shares: Interests in options: 67,545,950 ordinary shares 4,444,444 unlisted options exercisable at $0.07 each on or before 10 August 2024 14 Canyon Resources Limited Directors' report 30 June 2022 Name: Title: Experience and expertise: Steven Zaninovich Non-Executive Director (Resigned 8 August 2022) 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. n/a Other current directorships: Former directorships (last 3 years): n/a n/a Interests in shares: Name: Title: Qualifications: Experience and expertise: Cliff Lawrenson Non-Executive Chairman (Resigned 8 August 2022) Hons. B.Comm 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. n/a Other current directorships: Former directorships (last 3 years): n/a n/a Interests in shares: Name: Title: Qualifications: Experience and expertise: Phillip Gallagher Managing Director (Resigned 11 July 2022) B.Bus Mr Gallagher has had extensive experience in senior commercial and operational roles in both private and public companies. Mr Gallagher is the founder of Canyon Resources, has been the Company’s Managing Director since inception. n/a Other current directorships: Former directorships (last 3 years): n/a n/a Interests in shares: '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. 15 Canyon Resources Limited Directors' report 30 June 2022 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). Meetings of Directors The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2022, and the number of meetings attended by each Director were: Cliff Lawrenson Phillip Gallagher David Netherway Steven Zaninovich Peter Su Full Board Audit and Risk Committee Attended Held Attended Held 5 5 5 5 5 5 5 5 5 5 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 information Additional disclosures relating to key management personnel 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 2022. 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. 16 Canyon Resources Limited Directors' report 30 June 2022 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. 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 2022, and to the date of this report, the Company made $Nil payments to key management personnel (2021: $25,000). 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. 17 Canyon Resources Limited Directors' report 30 June 2022 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 29 November 2021 AGM, 87.95% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2021. 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 for the year ended 30 June 2022 consisted of the following Directors of Canyon Resources Limited: ● ● ● ● ● Cliff Lawrenson (Non-Executive Chairman) Phillip Gallagher (Managing Director) David Netherway (Non-Executive Director) Steven Zaninovich (Non-Executive Director) Peter Su (Non-Executive Director) And the following persons: ● ● ● Jean-Sebastien Boutet (Chief Executive Officer) - appointed 1 January 2022 James Durrant (Director of Projects) - resigned 10 September 2021 Rick Smith (Chief Development Officer) 18 Canyon Resources Limited Directors' report 30 June 2022 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 $ 150,000 90,000 79,992 143,082 323,279 200,000 44,086 325,486 1,355,925 - - - - - - - - - - - 6,200 - - - - - - - - - - - - - 150,000 90,000 86,192 143,082 - 23,412 3,845 - 350,536 - - - 6,200 - 6,924 - 30,336 - - - 3,845 272,627 41,981 - 472,627 92,991 325,486 314,608 1,710,914 30 June 2022 Non-Executive Directors: Cliff Lawrenson David Netherway Steven Zaninovich Peter Su Executive Directors: Phillip Gallagher ** Other Key Management Personnel: Jean-Sebastien Boutet James Durrant *** Rick Smith Refer to note 20 * ** Includes annual leave accrual $23,279. *** Includes annual leave accrual reversal ($26,347) 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 33,333 394,976 - 12,500 - 12,500 - - 75,000 15,273 - - - - - - - - - - - - - - - - 83,468 102,500 - 107,450 110,525 215,215 - 33,333 21,694 5,283 - 421,953 30 June 2021 Non-Executive Directors: Cliff Lawrenson David Netherway Emmanuel Correia (resigned 10 December 2020) Steven Zaninovich Dimitri Bacopanos (resigned 26 March 2021) Executive Directors: Phillip Gallagher ** Other Key Management Personnel: James Durrant *** Rick Smith Nick Allan (resigned 28 May 2021) 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 19 Canyon Resources Limited Directors' report 30 June 2022 Refer to note 20 * ** Includes annual leave accrual $11,509 *** Includes annual leave accrual $6,132 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: Jean-Sebastien Boutet James Durrant Rick Smith Nick Allan Fixed remuneration Performance related 30 June 2022 30 June 2021 30 June 2022 30 June 2021 100% 100% - 100% 100% - 100% 88% 100% 44% - 100% 100% 100% - - - - - - - 42% 55% 100% - - 56% 100% 55% 58% 45% - - - 12% - 56% - - - - 44% - 45% Other transactions with key management personnel The following other transactions occurred with key management personnel: Payment for other expenses: Rent expense paid to Collab Capital Pty Ltd* 30 June 2022 30 June 2021 $ $ 12,000 - The following balances are outstanding at the reporting date in relation to transactions with related parties: Current payables: Trade payables to Collab Capital Pty Ltd* 30 June 2022 30 June 2021 $ $ 3,300 - * Collab Capital Pty Ltd provided office premises to the Company during the year. Peter Su is a Director and Shareholder of Collab Capital Pty Ltd. 20 Canyon Resources Limited Directors' report 30 June 2022 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: Mr Phillip Gallagher Former 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. Name: Title: Agreement commenced: Details: Mr Jean-Sebastien Boutet Chief Executive Officer 1 January 2022 Remuneration of $400,000 per annum inclusive of any other benefits. Name: Title: Details: The agreement may be terminated by either the Company or Mr Boutet upon the giving of 6 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. Share-based compensation 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 2022. 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 2022. 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 21 August 2020 21 August 2020 1 2 333,333 666,667 $0.134 $0.134 * Performance Rights are subject to the following Vesting Conditions: (1) 24 months continuous employment following completion of 3 month probation period (2) Completions of successful Feasibility Study, as determined by the Board of Directors 21 Canyon Resources Limited Directors' report 30 June 2022 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 2022 are set out below: Name Phillip Gallagher David Netherway Emmanuel Correia Steven Zaninovich James Durrant Nick Allan Number of Number of Number of Number of rights granted during the rights granted during the rights vested rights vested during the during the year year year year 30 June 2022 30 June 2021 30 June 2022 30 June 2021 - - - - - - - - - - 2,000,000 1,600,000 - - - - 666,667 - 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 2022, refer to note 29 to the financial report for details of the methodology used to value those rights. Additional information It is not possible at this time to evaluate the Company's financial performance using generally accepted measures such as profitability and total shareholder return as the Company is an exploration company with no signification revenue stream. This assessment will be developed if and when the Company moves from explorer to producer. The earnings of the Group for the five years to 30 June 2022 are summarised below: 2022 $ 2021 $ 2020 $ 2019 $ 2018 $ Loss after income tax (12,775,411) (4,751,302) (8,520,515) (8,261,236) (2,991,871) The factors that are considered to affect total shareholders return ('TSR') are summarised below: Share price at financial year end ($) Basic earnings per share (cents per share) 0.04 (1.84) 0.12 (0.80) 0.17 (1.83) 0.21 (2.16) 0.10 (0.99) 2022 2021 2020 2019 2018 22 Canyon Resources Limited Directors' report 30 June 2022 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 Steven Zaninovich Peter Su Jean-Sebastien Boutet James Durrant * Rick Smith Balance at Performance the start of the year rights converted Additions Disposals/ other Balance at the end of the year - 14,640,016 14,413,015 1,200,000 56,330,024 - 1,000,000 - 87,583,055 - - - 600,000 - - 666,667 - 1,266,667 - - - - 6,771,482 2,444,444 - - 9,215,926 - - - - - - (1,666,667) - (1,666,667) - 14,640,016 14,413,015 1,800,000 63,101,506 2,444,444 - - 96,398,981 * Resignation date 10 September 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 Steven Zaninovich Peter Su Jean-Sebastien Boutet James Durrant* Rick Smith Balance at the start of the year - - - 600,000 - - 1,000,000 - 1,600,000 Granted Converted Expired/ forfeited/ other Balance at the end of the year - - - - - - - - - - - - (600,000) - - (666,667) - (1,266,667) - - - - - - (333,333) - (333,333) - - - - - - - - - * Resignation date 10 September 2021 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 10 August 2024 Exercise price Number under option $0.200 4,000,000 $0.070 110,080,798 114,080,798 23 Canyon Resources Limited Directors' report 30 June 2022 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 18 July 2022 Number 10,000,000 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 2022 and up to the date of this report. Shares issued on the exercise of performance rights There were no ordinary shares of Canyon Resources Limited issued on the exercise of performance rights during the year ended 30 June 2022 and up to the date of this report. 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. 24 Canyon Resources Limited Directors' report 30 June 2022 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 ___________________________ Scott Phegan Non-Executive Director 30 September 2022 25 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 2022, 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 2022 L Di Giallonardo Partner 26 Canyon Resources Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2022 Other income Interest received Expenses: Foreign exchange loss Employee benefits expense Consultants and contractors Depreciation and amortisation expense Impairment of exploration Loss on disposal of plant and equipment Travel expenses Compliance and regulatory Legal and professional fees Share based payments Exploration expenditure expensed Interest expense Occupancy Administration Loss before income tax expense Income tax expense Loss after income tax expense for the year Other comprehensive loss 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 loss for the year, net of tax Total comprehensive loss for the year Basic loss per share Diluted loss per share Note 30 June 2022 30 June 2021 $ $ 5 12 29 12 - 3,535 67,110 6,780 (57,200) (2,026,461) (466,354) (84,789) - (10,779) (310,343) (103,806) (258,367) (4,695,858) (4,461,512) (787) (115,135) (187,555) - (1,915,244) (320,300) (99,961) (232,257) (150) (88,928) (121,439) (84,699) (1,634,786) - (741) (125,879) (200,808) (12,775,411) (4,751,302) 6 - - 17 (12,775,411) (4,751,302) - 92,321 (792,490) (141,997) (792,490) (49,676) (13,567,901) (4,800,978) Cents Cents 30 30 (1.84) (1.84) (0.80) (0.80) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 27 Canyon Resources Limited Consolidated statement of financial position As at 30 June 2022 Assets Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current 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 2022 30 June 2021 $ $ 7 8 9 11 12 4,478,367 51,251 393,097 4,922,715 2,684,012 203,794 391,464 3,279,270 239,179 16,424,121 16,663,300 345,756 16,760,341 17,106,097 21,586,015 20,385,367 13 14 1,061,289 121,427 1,182,716 1,040,082 203,727 1,243,809 1,182,716 1,243,809 20,403,299 19,141,558 15 16 17 76,733,044 5,689,503 (62,019,248) 66,543,010 1,886,952 (49,288,404) 20,403,299 19,141,558 The above consolidated statement of financial position should be read in conjunction with the accompanying notes 28 Canyon Resources Limited Consolidated statement of changes in equity For the year ended 30 June 2022 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/(loss) 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 29) 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 - 1,122,132 - - - - - - (1,850,000) - 245,666 512,655 (3,165,167) (179,785) - - - - 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 Issued capital $ Foreign currency reserve $ Share based payments reserve $ Accumulated losses $ Total equity $ Balance at 1 July 2021 66,543,010 5,524 1,881,428 (49,288,404) 19,141,558 Loss after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year - - - - - (12,775,411) (12,775,411) (792,490) - - (792,490) (792,490) - (12,775,411) (13,567,901) Transactions with owners in their capacity as owners: Share issued for cash Share issue costs Shares issued in lieu of payment Fair value of shares to be issued for exploration and evaluation acquisition Value of performance rights expensed Transfer balance of reserve 10,889,209 (755,425) 56,250 - - - - - - - - - - - - - - - 10,889,209 (755,425) 56,250 4,325,000 314,608 (44,567) - - 44,567 4,325,000 314,608 - Balance at 30 June 2022 76,733,044 (786,966) 6,476,469 (62,019,248) 20,403,299 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 29 Canyon Resources Limited Consolidated statement of cash flows For the year ended 30 June 2022 Cash flows from operating activities Payments to suppliers and employees Payments for exploration and evaluation expenditure Interest received Government grants received Note 30 June 2022 30 June 2021 $ $ (3,211,469) (4,767,562) 3,535 - (3,335,751) - 6,780 50,000 Net cash used in operating activities 27 (7,975,496) (3,278,971) Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and evaluation Proceeds from disposal of investments 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 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 11 12 (8,047) (260,408) 138,528 3,175 (2,035) (5,021,369) - 68 (126,752) (5,023,336) 15 10,889,209 (755,425) 10,000,000 (668,432) 10,133,784 9,331,568 2,031,536 2,684,012 (237,181) 1,029,261 1,610,466 44,285 Cash and cash equivalents at the end of the financial year 7 4,478,367 2,684,012 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 30 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 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: 945 Wellington Street West Perth, Western Australia, 6005 T: +61 8 9322 7600 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 2022. 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 loss for the year ended 30 June 2022 of $12,775,411 (2021: $4,751,302). As at 30 June 2022, the Group's current assets exceeded is current liabilities by $3,739,999 (30 June 2021: $2,035,461). Net cash used in operating activities was $7,975,496 for the year ended (2021: $3,278,971). Subsequent to year end 5,444,443 shares were issued at a price of $0.045 raising a total of $245,000 before costs. The ability of the Group to continue as a going concern is dependent on securing additional funding through capital raising. To address the future funding requirements of the Group the directors have undertaken the following initiatives: ● undertaken a programme to continue to monitor the Group's ongoing working capital requirements and minimum expenditure commitments; and continued their focus on maintaining an appropriate level of corporate overheads in line with the Group's available cash resources. ● The Directors are confident that they will be able to complete a capital raising that will provide the Group with sufficient funding to meet it's minimum expenditure commitments and support its planned level of overhead expenditures, and therefore that it is appropriate to prepare the financial statements on the going concern basis. However, in the event that the Group is not able to successfully complete the fundraising referred to above, a material uncertainty would exist that may cause significant doubt as to whether the Group will continue as a going concern and, therefore, whether it will realise its assets and extinguish is liabilities in the normal course of business and at the amounts stated in the financial statements. 31 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) The financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. 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. 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 24. 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. 32 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) 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. 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. 33 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) 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. 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 Other receivables are recognised at amortised cost, less any allowance for expected credit losses. 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. 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. 34 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) 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. 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. 35 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) 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. 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. 36 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 2. Significant accounting policies (continued) 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 2022. 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. Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to 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. 37 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 3. Critical accounting judgements, estimates and assumptions (continued) 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. 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. 38 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 4. Operating segments (continued) 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 2022 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 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 $ - (5,475,420) (5,475,420) 3,535 (7,303,526) (7,299,991) 3,535 (12,778,946) (12,775,411) - (12,775,411) (82,157) (4,325,000) - (2,632) (370,858) 3,535 (84,789) (4,695,858) 3,535 17,079,257 4,506,758 219,647 963,069 21,586,015 21,586,015 1,182,716 1,182,716 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 39 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 5. Other income Net foreign exchange gain Subsidies and grants Other income Note 6. Income tax expense Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 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 expense 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 2022 30 June 2021 $ $ - - - 29,610 37,500 67,110 30 June 2022 30 June 2021 $ $ (12,775,411) (4,751,302) (3,832,623) (1,425,391) 515 3,071 (3,832,108) (80,147) 3,912,255 (1,422,320) (147,289) 1,569,609 - - 30 June 2022 30 June 2021 $ $ 36,428 5,100 242,105 41,167,332 61,118 8,100 233,268 32,569,220 41,450,965 32,871,706 30 June 2022 30 June 2021 $ $ 1,320,428 1,895,376 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. 40 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 7. Current assets - cash and cash equivalents Cash on hand Cash at bank Note 8. Current assets - trade and other receivables Receivables on sale of shares (i) Other receivables BAS receivable 30 June 2022 30 June 2021 $ $ 36,832 4,441,535 53,403 2,630,609 4,478,367 2,684,012 30 June 2022 30 June 2021 $ $ - 9,542 41,709 138,528 8,869 56,397 51,251 203,794 (i) 30 June 2021, an amount of $138,528 was receivable from the sale of the RTR shares sold (see note 10). Note 9. Current assets - other assets Prepayments Other deposits Other current assets 30 June 2022 30 June 2021 $ $ 87,226 267,139 38,732 70,144 282,679 38,641 393,097 391,464 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: 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 2022 30 June 2021 $ $ - - - - 46,207 (138,528) 92,321 - The shares held in Rumble Resources Ltd were categorised as Level 1 securities and designated as fair value through Other Comprehensive Income. 41 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 10. Non-current assets - financial assets (continued) The shares held in Rumble Resources Ltd were disposed of during the prior year at an average sale price of $0.4347 per share. The funds from the sale were received in the year ended 30 June 2022 (see note 8). 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 2022 30 June 2021 $ $ 528,473 (307,917) 220,556 561,607 (270,126) 291,481 61,487 (46,000) 15,487 57,332 (54,196) 3,136 77,297 (44,581) 32,716 65,977 (44,418) 21,559 239,179 345,756 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 2020 Additions Disposals Exchange differences Transfers in/(out) Depreciation expense Balance at 30 June 2021 Additions Disposals Exchange differences Depreciation expense Balance at 30 June 2022 Office Computer equipment equipment equipment $ Field $ $ 2,371 1,611 - (127) 33,517 (15,813) 21,559 - (3,008) (1,722) (13,693) 36,023 425 (218) (583) 12,446 (15,377) 32,716 4,681 (6,750) 522 (15,682) 388,498 - - 17,718 (45,963) (68,772) 291,481 3,366 (4,196) (14,681) (55,414) Total $ 426,892 2,036 (218) 17,008 - (99,962) 345,756 8,047 (13,954) (15,881) (84,789) 3,136 15,487 220,556 239,179 42 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 12. Non-current assets - capitalised exploration expenditure Exploration and evaluation phase - Minim Martap Exploration and evaluation phase - Birsok 30 June 2022 30 June 2021 $ $ 15,874,121 16,210,341 550,000 550,000 16,424,121 16,760,341 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 2020 Expenditure during the year Exchange differences Impairment of assets 1 Balance at 30 June 2021 Expenditure during the year Exchange differences Balance at 30 June 2022 $ 12,144,907 5,021,369 (173,678) (232,257) 16,760,341 260,408 (596,628) 16,424,121 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. As the Minim Martap tenements expired and were in the process of being renewed during the period, expenditure incurred of $4,461,512, as well as acquisition costs, are required to be expensed until such time that the renewals are finalised, in accordance with the Group's accounting policy. Confirmation was received that the Makan and Ngaoundal research permits were extended for an additional two years on 25 February 2022, whilst the mining convention negotiations continue for Minim Martap. Note 13. Current liabilities - trade and other payables Trade payables Other payables 30 June 2022 30 June 2021 $ $ 882,961 178,328 419,779 620,303 1,061,289 1,040,082 43 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 14. Current liabilities - provisions Annual leave Long service leave Note 15. Equity - issued capital 30 June 2022 30 June 2021 $ $ 61,427 60,000 147,572 56,155 121,427 203,727 30 June 2022 30 June 2021 30 June 2022 30 June 2021 Shares Shares $ $ Ordinary shares - fully paid 806,422,064 623,903,552 76,733,044 66,543,010 Movements in ordinary share capital Details Date Shares $ Balance Shares issued for cash Shares issued for cash Conversion of performance rights Shares issued in lieu of payment Cost of share issues Balance Shares issued for cash Shares issued for cash Shares issued in lieu of payment Shares issued for cash Cost of share issues 1 July 2020 7 September 2020 29 September 2020 22 October 2020 11 February 2021 30 June 2021 9 August 2021 21 September 2021 7 February 2022 28 June 2022 499,170,219 52,441,940 71,834,988 7,183,499 28,165,012 2,816,501 14,733,333 3,165,167 10,000,000 1,850,000 - (914,097) 623,903,552 66,543,010 70,485,675 5,638,854 6,771,482 541,719 625,000 56,250 104,636,355 4,708,636 - (755,425) Balance 30 June 2022 806,422,064 76,733,044 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. 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. 44 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 15. Equity - issued capital (continued) 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 2021 Annual Report. Note 16. Equity - reserves Foreign currency reserve Share-based payments reserve 30 June 2022 30 June 2021 $ $ (786,966) 6,476,469 5,524 1,881,428 5,689,503 1,886,952 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. 45 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 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 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 Balance at 30 June 2021 Foreign currency translation Fair value of shares to be issued for exploration and evaluation acquisition Performance rights issued to directors/employees Transfer balance to accumulated losses Balance at 30 June 2022 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 Fair value reserve $ Share based payment reserve $ Foreign currency translation $ 36,728 - - - - 92,321 - - (129,049) 5,195,927 - 1,122,132 (1,850,000) 512,655 - (3,165,167) 245,666 (179,785) 147,521 (141,997) - - - - - - - Total $ 5,380,176 (141,997) 1,122,132 (1,850,000) 512,655 92,321 (3,165,167) 245,666 (308,834) - - - - - - 1,881,428 - 5,524 (792,490) 1,886,952 (792,490) 4,325,000 314,608 (44,567) - - - 4,325,000 314,608 (44,567) 6,476,469 (786,966) 5,689,503 30 June 2022 30 June 2021 $ $ (49,288,404) (12,775,411) - 44,567 (44,845,936) (4,751,302) 129,049 179,785 (62,019,248) (49,288,404) 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. Liquidity risk Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable. The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. 46 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 19. Financial instruments (continued) Remaining contractual maturities The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. 30 June 2022 Non-derivatives Non-interest bearing Trade payables Other payables Total non-derivatives 30 June 2021 Non-derivatives Non-interest bearing Trade payables Other payables Total non-derivatives Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - 882,961 178,328 1,061,289 - - - - - - - - - 882,961 178,328 1,061,289 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - 419,779 620,303 1,040,082 - - - - - - - - - 419,779 620,303 1,040,082 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. 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 Steven Zaninovich Peter Su Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director 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: Jean-Sebastien Boutet James Durrant Rick Smith Chief Executive Officer (appointed 1 January 2022) Project Director (resigned 10 September 2021) Chief Development Officer 47 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 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 30 June 2022 30 June 2021 $ $ 1,362,125 30,336 3,845 314,608 1,553,105 61,526 5,283 512,655 1,710,914 2,132,569 30 June 2022 30 June 2021 - 6,200 75,000 15,273 6,200 90,273 (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 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: 30 June 2022 30 June 2021 $ $ 49,343 42,025 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 2022. Note 23. Related party transactions Parent entity Canyon Resources Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 25. Key management personnel Disclosures relating to key management personnel are set out in note 20 and the remuneration report included in the Directors' report. 48 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 23. Related party transactions (continued) The following transactions occurred with related parties: Payment for other expenses: Rent expense paid to Collab Capital Pty Ltd* 30 June 2022 30 June 2021 $ $ 12,000 - The following balances are outstanding at the reporting date in relation to transactions with related parties: Current payables: Trade payables to Collab Capital Pty Ltd* 30 June 2022 30 June 2021 $ $ 3,300 - * Collab Capital Pty Ltd provided office premises to the Company during the year. Peter Su is a Director and Shareholder of Collab Capital Pty Ltd. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 24. 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 Parent 30 June 2022 30 June 2021 $ $ (13,011,793) (9,266,903) - (13,011,793) 92,321 (9,174,582) 49 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 24. Parent entity information (continued) Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Accumulated losses Total equity Note 25. Interests in subsidiaries Parent 30 June 2022 30 June 2021 $ $ 4,503,463 2,832,391 10,518,578 8,857,934 963,069 1,120,274 963,069 1,120,274 76,733,044 6,476,469 (73,654,004) 66,543,010 1,881,428 (60,686,778) 9,555,509 7,737,660 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 2022 30 June 2021 % % Australia Australia Australia Australia Australia Burkina Faso Burkina Faso Burkina Faso Burkina Faso Cameroon British Virgin Islands 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Canyon Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group. Note 26. Events after the reporting period Managing Director Phillip Gallagher resigned as a Director on 11 July 2022. 50 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 26. Events after the reporting period (continued) 10,000,000 Performance Rights were issued to CEO Jean-Sebastien Boutet on 18 July 2022 with the following vesting conditions: * 1,000,000 - achievement of a 10-day Volume Weighted Average Price ('VWAP') of $0.10 * 1,000,000 - achievement of a 10-day VWAP of $0.15 * 1,000,000 - achievement of a 10-day VWAP of $0.20 * 1,000,000 - achievement of a 10-day VWAP of $0.25 * 1,000,000 - after 12 months of continuous employment * 1,000,000 - after 24 months of continuous employment * 1,000,000 - after 36 months of continuous employment * 1,000,000 - announcement of a fully approved mining licence * 1,000,000 - announcement of a completed rail access agreement * 1,000,000 - executed binding off take agreement for a minimum 2MT for a 12 month period. On 8 August 2022 Non-executive Chairman Cliff Lawrenson and Non-executive Director Steven Zaninovich resigned whilst Mark Hohnen was appointed as Non-executive Chairman and Scott Phegan as Non-Executive Director. 5,444,443 ordinary fully paid shares were issued on 7 September 2022 at an issue price of $0.045 raising $245,000 before costs. The shares issued were Tranche 2 of the Placement announced on 21 June 2022, and were entitled to one free attaching option. 104,636,355 unlisted options exercisable at $0.07 each on or before 10 August 2024 were issued on 7 September 2022. The options were part of the placement announced on 21 June 2022 where each share was entitled to one free attaching option. No other matter or circumstance has arisen since 30 June 2022 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. Note 27. Reconciliation of loss after income tax to net cash used in operating activities 30 June 2022 30 June 2021 $ $ (12,775,411) (4,751,302) 84,789 10,779 4,695,858 57,200 - 99,961 150 1,634,786 (29,610) 232,257 14,015 (1,633) 21,207 (82,300) 4,422 (94,898) (394,088) 19,351 (7,975,496) (3,278,971) 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 in trade and other receivables Increase in other operating assets Increase/(decrease) in trade and other payables Increase/(decrease) in employee benefits Net cash used in operating activities 51 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 28. Non-cash investing and financing activities Issue of performance rights to directors and employees (refer note 29) Options issued to advisors for capital raising costs Issue of shares on acquisition of exploration project (refer note 29) Issue of ordinary shares in lieu of payment (refer note 29) Note 29. Share-based payments Performance rights 30 June 2022 30 June 2021 $ $ 314,608 - 4,325,000 56,250 512,655 245,666 1,122,131 - 4,695,858 1,880,452 CEO Jean-Sebastien Boutet shall be entitled to participate in the Long-Term Incentive Plan via the issue of Performance Rights as follows: Tranche Vesting conditions Share Price Employment Tenure Project Milestones 1 2 3 4 5 6 7 8 9 10 Achievement of a 10-day Volume Weighted Average Price ('VWAP') of $0.10 Achievement of a 10-day VWAP of $0.15 Achievement of a 10-day VWAP of $0.20 Achievement of a 10-day VWAP of $0.25 12 months continuous employment 24 months continuous employment 36 months continuous employment Fully approved mining licence Complete rail access agreement Executed binding off take agreement for minimum 2MT for a 12 month period 1,000,000 1,000,000 1,000,000 1,000,000 - - - - - - - - - 1,000,000 1,000,000 1,000,000 - - - - - - - - - 1,000,000 1,000,000 - - 1,000,000 4,000,000 3,000,000 3,000,000 These performance rights were valued, using a valuation methodology based on the guidelines set out in AASB 2 Share-based Payment. Assumptions: Share price vesting conditions Number of performance rights Valuation date Interest rate Volatility rate Vesting share price Share price on valuation date Indicative value per Performance Right - Mr Jean-Sebastien Boutet Tranche 1 Tranche 2 Tranche 3 Tranche 4 1,000,000 1 January 2022 1.85% 100% $0.100 $0.096 $0.084 $84,300 1,000,000 1 January 2022 1.85% 100% $0.150 $0.096 $0.075 $74,900 1,000,000 1 January 2022 1.85% 100% $0.200 $0.096 $0.0711 $71,100 1,000,000 1 January 2022 1.85% 100% $0.250 $0.096 $0.070 $69,700 52 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 29. Share-based payments (continued) Assumptions: Employment tenure conditions Tranche 5 Tranche 6 Tranche 7 Number of performance rights Valuation date 10 day VWAP Indicative value per Performance Right - Mr Jean-Sebastien Boutet 1,000,000 1 January 2022 $0.090 $0.090 $90,000 1,000,000 1 January 2022 $0.090 $0.090 $90,000 1,000,000 1 January 2022 $0.090 $0.090 $90,000 Assumptions: Project Milestone Tranche 8 Tranche 9 Tranche 10 Number of performance rights Valuation date 10 day VWAP Indicative value per Performance Right - Mr Jean-Sebastien Boutet 1,000,000 1 January 2022 $0.090 $0.090 $90,000 1,000,000 1 January 2022 $0.090 $0.090 $90,000 1,000,000 1 January 2022 $0.090 $0.090 $90,000 The value of the Performance Rights is being expensed over the deemed life of the Rights. During the period $272,627 was recognised as an expense in relation to the rights. The Performance Rights were issued subsequent to year end, on 18 July 2022. However, they relate to the period from when Mr Boutet commenced employment, being 1 January 2022. On 21 August 2020 the Directors approved the issue of 3.6 million Performance Rights to key management personnel, which included 2 million rights to Mr James Durrant. 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) 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 21 August 2020 $0.1337 $0.1337 $267,400 In previous periods, vesting conditions 1 and 2 were satisfied in respect of the Performance Rights issued to Mr Durrant and have been converted into ordinary shares. On termination of his employment, the Company agreed to convert 666,667 Performance Rights into ordinary shares with the balance of 333,333 lapsing on his resignation. The value of the Performance Rights is being expensed over the deemed life of the Rights. During the period, $41,981 was recognised as an expense in relation to the rights. 53 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 29. Share-based payments (continued) Ordinary Shares Canyon issued 625,000 ordinary fully paid shares on 7 February 2022 to a consultant in lieu of payment for services provided for the year ended 30 June 2022. The company recorded an amount of $56,250 as a share based payment expense being the fair value (market price) of the shares at the measurement date being 16 August 2021, the date the agreement was entered into. 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") 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. Tranche 1 Shares were issued to Altus on 10 February 2020 and Tranche 2 shares were issued 11 February 2021. The Directors consider it is probable that the Tranche 3 shares will vest. As a result, in the current year, the Company recorded an amount of $925,000 as a cost of acquisition of the Birsok Project being the fair value (market price) of the third tranche of shares (5,000,000) at the measurement date being 12 October 2018, the date the agreement was entered into. 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 Group'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: 54 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 29. Share-based payments (continued) 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. 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. The Directors consider it probable that Tranches 3 and 4 will vest in the future. As a result, the Company recorded an amount of $1,360,000 in relation to the third tranche of shares (20,000,000) and $2,040,000 in relation to the fourth Tranche of shares (30,000,000) as a cost of Acquisition of the Minim Martap Project being the fair value (market price) at the measurement date being 15 August 2017, the date the agreement was entered into. As a result, the Company has recorded a total amount of $3,400,000 in relation to Tranches 3 and 4 during the current period. All amounts recognised are being expensed, as the Minim Martap 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 Group's accounting policy. Options Weighted average exercise price 30 June 2022 30 June 2022 30 June 2021 30 June 2021 Weighted average exercise price Number of options Number of options Outstanding at the beginning of the financial year Granted Expired 9,000,000 - (5,000,000) $0.200 $0.000 $0.200 5,000,000 4,000,000 - $0.200 $0.200 $0.000 Outstanding at the end of the financial year 4,000,000 $0.000 9,000,000 $0.200 Exercisable at the end of the financial year 4,000,000 $0.200 9,000,000 $0.200 55 Canyon Resources Limited Notes to the consolidated financial statements 30 June 2022 Note 29. Share-based payments (continued) Total value expensed in profit and loss Performance rights issued to Mr Zaninovich Performance rights issued to employees Shares issued in lieu of payment Shares issued on acquisition of Birsok: Tranche 2 Tranche 3 Shares issued on acquisition of Minim Martap: Tranche 3 Tranche 4 Note 30. Loss per share Loss after income tax 30 June 2022 30 June 2021 $ $ - 314,608 56,250 370,858 107,450 405,205 - 512,655 - 925,000 925,000 1,122,131 - 1,122,131 1,360,000 2,040,000 3,400,000 - - - 4,695,858 1,634,786 30 June 2022 30 June 2021 $ $ (12,775,411) (4,751,302) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 692,714,648 592,508,401 Weighted average number of ordinary shares used in calculating diluted earnings per share 692,714,648 592,508,401 Basic loss per share Diluted loss per share Cents Cents (1.84) (1.84) (0.80) (0.80) 56 Canyon Resources Limited Directors' declaration 30 June 2022 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 2022 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 ___________________________ Scott Phegan Non-Executive Director 30 September 2022 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 2022, 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 2022 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. Material Uncertainty Related to Going Concern We draw attention to Note 2 in the financial report, which indicates that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 58 In addition to the matter described in the Material Uncertainty Related to Going Concern section above, we have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How our audit addressed the key audit matter 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 further exploration and evaluation 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. As the Minim Martap tenements expired and were in the process of being renewed during the period, expenditure incurred as well as acquisition costs were required to be expensed until the renewals were finalised in February 2022. Our audit focussed on the Group’s assessment of the the capitalised exploration carrying amount of expenditure, as this is one of the most significant assets of the Group. Our procedures included but were not limited to the following: − We obtained an understanding of the associated with key management’s review of the carrying values of each area of interest; processes − We considered Directors’ assessment of potential indicators of impairment; the − 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; substantiated a sample of exploration and evaluation transactions; and − We − 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 2022, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. 59 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. 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. 60 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 2022. In our opinion, the Remuneration Report of Canyon Resources Limited for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HLB Mann Judd Chartered Accountants Perth, Western Australia 30 September 2022 L Di Giallonardo Partner 61 Canyon Resources Limited Corporate governance statement 30 June 2022 Corporate Governance Statement In fulfilling its obligations and responsibilities to its various stakeholders, the Board is a strong advocate of corporate governance. This statement outlines the principle corporate governance of Canyon Resources Limited. The Board of Directors (“Board”) supports a system of corporate governance to ensure that the management of Canyon Resources Limited is conducted to maximise shareholder wealth in a proper and ethical manner. ASX Corporate Governance Council Recommendations The Board has adopted corporate governance policies and practices consistent with the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (“ASX Principles and Recommendations 4th Edition”) where considered appropriate for the Group’s size and nature. Such policies include, but are not limited to the Board Charter, Board Committee Charters, Code of Conduct, Trading in Securities, Continuous Disclosure, Shareholder Communication and Risk Management Policies. Further details in respect to the Group’s corporate governance practices and copies of the Group’s corporate governance polices and the Corporate Governance Statement, approved by the Board, are available on the Group’s website: https://canyonresources.com.au/corporate/corporate-governance/ 62 Canyon Resources Limited Shareholder information 30 June 2022 Shareholder information Additional information required by the ASX Listing Rules not disclosed elsewhere in this Annual Report is set out below. Shareholdings 1. The issued capital of the Company as at 16 September 2022 is 811,866,507 ordinary fully paid shares (details below). All issued ordinary fully paid shares carry one vote per share. Ordinary Shares Holding Ranges Holders Total Units % Issued Share Capital above 0 up to and including 1,000 above 1,000 up to and including 5,000 above 5,000 up to and including 10,000 above 10,000 up to and including 100,000 above 100,000 Totals 84 218 385 1,358 892 2,937 7,707 846,958 3,172,418 58,155,192 749,684,232 811,866,507 Unmarketable parcels The number of shareholdings held in less than marketable parcels is 713. 2. Top 20 Shareholders as at 16 September 2022 Position 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Holder Name AUSGLOBAL BAUXITE PTY LTD ALTUS STRATEGIES LTD MAMMON IBT PTY LTD ZERO NOMINEES PTY LTD TREASURY SERVICES GROUP PTY LTD MR CHRISTOPHER JOHN SQUIERS + MR ADRIAN CHRISTOPHER SQUIERS + MR SASCHA TROY SQUIERS DC & PC HOLDINGS PTY LTD SISU INTERNATIONAL PTY LTD MR JOHN COLIN LOOSEMORE + MRS SUSAN MARJORY LOOSEMORE MR MICHAEL ARTHUR PARISH FREMANTLE ENTERPRISES PTY LTD ASHANTI INVESTMENT FUND PTY LTD MR MARX LIN WIDERANGE CORPORATION PTY LTD MR HOWIE JAMES FITZMAURICE BLUETAIL INVESTMENTS PTY LTD IBT MAMMON PTY LTD ALITIME NOMINEES PTY LTD SHIRLEE DOWNS NOMINEES PTY LTD FREMANTLE ENTERPRISES PTY LTD Totals Holding 67,545,950 24,000,000 22,450,092 18,185,861 14,061,708 11,140,731 9,000,000 8,551,652 8,174,950 7,260,595 7,000,000 6,744,444 6,496,390 6,400,000 6,141,443 5,666,587 5,574,747 5,150,000 5,010,919 5,000,000 249,556,069 0.00% 0.10% 0.39% 7.16% 92.34% 100% % IC 8.32% 2.96% 2.77% 2.24% 1.73% 1.37% 1.11% 1.05% 1.01% 0.89% 0.86% 0.83% 0.80% 0.79% 0.76% 0.70% 0.69% 0.63% 0.62% 0.62% 30.74% 63 Canyon Resources Limited Shareholder information 30 June 2022 3. Voting Rights The voting rights attached to each class of equity security are as follows: Ordinary Shares Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. The company is listed on the Australian Securities Exchange under the code “CAY”. 4. Substantial shareholders as at 16 September 2022 Number of Shares Held 67,545,950 Percentage 8.32% Name AUSGLOBAL BAUXITE PTY LTD 5. Unquoted securities Number Terms 5,000,000 110,080,798 10,000,000 O12 - UNL OPTS EXP 07/09/23 @ $0.20 O13 - UNL OPTS EXP 10/08/24 @ $0.07 PE1 - PERFORMANCE RIGHTS 6. Unquoted securities holders with greater than 20% of an individual class Holder 2020 ADVISORY PTY LTD ASHANTI CAPITAL PTY LTD THE 5TH ELEMENT MCTN PTY LTD CANYON INCENTIVE SCHEME PTY LTD Total number of holders Total holdings over 20% Other holder TOTAL O12 - UNL OPTS EXP 07/09/23 @ $0.20 O13 - UNL OPTS EXP 10/08/24 @ $0.07 PE1 - PERFORMANCE RIGHTS 1,000,000 2,000,000 1,000,000 - 3 3 - 3 - - - - 107 - 107 107 - - - 10,000,000 1 1 - 1 7. Restricted securities subject to escrow period The following ordinary shares are subject to escrow: Holder AUSGLOBAL BAUXITE PTY LTD MR TING CAO TOTAL Number of Shares Held 2,670,000 625,000 3,295,000 8. On-market buyback There is currently no on-market buyback program for any of Canyon Resources Limited’s listed securities. 64 Canyon Resources Limited Interest in mineral permits 30 June 2022 Interest in Mineral Permits Interest in, situation of and percentage interest in mineral permits held are: Permits Location MINIM MARTAP PROJECT Ngaoundal Minim Martap Makan BIRSOK BAUXITE PROJECT Birsok Mandoum Mambal (application) TAPARKO NORTH PROJECT Karga 2 Bani Diobou Tigou TAO PROJECT Tao PINARELLO PROJECT Sokarani Niofera Baniera Sokarani 2 Soukoura 2 KONKOLIKAN PROJECT Konkolikan DEROSA PROJECT Bompela Sapala Cameroon Cameroon Cameroon Cameroon Cameroon Cameroon Burkina Faso Burkina Faso Burkina Faso Burkina Faso Interest at 30 June 2022 Own 100% Agreement to earn up to 75%. Own 100% Own 100% Own 100% Rights to 100% Burkina Faso Own 100% Burkina Faso Burkina Faso Burkina Faso Burkina Faso Burkina Faso Own 49% (sale of 51% to Acacia Mining plc) Burkina Faso Own 49% (sale of 51% to Acacia Mining plc) Burkina Faso Burkina Faso 15% interest in joint venture with Rumble Resources Ltd 65

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