Capricorn Metals
Annual Report 2022

Plain-text annual report

A N N U A L R E P O R T 2022 CCoorrppoorraattee ddiirreeccttoorryy AABBNN 84 121 700 105 DDiirreeccttoorrss Mark Clark – Executive Chairman Mark Okeby – Non-Executive Director Myles Ertzen – Non-Executive Director Bernard De Araugo – Non-Executive Director CCoommppaannyy SSeeccrreettaarryy Kim Massey RReeggiisstteerreedd OOffffiiccee && PPrriinncciippaall PPllaaccee ooff BBuussiinneessss Level 3, 40 Kings Park Road West Perth WA 6000 Telephone: +61 8 9212 4600 Email: enquiries@capmet.com.au Website: capmetals.com.au SShhaarree RReeggiissttrryy Automic Pty Ltd Level 2, 267 St Georges Terrace PERTH WA 6000 Telephone: +61 2 9698 5414 or 1300 288 664 AAuuddiittoorrss KPMG Perth 235 St Georges Terrace PERTH WA 6000 SSeeccuurriittiieess EExxcchhaannggee LLiissttiinngg Capricorn Metals Ltd shares are listed on the Australian Securities Exchange (ASX). CCooddee CMM Processing plant at Karlawinda Gold Project CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 1 CCoonntteennttss Chairman’s report Highlights Directors’ report Remuneration report (Audited) 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 ASX additional information 3 4 9 19 30 31 32 33 34 35 69 70 75 Bibra pit CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 2 Page | 2 CAPRICORN METALS LTD - Annual Report CHAIRMAN’S REPORT CChhaaiirrmmaann’’ss rreeppoorrtt Dear Shareholder Dear Shareholder I write to you at a time of deep sadness for Capricorn and its mining contractor MACA Ltd. It was only very recently that I write to you at a time of deep sadness for Capricorn and its mining contractor MACA Ltd. It was only very recently that we reported a significant incident at the Karlawinda Gold Project (‘KGP’) that tragically claimed the life of an employee of we reported a significant incident at the Karlawinda Gold Project (‘KGP’) that tragically claimed the life of an employee MACA. Everyone at Capricorn is shocked and saddened by the fatality. Our deepest thoughts and condolences go out to of MACA. Everyone at Capricorn is shocked and saddened by the fatality. Our deepest thoughts and condolences go the MACA employee’s family, friends and colleagues. out to the MACA employee’s family, friends and colleagues. The financial year just completed was Capricorn’s first year as a gold producer. The first gold bar from the KGP in the The financial year just completed was Capricorn’s first year as a gold producer. The first gold bar from the KGP in the Pilbara region of WA was poured on 30 June 2021. It is a credit to our operations team that the project achieved all its Pilbara region of WA was poured on 30 June 2021. It is a credit to our operations team that the project achieved all KPI’s and moved to steady state production in the first quarter of processing. In the full year to 30 June 2022 the Company its KPI’s and moved to steady state production in the first quarter of processing. In the full year to 30 June 2022 the produced 118,432 ounces of gold. The all-in sustaining cost of production of A$1,112 per ounce established Capricorn Company produced 118,432 ounces of gold. The all-in sustaining cost of production of A$1,112 per ounce established as a low-cost producer in the Australian gold industry. Capricorn as a low-cost producer in the Australian gold industry. These results were all the more impressive given the very significant cost These results were all the more impressive given the very significant pressures experienced in the Australian mining industry over the last 12 cost pressures experienced in the Australian mining industry over months. Cost inflation in many of the inputs to the operation has had an the last 12 months. Cost inflation in many of the inputs to the effect but we continue to look for ways to manage and reduce its impact. operation has had an effect but we continue to look for ways to We are fortunate that the KGP processing plant is powered with natural gas manage and reduce its impact. We are fortunate that the KGP via the Kalgoorlie gas pipeline. To date, unlike in other states of Australia, processing plant is powered with natural gas via the Kalgoorlie gas the WA gas price has remained relatively stable. We will continue to pipeline. To date, unlike in other states of Australia, the WA gas actively manage our costs and like all miners have some optimism that price has remained relatively stable. We will continue to actively we may see the beginnings of easing of cost pressure in the current year. manage our costs and like all miners have some optimism that we may see the beginnings of easing of cost pressure in the current year. Capricorn’s wholly owned Mt Gibson Gold Project (‘MGGP’) in the Murchison region of WA, acquired in July 2021, is emerging as a very exciting development proposition for the Company. All the key mining tenure was granted in December 2021 and in January 2022 we commenced a major drill programme to infill and extend the 2.1 million ounce JORC compliant gold resource. We have had up to three drill rigs operating continuously and at the date of writing we have drilled in excess of 110,000 metres. This intensive effort has been very well managed by Capricorn’s exploration team. Capricorn’s wholly owned Mt Gibson Gold Project (‘MGGP’) in the Murchison region of WA, acquired in July 2021, is emerging as a very exciting development proposition for the Company. All the key mining tenure was granted in December 2021 and in January 2022 we commenced a major drill programme to infill and extend the 2.1 million ounce JORC compliant gold resource. We have had up to three drill rigs operating continuously and at the date of writing we have drilled in excess of 110,000 metres. This intensive effort has been very well managed by Capricorn’s exploration team. Numerous significant assay results have been reported at MGGP during the year both within and extensional to the resource envelop. We look forward to updating the resource and estimating a maiden reserve which will underpin a feasibility study and ultimately a development decision by the board. Map showing Capricorn’s project locations Map showing Capricorn’s project locations Numerous significant assay results have been reported at MGGP during the year both within and extensional to the resource envelop. We look forward to updating the resource and estimating a maiden reserve which will underpin a Our regional exploration efforts at both projects are expected to gather pace in FY2023 with access to high priority drill feasibility study and ultimately a development decision by the board. targets expected through the heritage survey process. Any new gold discovery within trucking distance of an operating processing plant has the potential to add mine life and value to the Company’s projects. With this in mind, we never lose Our regional exploration efforts at both projects are expected to gather pace in FY2023 with access to high priority drill sight of the importance of bold but scientifically robust exploration. targets expected through the heritage survey process. Any new gold discovery within trucking distance of an operating I would like to thank our dedicated staff for their loyalty and efforts in the past year. These amazing people are the heart processing plant has the potential to add mine life and value to the Company’s projects. With this in mind, we never lose and soul of the Company. I would also like to thank our management team for creating the culture that makes people sight of the importance of bold but scientifically robust exploration. proud to work at Capricorn and has seen the Company experience much lower than average staff attrition during the I would like to thank our dedicated staff for their loyalty and efforts in the past year. These amazing people are the heart last two years of labour shortages and high turnover throughout the mining industry. and soul of the Company. I would also like to thank our management team for creating the culture that makes people Finally, I would like to thank you, the shareholders for your support in this volatile year in both the equity and debt proud to work at Capricorn and has seen the Company experience much lower than average staff attrition during the last markets. I am excited about the year to come as we pursue our goal to become a high quality, multi mine Australian two years of labour shortages and high turnover throughout the mining industry. gold business and trust you are too. Finally, I would like to thank you, the shareholders for your support in this volatile year in both the equity and debt markets. I am excited about the year to come as we pursue our goal to become a high quality, multi mine Australian gold business and trust you are too. Mark Clark Executive Chairman Mark Clark Executive Chairman CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 3 Page | 3 CAPRICORN METALS LTD - Annual Report 2022 HIGH LIGHTS KARLAWINDA GOLD PROJECT (“KGP”) COMMENCEMENT OF OPERATIONS AND RESULTS + + + Commissioning and ramp up of operations successfully completed within first quarter of production at KGP with steady state operations achieved by end of September 2022. KGP achieves project key performance indicators within the first 6 months of operations and produces 118,432 ounces of gold during the first year which is at the top end of the production guidance range of 110,000 – 120,000 ounces Lowest quartile all-in-sustaining costs (‘AISC’) in the Australian gold industry of $1,112 per ounce generates outstanding operating cashflow of over $141 million for the year + Extensive drilling programmes across the KGP tenement package during the year of 773 holes for 58,513 metres KEY PERFORMANCE INDICATORS ACHIEVED WITHIN FIRST 6 MONTHS OF OPERATIONS PRODUCTION OF 118,432 OUNCES, AT TOP END OF GUIDANCE RANGE AISC IN THE LOWEST QUARTILE OF THE AUSTRALIAN GOLD INDUSTRY ROM Loader putting material into the crushing circuit at the Karlawinda Gold Project Aerial view of the Karlawinda Gold Project 4 CAPRICORN METALS LTD - Annual ReportHIGHLIGHTS KGP EXPLORATION – RESOURCE UPGRADE AND INFILL AND EXTENSIONAL DRILLING + + Delivered resource and reserve upgrade in October 2022 and identified exciting regional targets 30,000 metre RC programme focussed on extending and infilling the Mineral Resource Estimate (‘MRE’) at KGP resulting in an upgraded MRE of 2.3 million ounces and upgraded Ore Reserve Estimate (‘ORE’) of 1.3 million ounces after mining depletion Drilling progress along KGP 1.8km long mine trend Aircore rig at Carnoustie prospect + Encouraging results returned from resource drilling near the base of, below and along strike of current resource pit optimisations, which remain open down dip and south along strike, including: − − − − 10 metres @ 5.04g/t from 99 to 109m 3 metres @ 11.16g/t from 169 to 172m 22 metres @ 1.20g/t from 152 to 174m 18 metres @ 1.40g/t from 140 to 158m − − − − 18 metres @ 1.36g/t from 197 to 215m 26 metres @ 1.19g/t from 168 to 194m 6 metres @ 4.36g/t from 54 to 60m 26 metres @ 0.97g/t from 175 to 201m Southern corridor and Tramore cross sections 5 CAPRICORN METALS LTD - Annual ReportHIGHLIGHTS KGP EXPLORATION – REGIONAL DRILLING + + First pass near mine and regional drilling programmes deliver encouraging results with follow-up drilling planned in the future Strong results from Muirfield prospect, located 4 kilometres east of Bibra open pit, provide target for potential satellite project including: − − − 8 metres @ 6.32g/t from 24 to 32m 4 metres @ 1.45g/t from 68 to 72m 4 metres @ 6.44g/t from 92 to 96m − − 4 metres @ 1.88g/t from 132 to 136m 12 metres @ 1.24g/t from 44 to 56m KGP EXPLORATION – MUMBAKINE WELL PROJECT + Acquisition of Mumbakine Well Project situated contiguous to the KGP delivers significant additional prospective tenure and provides further high quality regional exploration targets on the extensive KGP tenement package Karlawinda regional exploration targets MT GIBSON GOLD PROJECT (“MGGP”) ACQUISITION Acquisition of 2.1 million ounce MGGP in July 2021 for total consideration of $39.6 million comprising $25.6 million cash payment and $14 million paid by the issue of 7.65 million fully paid ordinary shares in Capricorn and 1% net smelter royalty for gold production in excess of 90,000 ounces Consideration paid represents an acquisition cost of less than $20 per resource ounce. Combined area of 139 square kilometres of tenure (granted and under application) acquired with more than 15 kilometres of strike on the gold bearing Retaliation Greenstone Belt in Murchison Region of Western Australia. All key mining tenure granted in December 2021 and mining lease granted over the area required for mining operation in June 2022 + + + + 6 CAPRICORN METALS LTD - Annual ReportHIGHLIGHTS MGGP EXPLORATION - INFILL AND EXTENSIONAL DRILLING + 80,000 metre RC drill programme commenced in January 2022 to infill drill the resource to 25 x 25 metre spacing and to test for gaps and extensions between and below the resource pit optimisation shells. + Based on successful results, programme was extended to 105,000 metres of drilling Orion pits (looking north) MGGP RC drilling at Lexington Pit (looking north) ACQUISITION OF 2.1 MILLION OUNCE MGGP FOR TOTAL CONSIDERATION OF $39.6 MILLION IN CASH AND EQUITY AND 1% NET SMELTER ROYALTY. PA I D C O N S I D E R AT I O N R E P R E S E N T S A N A C Q U I S I T I O N C O S T O F L E S S T H A N $ 2 0 P E R R E S O U R C E O U N C E . 7 CAPRICORN METALS LTD - Annual ReportHIGHLIGHTS + Encouraging results returned from this drilling including: − − − − − − − − 23 metres @ 5.04g/t from 157 to 180m 4 metres @ 6.40g/t from 126 to 140m 4 metres @ 118.74g/t from 142 to 146m 0 metres @ 6.08g/t from 48 to 58m 6 metres @ 3.15g/t from 170 to 186m 20 metres @ 2.72g/t from 107 to 127m 1 metres @ 6.75g/t from 98 to 109m 2 metres @ 6.85g/t from 144 to 156m − − − − − − − 8 metres @ 3.65g/t from 149 to 167m 9 metres @ 3.18g/t from 160 to 179m 35 metres @ 1.55g/t from 200 to 235m 24 metres @ 2.27g/t from 256 to 280m 7 metres @ 3.61g/t from 37 to 54m 5 metres @ 17.23g/t from 79 to 84m 34 metres @ 2.93g/t from 121 to 155m + + + The results received to date confirm the historic 660,000 metre drill database acquired with the project and indicate the potential for the resource to grow at depth and along strike Results from this programme will form the basis of an upgraded MRE and maiden ORE Exciting regional exploration potential as broader tenement package has had limited drilling in the last 30 years Orion and Saratoga cross sections CORPORATE + + + Net profit after tax of $89.5 million from the first 12 months of operations at Karlawinda with EBITDA of $153.9 million and an EBITDA margin of 54% The value of cash and bullion increased by $55.6 million to $65.9 million after the repayment of $25 million of debt during the year Shortly after the end of the financial year the Company restructured its financing facility with Macquarie Bank early repaying an additional $15 million and converting the outstanding $50 million into a general purpose corporate loan facility with a single bullet repayment in June 2025 First gold bars poured at KGP 8 CAPRICORN METALS LTD - Annual ReportDDiirreeccttoorrss’’ rreeppoorrtt (Continued) The Directors submit the financial report of the Consolidated Group (“the Group” or “Capricorn”), consisting of Capricorn Metals Ltd (referred to in these financial statements as “Parent” or “Company”) and its wholly owned subsidiaries for the year ended 30 June 2022 and the audit report thereon, made in accordance with a resolution of the Board. DDiirreeccttoorrss The Directors of the Company who held office since 1 July 2021 and up to the date of this report are set out below. Directors were in office for the entire year unless stated otherwise. MMrr MMaarrkk CCllaarrkk B.Bus, CA EExxeeccuuttiivvee CChhaaiirrmmaann Appointed 8 July 2019 Mr Clark has over 30 years’ experience in corporate advisory and public company management. He was a director of successful Australian gold miner Equigold NL (“Equigold”) from April 2003 and was Managing Director from December 2005 until Equigold’s $1.2 billion merger with Lihir Gold Ltd in June 2008. Equigold successfully developed and operated gold mines in both Australia and Ivory Coast. Mr Clark was appointed Managing Director of Regis Resources Limited (“Regis”) in May 2009 and Executive Chairman in November 2016. He retired as a director of Regis in October 2018. Mr Clark oversaw the development of Regis’ three operating gold mines at the Duketon Gold Project, which culminated in the project producing well over 300,000 ounces of gold per annum. Mr Clark is a member of the Chartered Accountants Australia and New Zealand. Mr Clark is not an independent director. During the past three years Mr Clark has not held any other listed company directorships. MMrr MMaarrkk OOkkeebbyy LLM NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Appointed 8 July 2019 Mr Okeby began his career in the resources industry in the 1980s as a corporate lawyer advising companies on resource project acquisitions, financing, and development. He has a Masters of Law (LLM) and over 30 years’ experience as a director of ASX listed mining and exploration companies. Mr Okeby is currently a director of Red Hill Iron Limited (appointed in 2016) and is also Non-executive Chairman of Peel Mining Limited (appointed in 2022). Previously Mr Okeby has been a director of Hill 50 Ltd, Abelle Limited, Metals X Limited, Westgold Resources Limited, Lynas Corporation Ltd and Regis Resources Limited. Mr Okeby is an independent director. During the past three years Mr Okeby has held the following other listed company directorships: • Non-Executive Director of Peel Mining Limited (appointed 3 March 2022) • Non-Executive Director of Red Hill Iron Limited (August 2015 to present) CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 9 9 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) MMrr MMyylleess EErrttzzeenn B.Sc Grad Dip App Fin NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Appointed 13 September 2019 MMrr BBeerrnnaarrdd DDee AArraauuggoo B.App.Sc (Metallurgy) NNoonn--EExxeeccuuttiivvee DDiirreeccttoorr Appointed 26 May 2021 Mr Ertzen was from 2009 until December 2018 a senior executive at Regis Resources Limited having held project and business development roles, culminating in the role of Executive General Manager – Growth, from which he resigned in December 2018. Prior to Regis, Myles held a number of senior operations roles for gold mining and development companies and has significant experience in the permitting, development and operations of gold projects in Western Australia. Myles has various regulatory and technical qualifications in mining, management and finance. Mr Ertzen is an independent director. During the past three years Mr Ertzen has not held any other listed company directorships. Mr De Araugo is a qualified metallurgist with over 30 years’ experience in mining and processing including senior management and technical roles at several gold mining operations in Australia and overseas. He has held senior leadership roles across a range of business disciplines including operations, commercial management and technical functions at Orica Mining Services and leading processing consumables supplier Donhad Pty Ltd where he was an Executive Director for over 12 years. Mr De Araugo is an independent director. During the past three years Mr De Araugo has not held any other listed company directorships. CCoommppaannyy SSeeccrreettaarryy The Company Secretary of the Company during the year and up to the date of this report is set out below. MMrr KKiimm MMaasssseeyy B.Com, CA CCoommppaannyy SSeeccrreettaarryy Appointed 4 March 2021 CCoommmmiitttteeee mmeemmbbeerrsshhiipp Mr Kim Massey was appointed as Company Secretary on 4 March 2021. Mr Massey is a Chartered Accountant with significant experience in financial management and corporate advisory services, particularly in the resources sector, as a corporate advisor and company secretary for a number of ASX and AIM listed companies. At the date of this report, the Company had an Audit and Risk Management Committee, and a Remuneration, Nomination and Diversity Committee. Mr Okeby is the chairman of both Committees. The directors acting on the Committee’s during the year were: DDiirreeccttoorr M Okeby M Ertzen B De Araugo DDiirreeccttoorrss’’ mmeeeettiinnggss AAuuddiitt aanndd RRiisskk MMaannaaggeemmeenntt CCoommmmiitttteeee RReemmuunneerraattiioonn,, NNoommiinnaattiioonn aanndd DDiivveerrssiittyy CCoommmmiitttteeee ✓ ✓ ✓ ✓ ✓ ✓ The number of Board and Committee meetings held and attended by directors during the year were as follows: DDiirreeccttoorr BBooaarrdd AAuuddiitt && RRiisskk mmaannaaggeemmeenntt RReemmuunneerraattiioonn,, NNoommiinnaattiioonn aanndd DDiivveerrssiittyy NNoo.. hheelldd NNoo.. aatttteennddeedd NNoo.. hheelldd NNoo.. aatttteennddeedd NNoo.. hheelldd NNoo.. aatttteennddeedd M Clark M Okeby M Ertzen B De Araugo 10 10 10 10 10 10 10 10 - 5 5 5 - 5 5 5 - 4 4 4 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 10 - 4 4 4 Page | 10 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) PPrriinncciippaall AAccttiivviittiieess The principal activities of Capricorn during the financial year were: - - exploration, evaluation, development and production from the Karlawinda Gold Project (“KGP”); and exploration and evaluation of the Mt Gibson Gold Project “(MGGP”). SSttrraatteeggyy//OObbjjeeccttiivveess The Group’s strategy is to be a profitable mid-tier gold company that delivers superior returns to shareholders over the long term. The focus of the Company during the year was the commissioning, optimisation and operation of the KGP following the first gold pour on 30 June 2021. In addition, the Company actively pursued its strategy of growing in to a multi mine gold company with the acquisition of the MGGP in July 2021. The Company’s objectives are to: • Continue to optimise operations at KGP by mining and processing ore safely and responsibly: • Organically increase the Reserves and Resources of the Company through systematic exploration activity across the KGP tenement package; • Advance the development of the MGGP with the estimation of an updated Mineral Resource Estimate and Ore Reserve Estimate in the first half of FY23; • Continue the technical, environmental and other studies required to underpin a Reserve estimate and feasibility study and ultimately the development of the project in due course; and • Actively pursue inorganic growth opportunities. OOppeerraattiinngg aanndd FFiinnaanncciiaall RReevviieeww OOvveerrvviieeww Capricorn Metals Ltd is an Australian based gold producer and exploration company with two distinct project areas located in Western Australia. The KGP is located 65 kilometres south-east of Newman in the Pilbara region of Western Australia. The KGP commenced operations in June 2021 after completion of project development on time and on budget. The Company completed commissioning and optimisation of the project within the first full quarter of operations with steady state production achieved by the end of September 2021. The project produced 118,432 ounces of gold in the first financial year of operations which was at the top end of the 2022 financial year guidance of 110,000 – 120,000 ounces. KGP is expected to produce 115,000 – 125,000 ounces of gold at all-in-sustaining-costs of $1,160 - $1,260 per ounce in FY2023, with growth capital of $10 - $14 million. In July 2021 the Company acquired the MGGP. The project is located in the Mid-West region of Western Australia, 280 kilometres north-east of Perth. Capricorn has estimated a JORC compliant resource of 2.1 million ounces of gold and is progressing work with a view to developing the project. At an acquisition cost of less than $20 per resource ounce the project represents a deep value proposition for the Company and provides the potential for Capricorn to grow into a multi mine gold company. Since acquisition, the Company has undertaken an extensive resource definition and extension drilling programme with the aim of estimating an updated Mineral Resource Estimate (“MRE”) and maiden Ore Reserve Estimate (“ORE”) in the 2023 financial year. Technical work and studies were also commenced during the year for reserve estimation, feasibility studies, permitting applications and ultimately project development decisions. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 11 11 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) FFiinnaanncciiaall RReevviieeww Key financial data Financial results Sales revenue Cost of sales (excluding D&A) 1 Other income Corporate, admin and other costs EBITDA 1 Depreciation & amortisation (D&A) Finance income/(expenses) Profit/(loss) before tax Income tax expense Reported profit/(loss) after tax 2022 $‘000 287,043 (118,975) 229 (14,363) 153,934 (31,665) (11,363) 111100,,990066 (21,423) 89,483 2021 $‘000 110 - 110 (7,556) (7,336) (215) 2,786 ((44,,776655)) - ((44,,776655)) Change $’000 Change % 286,933 (118,975) 119 (6,807) 161,270 (31,450) (14,149) 115,671 (21,423) 94,248 260,848 N/A 108 90 22,,119988 14,627 508 2,428 N/A 1,978 1 EBITDA is an adjusted measure of earnings before interest (finance income/(expenses)), taxes, depreciation and amortisation. Cost of sales (excluding D&A) and EBITDA are non-IFRS financial information and are not subject to audit. These measures are included to assist investors to better understand the performance of the business. Capricorn achieved a net profit after tax of $89.5 million in FY22 up from a net loss position of $4.8 million in FY21 as a result of the commencement of operations at the KGP. The Group recorded an EBITDA of $153.9 million and an EBITDA margin for the year of 54%. A reconciliation between the statutory profit after tax and the Group’s EBITDA is tabled above. Gold revenue for the financial year was $286.9 million from the sale of 116,122 ounces of gold at an average realised price of $2,471 per ounce. During the year Capricorn delivered 35,053 ounces of gold into forward contracts at an average delivery price of $2,247 per ounce and sold 81,069 ounces of gold at spot prices averaging $2,568 per ounce. As at 30 June 2022, Capricorn’s forward gold hedging programme totalled 164,947 ounces of flat forward contracts at an average delivery price of $2,248 per ounce and 7,140 ounces of rolling spot deferred contracts at an average delivery price of $2,681 per ounce. In addition, the Company has a 16,700 ounce gold call option with a strike price of $2,250 per ounce maturing on 30 June 2025. Cost of sales for the year was $149.5 million. All-in-sustaining-costs (“AISC”) of $1,112 per ounce were reported for the first 9 months of steady state production. Statutory operating cash flow for the year was $134.7 million underpinning a $55.6 million increase (to $65.9 million) in cash and bullion for the year. Key cash flow movements for the year included: • • • • • Net cash inflow from operations (excluding interest paid) of $141.0 million Payments for the completion of construction of the KGP of $26.5 million $26.7 million on the acquisition of the MGGP $18.4 million on exploration activities at KGP and MGGP $25.0 million repayment of debt to Macquarie Bank Ltd The Company had outstanding debt at the end of the financial year of $65 million after repaying $25 million during the year. Shortly after the end of the financial year the Company repaid a further $15 million of its project loan facility, taking cumulative repayments to $40 million since September 2021 and reducing the principal outstanding to $50 million. In July 2022, Macquarie Bank agreed to convert the $50 million outstanding debt to a general-purpose corporate loan facility with a single bullet repayment in June 2025. During the year the Company added 1.5 million tonnes of ore to its inventory balance. Ore stocks at 30 June 2022 were 2.1 million tonnes valued at a cost of $36.7 million carried forward as an inventory asset on the Company’s Balance Sheet. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 12 Page | 12 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) PPrroojjeecctt RReevviieeww KKaarrllaawwiinnddaa GGoolldd PPrroojjeecctt Operating results for the first 12 months of operations to 30 June 2022 were as follows: Ore mined Waste mined Stripping ratio Ore mined Ore milled Head grade Recovery Gold production Cash cost 1 Cash cost inc. royalties 1 All-in-sustaining-cost 1 UUnniitt BCM (‘000) BCM (‘000) w:o Tonnes (‘000) Tonnes (‘000) g/t % Ounces A$/oz A$/oz A$/oz 3300 JJuunnee 22002222 2,790 8,954 3.21 5,940 4,450 0.89 94 118,432 $952 $1,073 $1,112 1 Costs are reported for the period from when operations were at steady state production which was 30 September 2021. KGP produced 118,432 ounces from its first year of operation achieving the upper end of the annual production guidance range of 110,000 – 120,000 ounces. All-in-sustaining-costs (“AISC”) for the nine months since the announcement of steady state production was achieved was $1,112 per ounce which was at the lower end of the AISC guidance range for the year of $1,100 - $1,200 per ounce. A total of 8.9 million BCM of material was mined from the Bibra open pit during the year at a strip ratio of 3.21. Mining focussed on delivering ore to the ROM from Stage 1 and 2 of the open pit and mining waste to open ore zones in stage 3 and 4 of the open pit. The processing plant performed well during the year with steady state production achieved in the September 2021 quarter, three months after commissioning commenced. Mill feed during the year was primarily a combination of laterite and oxide ore with a small proportion of transitional ore being fed towards the end of the year. Capricorn expects to continue its strong operational performance in FY2023 with gold production guidance of 115,000 – 125,000 ounces at an AISC range of $1,160 - $1,260 per ounce. MMtt GGiibbssoonn GGoolldd PPrroojjeecctt In July 2021 Capricorn announced the acquisition of the MGGP located approximately 280 kilometres northeast of Perth in the Mid-West region of WA. The Company has estimated a JORC 2012 compliant Inferred MRE of 79Mt @ 0.8g/t Au for 2,083,000 ounces of gold at MGGP. The Company acquired the project for total consideration of $39.6 million comprising $25.6 million cash payment and $14 million paid by the issue of 7.65 million fully paid ordinary shares in Capricorn. In addition, the Company granted a 1.0% net smelter royalty on all minerals produced from the project including gold production in excess of 90,000 ounces. In December 2021 all key mining tenure was granted over the project area allowing Capricorn to expedite work to grow the gold resource and advance the project towards a maiden reserve estimate and feasibility study. In January 2022 an extensive infill and extensional RC drilling programme commenced at MGGP to form the basis of an updated MRE and maiden ORE (refer to exploration section below for more details). In conjunction with the commencement of drilling, technical work and studies across numerous disciplines commenced at MGGP as required for reserve estimation, feasibility studies, permitting applications and ultimately project development. In June 2022 Capricorn’s application for a mining lease was granted for an original term of 21 years. The granted mining lease covers all of the areas required to develop the mining project. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 13 13 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) EExxpplloorraattiioonn KKaarrllaawwiinnddaa GGoolldd PPrroojjeecctt Capricorn wholly owns a 2,052 square kilometre tenement package at KGP which includes the greenstone belt hosting the Bibra gold deposit and other significant greenstone areas. The Pilbara region of Western Australia has not had a significant historical exploration focus on gold and as a result very little modern and meaningful gold exploration has been completed outside of the immediate Bibra deposit, the focus of current mining operations. During the year a total of 773 holes for 58,513 metres were drilled across the KGP tenement package. Drilling during the year focussed on extending and infilling the MRE at KGP with a 30,000 metre RC drilling programme commencing in March 2022. A total of 18,308 metres (85 holes) were completed by the end of the year covering 1.8 kilometres of strike from the Bibra Open Pit to the Southern Corridor and Tramore areas to the south. The programme tested for extensions of gold mineralisation below the current open pit resource shell and increased the drill density of the Southern Corridor and Tramore prospects whilst also testing for the occurrence of stacked lodes below the areas of shallow drilling in the deposit. The programme was completed in August 2022 with results expected to underpin the annual update of the MRE and ORE in October 2022. Multiple near mine exploration projects were advanced during the year focussing on areas situated proximal to either the Nanjilgardy Fault or the Sylvania Inlier and Pilbara Craton margin (refer Figure above). Encouraging results were received from first pass drilling across the Muirfield, Carnoustie and Mundiwindi deposits during the year. Follow up regional and near mine drilling programmes will continue in FY2023. In June 2022 Capricorn acquired the Mumbakine Well Project. Capricorn paid Gascoyne Resources Ltd $1.25 million in Capricorn shares and granted a 0.5% net smelter royalty on all gold produced from the project as well as contingent deferred payments of $3.5 million (refer ASX Announcement 30 May 2022). The Mumbakine Well Project is located contiguous to the KGP and only 10 kilometers from the KGP processing plant. The project is highly prospective and provides an outstanding opportunity to add satellite resources and ultimately mill feed to the KGP. First pass drilling is planned in FY2023. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 14 Page | 14 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) MMtt GGiibbssoonn GGoolldd PPrroojjeecctt In January 2022 two RC rigs commenced drilling a planned 81,000 metre drill programme across the 8 kilometres of strike of current resources at the Company’s 100% owned MGGP. The objectives of this programme included infill drilling of the resource to broadly bring the drill density to 25 x 25 metres, testing gaps between the resource pit optimisation shells along the 8 kilometres of strike and testing for extensions of gold mineralisation below the current resource shells. By the end of the year a total of 80,124 metres of drilling was completed. Following a review of the very encouraging results, Capricorn has extended the programme to 105,000 metres to continue testing strong extensional areas. The assays received from drilling to date continue to line up with the historic data both spatially and for grade tenor, providing validation of the historic +660,000 metre drill database acquired with the project in July 2021. The expectation is that a significant proportion of the Inferred resource will be converted to Indicated category. Current and previously reported drilling at the depth extremities of the resource optimisation shells (where historic drill density is broader spaced) and below them has returned results consistent with Capricorn’s geological interpretations of mineralisation location, widths and grade tenor. Drilling across the project to date indicates that mineralisation remains open down dip and along strike to the north and south with multiple stacked lodes intersected. Results of this extended programme will underpin an updated MRE targeted for completion in September 2022 and a maiden ORE targeted for completion in October 2022. MMaatteerriiaall bbuussiinneessss rriisskkss The material business risks of the Company include: • COVID-19: Capricorn continues to actively respond to the ongoing COVID-19 virus currently impacting people and businesses globally. The health and safety of people working at Capricorn, their families and our communities remains paramount during this time. Capricorn continues to operate under protocols developed internally and as prescribed by State and Federal health authorities to minimise risks to our people and communities and ensure we continue to safely operate during this challenging period. During the year a contact tracing system was implemented at the KGP allowing for faster and more accurate assessment of close contacts to any positive cases on site. This system remains in use at the date of this report. The KGP is located in Western Australia which has enabled the Company to have a dynamic, rapid, and consistent approach to the management of the COVID-19 virus. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 15 15 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) • Gold price and foreign exchange currency: The Company is exposed to fluctuations in the Australian dollar gold price which can impact on revenue streams from operations. To mitigate downside in the gold price, the Board has implemented a hedging program to assist in offsetting variations in the Australian dollar gold price. • Reserves and Resources: The Mineral Resource Estimates and Ore Reserve Estimates for the Company’s assets are estimates only and no assurance can be given that they will be realised. The estimates are determined in accordance with JORC and compiled or reviewed by a qualified competent person. • Government regulation: The Company’s mining, processing, development and exploration activities are subject to various laws and statutory regulations governing prospecting, development, production, taxes, royalty payments, labour standards and occupational health, mine safety, toxic substances, land use, water use, communications, land claims of local people and other matters. No assurance can be given that new laws, rules and regulations will not be enacted or that existing laws, rules and regulations will not be applied in a manner which could have an adverse effect on the group’s financial position and results of operations. Any such amendments to current laws, regulations and permits governing operations and activities of mining and exploration, or more stringent implementation thereof, could have a material adverse impact on the Company. • Operating risk: The Company’s gold mining operations are subject to operating risks that could result in decreased production, increased costs & reduced revenues. To manage this risk the Company seeks to attract and retain high calibre employees and implement suitable systems and processes to ensure production targets are achieved. • Exploration and development risk: An ability to sustain or increase the current level of production in the longer term is in part dependent on the success of the group’s exploration activities and development projects, and the expansion of existing mining operations. The exploration for, and development of, mineral deposits involves significant risks that even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties that are explored subsequently have economic deposits of gold identified, and even fewer are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to establish rights to mine the ground, to receive all necessary operating permits, to develop metallurgical processes and to construct mining and processing facilities at a particular site. • Climate Change: Capricorn acknowledges that climate change effects have the potential to impact our business. The highest priority climate related risks include reduced water availability, extreme weather events, changes to legislation and regulation, reputational risk, and technological and market changes. The group is committed to understanding and proactively managing the impact of climate related risks to our business. This includes integrating climate related risks, as well as energy considerations, into our strategic planning and decision making. • Environmental: The Company has environmental liabilities associated with its tenements which arise as a consequence of mining operations, including waste management, tailings management, chemical management, water management and energy efficiency. The Company monitors its ongoing environmental obligations and risks, and implements rehabilitation and corrective actions as appropriate, through compliance with its environmental management system. • People risks: The Company seeks to ensure that it provides a safe workplace to minimise risk of harm to its employees and contractors. It achieves this through an appropriate safety culture, safety systems, training and emergency preparedness. SSiiggnniiffiiccaanntt cchhaannggeess iinn ssttaattee ooff aaffffaaiirrss Other than as set out below and elsewhere in the report, there were no significant changes in the state of affairs. DDiivviiddeennddss ppaaiidd oorr rreeccoommmmeennddeedd No dividends were paid or recommended to be paid during the financial year (2021: Nil). CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 16 Page | 16 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) SSuubbsseeqquueenntt eevveennttss There were no material events arising subsequent to 30 June 2022, to the date of this report which may significantly affect the operations of the Group, the results of those operations and the state of affairs of the Group in the future, other than: LLooaann rreeffiinnaanncciinngg && rroolllliinngg ooff ggoolldd ccoonnttrraaccttss In July 2022 the Company arranged with Macquarie Bank to convert the project loan facility to a general-purpose corporate loan facility with a single bullet repayment in June 2025. Capricorn can elect to repay (part or full) the loan at any time without penalty. In addition, 30,000 ounces of gold contracts with an average delivery price of $2,247/oz have been rolled from Jul 22 – Dec 22 to Dec 25 – Jun 26 to align with the maturity date of the new corporate facility. SShhaarree iissssuuee On 19 September 2022 the Company announced the issue of 2,000,000 shares as a result of performance rights being exercised by the Chief Executive Officer Mr Massey and the Chief Operating Officer Mr Thomas, in equal proportions, in accordance with their employment contracts. LLiikkeellyy ddeevveellooppmmeennttss There are no likely developments of which the Directors are aware which could be expected to significantly affect the results of the Group’s operations in subsequent financial years not otherwise disclosed in the Principal Activities and Operating and Financial Review or the Subsequent events sections of the Directors’ Report. EEnnvviirroonnmmeennttaall iissssuueess Mining and exploration operations in Australia are subject to environmental regulation under the laws of the Commonwealth and the State of Western Australia. The Group holds various environmental licences issued under these laws, to regulate its mining and exploration activities. The Group’s current activities generally involve disturbance associated with mining activities and exploration drilling programmes in Australia. All environmental performance obligations are monitored by the Board of Directors and subjected from time to time to Government agency audits and site inspections. There have been no material breaches of the Group’s licenses and all mining and exploration activities have been undertaken in compliance with the relevant environmental regulations. DDiirreeccttoorrss’’ iinntteerreessttss As at the date of this report, the interests of the Directors in shares and options of the Company are set out in the table below: DDiirreeccttoorr M Clark M Okeby M Ertzen B De Araugo SShhaarree ooppttiioonnss UUnniissssuueedd sshhaarreess NNuummbbeerr ooff sshhaarreess 22,052,000 6,615,385 3,611,539 74,550 NNuummbbeerr ooff uunnqquuootteedd rriigghhttss 240,000 - - - At the date of this report, the Company had no unissued shares under listed and unlisted options. SShhaarreess iissssuueedd oonn eexxeerrcciissee ooff ooppttiioonnss During the year 10,000,000 ordinary shares were issued by the Company as a result of the exercise of 10,000,000 options at a weighted average exercise price of $0.60 per share. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 17 17 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ rreeppoorrtt (Continued) PPeerrffoorrmmaannccee rriigghhttss UUnniissssuueedd sshhaarreess At the date of this report, the Company had the following unissued shares under unvested performance rights. VVeessttiinngg ddaattee 1 February 2023 30 September 2022 30 September 2023 18 January 2023 18 January 2024 29 March 2023 29 March 2024 4 October 2022 4 October 2023 10 December 2022 10 December 2023 10 December 2024 30 June 2023 30 June 2024 NNuummbbeerr oouuttssttaannddiinngg 975,000 112,500 112,500 100,000 100,000 100,000 100,000 120,000 120,000 83,000 599,000 639,000 139,909 139,909 Performance rights holders do not have any right, by virtue of the performance rights to participate in any share issue of the Company or any related body corporate. Details of performance rights granted to directors and other key management personnel during the year are set out in the remuneration report. IInnddeemmnniiffiiccaattiioonn aanndd iinnssuurraannccee ooff ddiirreeccttoorrss aanndd ooffffiicceerrss The Company has established an insurance policy insuring Directors and officers of the Company against any liability arising from a claim brought by a third party against the Company or its Directors and officers, and against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in their capacity as a Director or officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. In accordance with a confidentiality clause under the insurance policy, the amount of the premium paid to insurers will not be disclosed. This is permitted under s300(9) of the Corporation Act 2001. No indemnity has been obtained for the auditor of the Group. AAuuddiittoorr iinnddeeppeennddeennccee aanndd nnoonn--aauuddiitt sseerrvviicceess No fees were paid or payable to KPMG Australia for non-audit services during the year ended 30 June 2022 (2021: Nil). A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 for the year ended 30 June 2022 is attached to the Directors’ Report. PPrroocceeeeddiinnggss oonn bbeehhaallff ooff tthhee CCoommppaannyy No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. RRoouunnddiinngg ooffff The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191 and in accordance with that Instrument, amounts in the consolidated financial statements and Director’s report have been rounded off to the nearest thousand dollars, unless otherwise stated. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 18 Page | 18 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) This remuneration report for the year ended 30 June 2022 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The report details the nature and amount of remuneration for each Key Management Personnel (“KMP”) of Capricorn Metals Ltd who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and Group, directly or indirectly, including any Director (whether executive or otherwise) of the parent company. For the purpose of this report, the term “executive” includes the Executive Chairman, senior executives and company secretaries of the Parent and the Group. RReemmuunneerraattiioonn pprriinncciipplleess The Remuneration, Nomination and Diversity Committee (“RNDC”) was appointed in June 2021 following the rapid growth of the Group. The RNDC is responsible for formulating the Group’s remuneration policy, setting each Director’s remuneration and reviewing the Executive Chairman’s remuneration recommendations for KMPs to ensure compliance with the remuneration Policy and consistency across the Group. Recommendations of the RNDC are put to the Board for approval. In determining KMP remuneration the Board aims to ensure remuneration levels are set that attract, retain and incentivise executives and directors that are appropriately qualified and of a high calibre. Executives are rewarded with a level and mix of remuneration appropriate to their position, responsibilities and performance in a way that aligns with the Group’s business strategy. For the 2022 financial year the Company has implemented an Executive Remuneration Incentive Plan for Executives which sets out the performance hurdles for both Short Term Incentives (“STI”) and Long Term Incentives (“LTI”). The objectives and principles of the Company’s remuneration policy include: • • • • To align the objectives of the KMP’s with the Company’s strategic and business objectives and the creation of shareholder value; To provide competitive and reasonable remuneration to attract and retain high calibre talent; To provide remuneration that is transparent, easily understood and acceptable to shareholders; and To provide remuneration that is structured to have a suitable mix of fixed remuneration and at-risk performance based elements using appropriate STI and LTI components. Executive remuneration levels are reviewed annually by the RNDC to ensure alignment to the market and the Company’s objectives. The Company’s remuneration policy provides for a combination of fixed and variable pay with the following components: • • Fixed remuneration in the form of base salary, superannuation and benefits; and Variable remuneration in the form of STI’s and LTI’s. The table below provides a summary of the structure of executive remuneration: Fixed Remuneration - Base salary - Superannuation - Other benefits Variable Remuneration - STI (cash bonuses) - LTI (performance rights) The relative proportion of target FY22 total remuneration packages split between the fixed and variable remuneration for the executives is shown below: (cid:3)(cid:3)(cid:3) CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 19 19 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) 33% MARK CLARK 48% 30% PAUL THOMAS 50% 19% 20% 26% 21% KIM MASSEY 53% (cid:3) (cid:3) (cid:3) Fixed remuneration Short tern incentives Long term incentives (cid:3) (cid:3) EElleemmeennttss ooff RReemmuunneerraattiioonn FFiixxeedd rreemmuunneerraattiioonn Fixed remuneration consists of base remuneration (including fringe benefits tax charges related to employee benefits), as well as employer contributions to superannuation funds and salary sacrifice superannuation contributions. Remuneration levels are reviewed annually by the RNDC through a process that considers market conditions, individual performance and the overall performance of the Group. Industry remuneration surveys and data are utilised to assist in this process as well as benchmarking against ASX listed companies within the gold mining sector. During the year, the RNDC recommended to the Board that executive fixed remuneration be increased to reflect the transformation of the Company to gold producer. From 1 October 2021 executive annual base salaries were: • Mark Clark • • Paul Thomas Kim Massey SShhoorrtt tteerrmm iinncceennttiivveess $650,000 $600,000 $500,000 Under the STI plan, all executives have the opportunity to earn an annual incentive which is delivered in cash if certain financial and non-financial key performance indicators (“KPI’s”) are met. The STI recognises and rewards annual performance and links the achievement of key short term Company targets with the remuneration received by those executives charged with meeting those targets. STI awards are capped at 100% of the target opportunity which in FY22 was 40% of the fixed remuneration of the executive. Each year the RNDC set KPI targets for executives. For FY22 the KPI’s included: • • • • operating targets including gold production and AISC measured against budgets; safety, environmental and heritage targets measured against internal objectives; additions to Company ore reserves net of mining depletion; and company performance measured as Total Shareholder Returns (“TSR”) versus a comparator peer group of companies. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 20 Page | 20 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) A summary of the KPI targets set for FY22 and their respective weightings and achievements are as follows: KKeeyy PPeerrffoorrmmaannccee IInnddiiccaattoorr Production Costs Safety, environment & heritage WWeeiigghhttiinngg MMeeaassuurree 25% 25% 10% Gold production in line or greater than budget AISC in line or less than budget Safety, environment and heritage internal targets Reserve growth 15% Addition to the Company’s reserve base net of depletion through mining %% ooff KKPPII aacchhiieevveedd 60% 60% 0% AAwwaarrdd 15% 15% 0% 0% 0% Company performance 25% TSR performance against comparator group 100% Total 100% 25% 55% In assessing the achievement of the KPI’s the Committee made the following assessments: Production – annual gold production of 118,432 ounces was in line with FY22 budgeted production and the base reward of 15% was awarded; Costs – AISC’s of $1,112 per ounce for the 9 months of production since steady state operations were achieved was in line with FY22 budgeted AISC’s and the base reward of 15% was awarded; Safety, environment & heritage – Reflecting the Company’s commitment to high standards of safety, environmental performance and heritage obligations, awards were only given if stretch targets were attained. Accordingly, although the Company achieved satisfactory performance for the year, the Committee decided not to allocate an award for this KPI; Reserve growth – At the time of this report, the Company had not completed its annual Reserve and Resource update which is expected to be completed in October 2022. Accordingly, the Committee decided not to allocate an award for this KPI; Company performance – The Company achieved a total shareholder return of 63% for the 12 months to 30 June 2022 which was at the upper end of the comparator group. Accordingly, the stretch target was achieved and a 25% weighting was awarded for this KPI. Based on the above assessment, 55% of the target opportunity of 40% of fixed remuneration was achieved with the following STI payments made to executives for FY22: EExxeeccuuttiivvee Mark Clark Paul Thomas Kim Massey LLoonngg tteerrmm iinncceennttiivveess MMaaxxiimmuumm SSTTII ooppppoorrttuunniittyy %% KKPPII aacchhiieevveedd SSTTII aawwaarrddeedd SSTTII aawwaarrddeedd 40% of TFR 40% of TFR 40% of TFR 55% 55% 55% 22% of TFR 22% of TFR 22% of TFR $143,000 $132,000 $110,000 The Board has established the Employee Incentive Plan (“Incentive Plan”) as a means for motivating senior employees to pursue the long-term growth and success of the Group. LTI’s are provided to executives under the Capricorn Performance Rights Plan. Executives are eligible to receive performance rights (being entitlements to shares in Capricorn subject to satisfaction of vesting conditions) as long-term incentives as determined by the Board in accordance with the terms and conditions of the plan. In the 2022 financial year, under the Performance Rights Plan, the number of rights granted to executives range from 50% to 60% of the executives fixed remuneration and is dependent on the individual’s skills, responsibilities and ability to influence financial or other key objectives of the Company. The number of rights granted is calculated by dividing the LTI remuneration dollar amount by the Capricorn share price on the date of the grant. The performance rights issued in FY22 were subject to one performance hurdle being total shareholder return (“TSR”) measured against a benchmark peer group. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 21 21 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) The following companies have been identified by Capricorn to comprise the peer group: Regis Resources Limited Silver Lake Resources Ltd Westgold Resources Limited Calidus Resources Limited Ora Banda Mining Ltd Gold Road Resources Limited PPeeeerr GGrroouupp Dacian Gold Limited St Barbara Limited Pantoro Limited Gascoyne Resources Ltd De Grey Mining Limited Bellevue Gold Limited Red 5 Limited Aurelia Metals Limited Alkane Resources Limited Ramelius Resources Limited This provides a broad and representative comparative peer group for Australian investors. The peer group will be adjusted if members are delisted (for reasons other than financial failure) or a company merges with or is acquired by another company in the peer group - in which case the resulting company remains in the peer group and the acquired company is removed. The Board has the discretion to adjust the peer group in other circumstances. The proportion of executive rights that vest is dependent on how Capricorn’s TSR compares to the peer group as follows: RReellaattiivvee TTSSRR ffoorr MMeeaassuurreemmeenntt PPeerriioodd PPrrooppoorrttiioonn ooff PPeerrffoorrmmaannccee RRiigghhttss tthhaatt wwiillll vveesstt Below the 50th percentile At the 50th percentile 0% 50% Between the 50th and 75th percentile Pro-rata between 50% and 100% At and above the 75th percentile 100% The measurement period for: • • 50% of the performance rights is the 24-month period commencing on 1 July 2021 and ending on 30 June 2023 (Tranche 1); and The other 50% of the performance rights is the 36-month period commencing on 1 July 2021 and ending on 30 June 2024 (Tranche 2). The following executives were awarded LTI’s during the reporting period: EExxeeccuuttiivvee Paul Thomas Kim Massey MMaaxxiimmuumm LLTTII OOppppoorrttuunniittyy 11.. SShhaarree pprriiccee aatt ggrraanntt ddaattee NNuummbbeerr ooff ppeerrffoorrmmaannccee rriigghhttss ggrraanntteedd dduurriinngg FFYY2222 60% 50% 2.18 2.18 22.. 33.. 165,138 114,680 In October 2021, the Remuneration, Nomination and Diversity Committee awarded the Company’s Executive Chairman 240,000 performance rights with similar performance hurdles however the measurement period was: • • 50% of the performance rights is the 12-month period commencing on 4 October 2021 and ending on 4 October 2022 (Tranche 1); and The other 50% of the performance rights is the 24-month period commencing on 4 October 2021 and ending on 4 October 2023 (Tranche 2). The Committee awarded the performance rights with a reduced measurement period in recognition that Mr Clark had not previously been awarded performance rights. Shareholders approved the issue of performance rights to Mr Clark at the Company AGM in November 2021. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22 Page | 22 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) Performance rights that were granted to KMPs as compensation during the current and previous years and which have vested during or remain outstanding at the end of the year are provided as follows: KKMMPP IInncceennttiivveess NNoo.. ooff rriigghhttss GGrraanntt ddaattee FFVV aatt ggrraanntt ddaattee TTeesstt ddaattee %% VVeesstteedd dduurriinngg tthhee yyeeaarr %% ffoorrffeeiitteedd dduurriinngg tthhee yyeeaarr M Clark TSR TSR 120,000 24/11/2021 $2.042 4/10/2022 120,000 24/11/2021 $2.042 4/10/2023 0% 0% K Massey 2 yrs service 1,000,000 17/12/2019 $1.180 17/9/2021 100% 3 yrs service 1,000,000 17/12/2019 $1.180 17/9/2022 TSR TSR 57,340 4/10/2021 $1.780 30/6/2023 57,340 4/10/2021 $1.872 30/6/2024 0% 0% 0% P Thomas 2 yrs service 1,000,000 17/12/2019 $1.180 17/9/2021 100% 3 yrs service 1,000,000 17/12/2019 $1.180 17/9/2022 TSR TSR 82,569 4/10/2021 $1.780 30/6/2023 82,569 4/10/2021 $1.872 30/6/2024 0% 0% 0% 44,,551199,,881188 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% The value of rights granted during the year is the fair value of the rights calculated at grant date. The total value of the rights granted during the year is $1,017,468. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2019 to 30 June 2024). The total performance rights expense recognised for KMP during the year is $1,736,338. There were 2,000,000 performance rights with a grant date 17 December 2019 that vested and were exercised during the year. The remaining performance rights granted on 17 December 2019, have a three-year performance period which ends on 17 September 2022. For performance rights granted on 4 October 2021, 50% of the rights have a performance period of two years which ends on 30 June 2023 and the remaining balance ends on 30 June 2024. In relation to the performance rights issued on 24 November 2021 50% of the rights have a performance period of one year which ends on 4 October 2022 and the remaining balance ends on 4 October 2023. OOppttiioonnss There were no options granted to KMP’s during the current year. The table below outlines the movements in options during the year. NNaammee Grant date Number held as at 1 July 2021 Fair value at grant date Exercise price per option Vesting date Expiry date Vested and exercisable Exercised during the year Number held as at 30 June 2022 MM CCllaarrkk 27 Aug 19 8,000,000 $1.225 $0.60 27 Aug 19 30 Aug 22 8,000,000 MM OOkkeebbyy 27 Aug 19 2,000,000 $1.225 $0.60 27 Aug 19 30 Aug 22 2,000,000 (8,000,000) (2,000,000) - - TToottaall 10,000,000 10,000,000 (10,000,000) - These options were fully expensed at the time of vesting in 2019. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 23 23 CAPRICORN METALS LTD - Annual Report i g n d u l c n i , P M K y b , y l l a i c i f e n e b r o y l t c e r i d n i , y l t c e r i d , l d e h y n a p m o C e h t n i s e r a h s i y r a n d r o r e v o s t h g i r e c n a m r o f r e p d n a s n o i t p o f o r e b m u n e h t n i d o i r e p g n i t r o p e r e h t g n i r u d t n e m e v o m e h T : s w o l l o f s a s i s e i t r a p d e t a e r l r i e h t ss tt nn ee mm uu rr tt ss nn ii yy tt ii uu qq ee rr ee vv oo ss tt hh gg ii rr dd nn aa ss nn oo ii tt pp oo nn ii ss tt nn ee mm ee vv oo MM )) dd ee tt ii dd uu AA (( tt rr oo pp ee rr nn oo ii tt aa rr ee nn uu mm ee RR 24 ll ee bb aa ss ii cc rr ee xx ee tt oo NN ll ee bb aa ss ii cc rr ee xx EE dd ee tt ss ee vv ll aa tt oo TT 22 22 00 22 ee nn uu JJ 00 33 rr ee hh tt oo dd ee ss ii cc rr ee xx EE tt aa ss aa dd ee HH ll ee gg nn aa hh cc tt ee NN ss aa dd ee tt nn aa rr GG nn oo ii tt aa rr ee nn uu mm ee rr tt aa ss aa dd ee HH ll 11 22 00 22 yy ll uu JJ 11 - - - 0 0 0 0 4 2 , , 0 8 6 4 1 1 1 , , 8 3 1 5 6 1 1 , , 8 1 8 9 1 5 2 , - - - - - - - - - - - - - - - - - 0 0 0 0 4 2 , , 0 8 6 4 1 1 1 , , 8 3 1 5 6 1 1 , , 8 1 8 9 1 5 2 , - - - - - - - , ) 0 0 0 0 0 0 8 ( , , ) 0 0 0 0 0 0 2 ( , , ) 0 0 0 0 0 0 0 1 ( , - , ) 0 0 0 0 0 0 1 ( , , ) 0 0 0 0 0 0 1 ( , , ) 0 0 0 0 0 0 2 ( , - - - 0 0 0 0 4 2 , 0 8 6 4 1 1 , 8 3 1 5 6 1 , 8 1 8 9 1 5 , , 0 0 0 0 0 0 8 , , 0 0 0 0 0 0 2 , , 0 0 0 0 0 0 0 1 , - , 0 0 0 0 0 0 2 , , 0 0 0 0 0 0 2 , , 0 0 0 0 0 0 4 1 , ss nn oo ii tt pp OO l k r a C M y b e k O M l a t o T ss tt hh gg RR ii y e s s a M K s a m o h T P l k r a C M l a t o T . r o i r p d e s i c r e x e n e e b t o n e v a h s n o i t p o e h t f i l , t n e m y o p m e f o n o i t a s s e c e h t r e t f a s y a d 0 3 e s p a l s n o i t p o d e t s e V l . t n e m y o p m e f o n o i t a s s e c n o y l e t a d e m m i i d e t i e f r o f e r a s n o i t p o d e t s e v n U ) 1 ( ) 2 ( 4 2 | e g a P 55 00 11 00 00 77 11 22 11 44 88 NN BB AA DD TT LL SS LL AA TT EE MM NN RR OO CC RR PP AA CC II CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) NNoonn--eexxeeccuuttiivvee ddiirreeccttoorrss Total remuneration for all Non-Executive Directors, last voted upon by shareholders at the 2021 Annual General Meeting, is not to exceed $600,000 per annum. Directors’ fees cover all main Board activities and committee memberships. The base fee for a Non-Executive Director increased from $100,000 to $120,000 per annum excluding superannuation on 1 October 2021. An additional amount of $15,000 is also paid to the Chairman of each of the Remuneration and Audit Committees. From time to time, Non-Executive Directors may provide additional services to the Company and in these cases, they are paid fees in line with industry rates. KKeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell The following table outlines the movements in KMP during the year ended 30 June 2022. NNaammee Mr Mark Okeby Mr Myles Ertzen PPoossiittiioonn Non-Executive Director Non-Executive Director Mr Bernard De Araugo Non-Executive Director Mr Mark Clark Mr Kim Massey Mr Paul Thomas Executive Director Chief Executive Officer & Company Secretary Chief Operating Officer The following table outlines the termination provisions for each current KMP: TTeerrmm aass KKMMPP Full Year Full Year Full Year Full Year Full Year Full Year MMaarrkk CCllaarrkk, Executive Director Notice Period by Capricorn: - With or without reason - Serious misconduct Notice Period by Executive: Fundamental change: KKiimm MMaasssseeyy, Chief Executive Officer Notice Period by Capricorn: - With or without reason - Serious misconduct Notice Period by Executive: Fundamental change: PPaauull TThhoommaass, Chief Operating Officer Notice Period by Capricorn: - With or without reason: - Serious misconduct: Notice Period by Executive: Fundamental change: NNoottiiccee ppeerriioodd PPaayymmeenntt iinn lliieeuu ooff nnoottiiccee EEnnttiittlleemmeenntt ttoo ooppttiioonnss aanndd rriigghhttss oonn tteerrmmiinnaattiioonn 2 months Up to 2 months Nil Nil 2 months Up to 2 months n/a n/a 6 months Up to 6 months Nil 3 months 1 month Nil 3 months 12 months 6 months Up to 6 months Nil 3 months 1 month Nil 3 months 12 months (1) As above n/a (1) As above n/a (1) As above n/a (1) Due to resignation or termination for cause, any unvested rights and options will automatically lapse on the date of the cessation of employment. For those performance rights or options that have vested, they lapse one (1) month after cessation of employment. These terms can be extended at the Board’s discretion. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 25 25 CAPRICORN METALS LTD - Annual Report %% - - - % 8 0 7 3 . % 4 4 0 6 . % 4 1 1 6 . dd ee tt aa ee RR ll ee cc nn aa mm rr oo ff rr ee PP $$ ll aa tt oo TT , 7 3 4 1 5 1 , 5 7 5 6 2 1 , 5 7 5 6 2 1 , 8 0 6 6 0 1 1 , , 8 9 6 8 7 3 1 , , 6 6 7 5 8 7 1 , ,, 99 55 66 55 77 66 44 ,, $$ - - - - - - -- $$ - - - $$ - - - $$ 7 3 9 3 1 , 5 7 5 1 1 , 5 7 5 1 1 , $$ - - - $$ - - - $$ , 0 0 5 7 3 1 , 0 0 0 5 1 1 , 0 0 0 5 1 1 , 9 0 3 7 6 2 2 5 4 4 5 , 0 0 5 7 2 , 7 4 3 9 , , 0 0 0 3 4 1 , 0 0 0 5 0 6 , 7 8 2 3 2 7 , 7 9 8 9 5 7 ,, 33 99 44 00 55 77 11 ,, 4 1 3 7 2 , 2 7 2 3 7 , ,, 88 33 00 55 55 11 0 0 5 7 2 , 0 0 5 7 2 , ,, 77 88 55 99 11 11 7 4 3 9 , 7 4 3 9 , 11 44 00 88 22 ,, , 0 0 0 0 1 1 , 0 0 0 2 3 3 ,, 00 00 00 55 88 55 , 0 5 2 1 8 4 , 0 5 7 3 8 5 ,, 00 00 55 77 33 00 22 ,, ss rr oo tt cc ee rr ii DD ee vv ii tt uu cc ee xx EE -- nn oo NN o g u a r A e D B y b e k O M n e z t r E M ss rr oo tt cc ee rr ii DD ee vv ii tt uu cc ee xx EE ) 1 ( l k r a C M ss ee vv ii tt uu cc ee xx EE rr ee hh tt OO ) 1 ( y e s s a M K ) 1 ( s a m o h T P ss tt nn ee mm yy aa pp dd ee ss aa bb -- ee rr aa hh SS ss tt ii ff ee nn ee bb mm rr ee tt -- gg nn oo LL -- tt ss oo PP ss tt ii ff ee nn ee bb tt nn ee mm yy oo pp mm ee ll ss tt ii ff ee nn ee bb mm rr ee tt tt rr oo hh SS ss tt nn ee mm yy aa PP nn oo ii tt aa nn mm rr ee TT ii ss tt hh gg RR ii && ss nn oo ii tt pp OO ## ee vv aa ee ll ee cc ii vv rr ee ss gg nn oo ll && ll aa uu nn nn aa dd ee uu rr cc cc AA nn oo ii tt aa uu nn nn aa rr ee pp uu SS hh ss aa CC -- nn oo NN ** ss tt ii ff ee nn ee BB ^^ rr ee hh tt OO ss ee ee FF dd nn aa yy rr aa aa SS ll 22 22 00 22 YY FF 22 22 00 22 ee nn uu JJ 00 33 dd ee dd nn ee rr aa ee yy ee hh tt gg nn ii rr uu dd pp uu oo rr GG ee hh tt ff oo ll ee nn nn oo ss rr ee pp tt nn ee mm ee gg aa nn aa mm yy ee KK rr oo ff nn oo ii tt aa rr ee nn uu mm ee RR ) d e u n i t n o C ( )) dd ee tt ii dd uu AA (( tt rr oo pp ee rr nn oo ii tt aa rr ee nn uu mm ee RR 26 n o i t c u r t s n o c g n i t e e m r o f , 0 0 0 0 0 2 $ f o s u n o b h s a c a s a w s t i f e n e b m r e t t r o h s r e h t o ’ s a m o h T r M n i d e d u l c n I . s t e g r a t I T S g n i t e e m r o f P M K o t d a p i s u n o b h s a c a o t r e f e r s t i f e n e b m r e t t r o h s r e h t O . n e k a t e v a e l y n a f o t e n , n o i s i v o r p e h t n i s t n e m e v o m e h t e r a e v a e l e c i v r e s g n o l d n a l a u n n a d e u r c c a r o f s t i f e n e b m r e t g n o L . y n a p m o C e h t l y b e b a y a p r o d a p x a t i s t i f e n e b e g n i r f y n a s u p t s o c l l a u t c a t a d e t n e s e r p e r a s t i f e n e b y r a t e n o m - n o N . s t e g r a t . y r a a s l s a t n u o m a m u m i x a m d e r i u q e r y l i r o t u t a t s e h t e v o b a s t n e m e l t i t n e n o i t a u n n a r e p u s r i e h t f o n o i t r o p a e v i e c e r o t d e t c e e s a m o h T r l M d n a y e s s a M r M , k r a C r l M ^ * # ) 1 ( 6 2 | e g a P 55 00 11 00 00 77 11 22 11 44 88 NN BB AA DD TT LL SS LL AA TT EE MM NN RR OO CC RR PP AA CC II CAPRICORN METALS LTD - Annual Report %% - - - - % 1 1 3 7 . % 2 8 1 7 . % 2 1 6 3 . 7 2 | e g a P dd ee tt aa ee RR ll ee cc nn aa mm rr oo ff rr ee PP ss ee ee FF dd nn aa yy rr aa aa SS ll ss tt nn ee mm yy aa PP nn oo ii tt aa nn mm rr ee TT ii ss tt hh gg RR ii && ss nn oo ii tt pp OO ## ee vv aa ee ll ee cc ii vv rr ee ss gg nn oo ll && ll aa uu nn nn aa dd ee uu rr cc cc AA nn oo ii tt aa uu nn nn aa rr ee pp uu SS hh ss aa CC -- nn oo NN ** ss tt ii ff ee nn ee BB $$ , 3 5 7 1 2 1 5 7 0 3 9 , 0 1 8 0 1 , , 0 9 7 2 9 3 , 3 6 5 9 7 4 1 , , 2 9 1 6 0 5 1 , , 6 1 6 1 3 4 ,, 99 99 77 55 33 00 44 ,, $$ - - - - - - , 0 0 0 0 0 1 ,, 00 00 00 00 00 11 $$ - - - - $$ - - - $$ 3 6 5 0 1 , 8 3 9 5 7 0 8 , $$ - - - 8 7 2 3 1 , 0 0 0 5 2 , 1 3 0 7 , , 3 8 6 1 8 0 1 , , 3 8 6 1 8 0 1 , , 4 8 8 5 5 1 ,, 00 55 22 99 11 33 22 ,, 9 9 5 7 , 8 2 2 4 3 , 11 11 66 22 44 ,, ) 4 9 4 2 1 ( , . y n a p m o C e h t 0 0 0 5 2 , 0 0 0 5 2 , 5 1 6 4 2 , ,, 11 99 11 99 11 11 1 3 0 7 , 1 3 0 7 , 8 0 5 4 , 11 00 66 55 22 ,, - - - - - - $$ rr ee hh tt OO 0 9 1 6 2 , 00 99 11 66 22 ,, ,, 66 55 99 22 00 44 11 ,, ss ee ee FF dd nn aa yy rr aa aa SS ll 11 22 00 22 YY FF $$ 0 0 0 5 8 , 0 0 0 5 8 , 2 7 8 9 , , 1 8 4 7 4 3 , 0 5 2 8 5 3 , 0 5 2 8 5 3 , 3 0 1 9 5 1 ss rr oo tt cc ee rr ii DD ee vv ii tt uu cc ee xx EE -- nn oo NN ) 2 ( o g u a r A e D B ) 1 ( y b e k O M n e z t r E M ss rr oo tt cc ee rr ii DD ee vv ii tt uu cc ee xx EE ) 4 ( l k r a C M ss ee vv ii tt uu cc ee xx EE rr ee hh tt OO ) 4 ( y e s s a M K ) 4 ( s a m o h T P ) 3 ( n o x i D T . y r a a s l s a t n u o m a m u m i x a m d e r i u q e r y l i r o t u t a t s e h t e v o b a s t n e m e l t i t n e n o i t a u n n a r e p u s r i e h t f o n o i t r o p a e v i e c e r o t d e t c e e s a m o h T r l M d n a y e s s a M r M , k r a C r l M . y n a p m o C e h t o t i r o t c e r i D e v i t u c e x E - n o N s a t n e m t n o p p a s i h g n i r u d y b e k O M y b d e d i v o r p s e c i v r e s g n i t l u s n o c l a n o i t i d d a e d u l c n i s e e f r e h t o e h T . n e k a t e v a e l y n a f o t e n , n o i s i v o r p e h t n i s t n e m e v o m e h t e r a e v a e l e c i v r e s g n o l d n a l a u n n a d e u r c c a r o f s t i f e n e b m r e t g n o L . 1 2 0 2 y a M 6 2 n o r o t c e r i D e v i t u c e x E - n o N a s a d e t n o p p a s a w o g u a r A e D B i . 1 2 0 2 h c r a M 4 e v i t c e f f e y r a t e r c e s y n a p m o c d n a r e c i f f O l i i a i c n a n F f e h C s a d e s a e c n o x i D T l y b e b a y a p r o d a p x a t i s t i f e n e b e g n i r f y n a s u p t s o c l l a u t c a t a d e t n e s e r p e r a s t i f e n e b y r a t e n o m - n o N * # ) 1 ( ) 2 ( ) 3 ( ) 4 ( ss tt nn ee mm yy aa pp dd ee ss aa bb -- ee rr aa hh SS ss tt ii ff ee nn ee bb mm rr ee tt -- gg nn oo LL -- tt ss oo PP ss tt ii ff ee nn ee bb tt nn ee mm yy oo pp mm ee ll ss tt ii ff ee nn ee bb mm rr ee tt tt rr oo hh SS 11 22 00 22 ee nn uu JJ 00 33 dd ee dd nn ee rr aa ee yy ee hh tt gg nn ii rr uu dd pp uu oo rr GG ee hh tt ff oo ll ee nn nn oo ss rr ee pp tt nn ee mm ee gg aa nn aa mm yy ee KK rr oo ff nn oo ii tt aa rr ee nn uu mm ee RR ) d e u n i t n o C ( )) dd ee tt ii dd uu AA (( tt rr oo pp ee rr nn oo ii tt aa rr ee nn uu mm ee RR 55 00 11 00 00 77 11 22 11 44 88 NN BB AA DD TT LL SS LL AA TT EE MM NN RR OO CC RR PP AA CC II 27 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) MMoovveemmeennttss iinn sshhaarree hhoollddiinnggss The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by KMP, including their related parties, is as follows: NNoonn--EExxeeccuuttiivvee DDiirreeccttoorrss M Okeby M Ertzen B De Araugo EExxeeccuuttiivvee DDiirreeccttoorrss M Clark OOtthheerr EExxeeccuuttiivveess K Massey P Thomas HHeelldd aass aatt 11 JJuullyy 22002211 IIssssuueedd oonn eexxeerrcciissee ooff ooppttiioonnss//rriigghhttss NNeett cchhaannggee ootthheerr* HHeelldd aass aatt 3300 JJuunnee 22002222 4,615,385 3,611,539 45,550 2,000,000 - - - - 29,000 6,615,385 3,611,539 74,550 14,052,000 8,000,000 - 22,052,000 2,153,847 4,300,000 1,000,000 1,000,000 2288,,777788,,332211 1122,,000000,,000000 (1,000,000) (1,900,000) ((22,,887711,,000000)) 2,153,847 3,400,000 3377,,990077,,332211 * Unless stated otherwise, “Net change other” relates to on market purchases and sales of shares. RReellaatteedd PPaarrttyy TTrraannssaaccttiioonnss wwiitthh KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell LLooaannss ttoo KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell aanndd tthheeiirr rreellaatteedd ppaarrttiieess There were no loans made to any Director, KMP and/or their related parties during the current or prior years. OOtthheerr ttrraannssaaccttiioonnss wwiitthh KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell No Director has entered into contracts with the Group since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end. Transactions between related parties are on usual commercial terms and on conditions no more favourable than those available to other parties unless otherwise stated. Other than the ordinary accrual of personnel expenses at balance date and transactions disclosed above, there are no other amounts receivable from and payable to KMP and their related parties. CCoommppaannyy PPeerrffoorrmmaannccee The following table shows the gross revenue, profits, dividends and share price at the end of financial year for the past five financial years ending 30 June: Revenue Net profit/(loss) after tax Share price at year-end Dividends paid Total assets Net assets 22001188 $$’’000000 242 (3,118) 0.066 - 37,388 35,984 22001199 $$’’000000 207 (23,817) 0.089 - 26,284 23,817 RReessttaatteedd 22002200 $$’’000000 122 (17,947) 1.795(1) - 22002211 $$’’000000 110 (4,765) 1.900 - 124,486 95,508 299,595 130,460 22002222 $$’’000000 287,043 89,483 3.130 - 448,512 247,535 (1) A share consolidation of one for every five shares was approved by shareholders in November 2019. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 28 Page | 28 CAPRICORN METALS LTD - Annual Report RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) The Board does not consider earnings during the current and previous four financial years when determining, and in relation to, the nature and amount of remuneration of KMP. -- EENNDD OOFF AAUUDDIITTEEDD RREEMMUUNNEERRAATTIIOONN RREEPPOORRTT -- Signed in accordance with a resolution of the Board of Directors. Mr Mark Clark Executive Chairman Perth, Western Australia 28 September 2022 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 29 29 CAPRICORN METALS LTD - Annual Report Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Capricorn Metals Ltd I declare that, to the best of my knowledge and belief, in relation to the audit of Capricorn Metals Ltd for the financial year ended 30 June 2022 there have been: i. ii. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. KPMG R Gambitta Partner Perth 28 September 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 30 CAPRICORN METALS LTD - Annual Report CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr ccoommpprreehheennssiivvee iinnccoommee FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 Revenue Cost of goods sold GGrroossss pprrooffiitt Other income Fair value gain/(loss) on financial assets Personnel costs Share-based payment expense Depreciation Amortisation Administrative expense Exploration and evaluation expenditure Finance income/(expenses) PPrrooffiitt//((lloossss)) bbeeffoorree iinnccoommee ttaaxx eexxppeennssee Income tax expense PPrrooffiitt//((lloossss)) aattttrriibbuuttaabbllee ttoo mmeemmbbeerrss ooff tthhee ppaarreenntt eennttiittyy OOtthheerr ccoommpprreehheennssiivvee iinnccoommee:: IItteemmss tthhaatt mmaayy bbee rree--ccllaassssiiffiieedd ttoo pprrooffiitt oorr lloossss:: Exchange differences on translation of foreign operations OOtthheerr ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr,, nneett ooff ttaaxx TToottaall ccoommpprreehheennssiivvee iinnccoommee//((lloossss)) ffoorr tthhee yyeeaarr aattttrriibbuuttaabbllee ttoo mmeemmbbeerrss ooff tthhee ppaarreenntt eennttiittyy NNoottee 2 3 2 9 3 29 3 3 3 5 22002222 $$’’000000 287,043 (149,480) 137,563 229 (340) (7,217) (4,893) (225) (935) (1,680) (233) (11,363) 111100,,990066 (21,423) 8899,,448833 22002211 $$’’000000 110 - 110 110 420 (3,619) (3,277) (215) - (1,076) (4) 2,786 ((44,,776655)) - ((44,,776655)) (196) ((119966)) (149) ((114499)) 8899,,228877 ((44,,991144)) EEaarrnniinnggss ppeerr sshhaarree:: Basic profit/(loss) per share (cents per share) Diluted profit/(loss) per share (cents per share) 4 4 24.27 23.91 (1.39) (1.39) The accompanying notes form part of these financial statements CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 31 31 CAPRICORN METALS LTD - Annual Report CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 CCuurrrreenntt aasssseettss Cash and cash equivalents Receivables Other assets Inventories Financial assets Assets classified as held for sale TToottaall ccuurrrreenntt aasssseettss NNoonn--ccuurrrreenntt aasssseettss Inventories Financial assets Plant and equipment Right of use assets Deferred exploration and evaluation costs Mine properties under development Mine properties TToottaall nnoonn--ccuurrrreenntt aasssseettss TToottaall aasssseettss CCuurrrreenntt lliiaabbiilliittiieess Trade and other payables Lease liabilities Borrowings Provisions TToottaall ccuurrrreenntt lliiaabbiilliittiieess NNoonn--ccuurrrreenntt lliiaabbiilliittiieess Lease liabilities Borrowings Provisions Financial liabilities Deferred tax liabilities TToottaall nnoonn--ccuurrrreenntt lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss EEqquuiittyy Issued capital Reserves Retained earnings TToottaall eeqquuiittyy NNoottee 6 7 8 9 10 8 9 11 12 13 14 15 17 18 19 20 18 19 20 21 22 23 24 25 22002222 $$’’000000 61,502 2,235 295 14,913 3,099 2,500 8844,,554444 29,883 3,067 159,121 47,972 77,297 22002211 $$’’000000 10,312 1,325 265 14,065 2,925 2,500 3311,,339922 - 4,516 1,075 51,591 2,698 - 208,323 46,628 336633,,996688 - 226688,,220033 444488,,551122 229999,,559955 27,407 7,613 38,386 1,087 7744,,449933 37,822 27,000 29,226 11,540 20,896 18,945 7,452 32,000 569 5588,,996666 43,603 38,000 21,483 7,083 -- 112266,,448844 111100,,116699 220000,,997777 116699,,113355 224477,,553355 113300,,446600 203,524 6,101 37,910 224477,,553355 180,629 10,647 (60,816) 113300,,446600 The accompanying notes form part of these financial statements CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 32 Page | 32 CAPRICORN METALS LTD - Annual Report ll aa tt oo TT 00 00 00 $$ ’’ 8 0 5 6 9 , ) 9 4 1 ( ) 5 6 7 4 ( , ) 4 1 9 4 ( , - 6 3 8 6 3 , ) 7 4 2 1 ( , 7 7 2 3 , ,, 00 66 44 00 33 11 2 2 4 9 , 00 00 00 $$ ’’ ee vv rr ee ss ee rr tt nn ee mm yy aa pp dd ee ss aa bb -- ee rr aa hh SS - - - - - 7 7 2 3 , ) 0 0 2 1 ( , 99 99 44 11 11 ,, , 0 6 4 0 3 1 9 9 4 1 1 , ) 6 9 1 ( 3 8 4 9 8 , 7 8 2 9 8 , - 0 1 4 2 2 , 5 8 4 3 9 8 4 , ,, 55 33 55 77 44 22 3 3 | e g a P - - - - - 3 9 8 4 , ) 3 4 2 9 ( , 99 44 11 77 ,, 00 00 00 $$ ’’ ee vv rr ee ss ee rr nn oo ii tt aa ll ss nn aa rr tt yy cc nn ee rr rr uu cc nn gg ee rr oo FF ii 00 00 00 $$ ’’ ii dd ee nn aa tt ee RR ii ss gg nn nn rr aa ee dd ee uu ss ss II ll aa tt ii pp aa cc 00 00 00 $$ ’’ ee tt oo NN 22 22 00 22 ee nn uu JJ 00 33 dd ee dd nn ee rr aa ee yy ee hh tt rr oo FF ) 3 0 7 ( - ) 9 4 1 ( ) 9 4 1 ( - - - - )) 22 55 88 (( ) 2 5 8 ( - ) 6 9 1 ( ) 6 9 1 ( - - - - )) 88 44 00 11 (( ,, ) 1 5 2 7 5 ( , , 0 4 0 5 4 1 00 22 00 22 yy ll uu JJ 11 tt aa ss aa ee cc nn aa aa BB ll - ) 5 6 7 4 ( , ) 5 6 7 4 ( , - - - 0 0 2 1 , )) 66 11 88 00 66 (( ,, - - - - - 6 3 8 6 3 , ) 7 4 2 1 ( , ,, 99 22 66 00 88 11 ) 6 1 8 0 6 ( , , 9 2 6 0 8 1 - 3 8 4 9 8 , 3 8 4 9 8 , - - - 3 4 2 9 , 00 11 99 77 33 ,, - - - - - 5 8 4 0 1 4 2 2 , ,, 44 22 55 33 00 22 3 2 3 2 9 2 4 2 3 2 3 2 9 2 4 2 s t n e m e t a t s l a i c n a n i f e s e h t f o t r a p m r o f s e t o n g n i y n a p m o c c a e h T dd ee tt aa tt ss ee rr ee mm oo cc nn ii ee vv ii ss nn ee hh ee rr pp mm oo cc ll aa tt oo TT e m o c n i e v i s n e h e r p m o c r e h t O r a e y e h t r o f ) s s o l ( / t i f o r P s t n e m y a p d e s a b e r a h S d e s i a r l a t i p a c f o t s o C s e r a h s f o e u s s I r e f s n a r T 11 22 00 22 ee nn uu JJ 00 33 tt aa ss aa ee cc nn aa aa BB ll 11 22 00 22 yy ll uu JJ 11 tt aa ss aa ee cc nn aa aa BB ll e m o c n i e v i s n e h e r p m o c r e h t O ee mm oo cc nn ii ee vv ii ss nn ee hh ee rr pp mm oo cc ll aa tt oo TT r a e y e h t r o f ) s s o l ( / t i f o r P s t n e m y a p d e s a b e r a h S d e s i a r l a t i p a c f o t s o C s e r a h s f o e u s s I r e f s n a r T 22 22 00 22 ee nn uu JJ 00 33 tt aa ss aa ee cc nn aa aa BB ll 55 00 11 00 00 77 11 22 11 44 88 NN BB AA DD TT LL SS LL AA TT EE MM NN RR OO CC RR PP AA CC II 33 yy tt ii uu qq ee nn ii ss ee gg nn aa hh cc ff oo tt nn ee mm ee tt aa tt ss dd ee tt aa dd ii ll oo ss nn oo CC CAPRICORN METALS LTD - Annual Report CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ccaasshh fflloowwss FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess Receipts from gold sales Payments to suppliers and employees Payments for exploration expenditure Interest received Interest paid Other income NNeett ccaasshh ffrroomm//((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess 6 CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess Payments for property, plant and equipment Payments for investments Payments for capitalised exploration expenditure Payments for mine properties under development Payment for acquisition of assets Proceeds on disposal of property, plant and equipment NNeett ccaasshh uusseedd iinn iinnvveessttiinngg aaccttiivviittiieess CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Proceeds from the issue of shares Proceeds from exercise of share options Transaction costs from issue of shares Proceeds from borrowings Repayment of borrowings Repayment of lease liabilities NNeett ccaasshh fflloowwss ffrroomm//((uusseedd iinn)) ffiinnaanncciinngg aaccttiivviittiieess NNeett iinnccrreeaassee//((ddeeccrreeaassee)) iinn ccaasshh hheelldd Cash and cash equivalent at the beginning of the year Effect of exchange rates on cash holdings in foreign currencies CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr 6 6 NNoottee 22002222 $$’’000000 22002211 $$’’000000 286,948 (146,390) - 28 (5,966) 37 113344,,665577 (5,777) - (18,437) (26,548) (26,744) 187 - (18,294) (4) 177 (994) 218 ((1188,,889977)) (385) (1,200) (2,750) (117,118) -- -- ((7777,,331199)) ((112211,,445533)) - 6,000 (42) 20,000 (25,000) (7,424) ((66,,446666)) 36,836 (1,243) 70,000 - (626) 110044,,996677 5511,,119900 ((3355,,338833)) 10,312 - 6611,,550022 45,695 - 1100,,331122 The accompanying notes form part of these financial statements CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 34 Page | 34 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss BBaassiiss ooff pprreeppaarraattiioonn PPeerrffoorrmmaannccee ffoorr tthhee yyeeaarr 1. 2. 3. 4. 5. 6. Segment information Revenue & other income Expenses Earnings per share Income tax Cash and cash equivalents AAsssseettss Receivables Inventories Financial assets Assets held for sale Plant and equipment Right of use assets Deferred exploration and evaluation costs 7. 8. 9. 10. 11. 12. 13. 14. Mine properties under development 15. Mine properties 16. Impairment of non-financial assets LLiiaabbiilliittiieess 17. 18. 19. 20. 21. 22. Trade and other payables Lease liabilities Borrowings Provisions Financial liabilities Deferred tax liabilities EEqquuiittyy 23. 24. 25. RRiisskk 26. 27. Issued capital Reserves Retained earnings Financial risk management Capital management OOtthheerr DDiisscclloossuurreess 28. Mt Gibson Gold Project Acquisition 29. 30. 31. 32. 33. 34. 35. 36. Share-based payments Related parties Parent entity disclosures Commitments Contingencies Auditors’ remuneration Subsequent events New accounting standards and interpretations issued but not yet effective PPaaggee 36 37 38 39 41 42 43 43 44 44 46 47 48 48 49 50 50 51 51 52 53 54 55 57 58 58 58 61 62 62 66 67 67 67 67 68 68 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 35 35 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 BBAASSIISS OOFF PPRREEPPAARRAATTIIOONN Capricorn Metals Ltd is a for profit company limited by shares, incorporated and domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange. The Company’s registered office and principal place of business is: Level 1, 28 Ord Street WEST PERTH WA 6005 The nature of the operations and principal activities of the Company and its subsidiaries are described in the Directors Report. The consolidated financial statements were authorised for issue by the Board of Directors on 28 September 2022. The consolidated financial statements are general purpose financial statements which: • have been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (”AASB”) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards adopted by the International Standards Board; • have been prepared on a historical cost basis except for assets and liabilities and share based payments which are required to be measured at fair value; • are presented in Australian dollars with all values rounded to the nearest thousand ($’000) unless otherwise stated in accordance with ASIC Instrument 2016/191; • adopts all new, revised and amended Accounting Standards and Interpretations issued by the AASB that are mandatory for the current reporting period (See details below); and • presents reclassified comparative information where required for consistency with the current year’s presentation. PPrriinncciipplleess ooff ccoonnssoolliiddaattiioonn The consolidated financial statements comprise the financial statements of the Group. A list of controlled entities (subsidiaries) at year end is contained in Note 29. The consolidated financial statements incorporate the financial statements of the Parent and Entities controlled by the Parent (its subsidiaries). The parent controls an entity when it 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 over the entity. The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. FFuunnccttiioonnaall aanndd pprreesseennttaattiioonn ccuurrrreennccyy The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian Dollars which is the parent entity’s functional and presentation currency. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss and other comprehensive income. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of profit or loss and other comprehensive income. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 36 Page | 36 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 KKeeyy eessttiimmaattee aanndd jjuuddggeemmeennttss In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial report are found in the following notes. Note 3 Note 8 Note 13 Note 16 Note 20 Note 22 Note 29 Expenses Inventories Deferred exploration and evaluation costs Impairment Provisions Deferred tax liabilities Share-based payments Page 39 Page 44 Page 48 Page 50 Page 53 Page 55 Page 62 NNeeww ssttaannddaarrddss aanndd iinntteerrpprreettaattiioonnss aaddoopptteedd The Group has early adopted AASB 116 Property, Plant and Equipment: Proceeds before Intended Use from 1 July 2021. Under the amendments, the Group recognises the proceeds from gold sales from mines which are in the pre- production/commissioning phase in the statement of profit or loss and other comprehensive income, together with the costs of production. Prior to the adoption of the amended standard any proceeds from sales in the pre-production/commissioning phase were deducted from the cost of the mine properties under development asset. NNeeww ssttaannddaarrddss aanndd iinntteerrpprreettaattiioonnss iissssuueedd bbuutt nnoott yyeett eeffffeeccttiivvee Refer to note 36 NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss The notes include information which is required to understand the financial statements and is material to the operations and the financial position and performance of the Group. The notes are organised into the following sections: • • • • • • Performance for the year Assets Liabilities Equity Financial instruments and risk management Other disclosures PPEERRFFOORRMMAANNCCEE FFOORR TTHHEE YYEEAARR This section focuses on the results and performance of the Group, covering profitability, return to shareholders via earnings per share combined with cash generation. 11.. SSEEGGMMEENNTT IINNFFOORRMMAATTIIOONN Operating segments are reported in a manner that is consistent with the internal reporting provided to the Board and the executive management team (the chief operating decision makers). The Group has two reportable segments which comprise the Karlawinda Gold Project and the Mt Gibson Gold Project. Unallocated items mainly comprise of corporate administrative costs. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 37 37 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 22002222 RReevveennuuee Revenue Other income RReessuulltt Profit/(loss) before income tax Finance income/(expense) Depreciation Amortisation AAsssseettss//LLiiaabbiilliittiieess Segment assets Segment liabilities 22002211 RReevveennuuee Revenue Other income RReessuulltt Profit/(loss) before income tax Finance income/(expense) Depreciation AAsssseettss//LLiiaabbiilliittiieess Segment assets Segment liabilities 22.. RREEVVEENNUUEE AANNDD OOTTHHEERR IINNCCOOMMEE AAccccoouunnttiinngg ppoolliicciieess KKaarrllaawwiinnddaa $$’’000000 MMtt GGiibbssoonn $$’’000000 UUnnaallllooccaatteedd $$’’000000 286,948 - 228866,,994488 124,125 (11,363) (24,828) (6,623) - 187 118877 95 42 113377 99 (13,318) - - - - (214) - TToottaall $$’’000000 287,043 229 228877,,227722 110,906 (11,363) (25,042) (6,623) 373,901 (162,946) 66,291 (13,054) 8,320 448,512 (24,977) (200,977) KKaarrllaawwiinnddaa $$’’000000 MMtt GGiibbssoonn $$’’000000 UUnnaallllooccaatteedd $$’’000000 - 50 5500 2,498 2,757 (9) 289,215 (168,443) - - -- - - - - - TToottaall $$’’000000 110 110 222200 110 60 117700 (7,263) 29 (206) (4,765) 2,786 (215) 10,380 (692) 299,595 (169,135) GGoolldd SSaalleess The Group recognises revenue from gold sales when it satisfies the performance obligation of transferring control of gold inventory to the bank. The Group has determined that this generally occurs when the sales contract has been entered into and the bank has physical possession of the gold, as this is the point at which the bank obtains control of the asset. The transaction price is determined based on the agreed price and the number of ounces delivered. Payment is due upon delivery into the sales contract. IInntteerreesstt Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. RReennttaall IInnccoommee Rental income is recognised on a straight-line basis over the period of the lease term so as to reflect a constant periodic return on the property. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 38 Page | 38 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 OOtthheerr RReevveennuuee Other revenue is recognised when it is received or when the right to receive payment is established. All revenue is stated net of the amount of goods and services tax (“GST”). GGoovveerrnnmmeenntt GGrraannttss Government grants are recognised when there is reasonable assurance that conditions attached to the grant will be complied with and that the grant will be received. RReevveennuuee Gold sales Rental income OOtthheerr IInnccoommee Government grant income Other Profit on sale of property, plant and equipment PPhhyyssiiccaall ggoolldd ddeelliivveerryy ccoommmmiittmmeennttss 22002222 $$’’000000 286,948 95 228877,,004433 - 42 187 222299 22002211 $$’’000000 - 110 111100 100 10 - 111100 As part of the risk management policy of the Group and in compliance with the conditions required by the Group’s financier Macquarie, the Group has entered into gold forward contracts to manage the gold price of a proportion of anticipated sales of gold. The contracts are accounted for as sale contracts with revenue recognised once gold has been delivered to Macquarie or its agent. The physical gold delivery contracts are considered a contract to sell a non-financial item and therefore do not fall within the scope of AASB 9 Financial Instruments. Hence no derivatives are recognised. The contracted sales price is rounded to the nearest dollar. WWiitthhiinn oonnee yyeeaarr - Fixed forward contracts - Rolled forward contracts BBeettwweeeenn oonnee aanndd ffiivvee yyeeaarrss - Fixed forward contracts GGoolldd ffoorr pphhyyssiiccaall ddeelliivveerryy oouunncceess 59,947 7,140 105,000 117722,,008877 CCoonnttrraacctteedd ggoolldd ssaallee pprriiccee VVaalluuee ooff ccoommmmiitttteedd ssaalleess $$ $$’’000000 2,247 2,681 2,249 134,680 19,142 236,135 338899,,995577 MMaarrkk--ttoo-- mmaarrkkeett $$’’000000 (24,104) 446 (54,722) ((7788,,338800)) Mark-to-market has been calculated using the average forward price per ounce of $2,726 (2021: $2,379). Mark to market represents the value of the open contracts at balance date, calculated with reference to the gold average forward price at that date. A negative amount reflects a valuation in the counterparty’s favour. 33.. EEXXPPEENNSSEESS AAccccoouunnttiinngg ppoolliicciieess CCaasshh ccoossttss ooff pprroodduuccttiioonn Cash costs of production is a component of costs of goods sold and includes direct costs incurred for mining, milling, laboratory and mine site administration, net of costs capitalised to pre-strip. This category includes movements in the cost of inventory and any net realisable value write downs. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 39 39 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 DDeeffiinneedd ccoonnttrriibbuuttiioonn ssuuppeerraannnnuuaattiioonn bbeenneeffiittss All employees of the Group, located in Australia, receive defined contribution superannuation entitlements, for which the Group pays the fixed superannuation guarantee contribution (currently 10% of the employee’s average ordinary salary) to the employee’s superannuation fund of choice. All contributions in respect of employees’ defined contribution entitlements are recognised as an expense when they become payable. The Group’s obligation with respect to employees’ defined contribution entitlements is limited to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting period. All obligations for unpaid superannuation guarantee contributions are measured at the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the Group’s statement of financial position. DDeepprreecciiaattiioonn Depreciation of mine specific plant, equipment, buildings and infrastructure with useful lives the same or greater than the expected life of mine are charged to the statement of profit and loss and other comprehensive income on a unit-of- production basis over the life of the mine using tonnes of ore milled. Depreciation of other assets with useful life shorter than the life of mine are charged to the statement of comprehensive income over the assets useful life using the straight line method as follows: Furniture and equipment Plant and equipment Mobile plant and equipment Buildings and infrastructure 2 - 5 years 2 - 10 years 2 - 5 years 2 - 10 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of the reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income. AAmmoorrttiissaattiioonn Mine properties are amortised on a unit-of-production bases over the run of mine ore included in the life of mine plan. BBoorrrroowwiinngg ccoossttss Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs have been expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. CCoossttss ooff ggooooddss ssoolldd Cash costs of production Royalties Depreciation of mine plant and equipment Amortisation of mine properties (refer Note 15) PPeerrssoonnnneell CCoossttss Salaries and wages Defined contribution superannuation Employee bonuses Other employee benefits expense Less: Amounts capitalised (1) Less: Amounts included in cost of goods sold CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 40 22002222 $$’’000000 22002211 $$’’000000 (105,399) (13,576) (24,817) (5,688) ((114499,,448800)) -- -- -- -- -- (16,520) (10,377) (1,607) (1,404) (2,384) 2,120 12,578 ((77,,221177)) (924) - (689) 8,371 - ((33,,661199)) Page | 40 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 DDeepprreecciiaattiioonn Plant and equipment depreciation (refer to Note 11) Right of use asset depreciation (refer to Note 12) Other Less: Amounts capitalised (1) Less: Amounts included in cost of goods sold AAmmoorrttiissaattiioonn Mine properties amortisation (refer note 15) Derivative amortisation (refer note 9) Less: Amounts included in cost of goods sold FFiinnaannccee IInnccoommee//((EExxppeennsseess)) Interest on borrowings Interest on lease liabilities (refer to Note 18) Net gain/(loss) on financial instruments at fair value through profit and loss (2) Unwinding of discount on provisions Other costs Less: Amounts capitalised (1) Interest revenue 22002222 $$’’000000 (18,827) (6,144) (71) - 24,817 ((222255)) (5,688) (935) 5,688 ((993355)) (2,841) (3,441) (4,458) (677) - - 54 ((1111,,336633)) 22002211 $$’’000000 (201) (1,473) - 1,459 - ((221155)) - -- -- -- (1,636) (464) 3,638 - (20) 1,126 142 22,,778866 (1) Capitalised personnel, depreciation and finance costs are being included as part of Mine properties under development during the construction and commissioning stage of the Karlawinda Gold Project. (2) The net gain/loss on financial instruments at fair value through profit or loss, refers to the movement in the fair value of an open sold gold call option contract recognised when they were entered into on 6 January 2020. For more information on the measurement and recognition of derivatives, refer to Note 21. KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– UUnniitt--ooff--pprroodduuccttiioonn mmeetthhoodd ooff ddeepprreecciiaattiioonn aanndd aammoorrttiissaattiioonn The group uses the unit-of-production basis when depreciating/amortising life-of-mine specific assets which results in a depreciation/amortisation charge proportionate to the depletion of the anticipated remaining life-of-mine production. Each item’s economic life, which is assessed annually, has due regard for both its physical life limitations and to present assessments of the available resource of the mine property at which it is located. 44.. EEAARRNNIINNGGSS PPEERR SSHHAARREE AAccccoouunnttiinngg ppoolliiccyy Basic earnings per share (“BEPS”) is calculated by dividing the income or loss attributable to the members of the Company for reporting period, after exclusion of any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period adjusted for any bonus elements. Diluted earnings per share (“DEPS”) adjusts the figures used in the determination of BEPS to take into account the after- tax effect of interest recognised associated with the 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 adjusted for any bonus elements. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 41 41 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 EEaarrnniinnggss ppeerr sshhaarree Basic earnings per share (BEPS) Diluted earnings per share (DEPS) EEaarrnniinnggss uusseedd iinn ccaallccuullaattiinngg BBEEPPSS aanndd DDEEPPSS Profit/(loss) attributable to members of the parent entity WWeeiigghhtteedd aavveerraaggee nnuummbbeerr ooff oorrddiinnaarryy sshhaarreess 22002222 CCeennttss 2244..2277 2233..9911 22002222 $$’’000000 89,483 22002222 NNuummbbeerr 22002211 CCeennttss ((11..3399)) ((11..3399)) 22002211 $$’’000000 (4,765) 22002211 NNuummbbeerr Weighted average number of ordinary shares used to calculate BEPS 368,756,565 343,354,110 AAddjjuussttmmeennttss ffoorr ccaallccuullaattiioonn ooff DDEEPPSS:: Performance rights Weighted average number of ordinary shares used to calculate DEPS 5,440,818 374,197,383 - - There have been no transactions involving ordinary shares between the reporting date and the date of completion of these financial statements which would impact the above calculations. 55.. IINNCCOOMMEE TTAAXX AAccccoouunnttiinngg ppoolliiccyy The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date. 22002222 $$’’000000 22002211 $$’’000000 AAmmoouunnttss rreeccooggnniisseedd iinn PPrrooffiitt aanndd LLoossss ((aa)) TTaaxx eexxppeennssee Current tax Deferred tax Total tax expense for the period ((bb)) NNuummeerriiccaall rreeccoonncciilliiaattiioonn bbeettwweeeenn ttaaxx eexxppeennssee aanndd pprree--ttaaxx nneett pprrooffiitt oorr ((lloossss)) Net profit/(loss) before tax Corporate tax rate applicable Income tax expense/(benefit) on above at applicable corporate rate IInnccrreeaassee//((ddeeccrreeaassee)) iinnccoommee ttaaxx dduuee ttoo ttaaxx eeffffeecctt ooff:: Non-deductible expenses Current year tax losses not recognised Non assessable income Movement in unrecognised temporary differences Recognition of previously unrecognised prior year tax losses Deductible equity raising costs Income tax expense/(benefit) attributable to entity ((cc)) AAmmoouunnttss cchhaarrggeedd oorr ((ccrreeddiitteedd)) ddiirreeccttllyy ttoo eeqquuiittyy Relating to equity raising costs Other CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 42 - 21,423 2211,,442233 110,906 30% 33,272 1,460 - - 75 (13,116) (268) 2211,,442233 (527) - ((552277)) - - -- (4,765) 30% (1,429) 1,030 828 (30) (100) - (299) -- - - -- Page | 42 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 66.. CCAASSHH AANNDD CCAASSHH EEQQUUIIVVAALLEENNTTSS AAccccoouunnttiinngg ppoolliiccyy Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. Cash at bank RReeccoonncciilliiaattiioonn ooff pprrooffiitt//((lloossss)) aafftteerr ttaaxx ttoo nneett ccaasshh ffllooww ffrroomm ooppeerraattiioonnss:: Profit/(loss) after income tax` NNoonn--ccaasshh fflloowwss iinn rreessuulltt Depreciation Amortisation Unwinding of discount on provisions Unrealised (gain)/loss on derivatives Fair value (gain)/loss on financial assets Share based payment (Profit)/Loss on disposal of fixed assets Write-off of a payment obligation CChhaannggeess iinn aasssseettss aanndd lliiaabbiilliittiieess (Increase)/decrease in receivables (Increase)/decrease in other current assets (Increase) in inventories Increase/(decrease) in payables and accruals Increase in provisions Increase in deferred tax liabilities Cashflow from operating activities NNoonn--ccaasshh iinnvveessttiinngg aanndd ffiinnaanncciinngg aaccttiivviittiieess 22002222 $$’’000000 6611,,550022 22002222 $$’’000000 22002211 $$’’000000 1100,,331122 22002211 $$’’000000 89,483 (4,765) 25,042 6,623 677 4,458 340 4,893 (187) - (909) (30) (30,731) 12,918 657 21,423 113344,,665577 215 - - (3,638) (420) 3,277 - (323) 432 273 (13,996) (293) 341 - ((1188,,889977)) There were no non-cash investing and financing activities during the year ended 30 June 2022 (2021: Nil). AASSSSEETTSS This section shows the assets used to generate the Group’s trading performance. 77.. RREECCEEIIVVAABBLLEESS AAccccoouunnttiinngg ppoolliiccyy Receivables include amounts due from customers for services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. Other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. The Group applies the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Receivables are recognised at amortised cost, less any allowance for expected credit losses. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 43 43 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 GST receivable Security deposits Fuel tax credit receivable Interest receivable Other receivables 88.. IINNVVEENNTTOORRIIEESS AAccccoouunnttiinngg ppoolliiccyy 22002222 $$’’000000 1,551 478 (66) 26 246 22002211 $$’’000000 907 324 45 1 48 22,,223355 11,,332255 Gold bullion, gold in circuit and ore stockpiles are physically measured or estimated and valued at the lower of cost and net realisable value. Cost is determined by the weighted average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting ore into gold bullion. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs of selling the final product, including royalties. Consumable stores are valued at the lower of cost and net realisable value. The cost of consumable stores is measured on a first-in first-out basis at weighted average cost. Inventories expected to be sold (or consumed in the case of stores) within 12 months after the balance sheet date are classifies as current assets, all other inventories are classified as non-current. The following balances are carried at cost. CCuurrrreenntt Ore stockpiles Gold in circuit Bullion on hand Consumable stores NNoonn--CCuurrrreenntt Ore stockpiles 22002222 $$’’000000 6,844 4,356 2,497 1,216 22002211 $$’’000000 10,103 2,817 504 641 1144,,991133 1144,,006655 2299,,888833 -- KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– IInnvveennttoorriieess Net realisable value tests are performed at each reporting date and represent the estimated forecast sales price of the gold contained in inventories, when it is expected to be realised, less estimated costs to complete production and bring the product to sale. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data, and the estimated recovery percentage. Stockpile tonnages are verified by periodic surveys. 99.. FFIINNAANNCCIIAALL AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy The Group’s financial assets include cash and cash equivalents, trade and other receivables, term deposits, equity investments and gold forward asset. RReeccooggnniittiioonn aanndd iinniittiiaall mmeeaassuurreemmeenntt All financial assets are initially recognised when the Group becomes party to the contractual provisions of the instrument except trade receivables which are initially recognised when they are originated. A financial asset (excluding trade receivables is initially measured at fair value plus or minus transaction costs that are directly attributable to its acquisition or issue, except where the instruments are classified ‘at fair value through profit or loss’ (“FVTPL”), in which case transaction costs are expensed to profit or loss immediately. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 44 Page | 44 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 CCllaassssiiffiiccaattiioonn aanndd ssuubbsseeqquueenntt mmeeaassuurreemmeenntt On initial recognition, a financial asset is classified as measured at: • at amortised cost; • • FVTPL. ‘fair value in other comprehensive income’ (“FVOCI”) – equity investment; or Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the changes. A financial asset is measured at amortised costs if it meets both of the following conditions and is not designated as FVTPL: • • It is held within a business model whose objective is to hold assets to collect contractual cash flows; and Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding On initial recognition of an equity investment that is not being held for trading, the Group may irrevocably elect to present subsequent changes to the investment’s fair value in OCI. This election is made on an investment -by-investment basis. All financial assets not measured at amortised cost or FVOCI are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. AAmmoorrttiisseedd ccoosstt Amortised cost is calculated as: the amount at which the financial asset is measured at initial recognition; less principal repayments; • • • plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. • The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carry amount of the financial asset. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. The Group does not designate any interest in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial statements. FFaaiirr vvaalluueess The carrying amounts and estimated fair values of all of the Group’s financial assets recognised in the financial statements are materially the same. The methods and assumptions used to estimate the fair value of the financial assets are disclosed in the respective notes. DDeerreeccooggnniittiioonn The Group derecognises a financial asset when: • • the contractual rights to receive the cash flows from the financial asset expire; or it transfers the rights to receive the contractual cash flows in a transaction in which either: - - substantially all of the risks and rewards of ownership of the financial asset are transferred; or the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 45 45 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 FFiinnaanncciiaall aasssseettss CCuurrrreenntt Gold forward asset Equity investments NNoonn--ccuurrrreenntt Gold forward asset 22002222 $$’’000000 1,751 1,348 33,,009999 33,,006677 22002211 $$’’000000 1,237 1,688 22,,992255 44,,551166 GGoolldd ffoorrwwaarrdd aasssseett The gold forward asset refers to the fair value of the premium income on the sold gold call option contract entered into on 6 January 2020. The sold gold call option premium was added to the price of the Company’s gold forward contracts (disclosed in Note 26). Subsequent measurement of the gold forward asset which matures on 30 June 2025 is at amortised cost. Amortisation expense in relation to the gold forward asset for the year ended 30 June 2022 was $935,000 (2021:nil) (refer to Note 3). EEqquuiittyy iinnvveessttmmeennttss As at 1 July Additions Fair value adjustment As at 30 June FFaaiirr vvaalluuee ooff lliisstteedd sshhaarreess aanndd aassssuummppttiioonnss BBllaacckkEEaarrtthh MMiinneerraallss NNLL Fair value per listed share Closing quoting bid price per share DDiissccoovvEExx RReessoouurrcceess LLiimmiitteedd Fair value per listed share Closing quoting bid price per share 1100.. AASSSSEETTSS HHEELLDD FFOORR SSAALLEE AAccccoouunnttiinngg ppoolliiccyy 1,688 - (340) 11,,334488 22002222 $0.074 $0.074 $0.004 $0.004 68 1,200 420 11,,668888 22002211 $0.094 $0.094 $0.005 $0.005 Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through the sale rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets, except deferred tax assets, employee benefits assets or investment property, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted. The held-for-sale property is subject to review and revalued on the basis of independent valuations. Any revaluation adjustment to the carrying amount is recognised in other comprehensive income and accumulated in equity under the heading of asset revaluation reserve. Property asset Impairment Translation adjustment CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 46 22002222 $$’’000000 2,500 - - 22,,550000 22002211 $$’’000000 4,500 (1,800) (200) 22,,550000 Page | 46 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 The Group has put its freehold property asset located in Antananarivo, Madagascar up for sale. The property covers an area of 19,373m2 containing several buildings, including offices, warehouses and villa accommodation. A valuation was completed by Cabinet D’Expertise Audit Techniques Et Conseils Qualities in June 2020 of 7,235,880,000 Ariary which translates to AUD $2,603,874 as at 30 June 2022 (2021: AUD $2,544,038). Based on the current valuation, the Directors considered the carrying value appropriate for the year ended 30 June 2022.The fair value of the freehold land was determined based on the market comparable approach that reflects recent transaction prices for similar properties. 1111.. PPLLAANNTT AANNDD EEQQUUIIPPMMEENNTT AAccccoouunnttiinngg ppoolliiccyy Each class of property, plant and equipment is carried at cost or fair value, less, where applicable, any accumulated depreciation and impairment losses. PPrrooppeerrttyy Land and Buildings are measured using a cost model in accordance with paragraph 31 of AASB 116 Property, Plant and Equipment. Any revaluation adjustment to the carrying amount of land and buildings is recognised in other comprehensive income and accumulated in equity under the heading of asset revaluation reserve. IInnffrraassttrruuccttuurree,, mmoobbiillee ppllaanntt aanndd eeqquuiippmmeenntt,, ppllaanntt aanndd eeqquuiippmmeenntt aanndd ffuurrnniittuurree aanndd eeqquuiippmmeenntt The value of infrastructure, mobile plant and equipment, plant and equipment and furniture and equipment is measured as the cost of the asset, less accumulated depreciation and impairment. The cost of the asset also includes the cost of assembly and replacing parts that are eligible for capitalisation, the cost of major inspections and an initial estimate of the cost of dismantling and removing the item from site at the end of its useful life. CCaappiittaall wwoorrkk iinn pprrooggrreessss The value of capital WIP is measured as the cost of the asset less impairment. The cost of the asset also includes the cost of assembly and replacing parts that are eligible for capitalisation, the cost of major inspections and an initial estimate of the cost of dismantling and removing the item from site at the end of its useful life. BBuuiillddiinnggss && IInnffrraassttrruuccttuurree PPllaanntt && EEqquuiippmmeenntt MMoobbiillee PPllaanntt && EEqquuiippmmeenntt FFuurrnniittuurree && EEqquuiippmmeenntt CCaappiittaall WWIIPP TToottaall $$’’000000 $$’’000000 $$’’000000 $$’’000000 $$’’000000 $$’’000000 Net carrying amount at 1 July 2020 Additions Transfers to mine properties Transfers between asset classes Depreciation Net carrying amount at 30 June 2021 As at 30 June 2021 Cost Accumulated depreciation Net carrying amount at 30 June 2021 - - - - - - - - - 83 180 - 441 (70) 663344 899 (265) 663344 - - - - - -- - - -- 343 196 - 20 (131) 442288 876 (448) 442288 443 109 (78) (461) - 1133 13 - 1133 869 485 (78) - (201) 11,,007755 1,788 (713) 11,,007755 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 47 47 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 BBuuiillddiinnggss && IInnffrraassttrruuccttuurree PPllaanntt && EEqquuiippmmeenntt MMoobbiillee PPllaanntt && EEqquuiippmmeenntt FFuurrnniittuurree && EEqquuiippmmeenntt CCaappiittaall WWIIPP Net carrying amount at 1 July 2021 Additions Transfers from mine properties under development Transfers between asset classes Depreciation Amounts written off $$’’000000 - 1,574 $$’’000000 634 1,230 46,520 113,574 - (269) (5,045) (11,837) (62) Net carrying amount at 30 June 2022 4433,,004499 110033,,227700 As at 30 June 2022 Cost Accumulated depreciation 48,094 (5,045) 115,216 (11,946) Net carrying amount at 30 June 2022 4433,,004499 110033,,227700 1122.. RRIIGGHHTT--OOFF--UUSSEE AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy $$’’000000 $$’’000000 $$’’000000 428 416 13 2,632 TToottaall $$’’000000 1,075 6,514 - 662 3,050 269 (832) (1) 33,,114488 3,980 (832) 33,,114488 7,333 - (1,113) (55) 77,,000099 - - - - 170,477 - (18,827) (118) 22,,664455 115599,,112211 8,377 (1,368) 2,645 178,312 - (19,191) 77,,000099 22,,664455 115599,,112211 Right-of-use assets are measured at cost comprising the following: • The amount of the initial measurement of the lease liability; • Any lease payments made at or before the commencement date less any lease incentives received; • Any initial direct costs; • Any restoration costs. The right-of-use asset is subsequently depreciated using the straight-line method over the term of the lease. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for remeasurements of the lease liability. Payments associated with short-term leases that have terms of 12 months or less and leases of low-value assets that have a replacement value of less than $5,000 are recognised on a straight-line basis as an expense in profit or loss. Assets arising from a lease are initially measured on a present value basis. As at 1 July Additions to right-of-use assets Depreciation charge for the year (refer to Note 3) As at 30 June 22002222 $$’’000000 51,591 2,525 (6,144) 4477,,997722 22002211 $$’’000000 218 52,846 (1,473) 5511,,559911 Payments associated with short-term leases and leases of low value assets for the year were $1,477,000 (2021: $1,626,000). 1133.. DDEEFFEERRRREEDD EEXXPPLLOORRAATTIIOONN AANNDD EEVVAALLUUAATTIIOONN CCOOSSTTSS AAccccoouunnttiinngg ppoolliiccyy Exploration and evaluation expenditure incurred is capitalised only when that expenditure is attributable to a defined area of interest for which the Group has the rights to explore, evaluate and develop. Tenement acquisition costs are initially capitalised. Costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, sale of the respective areas of interest or where activities in the area have not yet reached a stage, which permits reasonable assessment of the existence of economically recoverable reserves. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine properties under development. No amortisation is charged during the exploration and evaluation phase. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 48 48 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 Exploration and evaluation assets are assessed for impairment if: • the period for which the right to explore in the area has expired during the period or will expire in the near future, and is not expected to be renewed; • substantive expenditure on further exploration and evaluation of mineral resources is neither budgeted nor planned; • sufficient data exists to determine technical feasibility and commercial viability; and • facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units (“CGUs”) to which the exploration activity relates. The CGU is not larger than the area of interest. As at 1 July Expenditure for the period Acquisition of exploration and evaluation assets – MGGP (refer note 27) Acquisition of tenements (refer note 23) Transfer to mine properties under development As at 30 June KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– EExxpplloorraattiioonn aanndd eevvaalluuaattiioonn eexxppeennddiittuurree 22002222 $$’’000000 2,698 21,789 51,560 1,250 - 7777,,229977 22002211 $$’’000000 542 3,154 - - (998) 22,,669988 EExxpplloorraattiioonn eexxppeennddiittuurree Tenement acquisition costs are initially capitalised together with other exploration and evaluation expenditure. Costs are only carried forward to the extent that they are expected to be recouped through the successful development of a defined area of interest for which the Group has the rights to explore, evaluate and develop, the sale of the respective areas of interest or where activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. PPllaannnneedd eexxpplloorraattiioonn eexxppeennddiittuurree Exploration expenditure commitments represent tenement rentals and expenditure requirements that may be required to be met under the relevant legislation should the Group wish to retain tenure on all current tenements in which the Group has an interest. The terms and conditions under which the Group retains title to its various tenements require it to meet tenement rentals and minimum levels of exploration expenditure as gazetted by the Western Australian government, as well as local government rates and taxes. Within one year Exploration commitments at reporting date not recognised as liabilities 22002222 $$’’000000 3,313 33,,331133 22002211 $$’’000000 1,723 11,,772233 Annual exploration expenditure after one year will be a similar commitment to that within one year, however this amount is increased if new exploration tenements are added to the Group’s portfolio or reduced, if exploration tenements are removed from the Group’s portfolio. 1144.. MMIINNEE PPRROOPPEERRTTIIEESS UUNNDDEERR DDEEVVEELLOOPPMMEENNTT AAccccoouunnttiinngg ppoolliiccyy Mine properties under development represents the costs incurred in preparing mines for production and includes plant and equipment under construction and operating costs incurred before commercial production commences. These costs are capitalised to the extent they are expected to be recouped through successful exploitation of the related mining leases. Once production commences, these costs are transferred to property, plant and equipment and mine properties, as relevant, and are depreciated and amortised using the units-of-production method based on the estimated economically recoverable reserves to which they relate or are written off if the mine property is abandoned. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 49 49 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 As at 1 July Construction expenditure capitalised Pre-production expenditure capitalised Rehabilitation additions Transfer from exploration Transfers from plant and equipment Transfer to mine properties (refer note 15) Transfer to property plant & equipment (refer note 11) As at 30 June 22002222 $$’’000000 208,323 18,000 (233) - - - (55,613) (170,477) 22002211 $$’’000000 66,277 103,748 20,070 17,152 998 78 - - -- 220088,,332233 Transfers to plant and equipment relate to construction expenditure on the Karlawinda Gold Project. 1155.. MMIINNEE PPRROOPPEERRTTIIEESS AAccccoouunnttiinngg ppoolliiccyy Mine properties represent expenditure in respect of exploration, evaluation, feasibility, pre-production operating costs incurred by the Group prior to the commencement of production and rehabilitation assets. All expenditure is carried forward to the extent that it is expected to be recouped from future revenues. If additional expenditure is incurred in respect of a mine property after production has commenced such expenditure is carried forward as part of the cost of the mine property if it is expected to be recouped from future revenues otherwise the expenditure is classified as part of the cost of production and expensed as incurred. Mine properties are amortised on a unit-of production basis over the life of the mine using tonnes of ore milled. OOtthheerr PPrree--pprroodduuccttiioonn RReehhaabbiilliittaattiioonn Net carrying amount at 1 July 2021 Transfers from mine properties under development 1 Additions Rehabilitation provision adjustments Amortisation (refer note 3) Net carrying amount at 30 June 2022 As at 30 June 2022 Cost Accumulated depreciation Net carrying amount at 30 June 2022 (1) refer note 14 1166.. IIMMPPAAIIRRMMEENNTT OOFF NNOONN--FFIINNAANNCCIIAALL AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy $$’’000000 - 15,477 - - (1,726) 1133,,775511 15,477 (1,726) 1133,,775511 $$’’000000 - 18,865 - - (1,957) 1166,,990088 18,865 (1,957) 1166,,990088 TToottaall $$’’000000 - $$’’000000 - 21,271 55,613 149 (3,446) (2,005) 1155,,996699 149 (3,446) (5,688) 4466,,662288 17,974 (2,005) 1155,,996699 52,316 (5,688) 4466,,662288 At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the assets, being the higher of the asset’s fair value less costs of disposal and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. There have been no impairment indicators during the year. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 50 Page | 50 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– DDeetteerrmmiinnaattiioonn ooff mmiinneerraall rreessoouurrcceess aanndd rreesseerrvveess The Group estimates its Mineral Resources and Ore Reserves in accordance with the Australasian Code of Reporting for Mineral Resources and Ore Reserves 2012 (the “JORC Code”). The information on mineral resources and ore reserves was prepared by or under supervision of Competent Persons as defined under the JORC Code. The determination of mineral resources and ore reserves impacts the accounting for asset carrying values. There are numerous uncertainties inherent in estimating mineral resources and ore reserves, and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of Reserves and may ultimately result in Reserves being restated LLIIAABBIILLIITTIIEESS This section shows the liabilities incurred as a result of the trading activities of the Group. 1177.. TTRRAADDEE AANNDD OOTTHHEERR PPAAYYAABBLLEESS AAccccoouunnttiinngg ppoolliiccyy Trade and Other payables are initially recognised at fair value through profit or loss and subsequently measured at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. Trade payables Accrued expenses Other payables 1188.. LLEEAASSEE LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy 22002222 $$’’000000 8,169 12,156 7,082 2277,,440077 22002211 $$’’000000 6,100 11,200 1,645 1188,,994455 The nature of the Group’s leasing activities includes contracts for mining services, drilling, haulage, and power generation contracts. Additionally, office leases and office equipment have also been included. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in AASB 16. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments (including in-substance fixed payments), less any lease incentives receivable; • Variable lease payments that are based on an index or a rate; • Amounts expected to be payable by the lessee under residual value guarantees; • The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; • Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 51 51 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. Payments associated with short-term leases that have a term of 12 months or less and leases of low-value assets that have a replacement value of $5,000 or less are recognised on a straight-line basis as an expense in profit or loss. CCuurrrreenntt Lease liabilities NNoonn--CCuurrrreenntt Lease liabilities 22002222 $$’’000000 22002211 $$’’000000 77,,661133 77,,445522 3377,,882222 4433,,660033 Interest expense in relation to lease liabilities for the year ended 30 June 2022 was $3,441,000 (2021: $464,000) (refer to Note 3). Total cash outflows relating to leases during the year were $10,864,000 (2021: $952,000) comprising, principal ($7,423,000) and interest ($3,441,000) payments. The Group’s contracts that contain leases that are structured as variable payments are not included in the measurement of lease liabilities under AASB 16. Variable lease payments for the year ended 30 June 2022, including non-lease components such as labour, totalled $77,199,000 (2021: $16,009,000). Payments associated with short-term leases and leases of low value assets for the year were $1,477,000 (2021: $1,626,000). 1199.. BBOORRRROOWWIINNGGSS AAccccoouunnttiinngg ppoolliiccyy Interest bearing borrowings are initially measured at fair value, net of directly attributable transaction costs. After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the effective interest rate method. Borrowings which are due to be settled within 12 months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than 12 months or an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue. Other borrowings to be settled more than 12 months after the balance sheet date are included in non-current borrowings in the balance sheet. CCuurrrreenntt Bank loans NNoonn--CCuurrrreenntt Bank loans 22002222 $$’’000000 22002211 $$’’000000 38,386 32,000 27,000 6655,,338866 38,000 7700,,000000 Borrowings comprise of amounts drawn down on a Project Loan Facility of $100 Million with Macquarie Bank Limited (“Macquarie”). The facility accrues interest at the bank bill rate plus 3% and is repayable in various instalments over a term ending 30 June 2025 however, voluntary repayments can be made in accordance with the facility agreement. The facility includes customary liquidity and debt service covenants. The Group is in compliance with its covenants. The bank holds a first ranking, registered fixed and floating charge over all the assets of Capricorn Metals Ltd and its wholly owned subsidiary, Greenmount Resources Pty Ltd (owner of the Karlawinda Gold Project) as security for the facility provided by Macquarie. In July 2022 the Company refinanced the loan with Macquarie. Refer to note 35 for details. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 52 Page | 52 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 2200.. PPRROOVVIISSIIOONNSS AAccccoouunnttiinngg ppoolliiccyy Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of time value of money and the risks specific to the liability. A provision for site rehabilitation is recognised in respect of the estimated cost of rehabilitation and restoration of the areas disturbed by mining activities up to the reporting date, but not yet rehabilitated. RReehhaabbiilliittaattiioonn pprroovviissiioonn A provision for rehabilitation is recognised in respect of the estimated costs of rehabilitation of the areas that remain disturbed by mining activities up to the reporting date. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related mining assets. At each reporting date the rehabilitation is re-measured to reflect any changes in discount and inflation rates and timing of amounts to be incurred. Additional disturbances or changes in rehabilitation costs will be recognised as additions or changes to the corresponding asset and rehabilitation provision, prospectively from the date of change. Where the carrying value of the related asset has been reduced to nil either through amortisation or impairment, changes to estimated costs are recognised immediately in the statement of profit or loss and other comprehensive income. SShhoorrtt--tteerrmm eemmppllooyyeeee bbeenneeffiittss Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and annual leave entitlements. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The Group’s obligations for short-term employee benefits such as wages, salaries and annual leave are recognised as a part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ long service leave entitlements are recognised as provisions in the statement of financial position. OOtthheerr lloonngg--tteerrmm eemmppllooyyeeee bbeenneeffiittss Provision is made for employees’ long service leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on corporate bonds that have maturity dates that approximate the terms of the obligations. Any re-measurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the changes occur. The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions. CCuurrrreenntt Annual leave Rehabilitation NNoonn--CCuurrrreenntt Long service leave ROU asset demobilisation Rehabilitation CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22002222 $$’’000000 1,076 11 11,,008877 118 703 28,405 2299,,222266 22002211 $$’’000000 487 82 556699 50 244 21,189 2211,,448833 Page | 53 53 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 PPrroovviissiioonn ffoorr rreehhaabbiilliittaattiioonn As at 1 July Provisions raised during the year Provisions used during the year Provisions re-measured during the year Provisions assumed during the year – MGGP (refer note 27) Unwinding of the discount As at 30 June KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– RReehhaabbiilliittaattiioonn pprroovviissiioonn 22002222 $$’’000000 21,271 149 (15) (3,446) 9,779 678 2288,,441166 22002211 $$’’000000 4,119 17,152 - - - - 2211,,227711 The Group assesses site rehabilitation liabilities on an annual basis. The provision recognised is based on an assessment of the estimated cost of closure and reclamation of the areas using internal information concerning environmental issues in the exploration and previously mined areas, discounted to present value. Significant estimation is required in determining the provision for site rehabilitation as there are many factors that may affect the timing and ultimate cost to rehabilitate sites where mining and/or exploration activities have previously taken place. These factors include: future development/exploration activity; • • changes in the costs of goods and services required for restoration activity; and • changes to the legal and regulatory framework. These factors may result in future actual expenditure differing from the amounts currently provided. 2211.. FFIINNAANNCCIIAALL LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy The Group’s financial liabilities include trade and other payables, lease liabilities, gold forward liability and borrowings. RReeccooggnniittiioonn aanndd iinniittiiaall mmeeaassuurreemmeenntt All financial liabilities are initially recognised when the Group becomes party to the contractual provisions of the instrument except trade receivables which are initially recognised when they are originated. A financial liability is initially measured at fair value plus or minus transaction costs that are directly attributable to its acquisition or issue, except where the instruments are classified ‘at fair value through profit or loss’ (“FVTPL”), in which case transaction costs are expensed to profit or loss immediately. CCllaassssiiffiiccaattiioonn aanndd ssuubbsseeqquueenntt mmeeaassuurreemmeenntt Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is classified as held for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. AAmmoorrttiisseedd ccoosstt Amortised cost is calculated as: the amount at which the financial liability is measured at initial recognition; less principal repayments; • • • plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. • CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 54 Page | 54 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carry amount of the financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. The Group does not designate any interest in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial statements. FFaaiirr vvaalluueess The carrying amounts and estimated fair values of all of the Group’s financial liabilities recognised in the financial statements are materially the same. The methods and assumptions used to estimate the fair value of the financial liabilities are disclosed in the respective notes. DDeerreeccooggnniittiioonn The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in the profit or loss. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. DDeerriivvaattiivvee ffiinnaanncciiaall iinnssttrruummeennttss aanndd hheeddggee aaccccoouunnttiinngg Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value. The method of recognising any re-measurement gain or loss depends on the nature of the item being hedged. Any changes in the fair value of a derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement. The Group’s derivative financial instruments include the gold forward liability which does not qualify for hedge accounting and therefore any changes in the fair value of the gold forward liability are recognised immediately in the income statement. Gold forward liability 22002222 $$’’000000 1111,,554400 22002211 $$’’000000 77,,008833 The gold forward liability refers to the fair value of the sold gold call option contract entered into on 6 January 2020. Subsequent measurement of the sold gold call option contracts, which expire on 30 June 2025, is at fair value at balance date with any changes in the fair value immediately recognised in the profit or loss. 2222.. DDEEFFEERRRREEDD TTAAXX LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in profit and loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred revenue tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 55 55 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 DDeeffeerrrreedd ttaaxx aasssseettss aanndd lliiaabbiilliittiieess ((aa)) RReeccooggnniisseedd ddeeffeerrrreedd ttaaxx aasssseettss aanndd lliiaabbiilliittiieess DDeeffeerrrreedd ttaaxx lliiaabbiilliittiieess Prepayments Exploration and mine properties Inventory Plant and equipment Investments Other Gross deferred tax liabilities Set-off of deferred tax assets Net deferred tax liabilities Deferred tax assets Employee provisions Other provisions and accruals Derivative assets and liabilities Rehabilitation provision Blackhole previously expensed Blackhole equity raising costs Tax losses Other Gross deferred tax assets Set-off of deferred tax liabilities Net deferred tax assets ((bb)) RReeccoonncciilliiaattiioonn ooff ddeeffeerrrreedd ttaaxx,, nneett:: Opening balance at 1 July – net deferred tax assets/(liabilities) Income tax (expense)/benefit recognised in profit or loss Income tax (expense)/benefit recognised in equity Closing balance at 30 June – net deferred tax assets/(liabilities) KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– DDeeffeerrrreedd ttaaxx aasssseettss 22002222 $$’’000000 30% 19 17,066 4,970 39,835 - 7 61,897 (41,001) 2200,,889966 358 62 2,017 8,525 12 527 29,177 323 41,001 (41,001) -- - (21,423) 527 ((2200,,889966)) 22002211 $$’’000000 30% - 7,557 192 67 26 1 7,843 (7,843) -- 161 27 399 - 20 - 6,768 468 7,843 (7,843) -- - - - -- Judgement is required in determining whether deferred tax assets are recognised on the balance sheet. Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will generate taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in Australia. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted. Additionally, future changes in tax laws in Australia could limit the ability of the Group to obtain tax deductions in future periods. TTaaxx ccoonnssoolliiddaattiioonn The Company and its wholly-owned Australian resident entities became part of a tax-consolidated group on 1 July 2016. As a consequence, all members of the tax-consolidated group are taxed as a single entity from that date. The head entity within the tax consolidated group is Capricorn Metals Limited. The head entity, in conjunction with other members of the tax-consolidated group, have entered into a tax funding arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts. Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity and are recognised by the Company as intercompany receivables (or payables). Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation to make payments for tax liabilities to the relevant tax authorities. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 56 Page | 56 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the tax-consolidated group will be available against which asset can be utilised. Any subsequent period adjustment to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the head entity only. The head entity in conjunction with other members of the tax-consolidated group has also entered into a tax sharing agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote. EEQQUUIITTYY This section outlines how the Group manages its capital. 2233.. IISSSSUUEEDD CCAAPPIITTAALL AAccccoouunnttiinngg ppoolliiccyy Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. Ordinary shares - issued and fully paid MMoovveemmeenntt iinn oorrddiinnaarryy sshhaarreess oonn iissssuuee As at 1 July 2020 Issue of shares Issued on exercise of options Transaction costs As at 30 June 2021 As at 30 June 2021 Issue of shares on exercise of options (1) Issue of shares on exercise of performance rights (2) Issue of shares on acquisition - MGGP (3) Issue of shares on acquisition - Tenements (4) Transaction costs Tax effect of deferred tax deductions posted directly to equity 22002222 $$’’000000 220033,,552244 NNuummbbeerr ooff SShhaarreess 326,801,473 17,000,000 6,218,006 - 335500,,001199,,447799 350,019,479 10,000,000 3,275,000 8,285,954 344,752 - - 22002211 $$’’000000 118800,,662299 $$’’000000 145,040 32,300 4,536 (1,247) 118800,,662299 180,629 6,000 - 15,160 1,250 (42) 527 As at 30 June 2022 337711,,992255,,118855 220033,,552244 1. On 28 July 2021, 10,000,000 options were exercised at an exercise price of $0.60 each. 2. During the year 3,275,000 performance rights were exercised for nil value to employees in accordance with the shareholder approved Performance Rights Plan. 3. On the 28 July 2021, 8,285,954 shares with a fair value of $1.83 a share were issued in consideration for the acquisition of the Mt Gibson Gold project as announced on 28 July 2021. 4. On the 29 June 2022, 344,752 shares with a fair value of $3.62 a share were issued in consideration for the acquisition of the Mumbakine well project as announced on 30 May 2022. There are no preference shares on issue. The holders of ordinary shares are entitled to receive dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The Company does not have authorised capital or par value in respect of its shares. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 57 57 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 2244.. RREESSEERRVVEESS As at 1 July 2020 Share-based payment transactions (refer note 28) Translation movement for the year Transfers (1) As at 30 June 2021 Share-based payment transactions (refer note 28) Translation movement for the year Transfers (1) As at 30 June 2022 SShhaarree--bbaasseedd ppaayymmeenntt rreesseerrvvee FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee $$’’000000 9,422 3,277 - (1,200) 1111,,449999 4,893 - (9,243) 77,,114499 $$’’000000 (703) - (149) - ((885522)) - (196) - ((11,,004488)) TToottaall RReesseerrvveess $$’’000000 8,719 3,277 (149) (1,200) 1100,,664477 4,893 (196) (9,243) 66,,110011 (1) Transfer refers to options and performance rights that were either exercised, forfeited or expired in current and previous periods that have been transferred to retained earnings (refer to Note 25). SShhaarree--bbaasseedd ppaayymmeennttss rreesseerrvvee The share-based payments reserve is used to record the value of share-based payments including options and performance rights to Directors, employees, including KMPs, as part of their remuneration. FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries. 2255.. RREETTAAIINNEEDD EEAARRNNIINNGGSS As at 1 July Profit/(loss) for the year Transfers (1) As at 30 June 22002222 $$’’000000 (60,816) 89,483 9,243 3377,,991100 22002211 $$’’000000 (57,251) (4,765) 1,200 ((6600,,881166)) (1) Transfers refers to options and performance rights that were either forfeited or expired in the current period that have been transferred from reserves (refer to Note 24). RRIISSKK This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s financial position and performance 2266.. FFIINNAANNCCIIAALL RRIISSKK MMAANNAAGGEEMMEENNTT In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. The Group’s key financial instruments comprise cash and cash equivalents, trade and other receivables, gold forward assets, trade and other payables, lease liabilities, gold forward liabilities and borrowings. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of those risks is presented throughout these financial statements. There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 58 Page | 58 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The Group’s risk management policies and objectives are designed to minimise the potential impacts of these risks on the Group where such impacts may be material. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. CCaatteeggoorriieess ooff ffiinnaanncciiaall iinnssttrruummeennttss FFiinnaanncciiaall aasssseettss Cash and cash equivalents Receivables Equity investments Gold forward asset FFiinnaanncciiaall lliiaabbiilliittiieess Trade and other payables Lease liabilities Gold forward liability Borrowings MMaarrkkeett rriisskk 22002222 $$’’000000 61,502 2,235 1,348 4,817 6699,,990022 27,407 45,435 11,540 65,386 22002211 $$’’000000 10,312 1,325 1,688 5,752 1100,,007777 18,945 51,055 7,083 70,000 114499,,776688 114477,,008833 FFoorreeiiggnn ccuurrrreennccyy rriisskk The Group is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and services in currencies other than the Group’s functional and presentation currency. The Group’s revenue is derived from the sale of gold in Australian dollars and costs are mainly incurred in Australian dollars although as gold is globally traded in US dollars, the Group is exposed to foreign currency risk. The Group hedges its gold ounces in Australian dollars, which provides for some coverage of foreign currency risk. The Group is occasionally exposed to foreign currency risk when long lead items are purchased in a currency other than Australian dollars. The Group maintains all of its cash in Australian dollars and does not currently hedge these purchases. As a result of subsidiary companies being registered in Madagascar, the Group's statement of financial position can be affected by movements in the AUD$/Ariary exchange rates. The Group does not seek to hedge this exposure given there are minimal operations in these foreign subsidiaries and therefore minimal risk as a result of any changes in foreign currency. In the reporting period, the Group was not exposed to material financial risks of changes in foreign currency exchange rates. IInntteerreesstt rraattee rriisskk At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was: FFiixxeedd rraattee iinnssttrruummeennttss Cash and cash equivalents Term deposits Lease liabilities VVaarriiaabbllee rraattee iinnssttrruummeennttss Cash and cash equivalents Borrowings CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22002222 $$’’000000 - 478 (45,435) ((4444,,995577)) 61,502 (65,386) ((33,,888844)) 22002211 $$’’000000 2,369 324 (51,055) ((4488,,336622)) 7,941 (70,000) ((6622,,005599)) Page | 59 59 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 FFaaiirr vvaalluuee sseennssiittiivviittyy aannaallyyssiiss ffoorr ffiixxeedd rraattee iinnssttrruummeennttss The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change at reporting date would not affect profit or loss. CCaasshh ffllooww sseennssiittiivviittyy aannaallyyssiiss ffoorr vvaarriiaabbllee rraattee iinnssttrruummeennttss A change of 200 basis points (2021: 100 basis points) in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. 22002222 220000bbpp iinnccrreeaassee $$’’000000 (78) 220000bbpp ddeeccrreeaassee $$’’000000 78 22002211 110000bbpp iinnccrreeaassee $$’’000000 (621) 110000bbpp ddeeccrreeaassee $$’’000000 621 Variable rate instruments CCoommmmooddiittyy pprriiccee rriisskk The Group’s exposure to commodity price risk is from the fluctuations in the prevailing market prices of gold produced from its operating mine. The Group manages its exposure to movements in the gold price through the use of gold forward contracts (refer Note 2) and its sold gold call option contract (refer Note 21). The gold forward sale contracts do not meet the criteria of financial instruments for accounting purposes on the basis that they meet the normal purchase/sale exemption because physical gold will be delivered into the contract and accordingly no sensitivity analysis is provided for these contracts as they are outside the scope of AASB 9 Financial Instruments. The following table reflects the impact on equity and profit or loss relating to the sold gold call option contract of a $100 change in the average forward price per ounce which was $2,951 per ounce at 30 June 2022 (2021: $2,684). 22002222 $$110000 iinnccrreeaassee $$’’000000 (391) $$110000 ddeeccrreeaassee $$’’000000 391 22002211 $$110000 iinnccrreeaassee $$’’000000 (264) $$110000 ddeeccrreeaassee $$’’000000 264 Sold gold call option contract CCrreeddiitt rriisskk Credit risk is the risk of financial loss to the Group if the counterparty to a financial asset fails to meet its contractual obligation. Credit risk is managed to ensure that customers are of sound credit worthiness and monitoring is used to recover aged debts and assess receivables for impairment. Credit terms are generally 30 days from the invoice date. Risk is also minimized by investing surplus funds in financial institutions with a high credit rating. LLiiqquuiiddiittyy rriisskk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate facilities are maintained. FFiinnaanncciiaall lliiaabbiilliittyy mmaattuurriittyy aannaallyyssiiss 22002222 Trade and other payables Lease liabilities Borrowings $$’’000000 27,407 45,435 65,386 CCaarrrryyiinngg aammoouunntt lliiaabbiilliittiieess TToottaall ccoonnttrraaccttuuaall ccaasshh fflloowwss <<66 mmoonntthhss 66--1122 mmoonntthhss $$’’000000 $$’’000000 $$’’000000 27,407 27,407 58,732 5,400 72,313 16,541 - 5,478 1,155 66,,663333 113388,,222288 115588,,445522 4499,,334488 11--22 yyeeaarrss $$’’000000 - 22--55 yyeeaarrss $$’’000000 - >>55 yyeeaarrss $$’’000000 - 10,819 21,392 15,643 2,309 52,309 - 1133,,112288 7733,,770011 1155,,664433 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 60 Page | 60 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 CCaarrrryyiinngg aammoouunntt lliiaabbiilliittiieess TToottaall ccoonnttrraaccttuuaall ccaasshh fflloowwss <<66 mmoonntthhss 66--1122 mmoonntthhss 22002211 Trade and other payables Lease liabilities Borrowings $$’’000000 18,945 51,055 70,000 $$’’000000 $$’’000000 $$’’000000 18,945 18,945 - 11--22 yyeeaarrss $$’’000000 - 22--55 yyeeaarrss $$’’000000 - >>55 yyeeaarrss $$’’000000 - 65,907 5,368 5,319 10,113 27,673 17,434 72,724 14,975 18,727 24,805 14,217 - 114400,,000000 115577,,557766 3399,,228888 2244,,004466 3344,,991188 4411,,889900 1177,,443344 FFiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 1 Level 2 Level 3 AAsssseettss 22002222 $$’’000000 1,348 2,500 - 33,,884488 22002211 $$’’000000 1,688 2,500 - 44,,118888 LLiiaabbiilliittiieess 22002222 $$’’000000 - (11,540) - ((1111,,554400)) 22002211 $$’’000000 - (7,082) - ((77,,008822)) Included within Level 1 of the hierarchy are the BlackEarth Minerals NL and DiscovEx Resources Limited shares listed on the Australian Securities Exchange. The fair value of these financial assets have been based on the closing quoted bid prices at the end of the reporting period, excluding transaction costs. Included within Level 2 of the hierarchy is a freehold property asset located in Antanarirvo, Madagascar that is held for sale and the sold gold call option. The fair value of the freehold property asset is based on a valuation that was completed in June 2020. The fair value of the gold forward liability was based on valuation techniques that employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, and spot and forward rate curves of the underlying commodity. The changes in counterparty credit risk had no material effect on the gold forward liability recognised at fair value. No transfers between the levels of the fair value hierarchy occurred during the current or previous reporting period. The Directors consider that the carrying value of all financial assets and financial liabilities are recognised in the consolidated financial statements approximate to their fair value. 2277.. CCAAPPIITTAALL MMAANNAAGGEEMMEENNTT RRiisskk mmaannaaggeemmeenntt The Board controls the capital of the Group in order to ensure that the Group can fund its operations and continue as a going concern so that they can maximise shareholder value and benefits to other stakeholders. The Board effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. Total capital is equity, as shown in the statement of financial position. The Group is not subject to any externally imposed capital requirements. There have been no changes in the strategy adopted by the Board to control the capital of the Group since the prior year CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 61 61 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 OOTTHHEERR DDIISSCCLLOOSSUURREESS This section provides information on items which require disclosure to comply with Australian Standards and other regulatory requirements 2288.. MMTT GGIIBBSSOONN GGOOLLDD PPRROOJJEECCTT AACCQQUUIISSIITTIIOONN In July 2021 the Company acquired a 100% interest in the Mt Gibson Gold Project (‘MGGP’) located 280 kilometres northeast of Perth in the Mid-West region of Western Australia. Refer ASX announcement dated 28 July 2021 for more information regarding the acquisition. The Company acquired the project via a combination of cash of $25.6 million and $14.0 million in shares in the Company plus transaction costs ($2.2 million) and the assumption of rehabilitation obligations relating to the project. Further details of the transaction are set out below: PPuurrcchhaassee ccoonnssiiddeerraattiioonn Purchase cost (including transaction costs) $$’’000000 41,781 The Group has determined that the transaction does not constitute a business combination in accordance with AASB 3 Business Combinations. The acquisition of the net assets has therefore been accounted for as an asset acquisition. When an asset acquisition does not constitute a business combination, the assets and liabilities are allocated a carrying amount based on their relative fair values in an asset purchase transaction. The value of the assets acquired and liabilities assumed has been allocated on a fair value basis. Details of the purchase consideration and the net assets acquired as are follows: NNeett aasssseettss aaccqquuiirreedd Exploration and evaluation assets (refer note 13) Rehabilitation liabilities (refer note 20) Total purchase consideration 2299.. SSHHAARREE BBAASSEEDD PPAAYYMMEENNTTSS AAccccoouunnttiinngg ppoolliiccyy $$’’000000 51,560 (9,779) 4411,,778811 The Group provides benefits to employees (including Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value of options is determined by an internal valuation using a Black-Scholes option pricing model. The fair value of performance rights determined by consideration of the Company’s share price at the grant date and consideration of the specific market vesting conditions applicable to the performance rights. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“Vesting Date”). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects - - the extent to which the vesting period has expired and the number of options that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 62 Page | 62 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 PPllaannss The Company has an Incentive option plan and a Performance rights plan (collectively “the Plans”) which were last approved by shareholders on 10 November 2019 and 20 November 2020 respectively. The objectives of the Plans are to assist with the recruitment, reward, retention and motivation of eligible employees of the Group. In accordance with the Plans the Board, on advice from the Remuneration, Nomination and Diversity Committee may issue eligible employees with options or performance rights to acquire shares in the future at a determined fixed exercise price on grant of the options or performance rights. The vesting of the options and performance rights are subject to service conditions and performance criteria as outlined below. Total expenses arising from share-based payment transactions recognised during the period were as follows: RReeccooggnniisseedd sshhaarree--bbaasseedd ppaayymmeennttss eexxppeennssee Employee options share-based payments expense Performance rights expense Total expense arising from share-based payment transactions OOppttiioonnss 22002222 $$’’000000 - 4,893 44,,889933 22002211 $$’’000000 1 3,276 33,,227777 The following table outlines the number and weighted average exercise price (“WAEP”) of, and movements in, options during the year: 22002222 22002211 Outstanding as at 1 July Granted during the year NNuummbbeerr 10,000,000 - Exercised during the year (10,000,000) Outstanding at end of the year Exercisable as at 30 June - - WWAAEEPP $0.60 - $0.60 NNuummbbeerr 16,218,006 - (6,218,006) 10,000,000 10,000,000 WWAAEEPP $0.65 - $0.73 $0.60 $0.60 The weighted average share price at the date the options were exercised during the year ended 30 June 2022 is $2.25 (30 June 2021: $1.73). All options refer to options over ordinary shares of Capricorn Metals Ltd which are exercisable on a one for one basis. The fair value at grant date of the options has been estimated using the Black-Scholes option pricing formula, taking into account the terms and conditions upon which the options were granted. The options vested immediately upon issue and the contractual life of each option was 3 years. The ability to exercise the options is conditional upon the employee remaining with the Group throughout the vesting period. There were no new grants of employee options during the years ended 30 June 2022 and 30 June 2021. PPeerrffoorrmmaannccee rriigghhttss The following table outlines the number and movements in Performance rights during the year: Outstanding as at 1 July Granted during the year Forfeited during the year Exercised during the year Outstanding at end of the year Exercisable as at 30 June CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22002222 NNuummbbeerr ooff RRiigghhttss 7,175,000 1,840,818 (300,000) (3,275,000) 22002211 NNuummbbeerr ooff RRiigghhttss 6,450,000 725,000 - - 55,,444400,,881188 77,,117755,,000000 -- -- Page | 63 63 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 FFiinnaanncciiaall yyeeaarr 22002200 In December 2019, 4,000,000 Performance rights were granted to KMP, Mr Kim Massey and Mr Paul Thomas under the Group’s Performance Rights Plan. 50% of the rights will vest on 17 September 2021 and the remaining rights will vest on 17 September 2022. In March 2020, 2,450,000 Performance rights were granted to employees of the Company under the Group’s Performance Rights Plan. 50% of rights will vest on 1 February 2022 and the remaining rights will vest on 1 February 2023. The performance condition for the FY2020 Performance rights was continued employment with the Company for the performance period. The fair value of the Performance rights granted during Financial year 2020 was $7,047,500. The fair value at the grant date was estimated using a Black Scholes option pricing model. The table below details the terms and conditions of the grants and the assumptions used in estimating the fair value: IItteemm Grant date Value at grant date Exercise price Dividend yield Risk free rate Volatility Performance period (yrs) Test date Remaining performance period (yrs) Weighted average fair value IIssssuuee 11 17 Dec 2019 $1.18 nil 0% 0.77% 126% 2.75 17/09/22 0.22 1.18 IIssssuuee 22 27 Mar 2020 $0.95 nil 0% 0.38% 123% 2.85 01/02/23 0.59 0.95 In October 2021, 2,000,000 Dec 2019 performance rights were exercised and in February 2022, 1,275,000 Mar 2020 performance rights were exercised. In February 2022, 200,000 of the Mar 2020 performance rights were forfeited due to the resignation of an employee in accordance with the Performance rights plan. FFiinnaanncciiaall yyeeaarr 22002211 In October 2020, 325,000 Performance rights were granted to employees of the Company under the Group’s Performance Rights Plan. 50% of rights will vest on 30 September 2022 and the remaining rights will vest on 30 September 2023. In June 2021, 400,000 Performance rights were granted to employees of the Company under the Group’s Performance Rights Plan. 200,000 rights will vest in equal proportions on 18/1/2023 and 18/1/2024 and the remaining 200,000 Performance will vest in equal proportions on 29 March 2023 and 29 March 2024. The performance condition for the FY2021 Performance rights was continued employment with the Company for the performance period. The fair value of the Performance rights granted during Financial year 2021 was $1,351,250. The fair value at the grant date was estimated using a Black Scholes option pricing model. The table below details the terms and conditions of the grants and the assumptions used in estimating the fair value: IItteemm Grant date Value at grant date Exercise price Dividend yield Risk free rate Volatility Performance period (yrs) Test date Remaining performance period (yrs) Weighted average fair value CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 64 IIssssuuee 11 IIssssuuee 22 IIssssuuee 33 19 Oct 2020 $1.77 nil 0% 0.13% - 0.14% 95% - 123% 1.95 - 2.95 30/09/22 & 30/09/23 0.25 - 1.25 $1.77 16 Jun 2021 $1.94 nil 0% 0.04% - 0.14% 91% - 118% 1.59 - 2.59 18/01/23 & 18/01/24 0.55 - 1.55 $1.94 16 Jun 2021 $1.94 nil 0% 0.04% - 0.14% 91% - 118% 1.59 - 2.59 29/03/23 & 29/03/24 0.55 - 1.55 $1.94 Page | 64 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 In March and April 2022 100,000 Oct 2020 performance rights were forfeited due to the resignations of two employees in accordance with the Performance rights plan. FFiinnaanncciiaall yyeeaarr 22002222 In October 2021, 279,818 performance rights were granted to KMP, Mr Kim Massey and Mr Paul Thomas under the Group’s Performance Rights Plan. 50% of the rights will vest on 30 June 2023 and the remaining rights will vest on 30 June 2024. In November 2021, 240,000 performance rights were issued to KMP, Mr Clark under the Group’s Performance Rights Plan. 50% of the rights will vest on 4 October 2022 and the remaining rights will vest on 4 October 2023. In December 2021: - - - 249,000 performance rights were issued to employees under the Group’s Performance Rights Plan. A third of the rights will vest on 10 December 2022, another third on 10 December 2023 and the remaining rights will vest on 10 December 2024; In December 2021, 1,032,000 performance rights were issued to employees under the Group’s Performance Rights Plan. 50% of the rights will vest on 10 December 2023 and the remaining rights will vest on 10 December 2024; and In December 2021 40,000 performance rights were issued to employees under the Group’s Performance Rights Plan. All of the rights will vest on 10 December 2024. The performance conditions for Issues 1 & 2 and 5 of the FY2022 Performance rights was the Company’s relative total shareholder return (“TSR”) measured against the TSR’s of 12 comparator mining companies and continued employment with the Company for the performance period. The performance condition for Issues 3,4 and 5 of the FY2022 Performance rights was continued employment with the Company for the performance period. The fair value of the Performance rights granted during Financial year 2022 was $5,112,568. The fair value at the grant date was estimated using a Monte Carlo simulation (Issue 1 & 2), and a Black Scholes option pricing model (Issue 3,4 & 5). The table below details the terms and conditions of the grants and the assumptions used in estimating the fair value: IIssssuuee 11 4 Oct 2021 IIssssuuee 22 24 Nov 2021 IIssssuuee 33 IIssssuuee 44 IIssssuuee 55 10 Dec 2021 10 Dec 2021 10 Dec 2021 $2.18 nil 0% 0.05% - 0.27% 50% $2.95 nil 0% 0.54% 50% $3.10 nil 0% 1.32% $3.10 nil 0% 1.32% 72% - 106% 72% - 106% 1.00 – 3.00 10/12/22 & 10/12/24 0.45 – 2.45 $3.10 2.00 – 3.00 10/12/23 & 10/12/24 1.45 - 2.45 $3.10 $3.10 nil 0% 1.32% 106% 3.00 10/12/24 2.45 $3.10 Performance period (yrs) 2.00 – 3.00 1.00 – 2.00 Test date Remaining performance period (yrs) Weighted average fair value 30/6/23 & 30/06/24 1.00 - 2.00 1.83 4/10/22 & 4/10/23 0.26 – 1.26 2.11 KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– SShhaarree bbaasseedd ppaayymmeennttss IItteemm Grant date Value at grant date Exercise price Dividend yield Risk free rate Volatility The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of options is determined by an internal valuation using a Black-Scholes option pricing model, using the assumptions detailed in Note 24. The fair value of performance rights is determined by the share price at the date of valuation and consideration of the probability of the market vesting condition being met. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 65 65 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 3300.. RREELLAATTEEDD PPAARRTTYY DDIISSCCLLOOSSUURREESS KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell RReemmuunneerraattiioonn KMP remuneration has been included in the Remuneration Report section of the Directors Report for current KMP only. The total remuneration paid to current and former KMP of the Group is as follows: Short term benefits Other service fees Non-cash benefits Post-employment benefits Annual leave Share based payments Termination payments UUllttiimmaattee PPaarreenntt 22002222 $$ 22002211 $$ 2,037,500 1,402,956 585,000 28,041 119,587 155,038 1,750,493 - 44,,667755,,665599 26,190 25,601 119,191 42,611 2,319,250 100,000 44,,003355,,779999 Capricorn Metals Ltd is the ultimate parent entity of the Group. CCoonnttrroolllleedd EEnnttiittiieess The consolidated financial statements include the financial statements of the Parent and the subsidiaries set out in the following table: OOwwnneerrsshhiipp ((%%)) SSuubbssiiddiiaarriieess Mining Services SARL St Denis Holdings SARL MGY Mauritius Ltd Malagasy Graphite Holdings Ltd Greenmount Resources Pty Ltd 44.. 55.. Crimson Metals Pty Ltd Metrovex Pty Ltd CCoouunnttrryy PPrriinncciippaall aaccttiivviittyy Madagascar Exploration Services Madagascar Commercial Property Mauritius Investment Holding Australia Australia Australia Australia Investment Holding Production Exploration Exploration 22002222 100% 100% 100% 100% 100% 100% 100% 22002211 100% 100% 100% 100% 100% - - In June 2022 former subsidiaries Energex SARL and Mazoto Minerals SARL were deregistered and therefore have not been included in the consolidated financial statements as at 30 June 2022. The subsidiaries noted above are all controlled entities and are dependent on the parent entity for financial support. TTrraannssaaccttiioonnss wwiitthh RReellaatteedd PPaarrttiieess As at 30 June 2022, the net loans from the Parent to its subsidiaries totals $131,882,000 (2021: $142,599,000). This is made up of loans to subsidiaries of $139,620,000 (2021: $150,385,000) with a provision for impairment of $7,738,000 (2021: $7,786,000). SSuubbssiiddiiaarriieess Mining Services SARL MGY Mauritius Ltd Malagasy Graphite Holdings Ltd Greenmount Resources Pty Ltd Crimson Metals Pty Ltd Metrovex Pty Ltd There are no other transactions between related parties within the Group. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 66 LLooaann $$’’000000 452 2,971 6,815 106,019 10,379 12,984 113399,,662200 PPrroovviissiioonn ffoorr iimmppaaiirrmmeenntt CCaarrrryyiinngg vvaalluuee $$’’000000 (452) (471) (6,815) - - - ((77,,773388)) $$’’000000 - 2,500 - 106,019 10,379 12,984 113311,,888822 Page | 66 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 3311.. PPAARREENNTT EENNTTIITTYY DDIISSCCLLOOSSUURREESS The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. AAsssseettss Current assets Non-current assets Total Assets LLiiaabbiilliittiieess Current liabilities Non-current liabilities Total Liabilities SShhaarreehhoollddeerrss’’ EEqquuiittyy Issued capital Reserves Accumulated losses Total Shareholders’ Equity SSttaatteemmeenntt ooff ccoommpprreehheennssiivvee iinnccoommee Net loss attributable to members of the parent entity Other comprehensive income for the period 22002222 $$’’000000 4,385 167,203 171,588 3,176 904 4,080 202,997 7,149 (42,638) 116677,,550088 (13,388) - Total comprehensive loss for the year attributable to members of the parent entity ((1133,,338888)) 22002211 $$’’000000 7,402 146,932 154,334 643 55 698 180,629 11,500 (38,493) 115533,,663366 (7,119) - ((77,,111199)) The Parent entity has not entered into any contractual commitments for the acquisition of property plant and equipment at the date of this report. 3322.. CCOOMMMMIITTTTMMEENNTTSS The Group has physical gold delivery commitments and exploration expenditure commitments which are disclosed in notes 2 and 13 respectively. 3333.. CCOONNTTIINNGGEENNTT LLIIAABBIILLIITTIIEESS As at 30 June 2022 Capricorn Metals Ltd has bank guarantees totalling $478,000 (2021: $324,000), refer to Note 7. As at 30 June 2022 the Group has utilised $10 million (2021: $18 million) of the $20 million Bank Guarantee Facility with Macquarie under the existing Project Loan Facility in relation to the lateral pipeline that links Goldfields Gas Pipeline to the KGP. 3344.. AAUUDDIITTOORRSS RREEMMUUNNEERRAATTIIOONN Amount payable to KPMG Australia - Auditing or reviewing the financial report 22002222 $$ 22002211 $$ 113300,,000000 4455,,000000 Amounts payable to other audit firms for the audit and review of the financial reports of subsidiary companies was $1,688 (2021: $1,699). CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 67 67 CAPRICORN METALS LTD - Annual Report NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002222 3355.. SSUUBBSSEEQQUUEENNTT EEVVEENNTTSS There were no material events arising subsequent to 30 June 2021, to the date of this report which may significantly affect the operations of the Group, the results of those operations and the state of affairs of the Group in the future, other than: LLooaann rreeffiinnaanncciinngg && rroolllliinngg ooff ggoolldd ccoonnttrraaccttss In July 2022 the Company arranged with Macquarie Bank to convert the project loan facility to a general-purpose corporate loan facility with a single bullet repayment in June 2025. Capricorn can elect to repay (part or full) the loan at any time without penalty. In addition, 30,000 ounces of gold contracts with an average delivery price of $2,247/oz have been rolled from Jul 22 – Dec 22 to Dec 25 – Jun 26 to align with the maturity date of the new corporate facility. SShhaarree iissssuuee On 19 September 2022 the Company announced the issue of 2,000,000 shares as a result of performance rights being exercised by the Chief Executive Officer Mr Massey and the Chief Operating Officer Mr Thomas, in equal proportions, in accordance with their employment contracts. 3366.. NNEEWW AACCCCOOUUNNTTIINNGG SSTTAANNDDAARRDDSS AANNDD IINNTTEERRPPRREETTAATTIIOONNSS IISSSSUUEEDD BBUUTT NNOOTT YYEETT EEFFFFEECCTTIIVVEE The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2022 but have not been applied in preparing this financial report. Except where noted, the Group has evaluated the impact of the new standards and interpretations listed below and determined that the changes are not likely to have a material impact on its financial statements. AAAASSBB 22002200--33 AAmmeennddmmeennttss ttoo AAuussttrraalliiaa AAccccoouunnttiinngg SSttaannddaarrddss –– AAnnnnuuaall IImmpprroovveemmeennttss 22001188--22002200 && OOtthheerr AAmmeennddmmeennttss The subject of the principal amendments to the Standards are set out below: AAAASSBB 11 FFiirrsstt--ttiimmee AAddooppttiioonn ooff AAuussttrraalliiaann AAccccoouunnttiinngg SSttaannddaarrddss The amendment allows a subsidiary that becomes a first-time adopter after its parent to elect to measure cumulative translation differences for all foreign operations at the carrying amount that would be included in the parent’s consolidated financial statements, based on the parent’s date of transition, if no adjustment were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary. AAAASSBB 99 FFiinnaanncciiaall IInnssttrruummeennttss The amendment clarifies that an entity includes only fees paid or received between the borrower and the lender and fees paid or received by either the borrower or the lender on the other’s behalf when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. AAAASSBB 113377 PPrroovviissiioonnss,, CCoonnttiinnggeenntt LLiiaabbiilliittiieess aanndd CCoonnttiinnggeenntt AAsssseettss The amendment specifies the costs an entity includes when assessing whether a contract will be loss-making consists of the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. Application date of Standard: 1 January 2022 Application date for Group: 1 July 2022 AAAASSBB 22002200--11 AAmmeennddmmeennttss ttoo AAuussttrraalliiaann AAccccoouunnttiinngg SSttaannddaarrddss –– CCllaassssiiffiiccaattiioonn ooff LLiiaabbiilliittiieess aass CCuurrrreenntt oorr NNoonn--ccuurrrreenntt The amendments require a liability be classified as current when companies do not have a substantive right to defer settlement at the end of the reporting period. AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1 so the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2023 instead of 1 January 2022. Application date of Standard: 1 January 2023 Application date for Group: 1 July 2023 AAAASSBB 22002211--22 AAmmeennddmmeennttss ttoo AAuussttrraalliiaann AAccccoouunnttiinngg SSttaannddaarrddss –– DDiisscclloossuurree ooff AAccccoouunnttiinngg PPoolliicciieess aanndd DDeeffiinniittiioonn ooff AAccccoouunnttiinngg EEssttiimmaatteess The amendments provide a definition of and clarifications on accounting estimates and clarify the concept of materiality in the context of disclosure of accounting policies. Application date of Standard: 1 January 2023 Application date for Group: 1 July 2023 AAAASSBB 22002211--55 AAmmeennddmmeennttss ttoo AAuussttrraalliiaann AAccccoouunnttiinngg SSttaannddaarrddss –– DDeeffeerrrreedd TTaaxx rreellaatteedd ttoo AAsssseettss aanndd LLiiaabbiilliittiieess aarriissiinngg ffrroomm aa ssiinnggllee ttrraannssaaccttiioonn The amendments clarify the accounting for deferred tax on transactions that, at the time of the transaction, give rise to equal taxable and deductible temporary differences. Application date of Standard: 1 January 2023 Application date for Group: 1 July 2023 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 68 Page | 68 CAPRICORN METALS LTD - Annual Report DDiirreeccttoorrss’’ ddeeccllaarraattiioonn 1. In the opinion of the Directors of Capricorn Metals Ltd: (a) The consolidated financial statements, notes and additional disclosures included in the directors’ report designated as audited of the Company and Group, are in accordance with the Corporations Act 2001 and: (i) comply with Australian Accounting Standards and the Corporations Regulations 2001; and (ii) give a true and fair view of the financial position as at 30 June 2022 and of the performance for the year ended on that date of the Company and Group. (b) There are reasonable grounds to believe that the Company and Group 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 from the Chief Executive Officer and Financial Controller for the financial year ended 30 June 2022. The Directors draw attention to the notes to the consolidated financial statements, which include a statement of compliance with International Financial Reporting Standards. 2. 3. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by: Mr Mark Clark Executive Chairman Perth, Western Australia 28 September 2022 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 69 69 CAPRICORN METALS LTD - Annual Report Independent Auditor’s Report To the shareholders of Capricorn Metals Ltd Report on the audit of the Financial Report Opinion We have audited the Financial Report of Capricorn Metals Ltd (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • 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 ended on that date; and The Financial Report comprises: • Consolidated statement of financial position as at 30 June 2022 • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended • Notes including a summary of significant • complying with Australian Accounting Standards and the Corporations Regulations 2001. accounting policies • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 70 CAPRICORN METALS LTD - Annual Report Key Audit Matters The Key Audit Matters we identified are: • Acquisition of Mt Gibson Gold Project; and • Recognition of taxes. 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. Acquisition of Mt Gibson Gold Project Refer to Note 28 Mt Gibson Gold Project Acquisition to the Financial Report The key audit matter How the matter was addressed in our audit In July 2021, the Group acquired 100% interest in the Mt Gibson Gold Project (“MGGP”). The total consideration, consisting of cash and shares, for the acquisition of MGGP was $41.8m and resulted in the recognition of exploration and evaluation assets and rehabilitation provision. This transaction is considered to be a key audit matter due to the: • Size of the acquisition having a significant impact on the Group’s financial statements. • Group’s judgement and complexity relating to the determination of asset acquisition accounting, and allocation made to acquired assets and liabilities. • The acquisition included obligations for future MGGP site remediation. The recognition of the fair value of this rehabilitation provision is inherently complex involving the estimation of future rehabilitation and restoration costs and related judgements. Our procedures included: • We evaluated the asset acquisition accounting by the Group against the requirements of the accounting standards. • We read the underlying transaction agreements to understand the terms of the acquisition and nature of the assets and liabilities acquired. • We assessed the accuracy of the calculation and measurement of consideration paid to acquire MGGP based on the underlying transaction agreements and the Group’s bank statements. • We assessed the recognition of the acquired exploration and evaluation assets against the requirements of the accounting standards. • We obtained the Group’s estimation of the rehabilitation provision acquired and critically evaluated the liability by comparing the nature, timing and the quantum of the costs within the provision to the Group’s internal and external underlying documentation. • We assessed the adequacy of disclosures in the financial report using our understanding obtained from our testing and against the requirements of the accounting standards. 71 CAPRICORN METALS LTD - Annual Report Recognition of deferred tax Refer to Notes 5 and 22 to the Financial Report The key audit matter How the matter was addressed in our audit The Group recognised an income tax expense of $21.4 million during the year ended 30 June 2022. As at 30 June 2022, a net deferred tax liability totaling $20.9 million has been recognised. This deferred tax liability is net of deferred tax assets relating to past tax losses of $29.1 million. The recognition of taxes was a key audit matter due to: the significance of these tax balances recognised by the Group; Working with our specialists, our procedures included: • We examined the documentation prepared by the Group supporting the availability of tax losses that were recognised in accordance with Australian tax law. • We assessed the factors that led to the Group incurring tax losses and challenged the Group’s assessment of future taxable profits. the judgment required to assess that the deferred tax assets are expected to be utilised in the same period as the expected reversal of the deferred tax liabilities; and • We examined the Group’s tax calculations for current and income tax expense and deferred tax balances and compared to internal and external documentation. • • • the risk of the Group applying the requirements of the accounting standards and Australian tax law to incorrectly recognise deferred tax assets for past tax losses. We involved tax specialists to supplement our senior team members in assessing this key audit matter. • Understanding the anticipated timing of future taxable profits and considered the consistency those timeframes with the expected reversal of the deferred tax balances. We compared this to our knowledge of the business, its plans and Australian tax law and accounting requirements. • We assessed the Group’s disclosures in the financial report using the results from our testing and against the requirements of the accounting standards. Other Information Other Information is financial and non-financial information in Capricorn Metals Ltd’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. The Other Information we obtained prior to the date of this Auditor’s Report was the Director’s Report. The Chairman’s letter to shareholders, Company Highlights, Reserves & Resources report and ASX additional information are expected to be made available to us after the date of the Auditor’s Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. 72 CAPRICORN METALS LTD - Annual Report In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objective is: • • 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. They 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 the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our Auditor’s Report. 73 CAPRICORN METALS LTD - Annual Report Report on the Remuneration Report Opinion Directors’ responsibilities In our opinion, the Remuneration Report of Capricorn Metals Ltd for the year ended 30 June 2022, complies with Section 300A of the Corporations Act 2001. 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 responsibilities We have audited the Remuneration Report included in pages 13 to 23 of the Directors’ report for the year ended 30 June 2022. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG R Gambitta Partner Perth 28 September 2022 74 CAPRICORN METALS LTD - Annual Report AASSXX aaddddiittiioonnaall iinnffoorrmmaattiioonn As at 11 October 2022 the following information applied: 11.. aa)) SSeeccuurriittiieess FFuullllyy ppaaiidd oorrddiinnaarryy sshhaarreess The voting rights attached to the ordinary shares are governed by the Constitution. On a show of hands, every person present, who is a Member or representative of a Member shall have one vote and on a poll, every Member present in person or by proxy or by attorney or duly authorised representative shall have one vote for each share held. None of the options have any voting rights. SSiizzee ooff hhoollddiinngg 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over TToottaall NNuummbbeerr ooff SShhaarreehhoollddeerrss NNuummbbeerr ooff SShhaarreess PPeerrcceennttaaggee %% 944 949 361 661 172 33,,008877 447,541 2,613,046 2,812,464 22,044,593 346,007,542 337733,,992255,,118866 0.12 0.70 0.75 5.90 92.53 110000..0000 There are 178 Shareholders with less than a marketable parcel at a price of $3.24, totalling 7,853 shares. bb)) TToopp 2200 sshhaarreehhoollddeerrss NNaammee HSBC Custody Nominees (Australia) Limited Citicorp Nominees Pty Limited J P Morgan Nominees Australia Pty Limited Samoz Pty Ltd National Nominees Limited BNP Paribas Noms Pty Ltd Rollason Pty Ltd HSBC Custody Nominees (Australia) Limited Mutual Investments Pty Ltd Piama Pty Ltd Mr Glyn Evans & Mrs Thi Thu Van Evans Macquarie Bank Limited Nedlands Nominees Pty Ltd Liberty Management Pty Ltd Topaz Holdings Pty Ltd Avenger Projewcts Ltd Portbarb Pty Ltd Cenquest Pty Ltd Mr Kim Andrew Massey Liberty Management Pty Ltd Third Reef Pty Ltd TToopp 2200 sshhaarreehhoollddeerrss TToottaall iissssuueedd ccaappiittaall CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 NNuummbbeerr ooff FFuullllyy PPaaiidd OOrrddiinnaarryy SShhaarreess HHeelldd 93,846,306 46,508,253 25,303,511 21,846,154 18,202,556 13,133,652 9,148,299 8,860,147 7,283,360 6,351,529 5,596,049 5,000,000 4,691,705 4,615,385 3,611,539 2,840,000 2,750,000 2,525,000 2,153,847 2,000,000 2,000,000 PPeerrcceennttaaggee %% 25.10 12.44 6.77 5.84 4.87 3.51 2.45 2.37 1.95 1.70 1.50 1.34 1.25 1.23 0.97 0.76 0.74 0.68 0.58 0.53 0.53 228888,,226677,,229922 337733,,992255,,118866 7777..0099 110000..0000 Page | 75 75 CAPRICORN METALS LTD - Annual Report AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) cc)) UUnnlliisstteedd ooppttiioonnss The Company has no unlisted options on issue dd)) UUnnlliisstteedd ppeerrffoorrmmaannccee rriigghhttss PPeerrffoorrmmaannccee rriigghhttss iissssuueedd uunnddeerr eemmppllooyyeeee iinncceennttiivvee sscchheemmee Unvested 2020 Performance rights (Test date: 30 Sep 2022) Unvested 2020 Performance rights (Test date: 1 Feb 2023) Unvested 2020 Performance rights (Test date: 30 Sep 2023) Unvested 2021 Performance rights (Test date: 18 Jan 2023) Unvested 2021 Performance rights (Test date: 18 Jan 2024) Unvested 2021 Performance rights (Test date: 29 Mar 2023) Unvested 2021 Performance rights (Test date: 29 Mar 2024) Unvested 2021 Performance rights (Test date: 4 Oct 2022) Unvested 2021 Performance rights (Test date: 4 Oct 2023) Unvested 2021 Performance rights (Test date: 10 Dec 2022) Unvested 2021 Performance rights (Test date: 10 Dec 2023) Unvested 2021 Performance rights (Test date: 10 Dec 2024) Unvested 2021 Performance rights (Test date: 30 Jun 2023) Unvested 2021 Performance rights (Test date: 30 Jun 2024) TToottaall NNuummbbeerr ooff OOppttiioonn HHoollddeerrss NNuummbbeerr ooff OOppttiioonnss 2 9 2 1 1 1 1 1 1 6 31 33 2 2 9933 112,500 975,000 112,500 100,000 100,000 100,000 100,000 120,000 120,000 83,000 599,000 639,000 139,909 139,909 33,,444400,,881188 Performance rights do not carry a right to vote. Voting rights will be attached to the unissued shares when the performance rights have been exercised. 22.. SSuubbssttaannttiiaall sshhaarreehhoollddeerrss The names of the substantial shareholders listed in the Company’s share register as at 11 October 2022 were: SShhaarreehhoollddeerr Van Eck Associates Corporation Paradice Investment Management Pty Ltd TToottaall 33.. OOnn mmaarrkkeett bbuuyy--bbaacckk There is currently no on-market buy-back in place. 44.. CCoorrppoorraattee ggoovveerrnnaannccee The Company’s corporate governance statement can be found at the following URL: http://capmetals.com.au/corporate/corporate-governance/ NNuummbbeerr ooff SShhaarreess PPeerrcceennttaaggee %% 38,873,015 28,956,451 6677,,882299,,446666 10.40 7.74 1188..1144 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 76 Page | 76 CAPRICORN METALS LTD - Annual ReportAASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) 55.. MMiinneerraall RReessoouurrcceess && OOrree RReesseerrvveess GGrroouupp MMiinneerraall RReessoouurrcceess The JORC compliant Group Mineral Resources (inclusive of Ore Reserves) as at 30 June 2022 are estimated at 179.0 million tonnes at 0.8g/t Au for 4.37 million ounces of gold compared with the estimate at 30 June 2021 of 166.5 million tonnes at 0.8g/t Au for 4.23 million ounces of gold. The re-estimation of Group Mineral Resources resulted in an 8% increase in tonnes and 3% increase in ounces. The increase in the Group Mineral Resources is primarily the result of the inclusion of recent drilling at the Karlawinda Gold Project (‘KGP’), a gold price of $2,200/ounce for KGP (2021: $2,000/ounce) and a gold price of $2,000/ounce for Mt Gibson Gold Project (‘MGGP’) (2021: $2,000/ounce). s e c n u O n o i l l i M 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 4.23 - 30-Jun-21 Group Mineral Resources 0.29 - - - 0.14 Depletion Model Update New Deposits 4.37 - 30-Jun-22 Mineral Resources are reported inclusive of Ore Reserves and include all exploration and resource definition drilling information, where practicable, up to 30 June 2022 and have been depleted for mining to 30 June 2022. Mineral Resources are constrained by optimised open pit shells developed with operating costs and long-term gold price assumptions of A$2,200 per ounce for KGP and A$2,000 per ounce for MGGP. GGrroouupp OOrree RReesseerrvveess The JORC compliant Group Ore Reserves as at 30 June 2022 are estimated at 53.0 million tonnes at 0.8g/t Au for 1.34 million ounces of gold compared with the estimate at 30 June 2021 of 43.5 million tonnes at 0.9g/t Au for 1.20 million ounces of gold. The re-estimation of Group Ore Reserves resulted in a 22% increase in tonnes and 12% increase in ounces. The increase in Ore Reserves was primarily the result of the inclusion of recent drilling results at KGP and a gold price of A$1,900/ounce (2021: A$1,600/ounce). Group Ore Reserves 0.28 0.14 1.20 1.34 s e c n u O n o i l l i M 1.5 1.0 0.5 0.0 30-Jun-21 Depletion Model Update New Deposits 30-Jun-22 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 77 77 CAPRICORN METALS LTD - Annual Report AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) CCoommppeetteenntt PPeerrssoonnss ssttaatteemmeenntt The information in this report that relates to Mineral Resources is based on information compiled by Mr. Jarrad Price who is Resource Geologist and an employee of the Company. Mr. Jarrad Price is a current Member of the Australian Institute of Geoscientists and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Price consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The information in this report that relates to Ore Reserves is based on information compiled by Mr Quinton de Klerk. Mr de Klerk is a full-time employee of Cube Consulting Pty Ltd and is a Member of the Australian Institute of Mining and Metallurgy. Mr de Klerk has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. de Klerk consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. Capricorn Metals confirms that it is not aware of any new information or data that materially affects the information included in the previous ASX announcements on Mineral Resources and Metallurgy (27/10/2022) and, in the case of estimates of Mineral Resources, Ore Reserves, Plant operating costs and Metallurgy, all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons’ findings are presented have not materially changed from previous market announcements. This announcement may contain certain “forward-looking statements” which may not have been based solely on historical facts, but rather may be based on the Company’s current expectations about future events and results. Where the Company expresses or implies an expectation of belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. The detailed reasons for that conclusion are outlined throughout this announcement and all material assumptions are disclosed. However, forward looking statements are subject to risks, uncertainties, assumptions and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to resource risk, metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as governmental regulation and judicial outcomes. Readers should not place undue reliance on forward looking information. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) KKaarrllaawwiinnddaa GGoolldd PPrroojjeecctt ((‘‘KKGGPP’’)) MMiinneerraall RReessoouurrcceess The KGP JORC compliant Mineral Resource as at 30 June 2022 is 99.2 million tonnes at 0.7g/t Au for 2.29 million ounces, compared to 86.7 million tonnes at 0.8g/t Au for 2.14 million ounces at 30 June 2021. The change in the KGP Mineral Resource from June 2021 to June 2022 reflects a 14% increase in Mineral Resource tonnes and a 7% increase in KGP Mineral Resource ounces. OOrree RReesseerrvveess The KGP JORC compliant Ore Reserve as at 30 June 2022 is 53 million tonnes at 0.8g/t Au for 1.34 million ounces, compared to 43.5 million tonnes at 0.9g/t Au for 1.20 million ounces at 30 June 2021. The inclusion of recent drilling results and a gold price of $1,900/ounce (2021: $1,600/ounce) at KGP resulted in a 22% increase in Ore Reserve tonnes and 12% increase in Ore Reserve ounces. MMtt GGiibbssoonn GGoolldd PPrroojjeecctt ((‘‘MMGGGGPP’’)) MMiinneerraall RReessoouurrcceess The MGGP JORC compliant Mineral Resource at 30 June 2022 is 79.7 million tonnes at 0.8g/t Au for 2.083 million ounces, unchanged from 30 June 2021. GGrroouupp MMiinneerraall RReessoouurrcceess aass aatt 3300 JJuunnee 22002222 MMeeaassuurreedd IInnddiiccaatteedd IInnffeerrrreedd TToottaall RReessoouurrcceess FFoorrwwaarrdd llooookkiinngg ssttaatteemmeennttss GGoolldd DDeeppoossiitt Bibra Open pit Southern corridor Open pit Easky Stockpiles Open pit Stockpiles KKaarrllaawwiinnddaa TToottaall 00..33<< Mt Gibson Mt Gibson Mt Gibson MMtt GGiibbssoonn TToottaall GGRROOUUPP TTOOTTAALL Oxide Transitional Fresh 00..44 TTyyppee CCuutt--ooffff ((gg//tt)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) - - - -- -- - - - -- - - - -- -- - - - -- - - - -- -- - - - -- 54.8 22.4 3.0 2.1 8822..33 - - - -- 0.8 0.7 0.5 0.4 00..77 - - - -- MMeettaall ((kkoozz)) 1,392 476 47 30 4.7 11.5 0.7 - 11,,994455 1166..99 - - - -- 9.7 7.4 62.6 7799..77 MMeettaall ((kkoozz)) 1,498 706 57 30 22,,229911 243 189 1,651 22,,008833 106 229 11 - 334466 243 189 1,651 22,,008833 59.5 33.9 3.7 2.1 9999..22 9.7 7.4 62.6 7799..77 0.8 0.6 0.5 0.4 00..77 0.8 0.8 0.8 00..88 0.7 0.6 0.5 - 00..66 0.8 0.8 0.8 00..88 00..88 8822..33 00..77 11,,994455 9966..77 22,,442299 117799..00 00..88 44,,337744 NNootteess:: 1. Mineral Resources are estimated using a gold price of A$2,200/ounce for Karlawinda and A$2,000/ounce for Mt Gibson. 2. Mineral Resources are estimated using a cut-off grade between 0.3g/t and 0.4g/t Au. 3. The above data has been rounded to the nearest 100,000 tonnes, 0.1 g/t gold grade and 1,000 ounces. Errors of summation may occur due to rounding. GGrroouupp OOrree RReesseerrvveess aass aatt 3300 JJuunnee 22002222 GGoolldd DDeeppoossiitt PPrroovveedd PPrroobbaabbllee TToottaall RReesseerrvveess TTyyppee CCuutt--ooffff ((gg//tt)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) Bibra Open pit Southern corridor Open pit Stockpiles Stockpiles 0.3< 0.3< 0.3< GGRROOUUPP TTOOTTAALL - - - -- - - - -- - - - -- 40.2 10.7 2.1 5533..00 0.8 0.7 0.4 00..88 MMeettaall ((kkoozz)) 1,074 240 30 11,,334444 TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) 40.2 10.7 2.1 5533..00 0.8 0.7 0.4 00..88 MMeettaall ((kkoozz)) 1,074 240 30 11,,334444 NNootteess:: 1. Ore Reserves are a subset of Mineral Resources. 2. Ore Reserves are estimated using a gold price of A$1900/ounce. 3. Ore Reserves are estimated using a cut-off grade between 0.3g/t and 0.4g/t Au. 4. The above data has been rounded to the nearest 100,000 tonnes, 0.1 g/t gold grade and 1,000 ounces. Errors of summation may occur due to rounding. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 78 Page | 78 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 79 CAPRICORN METALS LTD - Annual Report AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) CCoommppeetteenntt PPeerrssoonnss ssttaatteemmeenntt The information in this report that relates to Mineral Resources is based on information compiled by Mr. Jarrad Price who is Resource Geologist and an employee of the Company. Mr. Jarrad Price is a current Member of the Australian Institute of Geoscientists and has sufficient experience, which is relevant to the style of mineralisation and types of deposit under consideration and to the activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Price consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The information in this report that relates to Ore Reserves is based on information compiled by Mr Quinton de Klerk. Mr de Klerk is a full-time employee of Cube Consulting Pty Ltd and is a Member of the Australian Institute of Mining and Metallurgy. Mr de Klerk has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. de Klerk consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. Capricorn Metals confirms that it is not aware of any new information or data that materially affects the information included in the previous ASX announcements on Mineral Resources and Metallurgy (27/10/2022) and, in the case of estimates of Mineral Resources, Ore Reserves, Plant operating costs and Metallurgy, all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons’ findings are presented have not materially changed from previous market announcements. FFoorrwwaarrdd llooookkiinngg ssttaatteemmeennttss This announcement may contain certain “forward-looking statements” which may not have been based solely on historical facts, but rather may be based on the Company’s current expectations about future events and results. Where the Company expresses or implies an expectation of belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. The detailed reasons for that conclusion are outlined throughout this announcement and all material assumptions are disclosed. However, forward looking statements are subject to risks, uncertainties, assumptions and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to resource risk, metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as governmental regulation and judicial outcomes. Readers should not place undue reliance on forward looking information. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this announcement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 79 79 CAPRICORN METALS LTD - Annual Report TTeenneemmeenntt SScchheedduullee LLeeaassee PPrroojjeecctt CCoommppaannyy LLooccaattiioonn SSttaattuuss M52/1070 E52/1711 E52/2247 E52/2398 E52/2409 E52/3323 E52/3363 E52/3364 E52/3450 E52/3474 E52/3531 E52/3533 E52/3541 E52/3543 E52/3571 E52/3656 E52/3671 E52/3677 E52/3729 E52/3797 E52/3808 L52/174 L52/177 L52/178 L52/179 L52/181 L52/183 L52/189 L52/192 L52/197 L52/223 L52/224 M59/328 M59/402 M59/403 M59/404 M59/772 E59/2439 E59/2450 E59/2546 E59/2594 E59/2606 E59/2611 E59/2612 E59/2655 E59/2656 E59/2657 E59/2751 Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Karlawinda Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Crimson Metals Pty Ltd Greenmount Resources Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Greenmount Resources Pty Ltd Crimson Metals Pty Ltd Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Application Granted Granted Application Application Application Application Application Application CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 80 PPeerrcceennttaaggee HHeelldd 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Page | 80 CAPRICORN METALS LTD - Annual Report AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) E59/2752 E59/2753 E59/2754 E59/2755 P59/2286 P59/2287 P59/2290 P59/2291 P59/2306 P59/2309 P59/2310 L59/140 L59/198 L59/45 L59/46 L59/53 G59/11 G59/12 G59/13 G59/14 G59/15 G59/16 G59/17 G59/18 G59/48 G59/70 Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Mt Gibson Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Metrovex Pty Ltd Greenmount Resources Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Metrovex Pty Ltd Greenmount Resources Pty Ltd Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Western Australia Application Application Application Application Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 81 81 CAPRICORN METALS LTD - Annual Report Level 3, 40 Kings Park Road West Perth WA 6000 TELEPHONE: EMAIL: WEBSITE: +61 8 9212 4600 capmetals.com.au enquiries@capmet.com.au 

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