ANNUAL REPORT 2023 CAPRICORN METALS LTD ABN 84 121 700 105 Financial Report for the year ended 30 June 2023 Directors Mark Clark Executive Chairman Share Registry Automic Pty Ltd Mark Okeby Non-Executive Director Level 5, 191 St Georges Terrace Myles Ertzen Non-Executive Director PERTH WA 6000 Bernard De Araugo Non-Executive Director Telephone: +61 2 9698 5414 or 1300 288 664 Company Secretary Kim Massey Auditors KPMG Perth 235 St Georges Terrace Registered Office & Principal Place of Business PERTH WA 6000 Level 3, 40 Kings Park Road WEST PERTH WA 6005 Telephone: +61 8 9212 4600 Email: Website: enquiries@capmet.com.au capmetals.com.au Securities Exchange Listing Capricorn Metals Ltd shares are listed on the Australian Securities Exchange (ASX). Code CMM q Contents Chairman’s report Environmental, social and governance report 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 2 10 24 33 44 45 46 47 48 49 86 87 CAPRICORN METALS ANNUAL REPORT 2023 1 Chairman’s report Dear Shareholder It is with pleasure that I report to you on the continued achievements of Capricorn in 2023. This year has further consolidated the Company’s position as a low cost Australian gold producer with a strong growth outlook. Capricorn followed up an excellent first year of operations at Karlawinda with another year of strong production and cashflow. The year also saw us progress the Mt Gibson Gold Project, completing an extensive resource drilling programme and estimating a maiden ore reserve underpinned by a robust pre-feasibility study. At Karlawinda we achieved record gold production of 120,014 ounces at an all-in-sustaining-cost of $1,208 per ounce which demonstrates the quality of the project. Even more importantly, these results demonstrate the quality and commitment of the management and staff who work at the project. Karlawinda generated operating cashflow of over $150 million for the year, translating to strong cash build on the balance sheet. Capricorn’s net cash position strengthened over the course of the year from net debt of $3.9 million to net cash of $55.9 million. The cashflow generated allowed Capricorn to invest $35.6 million in exploration, primarily focussed on more than 108,000 metres of RC drilling at Mt Gibson that confirmed the potential of the project. This drilling underpinned the estimation of a maiden ore reserve of 1.45 million ounces and a PFS that strongly supports the development of the project. We are excited about the potential of Mt Gibson to become Capricorn’s second mining operation with gold production of over 150,000 ounces pa over a long mine life. The development of Mt Gibson would see Capricorn become a multi mine gold producer with low cost production in the order of 270,000 ounces pa. During 2023 we took the opportunity to close-out our gold hedging A total of 51,000 ounces of gold hedging commitments for FY24. contracts were closed for a total cost of $36.8 million. This cost also included the price of purchased gold put options at A$2,810 per ounce over the same period of the closed hedging. This limits our downside risk on the gold price and provides full exposure to any increase in the A$ gold price in FY24. At the time of writing, the gold spot price is over A$130 per ounce higher than when the hedging was closed. This increase in around four months is indicative of the potential value of this transaction. I believe 2024 will be another exciting year for Capricorn. We expect Karlawinda to deliver another strong year of gold production, with the resulting cashflow continuing to underpin the funding of our development of Mt Gibson. I would also like to recognise all the hard work and commitment of Capricorn’s staff, management and our key contractors. It is through the effort, expertise and resilience of this group of people that we have delivered such strong results and have created a culture that will see us continue to do so in the future. Finally, I would like to thank shareholders for your support of Capricorn and for sharing our vision to create a high quality, multi mine Australian gold business. Mark Clark Executive Chairman 2 CAPRICORN METALS ANNUAL REPORT 2023 Net cash position increased by $59.8m to $55.9m (FY22: net debt $3.9m) Record revenue of $320.8m Underlying profit of $85.8m (after tax but before hedge closure costs & hedge accounting adjustments). Operating cashflow from Karlawinda of $153m Record EBITDA of $161.9m up from $153.9m in FY22. Record gold production at Karlawinda of 120,014ozs at AISC of $1,208/oz Maiden Ore Reserve Estimate at Mt Gibson of 1.45m ounces underpinned by robust prefeasibility study and taking Group Reserves to 2.70m ounces CAPRICORN METALS ANNUAL REPORT 2023 3 Highlights | 2023 Corporate + Net cash position increased by $59.8m to $55.9m (FY22: net debt $3.9m) after payment of $36.8m to partially close-out hedge book (and buy gold put options) and $35.6m in exploration expenditure. + + Profit after tax, gold hedge closure cost and hedge accounting adjustments was $4.4m (FY22: $89.5m). Close-out of 51,000 ounces of gold hedging in June 2023 at a cost + Increase in net cash position driven by record production at the of $33.1m provides exposure for the next 12 months to the gold Karlawinda Gold Project (“KGP”) for FY23 of 120,014 ounces at an spot price which is currently more than $130 per ounce higher than all-in-sustaining-cost (“AISC”) of $1,208 per ounce (FY22: 118,432 the spot price at closure. + + + oz at $1,112/oz). + Refinancing of project loan facility with Macquarie Bank during the Record revenue of $320.8m includes the sale of 120,320 ounces year which converted the facility into a general-purpose corporate of gold at an average realised price of $2,665 per ounce. loan with a single bullet repayment in June 2025. Record EBITDA of $161.9m up from $153.9m in FY22. + Non-binding indicative term sheet for a A$200 million extension of Profit after tax before gold hedge closure cost and hedge current corporate loan facility provided by Macquarie Bank to fund accounting adjustments of $85.8m was in line with the FY22 result the development of the Mt Gibson Gold Project (“MGGP”). of $89.5m. Financial results Revenue EBITDA Profit after tax - before hedge restructure Hedge closure cost (after tax) MTM adjustment on hedge book post restructure (after tax) Net profit after tax Earnings per share (cents) EBITDA margin Cashflow from operating activities Karlawinda Gold Project (KGP) Operations FY23 $’000 320,840 161,925 85,796 (23,173) (58,224) 4,399 1.18 50.5% 152,560 FY22 $’000 287,043 153,934 89,483 - - 89,483 24.27 53.6% 134,657 Change 33,797 7,991 (3,687) (23,173) (58,224) (85,084) 23.09 (3.1%) 17,903 + + + + Record gold production of 120,014 ounces for the year despite significant impact of rainfall on operations in the March 2023 quarter and other operational challenges. The AISC of gold production for FY23 at Karlawinda of $1,208/oz continues to be amongst the lowest in the Australian gold industry. Cashflow from operating activities of $152.6m, up 13% from FY22 reflects the strong operational and financial performance of the KGP. Capricorn expects to continue strong cashflow generation in FY24 with production guidance of 115,000 – 125,000 ounces at an AISC of $1,270 - $1,370/oz. Operating results Ore mined Waste mined Stripping ratio Ore mined Ore milled Head grade Recovery Gold production All-in-sustaining-cost (AISC) 4 BCM (000’s) BCM (000’s) w:o tonnes (000’s) tonnes (000’s) g/t % ounces $/oz FY23 2,443 10,129 4.15 5,807 4,219 0.96 93 120,014 1,208 FY22 2,790 8,954 3.21 5,940 4,450 0.89 94 118,432 1,112 CAPRICORN METALS ANNUAL REPORT 2023 Highlights | 2023 Exploration Drilling programmes – Near mine + Extensive drilling programmes across the KGP tenement package during the year of 1,020 holes for 73,335 metres identified exciting and near mine deposits, regional targets and delivered resource and reserve upgrades in FY23. + First pass drilling programmes completed at near mine targets at Muirfield, Carnoustie, Vedas and Berwick delivered encouraging results (see below). Drilling results Muirfield 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 Carnoustie 5 metres @ 4.0932g/t from 149m 4 metres @ 1.45g/t from 68 to 72m Vedas 8 metres @ 4.36g/t from 84 to 92m 10 metres @ 1.51g/t from 145 to 155m 8 metres @ 2.24g/t from 112 to 120m 4 metres @ 1.64g/t from 104 to 108m Berwick 8 metres @ 14.9g/t from 74 to 82m 5 metres @ 9.37g/t from 99 to 104m 4 metres @ 11.25g/t from 45 to 49m 6 metres @ 4.11g/t from 47 to 53m 3 metres @ 7.78g/t from 116 to 119m 2 metres @ 9.36g/t from 78 to 80m Karlawinda current near mine exploration targets Drilling programmes - Regional + Regional exploration programmes commenced after significant first pass exploration work during the year across the broader tenement package including geochemical soil sampling, aeromagnetic surveys and heritage clearance work. + A number of prospective regional targets identified with drilling completed, underway or planned at Jamie Well, Donomore, Forfar, Carrot Hill and Mumbakine Well. CAPRICORN METALS ANNUAL REPORT 2023 5 Highlights | 2023 Reserves & Resources + + Mineral Resource Estimate (“MRE”) upgraded in October 2022 from 2.14 million ounces to 2.29 million ounces and subsequently depleted for production to March 2023 to 2.23 million ounces. Ore Reserve Estimate (“ORE”) upgraded in October 2022 from 1.20 million ounces to 1.34 million ounces and subsequently depleted for production to March 2023 to 1.25 million ounces. Mt Gibson Gold Project (MGGP) Maiden Ore Reserve Estimate and Updated Resource Estimate Extensive drilling campaign that commenced in January 2022 delivered maiden ORE and robust prefeasibility study into the development of the MGGP. Maiden ORE of 48.7 million tonnes at 0.9g/t Au for 1.45 million ounces of gold completed in April 2023. Updated MRE of 104.9 million tonnes at 0.8g/t for 2.75 million ounces of gold completed in November 2022. + + + 6 CAPRICORN METALS ANNUAL REPORT 2023 Highlights | 2023 Prefeasibility Study + Prefeasibility study underpinning maiden ORE demonstrates robust project with forecast gold production averaging 152,000 ounces per annum over the project’s first 7.5 years of operation at AISC of $1,420 per ounce. Strong Production Profile Long Mine Life Low Cost High Margin Low Capital Cost Strong Financials (post capex pretax) @ GP A$2750/oz Low Technical Risk 152kozpa for first 7.5 yrs 10 years 1.45Moz ORE AISC A$1,420/ oz first 7.5 yrs 5mpta plant A$260m Peak 175kozpa Avg pit depth only 140m - drill to extend Preproduction mining A$79m NPV5 A$828m FCF A$1.2bn Payback 1.9 years Open pit Strip ratio 4.2 Contract mine Conventional Processing 93% recovery + With the established gold production at KGP, the development of MGGP has the potential to lift Capricorn to circa 270,000 ounces per annum production, which would rank Capricorn in the 10 largest gold producers and in the lowest quartile AISC of ASX listed gold producers. Capital cost estimate of $260m for a 5mtpa fresh rock capacity processing plant and $79m of pre-production mining. Compelling economic metrics using gold price of A$2,750 per ounce LOM revenue of A$3.6 billion; $1.5 billion of operating cashflow over 10 year mine life; including: - - - - - Board approved advancing project with a target of commencing Rapid payback period pre-tax of 1.9 years; and Pre-tax NPV5 of $828 million. LOM free cash flow (pre-tax) of $1.2 billion; construction H2CY24 and first gold production H2CY25. Financing from strong KGP cashflow and $200m extension of + + + + corporate debt facility. Exploration Drilling programmes – Near mine + 104,000 metres of resource drilling completed and assayed from January to November 2022, delivering a substantial MRE increase in November 2022, which provided a strong basis for a maiden ORE in April 2023. CAPRICORN METALS ANNUAL REPORT 2023 7 Highlights | 2023 Drilling results + Encouraging results returned from drilling in FY23 include: 8 metres @ 11.24g/t from 76 to 84m 8 metres @ 14.51g/t from 203 to 211m 14 metres @ 12.85g/t from 208 to 222m 47 metres @ 2.36g/t from 78 to 125m 21 metres @ 4.77g/t from 222 to 234m 50 metres @ 2.01g/t from 136 to 186m 17 metres @ 9.16g/t from 228 to 245m 15 metres @ 7.11g/t from 165 to 180m 26 metres @ 4.11g/t from 191 to 217m 20 metres @ 5.11g/t from 236 to 256m The results received validate 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. Drilling on the unmined areas Orion, S2, Saratoga and Deep South trends continues to define zones of high-grade within and outside the 2022 resource shell. These trends have the potential to improve the overall economics of the project. Follow up drilling planned to extend significant mineralisation beyond current resource shells. Target extension of higher grade areas to develop a better understanding of underground potential. + + + + 8 CAPRICORN METALS ANNUAL REPORT 2023 Highlights | 2023 Drilling programmes – Regional + + 30,000 metre aircore drilling programme underway in FY24 targeting near surface gold deposits proximal to reserves; and Significant near mine targets parallel to main Mt Gibson mine trend and southern extensions of main mine trend: - - Exciting regional exploration potential across the broader tenement package with first pass drilling completed across the McDonalds/Highway Significant near mine targets parallel to main Mt Gibson mine trend and southern extensions of main mine trend. area, 5 kilometres north of the Mt Gibson main mine trend. - Drilling confirmed mineralisation with follow-up programmes planned in FY24. CAPRICORN METALS ANNUAL REPORT 2023 9 Environmental, social and governance report FY23 SUSTAINABILITY ACHIEVEMENTS Delivered inaugural Capricorn Environmental, social and governance (“ESG”) report. Signed a Heritage Agreement with the Badimia people over the area of land comprising the Mt Gibson Gold Project (“MGGP”). Completed several cultural heritage surveys with the Nyiyaparli, Ngarlawangga and Badimia people over the Karlawinda Gold Project (“KGP”) and MGGP project tenements. Over 84% procurement spend from Western Australia. Zero reportable environmental incidents in FY23. Approval and implementation of a comprehensive water management strategy for the KGP. Completed our first materiality assessment. + + + + + + + + Our first ESG report provides a summary of our sustainability strategy and performance at the Company’s KGP in the Pilbara, our MGGP being developed project in the Murchison and our corporate head office in Perth. We consider our business strategies, stakeholder considerations, peer benchmarks and updates in ESG disclosures in our reporting. It is an important first step in establishing and reporting our baseline ESG data and to articulate a roadmap for continuous improvement. We will continue to expand these to reflect the company’s growth and sustainability ambitions. This report is prepared in reference to the Global Reporting Initiative (GRI) 2021 Standards and covers the period from 1 July 2022 to 30 June 2023. This ESG Report should be read in conjunction with the financial and governance information from this Annual Report. Strengthened governance framework with new social and STAKEHOLDER ENGAGEMENT environmental policies. OUR SUSTAINABILITY APPROACH & SCOPE We are pleased to deliver our inaugural ESG Report this year, demonstrating our commitment to shared and sustainable value for all our stakeholders. We recognise that responsible stewardship of environmental, social and governance activities are not only important to our shareholders, but shape the relationship we have with our employees, our communities, and the impact on the natural environment where our projects are located. We believe that positive collaboration with all our stakeholder groups is critical to the success of our projects and forms the basis for our social license to operate. As part of the materiality assessment, we mapped our key stakeholders, summarising the purpose and priorities of our engagement and the different ways we communicate and engage with these groups. 10 CAPRICORN METALS ANNUAL REPORT 2023 Environmental, social and governance report STAKEHOLDER GROUP Internal stakeholders Employees and contractors Board External stakeholders Shareholders & investors Nyiyaparli, Ngarlawangga, Badimia People and their communities Local communities State, federal government and local shires PRIORITIES ENGAGEMENT A safe and healthy workplace; employee retention and development; professional development and training opportunities Regular communication and consultation; Training and development programs Prudent and transparent corporate governance; risk management; return on investment Regular Board meetings; AGM; Annual Report; direct and open communication lines between executive and Board Return on investment and equity; Sensible allocation of capital and management of risk Respect for local customs and laws; cultural heritage preservation; land agreements; land care Social investment with local community; environmental impact and performance; access to pastoral land Regulatory compliance with laws and policies; Land access and approvals ASX releases, investor briefings, road shows, presentations, annual, half yearly and quarterly financial reports, direct engagement, AGM, Annual Report Face-to-face meetings, cultural surveys and mapping Community engagement and consultation; Direct engagement; Whistleblower Policy Direct engagement and consultation Regular submission of data and requests for information; direct engagement Regular investor presentations; annual, half yearly and quarterly financial reports; direct engagement; ASX releases Direct engagement; communications; training Community engagement; Direct engagement; Whistleblower Policy Regulatory agencies Compliance reporting Financial providers and analysts Suppliers Pastoralists Transparent reporting of company updates and ESG programme; prudent risk management; financial performance; governance Quality goods & services; prompt payment; responsible sourcing Social investment with local community; environmental impact and performance; access to pastoral land (Weelarrana pastoral station) General public and partners Community engagement and support Direct engagement; Whistleblower Policy Media Risk management; environmental performance; community engagement Transparent public reporting and media engagement; ASX releases Community organisations and local businesses Local procurement and support; social investment Business procurement support; community engagement, meetings and correspondence as required Peers and industry groups Industry knowledge and networking Regular engagement and collaboration Educational institutions Employment, training and industry pathways Communication and consultation; research and collaboration CAPRICORN METALS ANNUAL REPORT 2023 11 Environmental, social and governance report MATERIALITY ASSESSMENT Capricorn undertook its first materiality assessment this year to identify and prioritise the material topics with the greatest impact on our business and stakeholders. Working with external ESG consultants, we formed an ESG project team with internal subject matter experts and representatives from the executive. The team mapped key stakeholders and considered sustainability risks and opportunities across our operations, aligned with our strategic focus and reporting obligations. They prioritised the most important topics, with the results reviewed and approved by Capricorn’s executive team and the Board. Identify Prioritise Validate Review Senior leaders within the Company reviewed and validated the outcomes of the materiality assessment. Material topics will be reviewed on an annual basis. Stakeholders were mapped and a list of potential material topics was compiled based on our understanding of material risks, industry benchmarks, company strategic focus and stakeholder expectations. Internal stakeholders were invited to rate the importance of each topic. Results were then used to formulate a materiality matrix with prioritised material topics under two dimensions: importance to business and importance to our stakeholders. MATERIAL TOPICS Our top eight material topics as selected by Capricorn for reporting in FY2023 are listed in the pillars below. These topics reflect the current focus of the company and inform the content of this report. ENVIRONMENT Climate Change & Emissions Biodiversity & Environmental Management Water Management SOCIAL Health, Safety & Wellbeing Cultural Heritage Diversity & Equal Opportunity GOVERNANCE Business Ethics & Governance Economic Performance 12 CAPRICORN METALS ANNUAL REPORT 2023 Environmental, social and governance report REPORTING STANDARDS Global Reporting Initiative We have drawn on disclosure guidance from the Global Reporting Initiative (GRI) Standards 2021. This report incorporates the GRI principles of organisational context, and materiality assessment and prioritisation. structure Taskforce on Climate-Related Financial Disclosures (TCFD) Capricorn recognises the importance of managing our carbon footprint in response to global warming. We intend to report against the Taskforce on Climate-Related Financial Disclosures (TCFD). The TCFD framework is structured around four key areas: governance, strategy, risk management, and metrics and targets. These disclosure recommendations will provide transparency on our climate-related risk exposure and help us to implement appropriate mitigation measures and capture opportunities. We plan to address these over the medium term, beginning with governance, physical and transition risk identification in FY2024. Disclosure Recommendations The Task Force developed four widely-adoptable recommendations on climate-related financial disclosures that are applicable to organisations across sectors and jurisdictions. The recommendations are structured around four thematic areas that represent core elements of how organisations operate: Governance Strategy Risk Management Metrics and Targets Governance The organisation's governance around climate-related risks and opportunities Strategy The actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning Risk Management The processes used by the organisation to identify, assess, and manage climate-related risks Metrics and Targets The metrics and targets used to assess and manage relevant climate-related risks and opportunities CAPRICORN METALS ANNUAL REPORT 2023 13 Groundwater Dependant Vegetation Assessment (GDV) At the KGP Capricorn engaged an independent environmental specialist to complete two Groundwater Dependant Vegetation (GDV) assessments at four locations on the Weelarrana pastoral station during the year. We also carried out a Groundwater Dependent Ecosystem (GDE) assessment on the KGP and surrounding areas, focusing on Savory Creek. This assessment has evaluated the presence/absence of GDEs. We also completed an onsite field assessment to determine the presence of key phreatophytic species and then determined the level of dependency and potential impact to the GDEs from the proposed activities. The results of the assessment indicated that the projects’ activities are unlikely to impact the surrounding vegetation communities. Fauna update We have an Environmental Policy in place to protect native fauna, as well as specific actions in case there is an injured animal. The KGP has six certified snake handlers and three fauna handlers and works actively with native fauna when necessary. Rehabilitation update This year at the KGP 142ha of transport and service infrastructure disturbance is currently under rehabilitation. A total of 83,984m³ of topsoil was stockpiled during the reporting period with a gross total of 592,293m³ available for rehabilitation on closure. inspection Capricorn also in 20 initiated a topsoil rehabilitation stockpile points in 2021 (Tailings Storage Facility, waste dump, plant, ROM and aerodrome). The programme consists of a biannual (twice per year January and July) inspection of the various topsoil locations with photographic evidence. The photographic stations were designed to take pictures at the same point and direction while the topsoil rehabilitation monitoring programme is functioning. The inspection aims to verify changes of pioneer and succession vegetation species in the stockpiles, verifying the condition of the soils. Future focus In FY24 at the KGP, we plan to commence waste rock landform rehabilitation and continue GDV/GDE assessments and topsoil monitoring. Environmental, social and governance report ENVIRONMENTAL Material topic: Biodiversity & Environmental Management Careful stewardship of the natural environment at our projects in the Pilbara and Murchision is a priority focus for Capricorn. We recognise that our operations, particularly through clearing, ground disturbance, mining vehicle movement and waste disposal can have a significant impact on the ecosystems within our tenement areas. We have put in place measures to address and avoid any potential significant impacts on vegetation and fauna species. Environmental Management System We have implemented an Environmental Management System (EMS) to manage any biodiversity and environmental impacts, and to identify and address risks and compliance issues at our operations. The Environment Management Plan (EMP) is a key element of the EMS. The EMP outlines the programme for Capricorn to effectively manage environmental factors in all our activities and to meet our legal and compliance obligations. As well as managing the risk of unintended or unnecessary environmental impacts, the EMP also seeks to reduce or eliminate the business risk associated with poor environmental outcomes at our operations. The EMS is aligned with the international standard for environmental management systems, ISO 14001:2015, and will be continuously updated and amended to ensure that: Understand and adhere to our legal and compliance obligations. + We meet our environmental objectives and targets. + + Our environmental management activities are clearly defined. + We demonstrate a commitment to successful environmental management. We seek to continuously improve our environmental management procedures by applying the Plan-Do-Check-Act (PDCA) model as illustrated in the figure below. Plan Planning Improvement Leadership Support and Operation Do Performance Evaluation Check Act 14 CAPRICORN METALS ANNUAL REPORT 2023 Environmental, social and governance report Rehabilitation focus Land disturbance & rehabilitation FY23 (hectares) Gross land disturbed at the beginning of the reporting period Current land disturbed at the beginning of the reporting period Newly disturbed land Gross land disturbed at the end of the reporting period Newly rehabilitated land to agreed end use Total land rehabilitated to date Total current land disturbed (for future rehabilitation) Total land disturbance that has been rehabilitated to date Environmental compliance Material environmental incidents Monetary value of significant fines Non-monetary sanctions 1,045 1,045 72 1,117 142 142 975 1.14 Unit Number $ Number FY23 0 0 0 Material topic: Water Management Tailings Storage Facility Water scarcity is one of the most critical natural environmental issues in Western Australia and is also a vital resource for ore processing. We understand the importance of sensitively managing our water use and minimising any impact from our operations on this precious resource. Our commitments to responsible water stewardship and sourcing are outlined in our Environment Policy. No incidents or compliance breaches with respect to water management were recorded in FY23. Water operating strategy This year at the KGP we developed and implemented a comprehensive water operating strategy which was revised and formally approved by the Department of Water and Environmental Regulation (DWER). Monitoring the programs across our operations is essential to assess potential impacts, evaluate and refine hydrogeological conceptualisation and inform modelling of the groundwater regime. Our efforts to maximise water recovery from the Tailings Storage Facility (TSF) achieved 46% recovery in FY23. We have ‘low-to-no’ risk from water stress in our operational areas because we do not compete with others for water allocation, nor do we use surface water in our operations. Vehicle maintenance is undertaken in designated workshop areas on concrete pads where water is drained to a clean water recovery system. Washdown water is treated via a process to separate solids and hydrocarbons from the water. The treated water is re-used for dust suppression purposes. Water efficiencies Other practices undertaken to ensure the efficient use of water around the KGP site, include: + Tailings delivery and water return pipes and containment corridor are inspected daily for any visible leakage or damage. The specific objectives of the monitoring programme includes: + Weekly inspections of all pipelines and regular maintenance and + + + the early identification of potentially adverse environmental impacts. assess and refine the hydrogeological conceptualisation. understand and communicate the impact of the operation on the groundwater regime. correct operation of borefield infrastructure. + If significant change occurs to the process demand or overall water use, the site water balance will be reviewed to identify where opportunities exist to improve water use efficiencies. + Water use efficiency initiatives are continually reviewed and reported on in the annual monitoring reports. CAPRICORN METALS ANNUAL REPORT 2023 15 Environmental, social and governance report Water management performance at the KGP Water withdrawal Surface water withdrawn Borefield water withdrawn De-watering Third party water withdrawn Water returns to the environment Surface water discharged Managed aquifer recharge Third party water discharged Recycled water Water reused Water clarifier FY23 Nil 3,182,693m³ 192,540m³ Nil FY23 Nil Nil Nil FY23 Nil Nil Reverse osmosis – water reused 34,685m³ Reused water Tailing decant return Other water reuse activities FY23 2,665,578 m³ Nil Material topic: Climate Change and Emissions We recognise the impact of the mining sector on the warming climate, the associated climate risks for our projects and the importance of actively managing emissions across our business. Climate is considered as part of the sustainability and environmental risks addressed by our Risk Management Framework, governed by our Audit and Risk Committee Charter, which is available on our website. Climate risk disclosure As mentioned in our reporting section, we also have ambitions to map our climate risks against the Taskforce for Climate-Related Financial Disclosures (TCFD). The TCFD framework is structured around four key areas: governance, strategy, risk management, and metrics and targets. These disclosure recommendations will provide transparency on our climate-related risk exposure and help us better understand the risk and opportunities posed by climate change. Emissions & Energy Capricorn has chosen to utilise gas over diesel as a primary energy source to improve greenhouse gas emissions efficiencies over the life of the KGP. We report our annual emissions to the National Environmental Protection (National Pollution Inventory) and the National Greenhouse and Energy Reporting Act 2007. 16 CAPRICORN METALS ANNUAL REPORT 2023 Operations Corporate Office 163,641 0 1,659,815 294,710 1,365,105 0 0 0 24,648 89 0 0 89 0 Total 79,684 17 79,701 Environmental, social and governance report Energy and emissions performance Energy consumption Diesel Electricity purchased from grid Total energy consumption + Energy produced & consumed (thermal generation) + Energy consumed (diesel, petroleum & natural gas) + Energy consumed (electricity purchased) Percentage of total energy consumption from renewable sources Unit L kWh GJ GJ GJ GJ % Emissions Scope 1 emissions Scope 2 emissions Total emissions (Scope 1 & 2) Air Emissions Carbon monoxide Lead & compounds Mercury & compounds Oxides of nitrogen Particulate Matter 10.0 um Particulate Matter 2.5 um Sulfur Dioxide Total Volatile Organic Compounds Unit t CO2 -e t CO2 -e t CO2 -e Operations Corporate Office 79,684 0 0 17 Unit Kg Kg Kg Kg Kg Kg Kg Kg Operations 174,400 93 1,51 405,000 2,712,230 19,650 388 13,114 Dust management Dust management is undertaken on a continuous basis across the KGP operations to prevent impacts to the environment, and to ensure safe operations for mining activities. Dust controls include: + Water carts (applying dewatering water to roads and other areas at high risk of generating dust). Sprinklers and sprays in the processing plants. Return scrapers on conveyor belts. Restricted traffic areas. Speed limits and signage in designated work areas. Regular road maintenance and formal inspections and audits. + + + + + Waste management initiatives Sustainable waste management was one of the many focuses for our operation when it commenced and we immediately implemented a waste reduction programme across the KGP operation. Containers and cardboard are a significant contributor to our landfill and recycling these not only reduces our waste volumes but has raised over $21,000 for our designated charity, Perth Children’s Hospital (PCH). To date, we have recycled 211,249 containers raising over $21,000 with 100% being donated to PCH. During the last financial year 146,897 containers generated $14,690 in funding support. In addition to the containers, we have recycled 4.7 tonnes of cardboard which would otherwise have gone to site landfill. CAPRICORN METALS ANNUAL REPORT 2023 17 Environmental, social and governance report SOCIAL Material topic: Health, Safety & Wellbeing We want everyone to be safe and healthy at work. It is with deep regret however that we recorded one fatality at our KGP in October 2022 with the death of an employee of mining contractor MACA. The safety and wellbeing of all employees and contractors of the Company remain our highest priority and our thoughts and condolences remain with the MACA employee’s family, friends and colleagues. Counselling was provided on-site and available post event to all personnel involved or impacted by this tragic incident. We resolve to further our commitment to the highest standards of health and safety by strengthening audit and assurance programmes, prioritising safety training, effective risk and hazard assessment, incident investigation and active engagement by all employees and contractors. As a company, we seek to drive continuous improvements in health and safety management, while encouraging everyone to take responsibility for safe work practices. Health & Safety Policies Our overarching approach and objectives for health and safety are described in our Health and Safety Policy, which highlights risk Data Indicators1 Fatalities Fatality Rate Lost Time Injuries (LTI) Lost Time Injury Frequency Rate (LTIFR) Medical Treatment Injuries (MTI) Medical Treatment Injury Frequency Rate (MTIFR) First Aid Injuries (FAI) Restricted Work Injuries (RWI) Restricted Work Injury Frequency Rate (RWIFR) Total Recordable Injuries (TRI) Total Recordable Injury Frequency Rate (TRIFR) Total hours worked management principles to identify and reduce risks, a consultative approach with employees on safety matters and an emphasis on safety training. Other more specific policies include a Workplace Rehabilitation Policy which sets out the company’s commitments following a workplace injury; and a Mental Health and Wellbeing Policy that describes our position on an inclusive and supportive workplace and the promotion of measures to support mental health and wellbeing. Health & Safety Management System We have adopted a comprehensive Workplace Health & Safety (WHS) Management System, aligned to ISO45001 and the WorkSafe Mine Safety Management System Code of Practice, which covers all of our employees and contractors. It has recently been externally audited against the WHS Act 2020 and WHS (Mines) Regulations 2022. In the 2023 financial year, Capricorn achieved safety frequency rates of 7.14 for Total Recordable Injury Frequency Rate (TRIFR) and 1.43 for Lost Time Injury Frequency Rate (LITFR). Employees & contractors FY23 1 1.43 1 1.43 1 1.43 22 3 4.28 5 7.14 700,578 Percentage of employees and contractors covered by occupational health and safety management system 100% 1 Capricorn fatality rates, LTIFR, MTIFR, TRIFR and RWIFR are calculated by the number of injuries/fatalities divided by the total hours worked x 1,000,0000 hours worked. 12 Month Rolling Injury Frequency Rates TRIFR LTIFR RWIFR MTIFR 14 12 10 8 6 4 2 0 s r h n o i l l i m 1 / e t a R y c n e u q e r F 18 JUL 22 AUG 22 SEP 22 OCT 22 NOV 22 DEC 22 JAN 23 FEB 23 MAR 23 APR 23 MAY 23 JUN 23 JUL 23 CAPRICORN METALS ANNUAL REPORT 2023 Environmental, social and governance report Safety training Safety training initiatives in FY23 included: + Introduction of a monthly safety reward programme for our employees and contractors. + WHS Training completed as per position requirements with over 13,000 hours of internal, online or external training recorded. + + Commenced WHS Training for statutory position holders in line with new WHS (Mines) Regulations 2022. Continued with Cert III Mine Emergency Response and Rescue courses for ERT Members. Health and Wellbeing Health and wellbeing initiatives in place in FY23 include: + + + Development of a Mental Health and Wellbeing Policy to guide best practice within the company. An Employee Assistance Programme (EAP), available to all employees. A weekly medical clinic available to all employees and contractors provides general health and mental health support and nutritional advice. + Routine training provided through our toolbox sessions with a focus on mental health, targeting the implementation of formalised + + training and education sessions. Medics trained in mental health first aid. An on-site social club was formed with several events and competitions organised throughout the year. Material topic: Cultural Heritage We consider our relationships with our Indigenous communities, the Nyiyaparli, Ngarlawangga and the Badimia people, to be of vital importance. We respect their connections to country and will seek to preserve and protect their cultural heritage. We believe that we can help safeguard these values and contribute to the long-term sustainability of our operations through careful management of the environment, the preservation of cultural sites and a positive and collaborative working relationship. Australian regulations and Aboriginal communities to undertaking exploration and mining activities. laws also require us to engage with identify cultural heritage sites prior to Heritage agreement with the Badimia people We executed a Heritage agreement with representative corporations of the local Badimia people in June 2023 for the MGGP. The Badimia people are represented by the Badimia Land Aboriginal Corporation (BLAC) and the Badimia Bandi Barna Aboriginal Corporation (BBBAC). During FY22 and FY23, multiple heritage and ethnographic surveys have been carried out with Badimia knowledge holders. Key decisions and changes to the project layout have been made subsequent to these surveys and discussions. Land access agreement with the Nyiyaparli people In FY23, we were pleased to amend the Land access agreement with the Nyiyaparli people entered into in 2016 to include newly granted and acquired tenements for our KGP. The Nyiyaparli people hold native title over the area of the KGP. Heritage notices surveys, and consultation permission requests were completed to facilitate access for exploration activities during the year. Cultural awareness & engagement In addition, implemented in FY23: the following measures and programmes were + + + + Cultural awareness programmes were conducted for all onsite staff at Karlawinda. Annual meeting with Traditional owners. Continuous engagement on heritage surveys. As requested, heritage sites were kept confidential with no markings or identification. Future focus In FY24 we will provide cultural awareness training to new personnel onsite and will commence training at our MGGP as the project develops. CAPRICORN METALS ANNUAL REPORT 2023 19 Environmental, social and governance report Material topic: Diversity & Equal Opportunity We consider workforce diversity to include employees and contractors across gender, age, ethnicity and cultural background characteristics. We believe that it provides increased access to a broader talent pool of high quality employees, improves employee retention and enables the Company to draw on different perspectives and ideas. Our general female participation rate is 27% of the total workforce, well above the mining industry average of 20% (Workplace Gender Equality Agency Scorecard, 2021-22). Total workforce Data Indicator Total senior management employees Total general employees Total employees Gender diversity snapshot Total workforce by gender Total male Total female Senior management by gender Male Female Board team by gender Male Female FY23 3 139 142 103 39 3 0 4 0 Diversity is governed through our Code of Conduct Policy, Diversity Policy, and Remuneration, & Nomination Diversity Charter. At the Board level, the Remuneration, Nomination and Diversity Committee reviews and recommends policies that will promote Board and workplace diversity committee and inclusion. In FY24 we have appointed a female director to the Capricorn Board. Age diversity snapshot General employees by age Under 30 30-50 Over 50 Senior management by age Under 30 30-50 Over 50 Board team by age Under 30 30-50 Over 50 28 98 13 0 0 3 0 1 3 20 CAPRICORN METALS ANNUAL REPORT 2023 Environmental, social and governance report GOVERNANCE Material Topic: Business Ethics & Governance Modern Slavery Capricorn recognises that high standards of accountability and transparency have their foundation in a strong governance framework. We have a suite of governance policies and charters available on our website that sets out our approach to governance and business integrity. There were no governance or ethical breaches recorded in FY23. Corporate governance structure The Board, which meets on a regular basis, is responsible for corporate governance and risk management oversight, and delegates business strategy and executive decision-making to our senior management team. Executive responsibility lies with the Executive Chairman, who in turn, is accountable to the Board. There are clear lines of communication between the Executive Chairman and the Board. These roles are outlined in the Board Charter on our website, including those related to social and governance risk. The Company’s Audit and Risk Management Committee is responsible for overseeing the management of sustainability risks, including environmental, social and governance risks. While the Board has overall accountability for establishing and delivering an effective governance framework, all Capricorn employees share responsibility for upholding our corporate governance standards. These are outlined in our Corporate Code of Conduct Policy. Legal and regulatory framework The ASX Listing Rules and ASX Corporate Governance Principles require us to address significant corporate governance risk and report our progress. We are also subject to regulatory obligations under the Corporations Act 2001 (Cth). Corporate Code of Conduct Our Corporate Code of Conduct Policy, available on our website, outlines our commitment in our employment and business approach. It sets out the duty of care to our employees, contractors and other stakeholders and the standards and expectations of appropriate conduct in different contexts. integrity and fair dealing to Anti-Bribery & Corruption We do not tolerate bribery or corruption in any form. Our Anti-Bribery and Corruption Policy sets out our responsibilities to uphold our position on these matters and how to recognise and deal with any possible breaches and suspicious activity. The policy also provides strict guidelines with respect to financial benefits such as gifts, travel and hospitality. Whistleblower Directors, employees, contractors and suppliers of Capricorn are expected to act with honesty and integrity. Our Whistleblower Policy, available on our website, is the formal procedure which enables any person to raise concerns about reportable conduct. Modern Slavery risks are overseen by the Company’s Audit and Risk Management Committee. In FY23, we developed a Modern Slavery Statement to guide our principles and risks with respect to our business and supply chain. We consider that we have a relatively low risk of slavery in our supply chains as our business activities are based in Australia, which is not considered a high-risk jurisdiction for modern slavery. Although we retain some international subsidiaries, these only hold real estate and do not trade. Memberships & Associations Capricorn supports a thriving mining sector and ongoing professional development and networking opportunities. We participate in the following associations and networks: Association of Mining and Exploration Companies (AMEC), Chamber of Minerals and Energy (CME), Gold Industry Group and the Australian Resources & Energy Employer Association (AREEA). Material Topic: Economic Performance Delivering a strong economic performance creates shared and sustainable value for our stakeholders. We are focused on the efficient management of our business so we can continue to grow our operations, pay our obligations, reinvest assets and reward our shareholders. Financial management The Capricorn Board provides general financial performance oversight. Together with the Audit and Risk Management Committee, they receive regular risk management updates and periodically review the risk management framework. Our senior management team, led by the Executive Chairman, Chief Executive Officer and Chief Operating Officer, is responsible for day-to-day management of operations and administration. Economic contribution Capricorn is committed to supporting the communities in which we operate and is a significant contributor to the Australian economy. In FY23 Capricorn spent over $192 million in supplier payments, wages, royalties and taxes with over 99% of that expenditure within the Australian economy. Capricorn prides itself on providing significant support to local and regional suppliers with the bulk of the total expenditure within Western Australia. Origin supplier costs Local area Western Australia Rest of Australia International Total $M $M $M $M $AUD 2023 $3.1 $159.6 $27.5 $2.1 $192.3 CAPRICORN METALS ANNUAL REPORT 2023 21 Environmental, social and governance report FY23 Capricorn spend by region Local Area Western Australia Rest of Australia International Tax transparency We provide a transparent approach to tax and are fully compliant with all tax regulations. The authority for tax risk management lies with the Audit Committee and the Board, with responsibilities outlined in the Audit Committee Charter. An overview of the company’s tax position for FY2023 can be found in this annual report. Financial performance + Net cash position increased by $59.8m to $55.9m (FY22: net debt $3.9m) after payment of $36.8m to partially close-out hedge book (and buy gold put options) and $35.6m in exploration expenditure. + Increase in net cash position driven by record production at the KGP for FY23 of 120,014 ounces at an all-in-sustaining-cost (AISC) of $1,208 per ounce (FY22: 118,432 oz at $1,112/oz). + + + Record revenue of $320.8m from the sale of 120,320 ounces of gold at an average realised price of $2,665 per ounce. Record EBITDA of $161.9m, compared with $153.9m in FY22. Profit after tax before gold hedge closure cost and hedge accounting adjustments of $85.8m was in line with FY22 result of $89.5m. + Profit after tax, gold hedge closure cost and hedge accounting adjustments was $4.4m (FY22: $89.5m). Please refer to our Annual Report for a full summary of our FY23 financials. FY24 Future focus In FY24, we aim to continue profitability and returns for our shareholders. We will continue to progress development at our MGGP and seek to obtain the necessary permits and approvals to commence construction of the project. Capricorn expects to continue its strong operational performance at the KGP in FY24 with gold production guidance of 115,000 -125,000 ounces at an AISC range of $1,270 - $1,370 per ounce and growth capital of $10-20 million. 22 CAPRICORN METALS ANNUAL REPORT 2023 CAPRICORN METALS ANNUAL REPORT 2023 23 DDiirreeccttoorrss’’ rreeppoorrtt 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 2023 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 2022 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 also served as Managing Director of Regis Resources Limited (“Regis”) from May 2009 until November 2016 when he was appointed Executive Chairman. 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 joined Capricorn Metals in July 2019 and has overseen the successful development and commissioning of the Karlawinda Gold Project and the acquisition of the Mt Gibson Gold Project. 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 1980’s 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 2015) 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: Chairman of Peel Mining Limited (appointed 3 March 2022) Non‐Executive Director of Red Hill Iron Limited (August 2015 to present) 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 in the permitting, development companies and has significant experience 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. MMrr MMyylleess EErrttzzeenn B.Sc Grad Dip App Fin NNoonn‐‐EExxeeccuuttiivvee DDiirreeccttoorr Appointed 13 September 2019 24 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 3 CAPRICORN METALS ANNUAL REPORT 2023 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 2023 and the audit report thereon, made in accordance with a resolution of the Board. The Directors of the Company who held office since 1 July 2022 and up to the date of this report are set out below. Directors were in office for the entire year unless stated otherwise. DDiirreeccttoorrss’’ rreeppoorrtt (Continued) MMrr BBeerrnnaarrdd DDee AArraauuggoo B.App.Sc (Metallurgy) NNoonn‐‐EExxeeccuuttiivvee DDiirreeccttoorr Appointed 26 May 2021 DDiirreeccttoorrss’’ rreeppoorrtt DDiirreeccttoorrss MMrr MMaarrkk CCllaarrkk B.Bus, CA EExxeeccuuttiivvee CChhaaiirrmmaann Appointed 8 July 2019 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 9 9 9 9 9 9 9 9 ‐ 5 5 5 ‐ 5 5 5 ‐ 3 3 3 ‐ 3 3 3 M Clark M Okeby M Ertzen B De Araugo PPrriinncciippaall AAccttiivviittiieess The principal activities of Capricorn during the financial year were: ‐ ‐ exploration, evaluation, development and production at 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 operation of the Karlawinda Gold Project. In addition, the Company actively pursued its strategy of developing into a multi operational gold company undertaking an extensive resource drilling programme at the MGGP culminating in a maiden ore reserve estimate and prefeasibility study released in April 2023. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 4 25 MMrr MMaarrkk OOkkeebbyy LLM NNoonn‐‐EExxeeccuuttiivvee DDiirreeccttoorr Appointed 8 July 2019 Mr Okeby began his career in the resources industry in the 1980’s 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 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 also served as Managing Director of Regis Resources Limited (“Regis”) from May 2009 until November 2016 when he was appointed Executive Chairman. 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 joined Capricorn Metals in July 2019 and has overseen the successful development and commissioning of the Karlawinda Gold Project and the acquisition of the Mt Gibson Gold Project. 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. Mr Okeby is currently a director of Red Hill Iron Limited (appointed in 2015) 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: Chairman of Peel Mining Limited (appointed 3 March 2022) Non‐Executive Director of Red Hill Iron Limited (August 2015 to present) 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. MMrr MMyylleess EErrttzzeenn B.Sc Grad Dip App Fin NNoonn‐‐EExxeeccuuttiivvee DDiirreeccttoorr Appointed 13 September 2019 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 3 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) The Company’s objectives are to: Continue 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; Continue the technical, environmental and other studies required to advance the permitting and development of the MGGP 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 and has a 10‐year mine life on current reserves. The KGP completed its second full year of operations producing 120,014 ounces of gold at all‐in‐sustaining‐costs (“AISC”) of $1,208 per ounce. The Company’s second project is the MGGP, located in the Mid‐West region of Western Australia, 280 kilometres north‐ east of Perth. Capricorn acquired the MGGP in July 2021 at an acquisition cost of $39.6 million and a 1% net smelter royalty on all minerals produced from the project including gold production in excess of 90,000 ounces. The Company continued an extensive resource drilling programme at MGGP during the year and announced a maiden ore reserve estimate of 1.45 million ounces in April 2023 together with the results of a prefeasibility study. FFiinnaanncciiaall ssuummmmaarryy KKeeyy ffiinnaanncciiaall ddaattaa Sales revenue Cost of sales (excluding D&A) (1) Other income Corporate, admin and other costs EBITDA (1) Depreciation & amortisation (D&A) Net finance costs Profit before tax Income tax expense Profit/(loss) after tax Cashflow from operating activities Cash and cash equivalents Borrowings Net cash/(debt) Net assets Basic earnings per share (cents per share) 22002233 $$‘‘000000 320,840 (146,429) 34 (12,520) 116611,,992255 (27,510) (125,249) 99,,116666 (4,767) 44,,339999 152,560 106,471 (50,613) 55,858 256,537 1.18 22002222 $$‘‘000000 287,043 (118,975) 229 (14,363) 115533,,993344 (31,665) (11,363) 111100,,990066 (21,423) 8899,,448833 134,657 61,502 (65,386) (3,884) 247,535 24.27 CChhaannggee $$’’000000 33,797 (27,454) (195) 1,843 77,,999911 4,155 (113,886) ((110011,,774400)) 16,656 ((8855,,008844)) 17,903 44,969 14,773 59,742 9,002 (23.09) CChhaannggee %% 12 23 (85) (13) 55 (13) 1,002 ((9922)) (78) ((9955)) 13 73 (23) (1,538) 4 (95) 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 $4.4 million for the full year to 30 June 2023, down from $89.5 million in the previous year, primarily due to one‐off finance costs associated with the restructuring of gold forward contracts (see “Net finance costs” below). EBITDA increased 5% to $161.9 million for the full year to 30 June 2023 as higher gold sales revenue offset increases in operating and overhead costs. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 26 Page | 5 CAPRICORN METALS ANNUAL REPORT 2023 Continue 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 Continue the technical, environmental and other studies required to advance the permitting and development of the DDiirreeccttoorrss’’ rreeppoorrtt (Continued) The Company’s objectives are to: KGP tenement package; MGGP in due course; and Actively pursue inorganic growth opportunities. OOppeerraattiinngg aanndd FFiinnaanncciiaall RReevviieeww OOvveerrvviieeww located in Western Australia. Capricorn Metals Ltd is an Australian based gold producer and exploration company with two distinct project areas The KGP is located 65 kilometres south‐east of Newman in the Pilbara region of Western Australia. The KGP commenced operations in June 2021 and has a 10‐year mine life on current reserves. The KGP completed its second full year of operations producing 120,014 ounces of gold at all‐in‐sustaining‐costs (“AISC”) of $1,208 per ounce. The Company’s second project is the MGGP, located in the Mid‐West region of Western Australia, 280 kilometres north‐ east of Perth. Capricorn acquired the MGGP in July 2021 at an acquisition cost of $39.6 million and a 1% net smelter royalty on all minerals produced from the project including gold production in excess of 90,000 ounces. The Company continued an extensive resource drilling programme at MGGP during the year and announced a maiden ore reserve estimate of 1.45 million ounces in April 2023 together with the results of a prefeasibility study. FFiinnaanncciiaall ssuummmmaarryy KKeeyy ffiinnaanncciiaall ddaattaa Sales revenue Cost of sales (excluding D&A) (1) Corporate, admin and other costs Other income EBITDA (1) Depreciation & amortisation (D&A) Net finance costs Profit before tax Income tax expense Profit/(loss) after tax Cashflow from operating activities Cash and cash equivalents Borrowings Net cash/(debt) Net assets Basic earnings per share (cents per share) 22002233 $$‘‘000000 320,840 (146,429) 34 (12,520) 116611,,992255 (27,510) (125,249) 99,,116666 (4,767) 44,,339999 152,560 106,471 (50,613) 55,858 256,537 1.18 22002222 $$‘‘000000 287,043 (118,975) 229 (14,363) 115533,,993344 (31,665) (11,363) 111100,,990066 (21,423) 8899,,448833 134,657 61,502 (65,386) (3,884) 247,535 24.27 CChhaannggee $$’’000000 33,797 (27,454) (195) 1,843 77,,999911 4,155 (113,886) ((110011,,774400)) 16,656 ((8855,,008844)) 17,903 44,969 14,773 59,742 9,002 (23.09) CChhaannggee (13) 1,002 %% 12 23 (85) (13) 55 ((9922)) (78) ((9955)) 13 73 (23) 4 (95) (1,538) 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 $4.4 million for the full year to 30 June 2023, down from $89.5 million in the previous year, primarily due to one‐off finance costs associated with the restructuring of gold forward contracts (see “Net EBITDA increased 5% to $161.9 million for the full year to 30 June 2023 as higher gold sales revenue offset increases in finance costs” below). operating and overhead costs. DDiirreeccttoorrss’’ rreeppoorrtt (Continued) PPeerrffoorrmmaannccee ssuummmmaarryy SSaalleess Gold revenue for the financial year was $320.8 million from the sale of 120,320 ounces of gold at an average realised price of $2,665 per ounce (2022: $287.0 million from 116,122 ounces at $2,471 per ounce). During the year Capricorn delivered 16,947 ounces of gold into forward contracts at an average delivery price of $2,277 per ounce (2022: 35,053 at $2,247) and sold 103,373 ounces of gold at spot prices averaging $2,728 per ounce (2022: 81,069 ounces at $2,568). As at 30 June 2023, Capricorn’s gold forwards hedging programme totalled 107,000 ounces of flat forward contracts at an average delivery price of $2,327 per ounce. The Company has no gold hedging delivery obligations until 30 September 2024. CCoosstt ooff ssaalleess Cost of sales, excluding depreciation and amortisation, for the year increased 23% to $146.4 million from the previous year mainly due to increased mining volumes at the KGP and the effect of industry wide cost pressures. NNeett ffiinnaannccee ccoossttss Net finance costs have increased by $113.9 million to $125.2 million from the previous year due to the effect of restructuring the Group’s gold forward contracts. In June 2023, the Company announced that it had reduced its gold forward contracts by 51,000 ounces to provide further exposure to any increase in the A$ gold price. The closure of the gold forwards means the Company does not have any hedging delivery obligations until September 2024. The cost of reducing the hedge book was $33.1 million in cash and an $83.2 million in non‐cash expense relating to the recognition of the fair value of the remaining gold forward contracts through the profit and loss, as the Company is no longer able to apply the “Own use” exemption to account for the remaining flat forward contracts. The restructure of the gold forwards has led to a change in the accounting for the remaining gold forwards and are now valued through the profit and loss. These contracts previously qualified as future inventory sales contracts with the sales value recognised as revenue at the time of sale, also known as the “own use” exemption. CCaasshhffllooww Statutory operating cash flow for the year was $152.6 million which delivered a $45 million increase (to $106.5 million) in cash and cash equivalents for the year. Key cash flow movements for the year included: Net cash inflow from operations (excluding interest paid) of $158.8 million Payments for the partial closure of the gold forwards hedge book and purchase of gold put options of $36.8 million $35.6 million on exploration activities at KGP and MGGP $15.0 million repayment of debt to Macquarie Bank Ltd NNeett ccaasshh//((ddeebbtt)) The Company had net cash of $56m at the end of the financial year (2022: Net debt of $3.9m) an increase of $59.7m from the prior year. The Company had outstanding debt at the end of the financial year of $50 million (2022: $65 million) after repaying $15 million during the year. In July 2022, Macquarie Bank agreed to convert the $50 million outstanding debt to a general‐ purpose corporate loan facility with a single bullet repayment in June 2025. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 5 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 6 27 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) PPrroojjeecctt ssuummmmaarryy KKaarrllaawwiinnddaa GGoolldd PPrroojjeecctt OOppeerraattiioonnss Operating results for the 2023 financial year were as follows: Ore mined Waste mined Stripping ratio Ore mined Ore milled Head grade Recovery Gold production Cash cost (2) Cash cost inc. royalties All‐in‐sustaining‐cost (2) UUnniitt BCM (‘000) BCM (‘000) w:o Tonnes (‘000) Tonnes (‘000) g/t % Ounces A$/oz A$/oz A$/oz 3300 JJuunnee 22002233 3300 JJuunnee 22002222 2,443 10,129 4.15 5,807 4,219 0.96 93 120,014 $1,038 $1,186 $1,208 2,790 8,954 3.21 5,940 4,450 0.89 94 118,432 $952 $1,073 $1,112 2 Cash cost and all‐in sustaining costs (“AISC”) are non‐IFRS financial information and not subject to audit. These are comparable measures commonly used in the mining industry and in particular the gold mining industry. The Company calculates cash costs and AISC on a per ounce production basis. KGP produced 120,014 ounces from its second year of operation achieving above the mid‐point of the annual production guidance range of 115,000 – 125,000 ounces. All‐in‐sustaining‐costs (“AISC”) for the financial year was $1,208 per ounce which was at the lower end of the AISC guidance range for the year of $1,160 ‐ $1,260 per ounce. It was with great sadness that a significant incident occurred in October 2022 at the KGP that tragically claimed the life of an employee of mining contractor MACA. The safety and wellbeing of all employees and contractors of the Company remain our highest priority and our thoughts and condolences remain with the MACA employee’s family, friends and colleagues. A total of 12.6 million BCM of material was mined from the Bibra open pit during the year at a waste‐to‐ore strip ratio of 4.1. Mining focussed on delivering ore to the ROM primarily from Stage 3 of the open pit and mining waste to open up ore zones in stage 2 and 3 of the open pit. The processing plant performed well during the year with steady production and ongoing optimisation. Mill feed during the year was initially a blend of laterite and oxide ore with a small proportion of transitional ore, leading into a combination of fresh and transitional ore over the second half of the financial year. Capricorn expects to continue its strong operational performance in FY24 with gold production guidance of 115,000 – 125,000 ounces at an AISC range of $1,270 ‐ $1,370 per ounce and growth capital of $10‐20 million. EExxpplloorraattiioonn Capricorn wholly owns a 2,052 square kilometre tenement package at KGP which includes the greenstone belt hosting the Bibra gold deposit and other significant greenstone areas. The Pilbara region of Western Australia has not had a significant historical exploration focus on gold and as a result very little modern and meaningful gold exploration has been completed outside of the immediate Bibra deposit, the focus of current mining operations. During the year a total of 1,020 holes for 73,335 metres were drilled across the KGP tenement package. Multiple near mine and regional exploration projects were advanced during the year focussing on areas situated proximal to either the Nanjilgardy Fault or the Sylvania Inlier and Pilbara Craton margin (refer Figure 1 below). First pass drilling programmes were completed at near mine targets including Muirfield, Carnoustie, Vedas and Berwick with encouraging results received. Follow up near mine drilling programmes will continue in FY24. First pass regional drilling programmes are expected to commence in FY24 as areas were cleared for heritage in FY23. Drilling is planned at Carrot Hill, Domomore, Jamie Well and Mumbakine Well in FY24. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 28 Page | 7 CAPRICORN METALS ANNUAL REPORT 2023 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) PPrroojjeecctt ssuummmmaarryy KKaarrllaawwiinnddaa GGoolldd PPrroojjeecctt OOppeerraattiioonnss Operating results for the 2023 financial year were as follows: Ore mined Waste mined Stripping ratio Ore mined Ore milled Head grade Recovery Gold production Cash cost (2) Cash cost inc. royalties All‐in‐sustaining‐cost (2) UUnniitt BCM (‘000) BCM (‘000) w:o Tonnes (‘000) Tonnes (‘000) g/t % Ounces A$/oz A$/oz A$/oz 3300 JJuunnee 22002233 3300 JJuunnee 22002222 2,443 10,129 4.15 5,807 4,219 0.96 93 120,014 $1,038 $1,186 $1,208 2,790 8,954 3.21 5,940 4,450 0.89 94 118,432 $952 $1,073 $1,112 2 Cash cost and all‐in sustaining costs (“AISC”) are non‐IFRS financial information and not subject to audit. These are comparable measures commonly used in the mining industry and in particular the gold mining industry. The Company calculates cash costs and AISC on a per ounce production basis. KGP produced 120,014 ounces from its second year of operation achieving above the mid‐point of the annual production guidance range of 115,000 – 125,000 ounces. All‐in‐sustaining‐costs (“AISC”) for the financial year was $1,208 per ounce which was at the lower end of the AISC guidance range for the year of $1,160 ‐ $1,260 per ounce. It was with great sadness that a significant incident occurred in October 2022 at the KGP that tragically claimed the life of an employee of mining contractor MACA. The safety and wellbeing of all employees and contractors of the Company remain our highest priority and our thoughts and condolences remain with the MACA employee’s family, friends and colleagues. A total of 12.6 million BCM of material was mined from the Bibra open pit during the year at a waste‐to‐ore strip ratio of 4.1. Mining focussed on delivering ore to the ROM primarily from Stage 3 of the open pit and mining waste to open up ore zones in stage 2 and 3 of the open pit. The processing plant performed well during the year with steady production and ongoing optimisation. Mill feed during the year was initially a blend of laterite and oxide ore with a small proportion of transitional ore, leading into a combination of fresh and transitional ore over the second half of the financial year. Capricorn expects to continue its strong operational performance in FY24 with gold production guidance of 115,000 – 125,000 ounces at an AISC range of $1,270 ‐ $1,370 per ounce and growth capital of $10‐20 million. EExxpplloorraattiioonn 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 1,020 holes for 73,335 metres were drilled across the KGP tenement package. Multiple near mine and regional 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 1 below). First pass drilling programmes were completed at near mine targets including Muirfield, Carnoustie, Vedas and Berwick with encouraging results received. Follow up near mine drilling programmes will continue in FY24. First pass regional drilling programmes are expected to commence in FY24 as areas were cleared for heritage in FY23. Drilling is planned at Carrot Hill, Domomore, Jamie Well and Mumbakine Well in FY24. DDiirreeccttoorrss’’ rreeppoorrtt (Continued) RReesseerrvveess && RReessoouurrcceess In June 2023 the company announced an annual resource and reserve update for KGP. The updated KGP Ore Reserve Estimate (“ORE”) of 1,247,000 ounces (2022: 1.34 million ounces) is an increase of 5,000 ounces after accounting for mining depletion in the nine months to 31 March 2023. The updated Mineral Resource Estimate (“MRE”) is 2,228,000 ounces (2022: 2.29 million ounces) is an increase of 40,000 ounces after accounting for mining depletion in the nine months to 31 March 2023. MMtt GGiibbssoonn GGoolldd PPrroojjeecctt Figure 1: Karlawinda Gold Project exploration targets In July 2021 Capricorn announced the acquisition of the MGGP located approximately 280 kilometres northeast of Perth in the Mid‐West region of WA. At the time of acquisition the project had a JORC 2012 compliant Inferred MRE of 2,083,000 ounces of gold. In April 2023 the Company announced a maiden ORE and the results of a prefeasibility study for the MGGP. The maiden MGGP JORC 2012 compliant ORE is 48.7 million tonnes @ 0.9g/t Au for 1.45 million ounces. This ORE is based on a MRE of 104.9 million tonnes @ 0.8g/t Au for 2.76 million ounces. The ORE was estimated using a A$1,900 per ounce gold price with the reserve pits having a shallow average depth of 140 metres, down to a maximum depth of 240 metres and an operating strip ratio of 4.2. The maiden ORE was the culmination of an extensional and infill resource drilling programme that commenced in January 2022 and continued during the 2023 financial year. A total of 163,944 metres (1,078 holes) of RC drilling has been completed at the project to date with results received indicating mineralisation remains open down dip and along strike to the north and south. Continued resource extension and near mine exploration drilling will continue in FY24 in parallel with permitting and development work with a view to increasing reserves given the shallow depth of the reserve pits and significant untested strike north of the current resources. The results of the prefeasibility study completed indicate the MGGP as a robust, large scale open pit gold mine with gold production averaging 152,000 ounces per annum over the project's first 7.5 years. Production is expected to be 1.34 million ounces over a 10‐year mine life with average annual production of 138,000 ounces per annum at AISC’s of $1,529 per ounce. The project represents a strong economic proposition for the Company and is expected to generate over $1.5 billion in operating cashflow over a 10 year mine life with revenues in excess of $3.6 billion at a forecast gold price of $2,750 per ounce. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 7 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 8 29 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) On the basis of the strong Pre‐feasibility results the Board has given approval to: Complete project optimisation to feasibility study level; Complete remaining work streams to level required to support submission of relevant applications; and Commence long lead purchasing where advantageous to do so. MMaatteerriiaall bbuussiinneessss rriisskkss The material business risks of the Company include: 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. This involves forward contracts as well as call and put options. 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 (2022: Nil). CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 30 Page | 9 CAPRICORN METALS ANNUAL REPORT 2023 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) On the basis of the strong Pre‐feasibility results the Board has given approval to: Complete project optimisation to feasibility study level; Complete remaining work streams to level required to support submission of relevant applications; and Commence long lead purchasing where advantageous to do so. MMaatteerriiaall bbuussiinneessss rriisskkss The material business risks of the Company include: 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. This involves forward contracts as well as call and put options. 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 DDiivviiddeennddss ppaaiidd oorr rreeccoommmmeennddeedd CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) SSuubbsseeqquueenntt eevveennttss There were no material events arising subsequent to 30 June 2023, 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. 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 subjected from time to time to Government agency audits and site inspections. The Company is not aware of any 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 22,172,000 6,615,385 3,611,539 74,550 NNuummbbeerr ooff uunnqquuootteedd rriigghhttss 120,000 ‐ ‐ ‐ At the date of this report, the Company had no unissued shares under listed and unlisted options. SShhaarreess iissssuueedd oonn eexxeerrcciissee ooff ooppttiioonnss The Company had no shares issued under options for the year. PPeerrffoorrmmaannccee rriigghhttss UUnniissssuueedd sshhaarreess At the date of this report, the Company had the following unissued shares under unvested performance rights. VVeessttiinngg ddaattee 30 September 2023 18 January 2024 29 March 2024 4 October 2023 10 December 2023 10 December 2024 4 October 2024 10 December 2025 NNuummbbeerr oouuttssttaannddiinngg 112,500 100,000 100,000 259,909 525,000 645,707 139,909 80,707 Other than as set out below and elsewhere in the report, there were no significant changes in the state of affairs. No dividends were paid or recommended to be paid during the financial year (2022: Nil). 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. Page | 9 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 10 31 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) 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 2023 (2022: 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 2023 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 32 Page | 11 CAPRICORN METALS ANNUAL REPORT 2023 DDiirreeccttoorrss’’ rreeppoorrtt (Continued) 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 2023 (2022: 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 2023 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. RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) This remuneration report for the year ended 30 June 2023 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 2023 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 FY23 total remuneration packages split between the fixed and variable remuneration for the executives is shown below: CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 11 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 12 33 RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) MARK CLARK 55% 28% PAUL THOMAS 57% 15% 28% 17% 27% KIM MASSEY 57% 16% Fixed remuneration Short term incentives Long term incentives 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. At the end of the 2023 financial year, executive annual base salaries were: Mark Clark Paul Thomas Kim Massey SShhoorrtt tteerrmm iinncceennttiivveess $900,000 $700,000 $600,000 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 FY23 was 40% of the fixed remuneration of the executive. Each year the RNDC set KPI targets for executives. For FY23 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 34 Page | 13 CAPRICORN METALS ANNUAL REPORT 2023 RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) A summary of the KPI targets set for FY23 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% 100% 15% Company performance 25% TSR performance against comparator group 100% Total 100% 25% 70% In assessing the achievement of the KPI’s the Committee made the following assessments: Production – annual gold production of 120,014 ounces was in line with FY23 budgeted production and the base reward of 15% was awarded; Costs – AISC’s of $1,208 per ounce achieved was in line with FY23 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. The performance was impacted by a fatality at Karlawinda in October 2022, and subsequently, the metric was not achieved. Reserve growth – The Company’s reserves increased by 66% with the addition of the Mt Gibson maiden reserve. The stretch target was achieved and a 15% weighting was awarded. Company performance – The Company achieved a total shareholder return of 29% for the 12 months to 30 June 2023 which was at the upper end of the comparator group. Accordingly, the stretch target was achieved and a 25% weighting was awarded. Based on the above assessment, 70% of the target opportunity of 40% of fixed remuneration was achieved with the following STI payments made to executives for FY23: 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. At the end of the 2023 financial year, executive annual base salaries were: 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 70% 70% 70% 28% of TFR 28% of TFR 28% of TFR $252,000 $196,000 $168,000 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 2023 financial year, under the Performance Rights Plan, the number of rights granted to executives range from 50% to 70% 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 FY23 were subject to one performance hurdle being total shareholder return (“TSR”) measured against a benchmark peer group. Page | 13 CAPRICORN METALS ANNUAL REPORT 2023 Page | 14 35 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 MARK CLARK 55% PAUL THOMAS 57% 28% 15% KIM MASSEY 57% Fixed remuneration Short term incentives Long term incentives 28% 17% 27% 16% EElleemmeennttss ooff RReemmuunneerraattiioonn FFiixxeedd rreemmuunneerraattiioonn Mark Clark Paul Thomas Kim Massey SShhoorrtt tteerrmm iinncceennttiivveess $900,000 $700,000 $600,000 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 FY23 was 40% of the fixed remuneration of the executive. Each year the RNDC set KPI targets for executives. For FY23 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 RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) The following companies were identified by Capricorn to comprise the peer group for LTI purposes from 1 July 2022: Regis Resources Limited Silver Lake Resources Ltd Westgold Resources Limited OceanaGold Corporation Perseus Mining Limited Gold Road Resources Limited PPeeeerr GGrroouupp Dacian Gold Limited St Barbara Limited Pantoro Limited Red 5 Limited Aurelia Metals Limited Alkane Resources Limited Evolution Mining Limited Northern Star Resources Limited De Grey Mining Limited Bellevue Gold Limited Resolute Mining 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 2022 and ending on 30 June 2024 (Tranche 1); and The other 50% of the performance rights is the 36‐month period commencing on 1 July 2022 and ending on 30 June 2025 (Tranche 2). The following executives were awarded LTI’s during the reporting period: EExxeeccuuttiivvee Mark Clark Paul Thomas Kim Massey MMaaxxiimmuumm LLTTII OOppppoorrttuunniittyy NNuummbbeerr ooff ppeerrffoorrmmaannccee rriigghhttss ggrraanntteedd dduurriinngg FFYY2233 70% 60% 50% 161,414 127,712 88,688 Shareholders approved the issue of performance rights to Mr Clark at the Company AGM in November 2022. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 36 Page | 15 CAPRICORN METALS ANNUAL REPORT 2023 The following companies were identified by Capricorn to comprise the peer group for LTI purposes from 1 July 2022: Regis Resources Limited Silver Lake Resources Ltd Westgold Resources Limited OceanaGold Corporation Perseus Mining Limited Gold Road Resources Limited PPeeeerr GGrroouupp Dacian Gold Limited St Barbara Limited Pantoro Limited De Grey Mining Limited Bellevue Gold Limited Evolution Mining Limited Northern Star Resources Limited Red 5 Limited Aurelia Metals Limited Alkane Resources Limited Resolute Mining 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: Between the 50th and 75th percentile Pro‐rata between 50% and 100% 0% 50% 100% 50% of the performance rights is the 24‐month period commencing on 1 July 2022 and ending on 30 June 2024 The other 50% of the performance rights is the 36‐month period commencing on 1 July 2022 and ending on 30 June The following executives were awarded LTI’s during the reporting period: Below the 50th percentile At the 50th percentile At and above the 75th percentile The measurement period for: (Tranche 1); and 2025 (Tranche 2). EExxeeccuuttiivvee Mark Clark Paul Thomas Kim Massey MMaaxxiimmuumm LLTTII OOppppoorrttuunniittyy NNuummbbeerr ooff ppeerrffoorrmmaannccee rriigghhttss ggrraanntteedd dduurriinngg FFYY2233 70% 60% 50% 161,414 127,712 88,688 Shareholders approved the issue of performance rights to Mr Clark at the Company AGM in November 2022. RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) (Continued) 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 TSR TSR 120,000 24/11/2021 $2.042 4/10/2022 100% 120,000 24/11/2021 $2.042 4/10/2023 80,707 29/11/2022 $3.197 30/06/2024 80,707 29/11/2022 $3.297 30/06/2025 0% 0% 0% K Massey 3 yrs service 1,000,000 17/12/2019 $1.180 17/9/2022 100% TSR TSR TSR TSR 57,340 4/10/2021 $1.780 30/6/2023 57,340 4/10/2021 $1.872 30/6/2024 44,344 19/6/2023 $2.562 30/6/2024 44,344 19/6/2023 $2.867 30/6/2025 0% 0% 0% 0% RReellaattiivvee TTSSRR ffoorr MMeeaassuurreemmeenntt PPeerriioodd PPrrooppoorrttiioonn ooff PPeerrffoorrmmaannccee RRiigghhttss tthhaatt wwiillll vveesstt P Thomas 3 yrs service 1,000,000 17/12/2019 $1.180 17/9/2022 100% TSR TSR TSR TSR 82,569 4/10/2021 $1.780 30/6/2023 82,569 4/10/2021 $1.872 30/6/2024 63,856 19/6/2023 $2.562 30/6/2024 63,856 19/6/2023 $2.867 30/6/2025 0% 0% 0% 0% 22,,889977,,663322 0% 0% 0% 0% 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 $1,111,529. This amount is allocated to remuneration over the vesting period (i.e. in years 1 July 2022 to 30 June 2025). The total performance rights expense recognised for KMP during the year is $1,050,100. There were 2,000,000 performance rights with a grant date 17 December 2019 that vested and were exercised during the year. There were 120,000 performance rights with a grant date 24 November 2021 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. In relation to the performance rights issued on 29 November 2022 50% of the rights have a performance period of two years which ends on 30 June 2024 and the remaining balance ends on 30 June 2025. In relation to the performance rights issued on 19 June 2023 50% of the rights have a performance period of two years which ends on 30 June 2024 and the remaining balance ends on 30 June 2025. OOppttiioonnss There were no options granted to KMP’s during the current year. There were no movements in options during the year. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 15 CAPRICORN METALS ANNUAL REPORT 2023 Page | 16 37 d e t a e r l tt oo NN r i e h t g n d u l c n i i , P M K y b , 4 1 4 1 8 2 , 0 8 6 4 1 1 , 8 3 1 5 6 1 , 2 3 2 1 6 5 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ , 4 1 4 1 8 2 , 0 8 6 4 1 1 , 8 3 1 5 6 1 , 2 3 2 1 6 5 ll ee bb aa ss ii cc rr ee xx ee ll ee bb aa ss ii cc rr ee xx EE dd ee tt ss ee vv ll aa tt oo TT 33 22 00 22 ee nn uu JJ 00 33 tt aa ss aa dd ee HH ll )) 11 (( rr ee hh tt oo ee gg nn aa hh cc tt ee NN ‐ ) 8 8 6 8 8 ( , , ) 2 1 7 7 2 1 ( , ) 0 0 4 6 1 2 ( dd ee ss ii cc rr ee xx EE ) 0 0 0 0 2 1 ( , , ) 0 0 0 0 0 0 1 ( , , ) 0 0 0 0 0 0 1 ( , , ) 0 0 0 0 2 1 2 ( , 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 22 22 00 22 yy ll uu JJ 11 8 8 6 8 8 , , 4 1 4 1 6 1 , 2 1 7 7 2 1 , 4 1 8 7 7 3 , 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 , 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 t h g i r d e t s e v n U l k r a C M ss tt hh gg RR ii y e s s a M K s a m o h T P l a t o T , 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 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 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 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 38 7 1 | 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 . 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 t h g i r d e t s e V . d e u s s i t o n t u b d e t n a r g s t h g i r o t s r e f e r r e h t o e g n a h c t e N ) 1 ( CAPRICORN METALS ANNUAL REPORT 2023 RReemmuunneerraattiioonn rreeppoorrtt ((AAuuddiitteedd)) NNoonn‐‐eexxeeccuuttiivvee ddiirreeccttoorrss Total remuneration for all Non‐Executive Directors, last voted upon by shareholders at the 2022 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 is $120,000 per annum excluding superannuation. 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 2023. 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 CAPRICORN METALS ANNUAL REPORT 2023 Page | 18 39 %% ‐ ‐ ‐ % 7 7 4 4 . % 3 5 2 4 . % 4 8 2 4 . dd ee tt aa ee RR ll ee cc nn aa mm rr oo ff rr ee PP $$ ll aa tt oo TT , 5 2 1 7 6 1 , 0 0 7 3 3 1 , 0 0 7 3 3 1 , 2 9 5 5 8 4 1 , , 7 3 1 8 4 0 1 , , 6 0 9 5 9 2 1 , ,, 00 66 11 44 66 22 44 ,, ss tt nn ee mm yy aa pp dd ee ss aa bb ‐‐ ee rr aa hh SS ss tt ii ff ee nn ee bb mm rr ee tt ‐‐ gg nn oo LL ‐‐ tt ss oo PP ss tt ii ff ee nn ee bb tt nn ee mm yy oo pp mm ee ll ss tt ii ff ee nn ee bb mm rr ee tt tt rr oo hh SS ss tt nn ee mm yy aa PP nn oo ii tt aa nn mm rr ee TT ii ss tt hh gg RR ii && ss nn oo ii tt pp OO ## ee vv aa ee ll ee cc ii vv rr ee ss gg nn oo ll && ll aa uu nn nn aa dd ee uu rr cc cc AA nn oo ii tt aa uu nn nn aa rr ee pp uu SS hh ss aa CC ‐‐ nn oo NN ** ss tt ii ff ee nn ee BB ^^ rr ee hh tt OO ss ee ee FF dd nn aa yy rr aa aa SS ll 33 22 00 22 YY FF 33 22 00 22 ee nn uu JJ 00 33 dd ee dd nn ee rr aa ee yy ee hh tt gg nn ii rr uu dd pp uu oo rr GG ee hh tt ff oo ll ee nn nn oo ss rr ee pp tt nn ee mm ee gg aa nn aa mm yy ee KK rr oo ff nn oo ii tt aa rr ee nn uu mm ee RR ) d e u n i t n o C ( )) dd ee tt ii dd uu AA (( tt rr oo pp ee rr nn oo ii tt aa rr ee nn uu mm ee RR 40 $$ ‐ ‐ ‐ ‐ ‐ ‐ ‐‐ $$ ‐ ‐ ‐ $$ ‐ ‐ ‐ $$ 5 2 1 7 1 , 0 0 7 3 1 , 0 0 7 3 1 , $$ ‐ ‐ ‐ $$ ‐ ‐ ‐ $$ 0 0 0 0 5 1 , 0 0 0 0 2 1 , 0 0 0 0 2 1 , 0 9 0 3 1 4 , 2 3 8 4 7 , 0 0 5 7 2 , 5 9 2 4 , 0 0 0 2 5 2 , 5 7 8 3 1 7 , 6 9 7 7 7 2 , 4 1 2 9 5 3 , ,, 00 00 11 00 55 00 11 ,, 6 9 2 6 3 , 7 4 1 4 6 , ,, 55 77 22 55 77 11 0 0 5 7 2 , 0 0 5 7 2 , 55 22 00 77 22 11 ,, 5 9 2 4 , 5 9 2 4 , 55 88 88 22 11 ,, 0 0 0 8 6 1 , 0 0 0 6 9 1 , 00 00 00 66 11 66 ,, 0 5 2 4 3 5 , 0 5 7 4 4 6 , ,, 55 77 88 22 88 22 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 . 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 . 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 I T S g n i t e e m i r o f P M K o t d a p 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 ^ * # ) 1 ( 9 1 | 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 ANNUAL REPORT 2023 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 ^^ rr ee hh tt OO ss ee ee FF dd nn aa yy rr aa aa SS ll 22 22 00 22 YY FF 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 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 %% ‐ ‐ ‐ % 8 0 7 3 . % 4 4 0 6 . % 4 1 1 6 . $$ 7 3 4 1 5 1 , 5 7 5 6 2 1 , 5 7 5 6 2 1 , , 8 0 6 6 0 1 1 , , 8 9 6 8 7 3 1 , , 6 6 7 5 8 7 1 , ,, 99 55 66 55 77 66 44 ,, $$ ‐ ‐ ‐ ‐ ‐ ‐ ‐‐ $$ ‐ ‐ ‐ $$ ‐ ‐ ‐ $$ 7 3 9 3 1 , 5 7 5 1 1 , 5 7 5 1 1 , $$ ‐ ‐ ‐ $$ ‐ ‐ ‐ $$ 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 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 i r o f P M K o t d a p 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 . 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 . 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 * * # 0 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 . 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 ( CAPRICORN METALS ANNUAL REPORT 2023 41 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 22002222 IIssssuueedd oonn eexxeerrcciissee ooff ooppttiioonnss//rriigghhttss NNeett cchhaannggee ootthheerr* HHeelldd aass aatt 3300 JJuunnee 22002233 6,615,385 3,611,539 74,550 ‐ ‐ ‐ 22,052,000 120,000 ‐ ‐ ‐ ‐ 6,615,385 3,611,539 74,550 22,172,000 2,153,847 3,400,000 3377,,990077,,332211 1,000,000 1,000,000 22,,112200,,000000 (600,000) (1,400,000) ((22,,000000,,000000)) 2,553,847 3,000,000 3388,,002277,,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 Capricorn aims to align our executive remuneration to our strategic and business objectives and the creation of shareholder wealth. The table below shows measures of the Group’s financial performance over the last five years as required by the Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMPs, as discussed above. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded. Revenue Net profit/(loss) after tax Share price at year‐end Dividends paid Basic earnings per share Net assets 22001199 $$’’000000 207 (23,817) 0.089 ‐ (15.19) 23,817 RReessttaatteedd 22002200 $$’’000000 122 (17,947) 1.795(1) ‐ (4.30) 95,508 22002211 $$’’000000 110 (4,765) 1.900 ‐ (1.39) 130,460 22002222 $$’’000000 287,043 89,483 3.130 ‐ 24.27 247,535 22002233 $$’’000000 320,840 4,399 4.03 ‐ 1.18 256,537 (1) A share consolidation of one for every five shares was approved by shareholders in November 2019. 42 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 21 CAPRICORN METALS ANNUAL REPORT 2023 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: 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 7 September 2023 NNoonn‐‐EExxeeccuuttiivvee DDiirreeccttoorrss M Okeby M Ertzen B De Araugo EExxeeccuuttiivvee DDiirreeccttoorrss M Clark OOtthheerr EExxeeccuuttiivveess K Massey P Thomas * HHeelldd aass aatt IIssssuueedd oonn eexxeerrcciissee 11 JJuullyy 22002222 ooff ooppttiioonnss//rriigghhttss NNeett cchhaannggee ootthheerr* HHeelldd aass aatt 3300 JJuunnee 22002233 6,615,385 3,611,539 74,550 ‐ ‐ ‐ 6,615,385 3,611,539 74,550 22,052,000 120,000 22,172,000 ‐ ‐ ‐ ‐ 2,153,847 3,400,000 3377,,990077,,332211 1,000,000 1,000,000 22,,112200,,000000 (600,000) (1,400,000) ((22,,000000,,000000)) 2,553,847 3,000,000 3388,,002277,,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 Capricorn aims to align our executive remuneration to our strategic and business objectives and the creation of shareholder wealth. The table below shows measures of the Group’s financial performance over the last five years as required by the Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of remuneration to be awarded to KMPs, as discussed above. As a consequence, there may not always be a direct correlation between the statutory key performance measures and the variable remuneration awarded. Revenue Net profit/(loss) after tax Share price at year‐end Dividends paid Basic earnings per share Net assets 22001199 $$’’000000 207 (23,817) 0.089 ‐ (15.19) 23,817 RReessttaatteedd 22002200 $$’’000000 122 (17,947) 1.795(1) ‐ (4.30) 95,508 22002211 $$’’000000 110 (4,765) 1.900 ‐ (1.39) 130,460 22002222 $$’’000000 287,043 89,483 3.130 ‐ 24.27 247,535 22002233 $$’’000000 320,840 4,399 4.03 ‐ 1.18 256,537 (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 Page | 21 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 22 43 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 2023 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 7 September 2023 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. 44 Page I 23 CAPRICORN METALS ANNUAL REPORT 2023 CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr ccoommpprreehheennssiivvee iinnccoommee FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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 2023 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. Revenue Cost of goods sold GGrroossss pprrooffiitt Other income Personnel costs Share‐based payment expense Depreciation Amortisation Administrative expense Exploration and evaluation expenditure Net finance costs PPrrooffiitt bbeeffoorree iinnccoommee ttaaxx eexxppeennssee Income tax expense KPMG R Gambitta Partner Perth 7 September 2023 PPrrooffiitt 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 ffoorr tthhee yyeeaarr aattttrriibbuuttaabbllee ttoo mmeemmbbeerrss ooff tthhee ppaarreenntt eennttiittyy NNoottee 2 3 2 3 29 3 3 4 6 22002233 $$’’000000 320,840 (171,570) 149,270 22002222 $$’’000000 287,043 (149,480) 137,563 34 229 (5,175) (4,712) (341) (2,028) (2,567) (66) (125,249) 99,,116666 (4,767) 44,,339999 (7,217) (4,893) (225) (935) (1,680) (233) (11,703) 111100,,990066 (21,423) 8899,,448833 (7) ((77)) (196) ((119966)) 44,,339922 8899,,228877 EEaarrnniinnggss ppeerr sshhaarree:: Basic profit/(loss) per share (cents per share) Diluted profit/(loss) per share (cents per share) 5 5 1.18 1.17 24.27 23.91 The accompanying notes form part of these financial statements 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. Page I 23 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 24 45 CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 CCuurrrreenntt aasssseettss Cash and cash equivalents Receivables Other assets Inventories Other financial assets Assets classified as held for sale TToottaall ccuurrrreenntt aasssseettss NNoonn‐‐ccuurrrreenntt aasssseettss Inventories Other 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 Other financial liabilities Deferred tax liabilities TToottaall nnoonn‐‐ccuurrrreenntt lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss EEqquuiittyy Issued capital Reserves Retained earnings TToottaall eeqquuiittyy NNoottee 7 8 9 10 11 9 10 12 13 14 15 16 18 19 20 21 19 20 21 22 23 24 25 26 22002233 $$’’000000 106,471 2,535 356 16,619 3,517 2,500 113311,,999988 47,546 2,790 153,302 45,364 105,723 ‐ 49,762 440044,,448877 22002222 $$’’000000 61,502 2,235 295 14,913 3,099 2,500 8844,,554444 29,883 3,067 159,121 47,972 77,297 ‐ 46,628 336633,,996688 553366,,448855 444488,,551122 33,226 9,428 613 1,457 4444,,772244 31,769 50,000 30,452 97,103 25,900 27,407 7,613 38,386 1,087 7744,,449933 37,822 27,000 29,226 11,540 20,896 223355,,222244 112266,,448844 227799,,994488 220000,,997777 225566,,553377 224477,,553355 203,422 3,134 49,981 225566,,553377 203,524 6,101 37,910 224477,,553355 The accompanying notes form part of these financial statements 46 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 25 CAPRICORN METALS ANNUAL REPORT 2023 CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 CCuurrrreenntt aasssseettss Cash and cash equivalents Receivables Other assets Inventories Other financial assets Assets classified as held for sale TToottaall ccuurrrreenntt aasssseettss NNoonn‐‐ccuurrrreenntt aasssseettss Inventories Other 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 Other financial liabilities Deferred tax liabilities TToottaall nnoonn‐‐ccuurrrreenntt lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss EEqquuiittyy Issued capital Reserves Retained earnings TToottaall eeqquuiittyy NNoottee 7 8 9 10 11 9 10 12 13 14 15 16 18 19 20 21 19 20 21 22 23 24 25 26 22002233 $$’’000000 106,471 2,535 356 16,619 3,517 2,500 113311,,999988 47,546 2,790 153,302 45,364 105,723 ‐ 49,762 440044,,448877 33,226 9,428 613 1,457 4444,,772244 31,769 50,000 30,452 97,103 25,900 22002222 $$’’000000 61,502 2,235 295 14,913 3,099 2,500 8844,,554444 29,883 3,067 159,121 47,972 77,297 ‐ 46,628 336633,,996688 27,407 7,613 38,386 1,087 7744,,449933 37,822 27,000 29,226 11,540 20,896 553366,,448855 444488,,551122 223355,,222244 112266,,448844 227799,,994488 220000,,997777 225566,,553377 224477,,553355 203,422 3,134 49,981 225566,,553377 203,524 6,101 37,910 224477,,553355 The accompanying notes form part of these financial statements ll aa tt oo TT 00 00 00 $$ ’’ 0 6 4 0 3 1 , ) 6 9 1 ( 3 8 4 9 8 , 7 8 2 9 8 , ‐ 0 1 4 2 2 , 5 8 4 3 9 8 4 , 55 33 55 77 44 22 ,, ee vv rr ee ss ee rr tt nn ee mm yy aa pp 00 00 00 $$ ’’ 9 9 4 1 1 , ‐ ‐ ‐ ‐ ‐ 3 9 8 4 , ) 3 4 2 9 ( , 99 44 11 77 ,, 5 3 5 7 4 2 , 9 4 1 7 , ) 7 ( 9 9 3 4 , 2 9 3 4 , ‐ ‐ ) 2 0 1 ( 2 1 7 4 , 77 33 55 66 55 22 ,, 6 2 | e g a P ‐ ‐ ‐ ‐ ‐ 2 1 7 4 , ) 2 7 6 7 ( , 99 88 11 44 ,, 00 00 00 $$ ’’ ) 2 5 8 ( ‐ ) 6 9 1 ( ) 6 9 1 ( ‐ ‐ ‐ ‐ )) 88 44 00 11 (( ,, ) 8 4 0 1 ( , ‐ ) 7 ( ) 7 ( ‐ ‐ ‐ ‐ )) 55 55 00 11 (( ,, ee vv rr ee ss ee rr nn oo ii tt aa ll ss nn aa rr tt ii dd ee nn aa tt ee RR ii ss gg nn nn rr aa ee 00 00 00 $$ ’’ ) 6 1 8 0 6 ( , ‐ 3 8 4 9 8 , 3 8 4 9 8 , ‐ ‐ ‐ 3 4 2 9 , 00 11 99 77 33 ,, 0 1 9 7 3 , ‐ 9 9 3 4 , 9 9 3 4 , ‐ ‐ ‐ 2 7 6 7 , 11 88 99 99 44 ,, ‐ ‐ ‐ dd ee uu ss ss II ll aa tt ii pp aa cc 00 00 00 $$ ’’ , 9 2 6 0 8 1 ‐ ‐ 5 8 4 0 1 4 2 2 , ,, 44 22 55 33 00 22 , 4 2 5 3 0 2 ‐ ‐ ‐ ‐ ‐ ‐ ) 2 0 1 ( ,, 22 22 44 33 00 22 ee tt oo NN 4 2 4 2 9 2 5 2 4 2 4 2 9 2 5 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 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 11 22 00 22 yy ll uu JJ 11 tt aa ss aa ee cc nn aa aa BB ll 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 22 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 33 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 dd ee ss aa bb ‐‐ ee rr aa hh SS yy cc nn ee rr rr uu cc nn gg ee rr oo FF ii 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 33 22 00 22 ee nn uu JJ 00 33 dd ee dd nn ee rr aa ee yy ee hh tt rr oo FF CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 25 CAPRICORN METALS ANNUAL REPORT 2023 47 CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ccaasshh fflloowwss FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess Receipts from gold sales Payments to suppliers and employees Interest received Interest paid Other income NNoottee NNeett ccaasshh ffrroomm ooppeerraattiinngg aaccttiivviittiieess 7 CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess Payments for property, plant and equipment 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 exercise of share options Transaction costs from issue of shares Proceeds from borrowings Repayment of borrowings Payment of lease liabilities Payments for gold put options Payments for gold forward contracts NNeett ccaasshh fflloowwss uusseedd iinn ffiinnaanncciinngg aaccttiivviittiieess NNeett iinnccrreeaassee 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 7 7 22002233 $$’’000000 320,747 (164,124) 2,028 (6,218) 127 115522,,556600 (11,474) (35,606) (23) (200) ‐ ((4477,,330033)) ‐ 135 ‐ (15,000) (8,644) (3,674) (33,105) ((6600,,228888)) 22002222 $$’’000000 286,948 (146,390) 28 (5,966) 37 113344,,665577 (5,777) (18,437) (26,548) (26,744) 187 ((7777,,331199)) 6,000 (42) 20,000 (25,000) (7,424) ‐ ‐‐ ((66,,446666)) 4444,,996699 5511,,119900 61,502 ‐ 110066,,447711 10,312 ‐ 6611,,550022 The accompanying notes form part of these financial statements 48 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 27 CAPRICORN METALS ANNUAL REPORT 2023 NNeett ccaasshh ffrroomm ooppeerraattiinngg aaccttiivviittiieess 7 CCoonnssoolliiddaatteedd ssttaatteemmeenntt ooff ccaasshh fflloowwss FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess Receipts from gold sales Payments to suppliers and employees Interest received Interest paid Other income CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess Payments for property, plant and equipment Payments for capitalised exploration expenditure Payments for mine properties under development Payment for acquisition of assets Proceeds on disposal of property, plant and equipment NNeett ccaasshh uusseedd iinn iinnvveessttiinngg aaccttiivviittiieess CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Proceeds from exercise of share options Transaction costs from issue of shares Proceeds from borrowings Repayment of borrowings Payment of lease liabilities Payments for gold put options Payments for gold forward contracts NNeett ccaasshh fflloowwss uusseedd iinn ffiinnaanncciinngg aaccttiivviittiieess NNoottee 22002233 $$’’000000 320,747 (164,124) 2,028 (6,218) 127 115522,,556600 ‐ ‐ ‐ (11,474) (35,606) (23) (200) ((4477,,330033)) 135 (15,000) (8,644) (3,674) (33,105) ((6600,,228888)) 61,502 ‐ 110066,,447711 22002222 $$’’000000 286,948 (146,390) (5,966) 28 37 113344,,665577 (5,777) (18,437) (26,548) (26,744) 187 ((7777,,331199)) 6,000 (42) 20,000 (25,000) (7,424) ‐ ‐‐ ((66,,446666)) 10,312 ‐ 6611,,550022 NNeett iinnccrreeaassee iinn ccaasshh hheelldd 4444,,996699 5511,,119900 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 7 7 The accompanying notes form part of these financial statements NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss BBaassiiss ooff pprreeppaarraattiioonn PPeerrffoorrmmaannccee ffoorr tthhee yyeeaarr 1. 2. 3. 4. 5. 6. 7. Segment information Revenue & other income Expenses Net finance costs Earnings per share Income tax Cash and cash equivalents AAsssseettss Receivables Inventories Other financial assets Assets held for sale Plant and equipment Right of use assets Deferred exploration and evaluation costs 8. 9. 10. 11. 12. 13. 14. 15. Mine properties under development 16. Mine properties 17. Impairment of non‐financial assets LLiiaabbiilliittiieess 18. 19. 20. 21. 22. 23. Trade and other payables Lease liabilities Borrowings Provisions Other financial liabilities Deferred tax liabilities EEqquuiittyy 24. 25. 26. RRiisskk 27. 28. Issued capital Reserves Retained earnings Financial risk management Capital management OOtthheerr DDiisscclloossuurreess 29. 30. 31. 32. 33. 34. 35. 36. 37. Share‐based payments Related parties Parent entity disclosures Deed of cross guarantee Commitments Contingencies Auditors’ remuneration Subsequent events New accounting standards and interpretations issued but not yet effective PPaaggee 29 50 30 31 32 34 34 35 36 51 52 53 55 55 56 57 36 37 37 39 40 41 42 43 43 44 57 58 58 60 61 62 63 64 64 65 44 45 46 46 48 49 65 66 67 67 69 70 51 52 52 72 73 73 53 56 74 77 56 61 62 63 63 63 63 63 63 77 82 83 84 84 84 84 84 84 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 27 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 49 Page | 28 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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 3, 40 Kings Park Road 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 7 September 2023. 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 30. 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. 50 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 29 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 BBAASSIISS OOFF PPRREEPPAARRAATTIIOONN KKeeyy eessttiimmaattee aanndd jjuuddggeemmeennttss 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: 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 9 Note 14 Note 17 Note 21 Note 22 Note 23 Note 29 Expenses Inventories Deferred exploration and evaluation costs Impairment Provisions Other Financial Liabilities Deferred tax liabilities Share‐based payments Page 32 Page 53 Page 37 Page 58 Page 42 Page 63 Page 44 Page 65 Page 46 Page 67 Page 48 Page 69 Page 49 Page 70 Page 56 Page 77 International Financial Reporting Standards adopted by the International Standards Board; NNeeww ssttaannddaarrddss aanndd iinntteerrpprreettaattiioonnss aaddoopptteedd The Group has adopted AASB 9 Financial Instruments: from 1 July 2022. Under the amendments, the Group recognises 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. The Group has adopted AASB 137 Provisions, Contingent Liabilities and Contingent Assets from 1 July 2022. Under the amendments, the Group recognises that 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. The adoption of the new standards and interpretations have not had a material impact on the financial performance of the Company. NNeeww ssttaannddaarrddss aanndd iinntteerrpprreettaattiioonnss iissssuueedd bbuutt nnoott yyeett eeffffeeccttiivvee Refer to Note 37 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 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 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. 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 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 29 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 30 51 Level 3, 40 Kings Park Road WEST PERTH WA 6005 Report. The nature of the operations and principal activities of the Company and its subsidiaries are described in the Directors The consolidated financial statements were authorised for issue by the Board of Directors on 7 September 2023. 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 have been prepared on a historical cost basis except for assets and liabilities and share based payments which are are presented in Australian dollars with all values rounded to the nearest thousand ($’000) unless otherwise stated in required to be measured at fair value; 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 30. 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. or loss and other comprehensive income. NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 KKaarrllaawwiinnddaa MMtt GGiibbssoonn UUnnaallllooccaatteedd TToottaall 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 RReevveennuuee Revenue 320,747 286,948 Other income ‐ ‐ 332200,,774477 228866,,994488 ‐‐ ‐‐ ‐‐ ‐‐ 187 118877 93 34 112277 95 42 320,840 287,043 34 229 113377 332200,,887744 228877,,227722 RReessuulltt Profit/(loss) before income tax 22,270 Net finance costs (125,237) Depreciation Amortisation (21,274) (5,911) AAsssseettss//LLiiaabbiilliittiieess 124,125 (11,363) (24,828) (6,623) (35) 7 (49) ‐ 99 (13,069) (13,318) 9,166 110,906 ‐ ‐ ‐ (19) (335) ‐ ‐ (125,249) (11,703) (214) (21,658) (25,042) ‐ (5,911) (6,623) Segment assets 433,908 373,901 93,441 66,291 9,136 8,320 536,485 448,512 Segment liabilities (240,421) (162,946) (11,752) (13,054) (27,775) (24,977) (279,948) (200,977) 22.. RREEVVEENNUUEE AANNDD OOTTHHEERR IINNCCOOMMEE AAccccoouunnttiinngg ppoolliicciieess 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. 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. 52 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 31 CAPRICORN METALS ANNUAL REPORT 2023 KKaarrllaawwiinnddaa MMtt GGiibbssoonn UUnnaallllooccaatteedd TToottaall 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 3300 JJuunn 22002222 $$’’000000 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 3300 JJuunn 22002233 $$’’000000 3300 JJuunn 22002222 $$’’000000 RReevveennuuee Revenue Other income ‐ ‐ 320,747 286,948 332200,,774477 228866,,994488 ‐‐ ‐‐ ‐‐ ‐‐ 187 118877 93 34 112277 95 42 320,840 287,043 34 229 113377 332200,,887744 228877,,227722 RReessuulltt Profit/(loss) before income tax 22,270 Net finance costs (125,237) Depreciation Amortisation (21,274) (5,911) 124,125 (11,363) (24,828) (6,623) (35) (49) 7 ‐ AAsssseettss//LLiiaabbiilliittiieess ‐ ‐ ‐ (19) (335) ‐ ‐ (125,249) (11,703) (214) (21,658) (25,042) ‐ (5,911) (6,623) Segment assets 433,908 373,901 93,441 66,291 9,136 8,320 536,485 448,512 Segment liabilities (240,421) (162,946) (11,752) (13,054) (27,775) (24,977) (279,948) (200,977) 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 Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial 22.. RREEVVEENNUUEE AANNDD OOTTHHEERR IINNCCOOMMEE AAccccoouunnttiinngg ppoolliicciieess GGoolldd SSaalleess delivery into the sales contract. IInntteerreesstt assets. RReennttaall IInnccoommee return on the property. 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 complied with and that the grant will be received. Government grants are recognised when there is reasonable assurance that conditions attached to the grant will be NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 RReevveennuuee aanndd ootthheerr iinnccoommee RReevveennuuee Gold sales Rental income OOtthheerr iinnccoommee Other Profit on sale of property, plant and equipment 22002233 $$’’000000 22002222 $$’’000000 320,747 286,948 93 95 332200,,884400 228877,,004433 34 ‐ 3344 42 187 222299 99 (13,069) (13,318) 9,166 110,906 GGoolldd ffoorrwwaarrdd ccoonnttrraaccttss As part of the risk management policy of the Group and in compliance with the conditions required by the Group’s financier Macquarie, the Group has entered into gold forward contracts to manage the gold price of a proportion of anticipated sales of gold. In June 2023 the Company announced that it had cash settled 51,000 ounces of gold forward contracts it held, consequently in accordance with accounting standards the remaining gold forwards are now recognised in the balance sheet at fair value (refer Note 22). Previously the gold forward contracts had only been settled via the physical delivery of gold which did not require the gold forwards to be recognised at fair value on the balance sheet. The gold forward contracts were treated as sale contracts with revenue recognised once gold has been delivered to Macquarie or its agent. Set out below is the settlement timeframe for the remaining gold forward contracts as at 30 June 2023. BBeettwweeeenn oonnee aanndd ffiivvee yyeeaarrss ‐ Fixed forward contracts GGoolldd ffoorr pphhyyssiiccaall ddeelliivveerryy AAvveerraaggee CCoonnttrraacctteedd ggoolldd ssaallee pprriiccee VVaalluuee ooff ccoommmmiitttteedd ssaalleess oouunncceess $$ $$’’000000 MMaarrkk‐‐ttoo‐‐ mmaarrkkeett $$’’000000 107,000 2,327 248,989 (83,177) The average contracted sales price is rounded to the nearest dollar. Mark‐to‐market has been calculated using the average forward price per ounce of $2,885 (2022: $2,726). 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. Rental income is recognised on a straight‐line basis over the period of the lease term so as to reflect a constant periodic 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. 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 31 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 32 53 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. EExxppeennsseess CCoossttss ooff ggooooddss ssoolldd Cash costs of production Royalties Depreciation of mine plant and equipment Amortisation of mine properties (refer Note 16) PPeerrssoonnnneell ccoossttss Salaries and wages Defined contribution superannuation Employee bonuses Other employee benefits expense Less: Amounts capitalised Less: Amounts included in cost of goods sold DDeepprreecciiaattiioonn Plant and equipment depreciation (refer to Note 12) Right of use asset depreciation (refer to Note 13) Less: Amounts capitalised Less: Amounts included in cost of goods sold AAmmoorrttiissaattiioonn Mine properties amortisation (refer note 16) Financial asset amortisation (refer note 10) Less: Amounts included in cost of goods sold 54 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22002233 $$’’000000 22002222 $$’’000000 (128,749) (105,399) (17,680) (21,258) (3,883) (13,576) (24,817) (5,688) ((117711,,557700)) ((114499,,448800)) (20,658) (1,945) ‐ (2,131) 4,290 15,269 ((55,,117755)) (14,757) (6,901) 59 21,258 ((334411)) (3,883) (2,028) 3,883 ((22,,002288)) (16,520) (1,607) (1,404) (2,384) 2,120 12,578 ((77,,221177)) (18,827) (6,144) (71) 24,817 ((222255)) (5,688) (935) 5,688 ((993355)) Page | 33 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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: 44.. NNEETT FFIINNAANNCCEE CCOOSSTTSS AAccccoouunnttiinngg ppoolliicciieess 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 BBoorrrroowwiinngg ccoossttss Mine properties are amortised on a unit‐of‐production bases over the run of mine ore included in the life of mine plan. 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. EExxppeennsseess CCoossttss ooff ggooooddss ssoolldd Cash costs of production Royalties Depreciation of mine plant and equipment Amortisation of mine properties (refer Note 16) PPeerrssoonnnneell ccoossttss Salaries and wages Defined contribution superannuation Employee bonuses Other employee benefits expense Less: Amounts capitalised Less: Amounts included in cost of goods sold DDeepprreecciiaattiioonn Plant and equipment depreciation (refer to Note 12) Right of use asset depreciation (refer to Note 13) Less: Amounts capitalised Less: Amounts included in cost of goods sold AAmmoorrttiissaattiioonn Mine properties amortisation (refer note 16) Financial asset amortisation (refer note 10) Less: Amounts included in cost of goods sold 22002233 $$’’000000 22002222 $$’’000000 (128,749) (105,399) ((117711,,557700)) ((114499,,448800)) (17,680) (21,258) (3,883) (20,658) (1,945) ‐ (2,131) 4,290 15,269 ((55,,117755)) (14,757) (6,901) 59 21,258 ((334411)) (3,883) (2,028) 3,883 ((22,,002288)) (13,576) (24,817) (5,688) (16,520) (1,607) (1,404) (2,384) 2,120 12,578 ((77,,221177)) (18,827) (6,144) (71) 24,817 ((222255)) (5,688) (935) 5,688 ((993355)) 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. NNeett ffiinnaannccee ccoossttss Interest revenue Interest on borrowings Interest on lease liabilities (refer to Note 19) Unwinding of discount on provisions (refer Note 21) Fair value loss on equity investments (refer Note 10) Fair value loss on gold put options (refer Note 10) Fair value loss on gold call options (refer Note 22) Fair value loss on gold forwards (1) (refer Note 22) Cost of gold forwards (2) 22002233 $$’’000000 2,287 (3,127) (3,318) (718) (595) (1,110) (2,386) (83,177) (33,105) 22002222 $$’’000000 54 (2,841) (3,441) (677) (340) ‐ (4,458) ‐ ‐ ((112255,,224499)) ((1111,,770033)) (1) Fair value loss on gold forwards represents the non‐cash cost of fair valuing the remaining gold forwards held by the Company at year end. The initial recognition of the gold forwards at fair value during the year was required due to the company no longer being able to apply on the “own use” exemption in AASB 9 Financial instruments. (2) Cost of gold forwards represents the settlement of 51,000 ounces of gold forward contracts held by the Company in cash as announced on 26 June 2023. 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. 55.. 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. EEaarrnniinnggss ppeerr sshhaarree Basic earnings per share (BEPS) Diluted earnings per share (DEPS) 22002233 CCeennttss 11..1188 11..1177 22002222 CCeennttss 2244..2277 2233..9911 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 33 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 34 55 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 EEaarrnniinnggss uusseedd iinn ccaallccuullaattiinngg BBEEPPSS aanndd DDEEPPSS Profit attributable to members of the parent entity 22002233 $$’’000000 22002222 $$’’000000 4,399 89,483 22002233 NNuummbbeerr 22002222 NNuummbbeerr WWeeiigghhtteedd aavveerraaggee nnuummbbeerr ooff oorrddiinnaarryy sshhaarreess Weighted average number of ordinary shares used to calculate BEPS 373,757,298 368,756,565 AAddjjuussttmmeennttss ffoorr ccaallccuullaattiioonn ooff DDEEPPSS:: Performance rights 1,963,732 5,440,818 Weighted average number of ordinary shares used to calculate DEPS 375,721,030 374,197,383 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. 66.. 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. 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 before tax Corporate tax rate applicable Income tax expense 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 attributable to entity ((cc)) AAmmoouunnttss cchhaarrggeedd oorr ((ccrreeddiitteedd)) ddiirreeccttllyy ttoo eeqquuiittyy Relating to equity raising costs Other 56 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22002233 $$’’000000 ‐ 4,767 44,,776677 9,166 30% 2,750 1,425 ‐ ‐ 829 ‐ (237) 44,,776677 237 ‐ 223377 22002222 $$’’000000 ‐ 21,423 2211,,442233 110,906 30% 33,272 1,460 ‐ ‐ 75 (13,116) (268) 2211,,442233 (527) ‐ ((552277)) Page | 35 CAPRICORN METALS ANNUAL REPORT 2023 EEaarrnniinnggss uusseedd iinn ccaallccuullaattiinngg BBEEPPSS aanndd DDEEPPSS Profit attributable to members of the parent entity WWeeiigghhtteedd aavveerraaggee nnuummbbeerr ooff oorrddiinnaarryy sshhaarreess AAddjjuussttmmeennttss ffoorr ccaallccuullaattiioonn ooff DDEEPPSS:: Performance rights 66.. IINNCCOOMMEE TTAAXX AAccccoouunnttiinngg ppoolliiccyy date. AAmmoouunnttss rreeccooggnniisseedd iinn pprrooffiitt aanndd lloossss ((aa)) TTaaxx eexxppeennssee Current tax Deferred tax Total tax expense for the period Weighted average number of ordinary shares used to calculate DEPS 375,721,030 374,197,383 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. 1,963,732 5,440,818 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 ((bb)) NNuummeerriiccaall rreeccoonncciilliiaattiioonn bbeettwweeeenn ttaaxx eexxppeennssee aanndd pprree‐‐ttaaxx nneett pprrooffiitt oorr ((lloossss)) Net profit before tax Corporate tax rate applicable Income tax expense 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 attributable to entity ((cc)) AAmmoouunnttss cchhaarrggeedd oorr ((ccrreeddiitteedd)) ddiirreeccttllyy ttoo eeqquuiittyy Relating to equity raising costs Other 22002233 $$’’000000 22002222 $$’’000000 4,399 89,483 22002233 NNuummbbeerr 22002222 NNuummbbeerr 22002233 $$’’000000 ‐ 4,767 44,,776677 9,166 30% 2,750 1,425 ‐ ‐ ‐ 829 (237) 44,,776677 237 ‐ 223377 22002222 $$’’000000 ‐ 21,423 2211,,442233 110,906 30% 33,272 1,460 ‐ ‐ 75 (13,116) (268) 2211,,442233 (527) ‐ ((552277)) NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 77.. 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. Weighted average number of ordinary shares used to calculate BEPS 373,757,298 368,756,565 RReeccoonncciilliiaattiioonn ooff pprrooffiitt aafftteerr ttaaxx ttoo nneett ccaasshh ffllooww ffrroomm ooppeerraattiioonnss:: CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss Cash at bank Profit after income tax AAddjjuussttmmeennttss ffoorr:: Depreciation Amortisation Unwinding of discount on provisions Unrealised loss on derivatives Fair value loss on financial assets Share based payment Profit on disposal of fixed assets Unrealised foreign exchange gain Payments for gold derivatives CChhaannggeess iinn aasssseettss aanndd lliiaabbiilliittiieess Increase in receivables Increase in other current assets Increase in inventories Increase in financial assets Increase in payables and accruals Increase in provisions Increase in deferred tax liabilities Cashflow from operating activities 22002233 $$’’000000 110066,,447711 22002222 $$’’000000 6611,,550022 4,399 89,483 21,599 5,911 718 86,672 595 4,712 ‐ (6) 33,105 (300) (61) 25,042 6,623 677 4,458 340 4,893 (187) ‐ ‐ (909) (30) (19,369) (30,731) 9,228 590 4,767 115522,,556600 ‐ 12,918 657 21,423 113344,,665577 NNoonn‐‐ccaasshh iinnvveessttiinngg aanndd ffiinnaanncciinngg aaccttiivviittiieess There were no non‐cash investing and financing activities during the year ended 30 June 2023 (2022: Nil). AASSSSEETTSS This section shows the assets used to generate the Group’s trading performance. 88.. 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 | 35 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 36 57 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 RReecceeiivvaabblleess GST receivable Security deposits Fuel tax credit receivable Interest receivable Other receivables 99.. IINNVVEENNTTOORRIIEESS AAccccoouunnttiinngg ppoolliiccyy 22002233 $$’’000000 1,647 386 150 283 69 22002222 $$’’000000 1,551 478 (66) 26 246 22,,553355 22,,223355 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 classified as current assets, all other inventories are classified as non‐current. The following balances are carried at cost. IInnvveennttoorriieess CCuurrrreenntt Ore stockpiles Gold in circuit Bullion on hand Consumable stores NNoonn‐‐CCuurrrreenntt Ore stockpiles 22002233 $$’’000000 9,460 3,972 1,805 1,382 22002222 $$’’000000 6,844 4,356 2,497 1,216 1166,,661199 1144,,991133 4477,,554466 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 in accordance with the approved mine plan which includes the blending of ores. 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. 1100.. OOTTHHEERR FFIINNAANNCCIIAALL AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy The Group’s other financial assets include equity investments, gold call options and gold put options. 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. 58 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 37 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 RReecceeiivvaabblleess GST receivable Security deposits Fuel tax credit receivable Interest receivable Other receivables 99.. IINNVVEENNTTOORRIIEESS AAccccoouunnttiinngg ppoolliiccyy IInnvveennttoorriieess CCuurrrreenntt Ore stockpiles Gold in circuit Bullion on hand Consumable stores NNoonn‐‐CCuurrrreenntt Ore stockpiles 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 classified as current assets, all other inventories are classified as non‐current. The following balances are carried at cost. 22,,553355 22,,223355 22002233 $$’’000000 1,647 386 150 283 69 22002233 $$’’000000 9,460 3,972 1,805 1,382 22002222 $$’’000000 1,551 478 (66) 26 246 22002222 $$’’000000 6,844 4,356 2,497 1,216 1166,,661199 1144,,991133 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. 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 in accordance with the approved mine plan which includes the blending of ores. 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. 1100.. OOTTHHEERR FFIINNAANNCCIIAALL AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy The Group’s other financial assets include equity investments, gold call options and gold put options. 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. 4477,,554466 2299,,888833 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 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 | 37 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 38 59 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 OOtthheerr ffiinnaanncciiaall aasssseettss CCuurrrreenntt Gold call options at FVTPL Gold put options at FVTPL Equity investments at FVTPL NNoonn‐‐ccuurrrreenntt Gold call options at FVTPL 22002233 $$’’000000 ‐ 2,564 953 33,,551177 22,,779900 22002222 $$’’000000 1,751 ‐ 1,348 33,,009999 33,,006677 GGoolldd ooppttiioonn aasssseettss Gold option assets represent the fair value gold call option contracts entered into on 6 January 2020 and gold put option contracts purchased on 26 June 2023. GGoolldd ooppttiioonn aasssseettss As at 1 July Additions Amortisation (refer Note 3) Fair value adjustments (refer Note 4) As at 30 June 22002233 $$’’000000 4,818 3,674 (2,028) (1,110) 55,,335544 EEqquuiittyy iinnvveessttmmeennttss Equity investments represent the fair value of shares held by the Company in ASX listed Companies. EEqquuiittyy iinnvveessttmmeennttss As at 1 July Additions Fair value adjustments (refer Note 4) As at 30 June FFaaiirr vvaalluuee ooff lliisstteedd sshhaarreess aanndd aassssuummppttiioonnss EEvviioonn GGrroouupp NNLL ((ffoorrmmeerrllyy BBllaacckkEEaarrtthh MMiinneerraallss NNLL)) Fair value per listed share Closing quoting bid price per share DDiissccoovvEExx RReessoouurrcceess LLiimmiitteedd Fair value per listed share Closing quoting bid price per share 1111.. AASSSSEETTSS HHEELLDD FFOORR SSAALLEE AAccccoouunnttiinngg ppoolliiccyy 22002233 $$’’000000 1,348 200 (595) 995533 22002233 $0.036 $0.036 $0.0025 $0.0025 22002222 $$’’000000 5,753 ‐ (935) ‐ 44,,881188 22002222 $$’’000000 1,688 ‐ (340) 11,,334488 22002222 $0.074 $0.074 $0.004 $0.004 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. 60 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 39 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 Gold option assets represent the fair value gold call option contracts entered into on 6 January 2020 and gold put option contracts purchased on 26 June 2023. Equity investments represent the fair value of shares held by the Company in ASX listed Companies. OOtthheerr ffiinnaanncciiaall aasssseettss CCuurrrreenntt Gold call options at FVTPL Gold put options at FVTPL Equity investments at FVTPL NNoonn‐‐ccuurrrreenntt Gold call options at FVTPL GGoolldd ooppttiioonn aasssseettss Amortisation (refer Note 3) Fair value adjustments (refer Note 4) GGoolldd ooppttiioonn aasssseettss As at 1 July Additions As at 30 June EEqquuiittyy iinnvveessttmmeennttss EEqquuiittyy iinnvveessttmmeennttss As at 1 July Additions Fair value adjustments (refer Note 4) As at 30 June FFaaiirr vvaalluuee ooff lliisstteedd sshhaarreess aanndd aassssuummppttiioonnss EEvviioonn GGrroouupp NNLL ((ffoorrmmeerrllyy 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 1111.. AASSSSEETTSS HHEELLDD FFOORR SSAALLEE AAccccoouunnttiinngg ppoolliiccyy 22002233 $$’’000000 ‐ 2,564 953 33,,551177 22,,779900 22002233 $$’’000000 4,818 3,674 (2,028) (1,110) 55,,335544 22002233 $$’’000000 1,348 200 (595) 995533 22002233 $0.036 $0.036 $0.0025 $0.0025 22002222 $$’’000000 1,751 ‐ 1,348 33,,009999 33,,006677 22002222 $$’’000000 5,753 (935) ‐ ‐ 44,,881188 22002222 $$’’000000 1,688 ‐ (340) 11,,334488 22002222 $0.074 $0.074 $0.004 $0.004 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. AAsssseettss hheelldd ffoorr ssaallee Property asset Impairment Translation adjustment 22002233 $$’’000000 2,500 ‐ ‐ 22002222 $$’’000000 2,500 ‐ ‐ 22,,550000 22,,550000 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 2023 of 9,019,164,000 Ariary which translates to AUD $3,027,733 as at 30 June 2023 (2022: AUD $2,603,874). Based on the current valuation, the Directors considered the carrying value appropriate for the year ended 30 June 2023.The fair value of the freehold land was determined based on the market comparable approach that reflects recent transaction prices for similar properties. 1122.. 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. 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 39 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 40 61 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 BBuuiillddiinnggss && IInnffrraassttrruuccttuurree PPllaanntt && EEqquuiippmmeenntt MMoobbiillee PPllaanntt && EEqquuiippmmeenntt FFuurrnniittuurree && EEqquuiippmmeenntt CCaappiittaall WWIIPP PPllaanntt aanndd eeqquuiippmmeenntt 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 ‐ 662 3,050 269 (832) (1) 33,,114488 $$’’000000 $$’’000000 $$’’000000 428 416 13 2,632 TToottaall $$’’000000 1,075 6,514 7,333 ‐ (1,113) (55) 77,,000099 ‐ ‐ ‐ ‐ 170,477 ‐ (18,827) (118) 22,,664455 115599,,112211 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 3,980 (832) 33,,114488 8,377 (1,368) 2,645 178,312 ‐ (19,191) 77,,000099 22,,664455 115599,,112211 BBuuiillddiinnggss && IInnffrraassttrruuccttuurree PPllaanntt && EEqquuiippmmeenntt MMoobbiillee PPllaanntt && EEqquuiippmmeenntt FFuurrnniittuurree && EEqquuiippmmeenntt CCaappiittaall WWIIPP PPllaanntt aanndd eeqquuiippmmeenntt $$’’000000 $$’’000000 Net carrying amount at 1 July 2022 43,049 103,270 Additions Depreciation Amounts written off 1,738 (3,505) 1,656 (9,032) (36) $$’’000000 3,148 1,263 $$’’000000 7,009 1,509 (1,149) (1,071) ‐ ‐ $$’’000000 2,645 2,808 ‐ ‐ TToottaall $$’’000000 159,121 8,974 (14,757) (36) Net carrying amount at 30 June 2023 4411,,228822 9955,,885588 33,,226622 77,,444477 55,,445533 115533,,330022 As at 30 June 2023 Cost Accumulated depreciation Net carrying amount at 30 June 2023 1133.. RRIIGGHHTT‐‐OOFF‐‐UUSSEE AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy 49,832 (8,550) 4411,,228822 116,817 (20,959) 9955,,885588 5,243 (1,981) 33,,226622 9,886 (2,439) 5,453 187,231 ‐ (33,929) 77,,444477 55,,445533 115533,,330022 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. 62 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 41 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 Net carrying amount at 30 June 2022 4433,,004499 110033,,227700 22,,664455 115599,,112211 AAccccoouunnttiinngg ppoolliiccyy RRiigghhtt ooff uussee aasssseettss As at 1 July Additions to right‐of‐use assets Depreciation charge for the year (refer to Note 3) As at 30 June 22002233 $$’’000000 47,972 4,293 (6,901) 4455,,336644 22002222 $$’’000000 51,591 2,525 (6,144) 4477,,997722 Payments associated with short‐term leases and leases of low value assets for the year were $1,523,000 (2022: $1,477,000). 1144.. DDEEFFEERRRREEDD EEXXPPLLOORRAATTIIOONN AANNDD EEVVAALLUUAATTIIOONN CCOOSSTTSS 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. 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. DDeeffeerrrreedd eexxpplloorraattiioonn aanndd eevvaalluuaattiioonn ccoossttss As at 1 July Expenditure for the period Acquisition of exploration and evaluation assets – MGGP Acquisition of tenements Transfer to mine properties As at 30 June 22002233 $$’’000000 77,297 35,160 ‐ ‐ (6,734) 110055,,772233 22002222 $$’’000000 2,698 21,789 51,560 1,250 ‐ 7777,,229977 KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– EExxpplloorraattiioonn aanndd eevvaalluuaattiioonn eexxppeennddiittuurree 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. BBuuiillddiinnggss && PPllaanntt && MMoobbiillee PPllaanntt FFuurrnniittuurree && CCaappiittaall TToottaall IInnffrraassttrruuccttuurree EEqquuiippmmeenntt && EEqquuiippmmeenntt EEqquuiippmmeenntt PPllaanntt aanndd eeqquuiippmmeenntt Net carrying amount at 1 July 2021 Additions development Transfers from mine properties under Transfers between asset classes Depreciation Amounts written off $$’’000000 1,574 ‐ ‐ 46,520 113,574 (5,045) (11,837) $$’’000000 634 1,230 (269) (62) $$’’000000 $$’’000000 ‐ 662 3,050 269 (832) (1) 33,,114488 428 416 7,333 ‐ (1,113) (55) 77,,000099 WWIIPP $$’’000000 13 2,632 $$’’000000 1,075 6,514 ‐ ‐ ‐ ‐ 170,477 ‐ (18,827) (118) As at 30 June 2022 Cost Accumulated depreciation Net carrying amount at 30 June 2022 4433,,004499 110033,,227700 48,094 (5,045) 115,216 (11,946) 3,980 (832) 33,,114488 8,377 (1,368) 2,645 178,312 ‐ (19,191) 77,,000099 22,,664455 115599,,112211 BBuuiillddiinnggss && PPllaanntt && MMoobbiillee PPllaanntt FFuurrnniittuurree && CCaappiittaall TToottaall IInnffrraassttrruuccttuurree EEqquuiippmmeenntt && EEqquuiippmmeenntt EEqquuiippmmeenntt PPllaanntt aanndd eeqquuiippmmeenntt $$’’000000 $$’’000000 Net carrying amount at 1 July 2022 43,049 103,270 Additions Depreciation Amounts written off 1,738 (3,505) 1,656 (9,032) (36) $$’’000000 3,148 1,263 $$’’000000 7,009 1,509 (1,149) (1,071) ‐ ‐ WWIIPP $$’’000000 2,645 2,808 ‐ ‐ $$’’000000 159,121 8,974 (14,757) (36) Net carrying amount at 30 June 2023 4411,,228822 9955,,885588 33,,226622 77,,444477 55,,445533 115533,,330022 As at 30 June 2023 Cost Accumulated depreciation Net carrying amount at 30 June 2023 1133.. RRIIGGHHTT‐‐OOFF‐‐UUSSEE AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy 49,832 (8,550) 4411,,228822 116,817 (20,959) 9955,,885588 5,243 (1,981) 33,,226622 9,886 (2,439) 5,453 187,231 ‐ (33,929) 77,,444477 55,,445533 115533,,330022 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. liability. 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 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 41 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 42 63 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. EExxpplloorraattiioonn ccoommmmiittmmeennttss aatt rreeppoorrttiinngg ddaattee nnoott rreeccooggnniisseedd aass lliiaabbiilliittiieess Within one year 22002233 $$’’000000 3,582 33,,558822 22002222 $$’’000000 3,313 33,,331133 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. 1155.. 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. MMiinnee pprrooppeerrttiieess uunnddeerr ddeevveellooppmmeenntt As at 1 July Construction expenditure capitalised Pre‐production expenditure capitalised Transfer to mine properties Transfer to property plant & equipment As at 30 June 22002233 $$’’000000 ‐ ‐ ‐ ‐ ‐ ‐‐ 22002222 $$’’000000 208,323 18,000 (233) (55,613) (170,477) ‐‐ Transfers to plant and equipment relate to construction expenditure on the Karlawinda Gold Project. 1166.. 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 TToottaall MMiinnee pprrooppeerrttiieess Net carrying amount at 1 July 2022 Additions Transfers from Exploration Amortisation (refer note 3) Net carrying amount at 30 June 2023 64 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 $$’’000000 13,751 ‐ 6,734 (1,247) 1199,,223388 $$’’000000 16,908 ‐ ‐ (1,341) 1155,,556677 $$’’000000 15,969 283 ‐ (1,295) 1144,,995577 $$’’000000 46,628 283 6,734 (3,883) 4499,,776622 Page | 43 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. EExxpplloorraattiioonn ccoommmmiittmmeennttss aatt rreeppoorrttiinngg ddaattee nnoott rreeccooggnniisseedd aass lliiaabbiilliittiieess Within one year 22002233 $$’’000000 3,582 33,,558822 22002222 $$’’000000 3,313 33,,331133 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. 1155.. 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. 22002233 $$’’000000 ‐ ‐ ‐ ‐ ‐ ‐‐ 22002222 $$’’000000 208,323 18,000 (233) (55,613) (170,477) ‐‐ 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. MMiinnee pprrooppeerrttiieess uunnddeerr ddeevveellooppmmeenntt As at 1 July Construction expenditure capitalised Pre‐production expenditure capitalised Transfer to mine properties Transfer to property plant & equipment As at 30 June 1166.. MMIINNEE PPRROOPPEERRTTIIEESS AAccccoouunnttiinngg ppoolliiccyy MMiinnee pprrooppeerrttiieess Net carrying amount at 1 July 2022 Additions Transfers from Exploration Amortisation (refer note 3) Net carrying amount at 30 June 2023 OOtthheerr PPrree‐‐pprroodduuccttiioonn RReehhaabbiilliittaattiioonn TToottaall $$’’000000 13,751 ‐ 6,734 (1,247) 1199,,223388 $$’’000000 16,908 ‐ ‐ (1,341) 1155,,556677 $$’’000000 15,969 283 ‐ (1,295) 1144,,995577 $$’’000000 46,628 283 6,734 (3,883) 4499,,776622 Page | 43 As at 30 June 2023 Cost Accumulated amortisation Net carrying amount at 30 June 2023 1177.. IIMMPPAAIIRRMMEENNTT OOFF NNOONN‐‐FFIINNAANNCCIIAALL AASSSSEETTSS AAccccoouunnttiinngg ppoolliiccyy OOtthheerr PPrree‐‐pprroodduuccttiioonn RReehhaabbiilliittaattiioonn $$’’000000 $$’’000000 $$’’000000 22,211 (2,973) 1199,,223388 18,865 (3,298) 1155,,556677 18,257 (3,300) 1144,,995577 TToottaall $$’’000000 59,333 (9,571) 4499,,776622 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. 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 Transfers to plant and equipment relate to construction expenditure on the Karlawinda Gold Project. LLIIAABBIILLIITTIIEESS This section shows the liabilities incurred as a result of the trading activities of the Group. 1188.. 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. TTrraaddee aanndd ootthheerr ppaayyaabblleess Trade payables Accrued expenses Other payables 22002233 $$’’000000 17,141 10,260 5,825 3333,,222266 22002222 $$’’000000 8,169 12,156 7,082 2277,,440077 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 44 65 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 1199.. LLEEAASSEE LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy 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. 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. LLeeaassee lliiaabbiilliittiieess CCuurrrreenntt Lease liabilities NNoonn‐‐CCuurrrreenntt Lease liabilities 22002233 $$’’000000 22002222 $$’’000000 99,,442288 77,,661133 3311,,776699 3377,,882222 Interest expense in relation to lease liabilities for the year ended 30 June 2023 was $3,318,000 (2022: $3,441,000) (refer to Note 4). Total cash outflows relating to leases during the year were $11,962,000 (2022: $10,864,000) comprising, principal ($8,644,000) and interest ($3,318,000) 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 2023, including non‐lease components such as labour, totalled $77,222,769 (2022: $77,199,000). Payments associated with short‐term leases and leases of low value assets for the year were $1,706,377 (2022: $1,477,000). 66 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 45 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 1199.. LLEEAASSEE LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy 2200.. BBOORRRROOWWIINNGGSS AAccccoouunnttiinngg ppoolliiccyy 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. 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. 22002233 $$’’000000 22002222 $$’’000000 99,,442288 77,,661133 3311,,776699 3377,,882222 LLeeaassee lliiaabbiilliittiieess CCuurrrreenntt Lease liabilities NNoonn‐‐CCuurrrreenntt Lease liabilities to Note 4). Interest expense in relation to lease liabilities for the year ended 30 June 2023 was $3,318,000 (2022: $3,441,000) (refer Total cash outflows relating to leases during the year were $11,962,000 (2022: $10,864,000) comprising, principal ($8,644,000) and interest ($3,318,000) 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 2023, including non‐lease components such as labour, totalled $77,222,769 (2022: $77,199,000). Payments associated with short‐term leases and leases of low value assets for the year were $1,706,377 (2022: $1,477,000). 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. BBoorrrroowwiinnggss CCuurrrreenntt Bank loans NNoonn‐‐CCuurrrreenntt Bank loans 22002233 $$’’000000 22002222 $$’’000000 661133 3388,,338866 5500,,000000 2277,,000000 Borrowings comprise of amounts drawn down on an original Project Loan Facility of $100 Million with Macquarie Bank Limited (“Macquarie”). The facility accrues interest at the bank bill rate plus 3% and was repayable in various instalments over a term ending 30 June 2025 however, voluntary repayments can be made in accordance with the facility agreement. 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. The bank holds a first ranking, registered fixed and floating charge over all the assets of Capricorn Metals Ltd and its wholly owned subsidiaries, as security for the facility provided by Macquarie. The facility includes customary liquidity and debt service covenants. The Group is in compliance with its covenants. 2211.. 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 45 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 46 67 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. PPrroovviissiioonnss CCuurrrreenntt Annual leave Rehabilitation NNoonn‐‐CCuurrrreenntt Long service leave ROU asset demobilisation Rehabilitation 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 Unwinding of the discount (refer Note 4) As at 30 June 22002233 $$’’000000 1,431 26 11,,445577 338 743 29,371 3300,,445522 22002233 $$’’000000 28,416 283 (19) (1) ‐ 718 2299,,339977 22002222 $$’’000000 1,076 11 11,,008877 118 703 28,405 2299,,222266 22002222 $$’’000000 21,271 149 (15) (3,446) 9,779 678 2288,,441166 KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– RReehhaabbiilliittaattiioonn pprroovviissiioonn 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. 68 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 47 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. 2222.. OOTTHHEERR FFIINNAANNCCIIAALL LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy OOtthheerr lloonngg‐‐tteerrmm eemmppllooyyeeee bbeenneeffiittss The Group’s other financial liabilities include gold call options and gold forwards. 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. RReeccooggnniittiioonn aanndd iinniittiiaall mmeeaassuurreemmeenntt All financial liabilities are initially recognised when the Group becomes party to the contractual provisions of the instrument. 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. 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 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. HHeeddggee aaccccoouunnttiinngg The Group designates certain financial liabilities as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in the gold price. 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. PPrroovviissiioonnss CCuurrrreenntt Annual leave Rehabilitation NNoonn‐‐CCuurrrreenntt Long service leave ROU asset demobilisation Rehabilitation 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 Unwinding of the discount (refer Note 4) As at 30 June KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– RReehhaabbiilliittaattiioonn pprroovviissiioonn 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 22002233 $$’’000000 1,431 26 11,,445577 338 743 29,371 3300,,445522 22002233 $$’’000000 28,416 283 (19) (1) ‐ 718 2299,,339977 22002222 $$’’000000 1,076 11 11,,008877 118 703 28,405 2299,,222266 22002222 $$’’000000 21,271 149 (15) (3,446) 9,779 678 2288,,441166 Page | 47 At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 48 69 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 CCaasshhffllooww hheeddggeess When a financial liability is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the financial liability is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the financial liability that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the financial liability is recognised immediately in profit or loss. The amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss. If the financial liability no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non‐financial item, it is included in the non‐financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss. The company has adopted hedge accounting from 1 July 2023. OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess NNoonn‐‐ccuurrrreenntt Gold call options at FVTPL Gold forwards at FVTPL 22002233 $$’’000000 13,926 83,177 9977,,110033 22002222 $$’’000000 11,540 ‐ 1111,,554400 GGoolldd ccaallll ooppttiioonnss Gold call option liability refers to the fair value of the gold call option contract entered into on 6 January 2020. Subsequent measurement of the 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. GGoolldd ccaallll ooppttiioonnss As at 1 July Fair value adjustments (refer Note 4) As at 30 June 22002233 $$’’000000 11,540 2,386 1133,,992266 22002222 $$’’000000 7,083 4,457 1111,,554400 GGoolldd ffoorrwwaarrddss Gold forward liability refers to the fair value of the remaining gold forward contracts at year end which expire at various dates up until 31 December 2026. Previously the Company was required to only recognise the fair value the gold forward contracts that settled. GGoolldd ffoorrwwaarrddss As at 1 July Fair value adjustments (refer Note 4) As at 30 June 2233.. DDEEFFEERRRREEDD TTAAXX LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy 22002233 $$’’000000 ‐ 83,177 8833,,117777 22002222 $$’’000000 ‐ ‐ ‐‐ 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 70 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 49 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 CCaasshhffllooww hheeddggeess When a financial liability is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the financial liability is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the financial liability that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the financial liability is recognised immediately in profit or loss. The amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss. If the financial liability no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non‐financial item, it is included in the non‐financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss. The company has adopted hedge accounting from 1 July 2023. Gold call option liability refers to the fair value of the gold call option contract entered into on 6 January 2020. Subsequent measurement of the 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. Gold forward liability refers to the fair value of the remaining gold forward contracts at year end which expire at various dates up until 31 December 2026. Previously the Company was required to only recognise the fair value the gold forward contracts that settled. 22002233 $$’’000000 13,926 83,177 9977,,110033 22002233 $$’’000000 11,540 2,386 1133,,992266 22002233 $$’’000000 ‐ 83,177 8833,,117777 22002222 $$’’000000 11,540 ‐ 1111,,554400 22002222 $$’’000000 7,083 4,457 1111,,554400 22002222 $$’’000000 ‐ ‐ ‐‐ OOtthheerr ffiinnaanncciiaall lliiaabbiilliittiieess NNoonn‐‐ccuurrrreenntt Gold call options at FVTPL Gold forwards at FVTPL GGoolldd ccaallll ooppttiioonnss Fair value adjustments (refer Note 4) GGoolldd ccaallll ooppttiioonnss As at 1 July As at 30 June GGoolldd ffoorrwwaarrddss GGoolldd ffoorrwwaarrddss As at 1 July As at 30 June Fair value adjustments (refer Note 4) 2233.. DDEEFFEERRRREEDD TTAAXX LLIIAABBIILLIITTIIEESS AAccccoouunnttiinngg ppoolliiccyy CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 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. DDeeffeerrrreedd ttaaxx aasssseettss aanndd lliiaabbiilliittiieess ((aa)) RReeccooggnniisseedd ddeeffeerrrreedd ttaaxx aasssseettss aanndd lliiaabbiilliittiieess DDeeffeerrrreedd ttaaxx lliiaabbiilliittiieess Prepayments Exploration and mine properties Inventory Plant and equipment 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 liabilities Income tax expense recognised in profit or loss Income tax (expense)/benefit recognised in equity Closing balance at 30 June – net deferred tax liabilities KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– DDeeffeerrrreedd ttaaxx aasssseettss 22002233 $$’’000000 30% 4 31,697 6,535 44,029 85 82,350 (56,450) 2255,,990000 531 56 28,327 8,819 4 290 18,244 179 56,450 (56,450) ‐‐ (20,896) (4,767) (237) ((2255,,990000)) 22002222 $$’’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)) ‐ ‐ ‐ ‐‐ 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. Page | 49 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 50 71 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. 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. 2244.. 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. IIssssuueedd ccaappiittaall Ordinary shares ‐ issued and fully paid MMoovveemmeenntt iinn oorrddiinnaarryy sshhaarreess oonn iissssuuee As at 1 July 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 22002233 $$’’000000 220033,,442222 NNuummbbeerr ooff SShhaarreess 350,019,479 10,000,000 3,275,000 8,285,954 344,752 ‐ ‐ 22002222 $$’’000000 220033,,552244 $$’’000000 180,629 6,000 ‐ 15,160 1,250 (42) 527 As at 30 June 2022 337711,,992255,,118855 220033,,552244 As at 30 June 2022 Issue of shares on exercise of performance rights (5) Transaction costs As at 30 June 2023 371,925,185 4,032,990 ‐ 337755,,995588,,117755 203,524 ‐ (102) 220033,,442222 (1) On 28 July 2021, 10,000,000 options were exercised at an exercise price of $0.60 each. (2) During the 2022 financial 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. 72 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 51 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 (5) During the 2023 financial year 4,032,990 performance rights were exercised for nil value to employees in accordance with the shareholder approved Performance Rights Plan. 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. 2255.. RREESSEERRVVEESS RReesseerrvveess As at 1 July 2021 Share‐based payment transactions (refer note 29) Translation movement for the year Transfers (1) As at 30 June 2022 Share‐based payment transactions (refer note 29) Translation movement for the year Transfers (1) As at 30 June 2023 SShhaarree‐‐bbaasseedd ppaayymmeenntt rreesseerrvvee FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn rreesseerrvvee TToottaall RReesseerrvveess $$’’000000 11,499 4,893 ‐ (9,243) 77,,114499 4,712 ‐ (7,672) 44,,118899 $$’’000000 (852) ‐ (196) ‐ ((11,,004488)) ‐ (7) ‐ ((11,,005555)) $$’’000000 10,647 4,893 (196) (9,243) 66,,110011 4,712 (7) (7,672) 33,,113344 (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 26). 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. 2266.. RREETTAAIINNEEDD EEAARRNNIINNGGSS RReettaaiinneedd eeaarrnniinnggss As at 1 July Profit for the year Transfers (1) As at 30 June 22002233 $$’’000000 37,910 4,399 7,672 4499,,998811 22002222 $$’’000000 (60,816) 89,483 9,243 3377,,991100 Issue of shares on exercise of performance rights (5) (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 25). CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 51 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 52 73 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. 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 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 This section outlines how the Group manages its capital. considered remote. EEQQUUIITTYY 2244.. IISSSSUUEEDD CCAAPPIITTAALL AAccccoouunnttiinngg ppoolliiccyy received. IIssssuueedd ccaappiittaall Ordinary shares ‐ issued and fully paid MMoovveemmeenntt iinn oorrddiinnaarryy sshhaarreess oonn iissssuuee As at 1 July 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 As at 30 June 2022 As at 30 June 2022 Transaction costs As at 30 June 2023 22002233 $$’’000000 220033,,442222 NNuummbbeerr ooff SShhaarreess 350,019,479 10,000,000 3,275,000 8,285,954 344,752 ‐ ‐ ‐ 371,925,185 4,032,990 337755,,995588,,117755 22002222 $$’’000000 220033,,552244 $$’’000000 180,629 6,000 ‐ 15,160 1,250 (42) 527 203,524 ‐ (102) 220033,,442222 Tax effect of deferred tax deductions posted directly to equity 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 2022 financial year 3,275,000 performance rights were exercised for nil value to employees in accordance with the (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 shareholder approved Performance Rights Plan. Mt Gibson Gold project as announced on 28 July 2021. Mumbakine well project as announced on 30 May 2022. (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 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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. 2277.. 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 option assets, trade and other payables, lease liabilities, gold call options, gold forwards and borrowings. In June 2023, the Company announced that it had reduced its gold forward contracts by 51,000 ounces to provide further exposure to any increase in the A$ gold price. The closure of the gold forwards means the Company does not have any hedging delivery obligations until September 2024. The restructure of the gold forwards has led to a change in the accounting for the remaining gold forwards and are now valued through the profit and loss. These contracts previously qualified as future inventory sales contracts with the sales value recognised as revenue at the time of sale, also known as the “own use” exemption. 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. 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 call options Gold put options FFiinnaanncciiaall lliiaabbiilliittiieess Trade and other payables Lease liabilities Borrowings Gold call options Gold forwards MMaarrkkeett rriisskk FFoorreeiiggnn ccuurrrreennccyy rriisskk 22002233 $$’’000000 106,471 2,535 953 2,790 2,564 111155,,331133 33,226 41,197 50,613 13,926 83,177 22002222 $$’’000000 61,502 2,235 1,348 4,818 ‐ 6699,,990022 27,407 45,435 65,386 11,540 ‐ 222222,,113399 114499,,776688 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 53 74 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s RRIISSKK financial position and performance. 2277.. 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 option assets, trade and other payables, lease liabilities, gold call options, gold forwards and borrowings. In June 2023, the Company announced that it had reduced its gold forward contracts by 51,000 ounces to provide further exposure to any increase in the A$ gold price. The closure of the gold forwards means the Company does not have any hedging delivery obligations until September 2024. The restructure of the gold forwards has led to a change in the accounting for the remaining gold forwards and are now valued through the profit and loss. These contracts previously qualified as future inventory sales contracts with the sales value recognised as revenue at the time of sale, also known as the “own use” exemption. 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 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 statements. in this note. 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. Group’s competitiveness and flexibility. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the CCaatteeggoorriieess ooff ffiinnaanncciiaall iinnssttrruummeennttss FFiinnaanncciiaall aasssseettss Cash and cash equivalents Receivables Equity investments Gold call options Gold put options FFiinnaanncciiaall lliiaabbiilliittiieess Trade and other payables Lease liabilities Borrowings Gold call options Gold forwards MMaarrkkeett rriisskk FFoorreeiiggnn ccuurrrreennccyy rriisskk 22002233 $$’’000000 106,471 2,535 953 2,790 2,564 111155,,331133 33,226 41,197 50,613 13,926 83,177 22002222 $$’’000000 61,502 2,235 1,348 4,818 ‐ 6699,,990022 27,407 45,435 65,386 11,540 ‐ 222222,,113399 114499,,776688 The Group is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and services in currencies other than the Group’s functional and presentation currency. The Group’s revenue is derived from the sale of gold in Australian dollars and costs are mainly incurred in Australian dollars although as gold is globally traded in US dollars, the Group is exposed to foreign currency risk. The Group hedges its gold ounces in Australian dollars, which provides for some coverage of foreign currency risk. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 The Group is occasionally exposed to foreign currency risk when long lead items are purchased in a currency other than Australian dollars. The Group maintains all of its cash in Australian dollars and does not currently hedge these purchases. As a result of subsidiary companies being registered in Madagascar, the Group's statement of financial position can be affected by movements in the AUD$/Ariary exchange rates. The Group does not seek to hedge this exposure given there are minimal operations in these foreign subsidiaries and therefore minimal risk as a result of any changes in foreign currency. In the reporting period, the Group was not exposed to material financial risks of changes in foreign currency exchange rates. IInntteerreesstt rraattee rriisskk At the reporting date, the interest rate profile of the Group’s interest‐bearing financial instruments was: IInntteerreesstt‐‐bbeeaarriinngg ffiinnaanncciiaall iinnssttrruummeennttss FFiixxeedd rraattee iinnssttrruummeennttss Term deposits Lease liabilities VVaarriiaabbllee rraattee iinnssttrruummeennttss Cash and cash equivalents Borrowings 22002233 $$’’000000 386 (41,197) ((4400,,881111)) 106,471 (50,613) 5555,,885588 22002222 $$’’000000 478 (45,435) ((4444,,995577)) 61,502 (65,386) ((33,,888844)) FFaaiirr vvaalluuee sseennssiittiivviittyy aannaallyyssiiss ffoorr ffiixxeedd rraattee iinnssttrruummeennttss The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change at reporting date would not affect profit or loss. CCaasshh ffllooww sseennssiittiivviittyy aannaallyyssiiss ffoorr vvaarriiaabbllee rraattee iinnssttrruummeennttss A change of 200 basis points (2022: 200 basis points) in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. IInntteerreesstt‐‐bbeeaarriinngg ffiinnaanncciiaall iinnssttrruummeennttss Variable rate instruments CCoommmmooddiittyy pprriiccee rriisskk 22002233 220000bbpp iinnccrreeaassee $$’’000000 1,117 220000bbpp ddeeccrreeaassee $$’’000000 (1,117) 22002222 220000bbpp iinnccrreeaassee $$’’000000 (78) 220000bbpp ddeeccrreeaassee $$’’000000 78 The Group’s exposure to commodity price risk is from the fluctuations in the prevailing market prices of gold produced from its operating mine. The Group manages its exposure to movements in the gold price through the use of gold put options (refer Note 10), gold call options and gold forwards (refer Note 22) and its sold gold call option contract (refer Note 22). The following table reflects the impact on equity and profit or loss relating to the gold put options, gold call options and the gold forwards of a $100 change in the spot price of gold as at 30 June 2023 (2022: $100). 22002233 $$110000 IInnccrreeaassee $$’’000000 (2,564) (1,670) (10,700) $$110000 ddeeccrreeaassee $$’’000000 5,100 1,670 10,700 22002222 $$110000 iinnccrreeaassee $$’’000000 n/a (391) n/a $$110000 ddeeccrreeaassee $$’’000000 n/a 391 n/a Gold put options Gold call options Gold forwards CCrreeddiitt rriisskk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligation. Page | 53 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 54 75 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 Credit risk is managed to ensure that customers and counterparties are of sound credit worthiness and monitoring is used to recover aged debts and assess receivables for impairment. Credit terms are generally 30 days from the invoice date. Risk is also minimized by investing surplus funds in financial institutions with a high credit rating. LLiiqquuiiddiittyy rriisskk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate facilities are maintained. FFiinnaanncciiaall lliiaabbiilliittyy mmaattuurriittyy aannaallyyssiiss CCaarrrryyiinngg aammoouunntt lliiaabbiilliittiieess TToottaall ccoonnttrraaccttuuaall ccaasshh fflloowwss <<66 mmoonntthhss 66‐‐1122 mmoonntthhss 22002233 Trade and other payables Lease liabilities Borrowings Gold forwards $$’’000000 33,226 41,197 50,613 83,177 $$’’000000 $$’’000000 $$’’000000 33,226 33,226 50,515 60,408 83,177 6,053 2,245 ‐ ‐ 5,915 1,633 11‐‐22 yyeeaarrss $$’’000000 ‐ 22‐‐55 yyeeaarrss $$’’000000 ‐ >>55 yyeeaarrss $$’’000000 ‐ 11,280 15,074 12,193 3,265 53,265 ‐ ‐ 31,697 51,480 220088,,221133 222277,,332266 4411,,552244 77,,554488 4466,,224422 111199,,881199 1122,,119933 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 $$’’000000 ‐ 10,819 21,392 15,643 2,309 52,309 ‐ 1133,,112288 7733,,770011 1155,,664433 FFiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 1 Level 2 Level 3 AAsssseettss 22002233 $$’’000000 953 2,564 ‐ 33,,551177 22002222 $$’’000000 1,348 2,500 ‐ 33,,884488 LLiiaabbiilliittiieess 22002233 $$’’000000 ‐ 22002222 $$’’000000 ‐ (97,103) (11,540) ‐ ‐ ((9977,,110033)) ((1111,,554400)) Included within Level 1 of the hierarchy are the Evion Group NL (formerly BlackEarth Minerals NL) and DiscovEx Resources Limited shares listed on the Australian Securities Exchange. The fair value of these financial assets has been based on the closing quoted bid prices at the end of the reporting period, excluding transaction costs. 76 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 55 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 Credit risk is managed to ensure that customers and counterparties are of sound credit worthiness and monitoring is Included within Level 2 of the hierarchy is the gold put options, gold call options and the gold forwards. used to recover aged debts and assess receivables for impairment. Credit terms are generally 30 days from the invoice Risk is also minimized by investing surplus funds in financial institutions with a high credit rating. date. LLiiqquuiiddiittyy rriisskk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate facilities are maintained. FFiinnaanncciiaall lliiaabbiilliittyy mmaattuurriittyy aannaallyyssiiss CCaarrrryyiinngg TToottaall aammoouunntt ccoonnttrraaccttuuaall <<66 66‐‐1122 lliiaabbiilliittiieess ccaasshh fflloowwss mmoonntthhss mmoonntthhss $$’’000000 33,226 41,197 50,613 83,177 $$’’000000 $$’’000000 $$’’000000 33,226 33,226 50,515 60,408 83,177 6,053 2,245 ‐ ‐ 5,915 1,633 11‐‐22 yyeeaarrss $$’’000000 ‐ 22‐‐55 yyeeaarrss $$’’000000 ‐ >>55 yyeeaarrss $$’’000000 11,280 15,074 12,193 3,265 53,265 ‐ 31,697 51,480 220088,,221133 222277,,332266 4411,,552244 77,,554488 4466,,224422 111199,,881199 1122,,119933 CCaarrrryyiinngg TToottaall aammoouunntt ccoonnttrraaccttuuaall <<66 66‐‐1122 lliiaabbiilliittiieess ccaasshh fflloowwss mmoonntthhss mmoonntthhss $$’’000000 $$’’000000 $$’’000000 27,407 27,407 58,732 5,400 72,313 16,541 ‐ 5,478 1,155 66,,663333 11‐‐22 yyeeaarrss $$’’000000 ‐ 22‐‐55 yyeeaarrss $$’’000000 ‐ >>55 yyeeaarrss $$’’000000 10,819 21,392 15,643 2,309 52,309 113388,,222288 115588,,445522 4499,,334488 1133,,112288 7733,,770011 1155,,664433 ‐ ‐ ‐ ‐ 22002233 Trade and other payables Lease liabilities Borrowings Gold forwards 22002222 Trade and other payables Lease liabilities Borrowings $$’’000000 27,407 45,435 65,386 FFiinnaanncciiaall iinnssttrruummeennttss mmeeaassuurreedd aatt ffaaiirr vvaalluuee The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 1 Level 2 Level 3 AAsssseettss LLiiaabbiilliittiieess 22002233 $$’’000000 953 2,564 ‐ 33,,551177 22002222 $$’’000000 1,348 2,500 ‐ 33,,884488 22002233 $$’’000000 ‐ ‐ (97,103) (11,540) ((9977,,110033)) ((1111,,554400)) 22002222 $$’’000000 ‐ ‐ Included within Level 1 of the hierarchy are the Evion Group NL (formerly BlackEarth Minerals NL) and DiscovEx Resources Limited shares listed on the Australian Securities Exchange. The fair value of these financial assets has been based on the closing quoted bid prices at the end of the reporting period, excluding transaction costs. The fair value of the gold put options, the gold call options and the gold forwards 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 put options. gold call options or the gold forwards 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. 2288.. 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. OOTTHHEERR DDIISSCCLLOOSSUURREESS This section provides information on items which require disclosure to comply with Australian Standards and other regulatory requirements. 2299.. SSHHAARREE BBAASSEEDD PPAAYYMMEENNTTSS AAccccoouunnttiinngg ppoolliiccyy 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 Page | 55 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 56 77 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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 Performance rights expense 22002233 $$’’000000 44,,771122 22002222 $$’’000000 44,,889933 OOppttiioonnss The following table outlines the number and weighted average exercise price (“WAEP”) of, and movements in, options during the year: OOppttiioonnss Outstanding as at 1 July Granted during the year Exercised during the year Outstanding at end of the year Exercisable as at 30 June 22002233 22002222 NNuummbbeerr WWAAEEPP ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ NNuummbbeerr 10,000,000 ‐ (10,000,000) ‐ ‐ WWAAEEPP $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. 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 2023 and 30 June 2022. PPeerrffoorrmmaannccee rriigghhttss The following table outlines the number and movements in Performance rights during the year: PPeerrffoorrmmaannccee rriigghhttss Outstanding as at 1 July Granted during the year Forfeited during the year Exercised during the year Unissued during the year Outstanding at end of the year Exercisable as at 30 June 22002233 NNuummbbeerr ooff RRiigghhttss 5,440,818 920,304 (148,000) 22002222 NNuummbbeerr ooff RRiigghhttss 7,175,000 1,840,818 (300,000) (4,032,990) (3,275,000) (216,400) 11,,996633,,773322 ‐‐ ‐‐ 55,,444400,,881188 ‐‐ 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. 78 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 57 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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 ‐ $1.18 IIssssuuee 22 27 Mar 2020 $0.95 nil 0% 0.38% 123% 2.85 01/02/23 ‐ $0.95 In October 2021, 2,000,000 Dec 2019 Performance rights were exercised by KMP, Mr Kim Massey and Mr Paul Thomas. In February 2022, 1,275,000 Mar 2020 Performance rights were exercised by employees. and in February 2023, 975,000 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. In September 2022, 2,000,000 of the Dec 2019 Performance rights were exercised by KMP, Mr Kim Massey and Mr Paul Thomas. In February 2023, 975,000 Mar 2020 Performance rights were exercised by employees. There are no Performance rights remaining from the Financial year 2020. 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. 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 Page | 57 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 58 79 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 PPllaannss below. Total expenses arising from share‐based payment transactions recognised during the period were as follows: 22002233 $$’’000000 44,,771122 22002222 $$’’000000 44,,889933 The following table outlines the number and weighted average exercise price (“WAEP”) of, and movements in, options RReeccooggnniisseedd sshhaarree‐‐bbaasseedd ppaayymmeennttss eexxppeennssee Performance rights expense OOppttiioonnss during the year: OOppttiioonnss Outstanding as at 1 July Granted during the year Exercised during the year Outstanding at end of the year Exercisable as at 30 June 22002233 22002222 NNuummbbeerr WWAAEEPP ‐ ‐ ‐ ‐ ‐ NNuummbbeerr 10,000,000 (10,000,000) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ WWAAEEPP $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. 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 2023 and 30 June 2022. PPeerrffoorrmmaannccee rriigghhttss The following table outlines the number and movements in Performance rights during the year: 22002233 NNuummbbeerr ooff RRiigghhttss 5,440,818 920,304 (148,000) (216,400) 11,,996633,,773322 ‐‐ 22002222 NNuummbbeerr ooff RRiigghhttss 7,175,000 1,840,818 (300,000) 55,,444400,,881188 ‐‐ ‐‐ (4,032,990) (3,275,000) PPeerrffoorrmmaannccee rriigghhttss Outstanding as at 1 July Granted during the year Forfeited during the year Exercised during the year Unissued during the year Outstanding at end of the year Exercisable as at 30 June FFiinnaanncciiaall yyeeaarr 22002200 17 September 2022. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 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 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 $1.77 16 Jun 2021 $1.94 nil 0% 0.04% ‐ 0.14% 91% ‐ 118% 1.59 ‐ 2.59 18/01/23 & 18/01/24 0.75 $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 0.75 $1.94 In December 2022, 12,500 Oct 2020 Performance rights were exercised, and in February 2023, 100,000 of the Oct 2020 Performance rights were exercised. In May 2023, 200,000 Jun 2021 (Issue 2 and 3) Performance rights were exercised. In March and April 2022, 100,000 Oct 2020 Performance rights were forfeited due to the resignations of employees in accordance with the Performance Rights Plan. There are 312,500 Performance rights remaining from Financial year 2021. 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 2, 4, 5 and 6 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 $6,948,177. The fair value at the grant date was estimated using a Monte Carlo simulation (Issue 1 & 3), and a Black Scholes option pricing model (Issue 3, 4 & 5). 80 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 59 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 The table below details the terms and conditions of the grants and the assumptions used in estimating the fair value: 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 Performance rights were exercised. IIssssuuee 11 19 Oct 2020 $1.77 nil 0% 0.13% ‐ 0.14% 95% ‐ 123% 1.95 ‐ 2.95 0.25 $1.77 0.04% ‐ 0.14% 0.04% ‐ 0.14% IIssssuuee 22 16 Jun 2021 $1.94 nil 0% 91% ‐ 118% 1.59 ‐ 2.59 0.75 $1.94 IIssssuuee 33 16 Jun 2021 $1.94 nil 0% 91% ‐ 118% 1.59 ‐ 2.59 0.75 $1.94 30/09/22 & 30/09/23 18/01/23 & 18/01/24 29/03/23 & 29/03/24 FFiinnaanncciiaall yyeeaarr 22002222 June 2024. In December 2021: December 2024; ‐ ‐ ‐ In December 2022, 12,500 Oct 2020 Performance rights were exercised, and in February 2023, 100,000 of the Oct 2020 In May 2023, 200,000 Jun 2021 (Issue 2 and 3) Performance rights were exercised. In March and April 2022, 100,000 Oct 2020 Performance rights were forfeited due to the resignations of employees in accordance with the Performance Rights Plan. There are 312,500 Performance rights remaining from Financial year 2021. 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 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. 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 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 2, 4, 5 and 6 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 $6,948,177. The fair value at the grant date was estimated using a Monte Carlo simulation (Issue 1 & 3), and a Black Scholes option pricing model (Issue 3, 4 & 5). IItteemm Grant date Value at grant date Exercise price Dividend yield Risk free rate Volatility Performance period (yrs) Test date IIssssuuee 11 IIssssuuee 22 IIssssuuee 33 IIssssuuee 44 IIssssuuee 55 4 Oct 2021 24 Nov 2021 10 Dec 2021 10 Dec 2021 10 Dec 2021 $2.18 $2.95 $3.10 $3.10 $3.10 nil 0% 0.05% ‐ 0.27% 50% nil 0% 0.54% 50% nil 0% nil 0% 1.32% 1.32% 72% ‐ 106% 72% ‐ 106% 2.00 – 3.00 1.00 – 2.00 1.00 – 3.00 2.00 – 3.00 nil 0% 1.32% 106% 3.00 30/6/23 & 30/06/24 4/10/22 & 4/10/23 10/12/22, 10/12/23 & 10/12/24 10/12/23 & 10/12/24 10/12/24 Remaining performance period (yrs) Weighted average fair value 0.00‐1.00 $1.83 0.26 $2.11 0.45 – 1.45 0.45 ‐ 1.45 $3.10 $3.10 1.45 $3.10 In December 2022, 120,000 Nov 2021 Performance rights were issued to KMP, Mr Mark Clark. In December 2022 83,000 Dec 2021 (Issue 3) Performance rights were exercised by KMP, Mr Mark Clark. In June 2023, 148,000 Dec 21 (Issue 3) Performance rights were forfeited due to the resignation of employees in accordance with the Performance Rights Plan. There are 1,489,818 Performance rights remaining from Financial year 2022. FFiinnaanncciiaall yyeeaarr 22002233 In November 2022, 542,490 Performance rights were issued to employees under the Group’s Performance Rights Plan. 100% of the rights vested on 31 October 2022. In November 2022, 161,414 Performance rights were issued to KMP, Mr Clark under the Group’s Performance Rights Plan. 50% of the rights will vest on 30 June 2024 and the remaining rights will vest on 30 June 2025. During FY23, 216,400 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 2024 and the remaining rights will vest on 30 June 2025. The performance condition for the FY2023 Performance rights was continued employment with the Company for the performance period. The fair value of the Performance rights granted during Financial year 2023 was $2,947,423. The fair value at the grant date was estimated using a Monte Carlo simulation (Issue 2 and 3), and a Black Scholes option pricing model (Issue 1). 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 26 Oct 2021 $3.36 Nil 0% 0.54% 50% 1.00 31/10/2022 ‐ $3.38 IIssssuuee 22 IIssssuuee 33 29 Nov 2022 $4.21 Nil 0% 3.18% 50% 2.00‐3.00 30/06/24 & 30/06/25 1.00‐2.00 $3.25 19 Jun 2023 $4.23 nil 0% 4.14% 50% 2.00 – 3.00 30/6/24 & 30/6/25 1.03‐2.03 2.72 In December 2022, 542,490 Oct 2021 Performance rights were exercised by employees. There are 161,414 Performance rights remaining from Financial year 2023. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 59 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 60 81 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– SShhaarree bbaasseedd ppaayymmeennttss 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. 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. TToottaall rreemmuunneerraattiioonn ppaaiidd ttoo ccuurrrreenntt aanndd ffoorrmmeerr KKMMPP ooff tthhee GGrroouupp Short term benefits Other service fees Non‐cash benefits Post‐employment benefits Annual leave Share based payments Termination payments UUllttiimmaattee PPaarreenntt 22002233 $$ 22002222 $$ 2,282,875 2,037,500 616,000 12,885 127,025 175,275 585,000 28,041 119,587 155,038 1,050,100 1,750,493 ‐ ‐ 44,,226644,,116600 44,,667755,,665599 Capricorn Metals Ltd is the ultimate parent entity of the Group. CCoonnttrroolllleedd EEnnttiittiieess The consolidated financial statements include the financial statements of the Parent and the subsidiaries set out in the following table: OOwwnneerrsshhiipp ((%%)) SSuubbssiiddiiaarriieess Mining Services SARL St Denis Holdings SARL MGY Mauritius Ltd Malagasy Graphite Holdings Ltd Greenmount Resources Pty Ltd Crimson Metals Pty Ltd CCoouunnttrryy PPrriinncciippaall aaccttiivviittyy Madagascar Exploration Services Madagascar Commercial Property Mauritius Investment Holding Australia Australia Australia Investment Holding Production Exploration 22002233 100% 100% 100% 100% 100% 100% 22002222 100% 100% 100% 100% 100% 100% Metrovex Pty Ltd The subsidiaries noted above are all controlled entities and are dependent on the parent entity for financial support. Exploration Australia 100% 100% TTrraannssaaccttiioonnss wwiitthh RReellaatteedd PPaarrttiieess As at 30 June 2023, the net loans from the Parent to its subsidiaries totals $122,692,000 (2022: $131,882,000). This is made up of loans to subsidiaries of $130,422,000 (2022: $139,620,000) with a provision for impairment of $7,730,000 (2022: $7,738,000). 82 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 61 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 SSuubbssiiddiiaarriieess Mining Services SARL MGY Mauritius Ltd Malagasy Graphite Holdings Ltd Greenmount Resources Pty Ltd Crimson Metals Pty Ltd Metrovex Pty Ltd LLooaann $$’’000000 452 2,980 6,815 90,460 29,693 22 PPrroovviissiioonn ffoorr iimmppaaiirrmmeenntt CCaarrrryyiinngg vvaalluuee $$’’000000 (452) (463) (6,815) ‐ ‐ ‐ $$’’000000 ‐ 2,517 ‐ 90,460 29,693 22 113300,,442222 ((77,,773300)) 112222,,669922 KMP remuneration has been included in the Remuneration Report section of the Directors Report for current KMP only. There are no other transactions between related parties within the Group. TToottaall rreemmuunneerraattiioonn ppaaiidd ttoo ccuurrrreenntt aanndd ffoorrmmeerr KKMMPP ooff tthhee GGrroouupp 2,282,875 2,037,500 The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. 3311.. PPAARREENNTT EENNTTIITTYY DDIISSCCLLOOSSUURREESS SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn 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 22002233 $$’’000000 4,706 177,222 181,928 1,003 865 1,868 203,422 4,188 (27,550) 118800,,006600 22002222 $$’’000000 4,385 167,203 171,588 3,176 904 4,080 202,997 7,149 (42,638) 116677,,550088 22002233 $$’’000000 22002222 $$’’000000 (10,514) (13,388) ‐ ‐ Total comprehensive loss for the year attributable to members of the parent entity ((1100,,551144)) ((1133,,338888)) The Parent entity has not entered into any contractual commitments for the acquisition of property plant and equipment at the date of this report. NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 KKeeyy eessttiimmaatteess aanndd jjuuddggeemmeennttss –– SShhaarree bbaasseedd ppaayymmeennttss 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. 3300.. RREELLAATTEEDD PPAARRTTYY DDIISSCCLLOOSSUURREESS KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell RReemmuunneerraattiioonn 22002233 $$ 616,000 12,885 127,025 175,275 22002222 $$ 585,000 28,041 119,587 155,038 1,050,100 1,750,493 ‐ ‐ 44,,226644,,116600 44,,667755,,665599 Short term benefits Other service fees Non‐cash benefits Post‐employment benefits Annual leave Share based payments Termination payments UUllttiimmaattee PPaarreenntt CCoonnttrroolllleedd EEnnttiittiieess following table: SSuubbssiiddiiaarriieess Mining Services SARL St Denis Holdings SARL MGY Mauritius Ltd Malagasy Graphite Holdings Ltd Greenmount Resources Pty Ltd Crimson Metals Pty Ltd Metrovex Pty Ltd TTrraannssaaccttiioonnss wwiitthh RReellaatteedd PPaarrttiieess (2022: $7,738,000). Capricorn Metals Ltd is the ultimate parent entity of the Group. The consolidated financial statements include the financial statements of the Parent and the subsidiaries set out in the OOwwnneerrsshhiipp ((%%)) CCoouunnttrryy PPrriinncciippaall aaccttiivviittyy Madagascar Exploration Services Madagascar Commercial Property Mauritius Investment Holding Investment Holding Australia Australia Australia Australia Production Exploration Exploration 22002233 100% 100% 100% 100% 100% 100% 100% 22002222 100% 100% 100% 100% 100% 100% 100% The subsidiaries noted above are all controlled entities and are dependent on the parent entity for financial support. As at 30 June 2023, the net loans from the Parent to its subsidiaries totals $122,692,000 (2022: $131,882,000). This is made up of loans to subsidiaries of $130,422,000 (2022: $139,620,000) with a provision for impairment of $7,730,000 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 61 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 62 83 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 3322.. DDEEEEDD OOFF CCRROOSSSS GGUUAARRAANNTTEEEE Capricorn Metals Ltd and its subsidiaries are parties to a Deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare a financial report and Directors’ report under ASIC Corporations (Wholly‐owned Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission. Capricorn Metals Ltd Greenmount Resources Crimson Metals Pty Ltd Metrovex Pty Ltd Malagasy Graphite Holding Pty Ltd The above companies represent a ‘closed group’ for the purpose of the Legislative instrument, and as there are no other parties to the Deed of cross guarantee that are controlled by Capricorn Metals Ltd, they also represent the ‘extended closed group’. 3333.. CCOOMMMMIITTTTMMEENNTTSS The Group has physical gold delivery commitments and exploration expenditure commitments which are disclosed in Notes 2 and 14 respectively. 3344.. CCOONNTTIINNGGEENNTT LLIIAABBIILLIITTIIEESS As at 30 June 2023 Capricorn Metals Ltd has bank guarantees totalling $386,000 (2022: $478,000), refer to Note 8. As at 30 June 2023 the Group has a $4 million (2022: $10 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. 3355.. AAUUDDIITTOORRSS RREEMMUUNNEERRAATTIIOONN AAmmoouunntt ppaayyaabbllee ttoo KKPPMMGG AAuussttrraalliiaa Audit and review of financial statements – Group Audit and review of financial statements – controlled entities Audit and review of financial statements – controlled entities 22002233 $$ 130,000 ‐ 113300,,000000 22002222 $$ 130,000 15,000 114455,,000000 Amounts payable to other audit firms for the audit and review of the financial reports of subsidiary companies was $2,253 (2022: $1,688). 3366.. SSUUBBSSEEQQUUEENNTT EEVVEENNTTSS There were no material events arising subsequent to 30 June 2023, 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. 3377.. 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 2023 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. 84 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 63 CAPRICORN METALS ANNUAL REPORT 2023 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 NNootteess ttoo tthhee ccoonnssoolliiddaatteedd ffiinnaanncciiaall ssttaatteemmeennttss (Continued) FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002233 Capricorn Metals Ltd and its subsidiaries are parties to a Deed of cross guarantee under which each company guarantees The subject of the principal amendments to the Standards are set out below: AAAASSBB 22002200‐‐33 AAmmeennddmmeennttss ttoo AAuussttrraalliiaa AAccccoouunnttiinngg SSttaannddaarrddss –– AAnnnnuuaall IImmpprroovveemmeennttss 22001188‐‐22002200 && OOtthheerr AAmmeennddmmeennttss 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 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 By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare a financial report and Directors’ report under ASIC Corporations (Wholly‐owned Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission. 3322.. DDEEEEDD OOFF CCRROOSSSS GGUUAARRAANNTTEEEE the debts of the others. Capricorn Metals Ltd Greenmount Resources Crimson Metals Pty Ltd Metrovex Pty Ltd Malagasy Graphite Holding Pty Ltd closed group’. 3333.. CCOOMMMMIITTTTMMEENNTTSS Notes 2 and 14 respectively. 3344.. CCOONNTTIINNGGEENNTT LLIIAABBIILLIITTIIEESS The above companies represent a ‘closed group’ for the purpose of the Legislative instrument, and as there are no other parties to the Deed of cross guarantee that are controlled by Capricorn Metals Ltd, they also represent the ‘extended The Group has physical gold delivery commitments and exploration expenditure commitments which are disclosed in As at 30 June 2023 Capricorn Metals Ltd has bank guarantees totalling $386,000 (2022: $478,000), refer to Note 8. As at 30 June 2023 the Group has a $4 million (2022: $10 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. 22002233 $$ ‐ 130,000 113300,,000000 22002222 $$ 130,000 15,000 114455,,000000 3355.. AAUUDDIITTOORRSS RREEMMUUNNEERRAATTIIOONN AAmmoouunntt ppaayyaabbllee ttoo KKPPMMGG AAuussttrraalliiaa Audit and review of financial statements – Group Audit and review of financial statements – controlled entities Audit and review of financial statements – controlled entities (2022: $1,688). 3366.. SSUUBBSSEEQQUUEENNTT EEVVEENNTTSS Amounts payable to other audit firms for the audit and review of the financial reports of subsidiary companies was $2,253 There were no material events arising subsequent to 30 June 2023, 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. 3377.. 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 2023 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. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 63 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 CAPRICORN METALS ANNUAL REPORT 2023 Page | 64 85 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 2023 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, and (c) At the date of this declaration there are reasonable grounds to believe that the members of the extended closed group identified in Note 32 will be able to meet any obligations or liabilities to which there are, or may become, subject by virtue of the deed of cross guarantee described in Note 32. 2. 3. 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 2023. The Directors draw attention to the notes to the consolidated financial statements, which include a statement of compliance with International Financial Reporting Standards. 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 7 September 2023 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 The Financial Report comprises: Metals Ltd (the Company). • Consolidated statement of financial position as at In our opinion, the accompanying Financial Report of 30 June 2023. the Company is in accordance with the Corporations Act 2001, including: • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement • giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial of cash flows for the year then ended. performance for the year ended on that date; and • Notes including a summary of significant • complying with Australian Accounting Standards accounting policies. and the Corporations Regulations 2001. • 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. Key Audit Matters Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. This matter was 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 this matter. 86 CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 65 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. Page I 66 CAPRICORN METALS ANNUAL REPORT 2023 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 2023 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, and (c) At the date of this declaration there are reasonable grounds to believe that the members of the extended closed group identified in Note 32 will be able to meet any obligations or liabilities to which there are, or may become, subject by virtue of the deed of cross guarantee described in Note 32. 2. 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 2023. 3. The Directors draw attention to the notes to the consolidated financial statements, which include a statement of compliance with International Financial Reporting Standards. 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 7 September 2023 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 2023 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 2023. • 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 accounting policies. and the Corporations Regulations 2001. • 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. Key Audit Matters Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. This matter was 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 this matter. CCAAPPRRIICCOORRNN MMEETTAALLSS LLTTDD AABBNN 8844 112211 770000 110055 Page | 65 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. CAPRICORN METALS ANNUAL REPORT 2023 Page I 66 87 Gold forward restructure Refer to Note 4 Net Finance Costs and Note 22 Other Financial Liabilities in the Financial Report The key audit matter How the matter was addressed in our audit The Group recognised a realised loss of $33.1 million on partial termination of gold forwards (‘gold forward restructure’) and a fair value loss of $83.2 million on the remaining gold forwards, now recognised as other financial liabilities at 30 June 2023. The forward contracts previously qualified as future inventory sales contracts, with sales recognised as revenue at the time of sale, also known as the own use exemption. The partial termination led to a change in accounting for the remaining gold forwards which are now recognised at fair value through profit and loss. The recognition of these losses was a key audit matter due to: • • • the significance of the gold forward restructure to the income statement and liabilities of the Group; the judgment required to assess the accounting treatment of the remaining gold forwards; and the judgement required in the valuation of the remaining gold forwards as at 30 June 2023. We involved valuation specialists to supplement our senior team members in assessing this key audit matter. Our procedures included: • • Compared the inputs of each gold forward to confirmations obtained from counterparties; Checked the partial termination of the gold forwards to source documentation including bank statements; • With the assistance of technical specialists we assessed the accounting treatment of the gold forward restructure against accounting standard requirements which resulted in the recognition of the fair value loss; • With the assistance of valuation specialists, we independently estimated the fair values of the Group’s gold forwards as at 30 June 2023 using recognised market valuation methodologies and inputs. We compared the Group’s valuations recorded in the general ledger to these fair value ranges; and • We evaluated the appropriateness of the classification and the presentation of the open gold forwards and the related risk management disclosures against accounting standard requirements. 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, ESG 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. 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. 88 Page I 67 CAPRICORN METALS ANNUAL REPORT 2023 Gold forward restructure Responsibilities of the Directors for the Financial Report Refer to Note 4 Net Finance Costs and Note 22 Other Financial Liabilities in the Financial Report The Directors are responsible for: The key audit matter How the matter was addressed in our audit Standards and the Corporations Act 2001; • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting The Group recognised a realised loss of $33.1 million Our procedures included: on partial termination of gold forwards (‘gold forward restructure’) and a fair value loss of $83.2 million on the remaining gold forwards, now recognised as other financial liabilities at 30 June 2023. • • The forward contracts previously qualified as future inventory sales contracts, with sales recognised as revenue at the time of sale, also known as the own use exemption. The partial termination led to a change in accounting for the remaining gold forwards which are now recognised at fair value through profit and loss. matter due to: The recognition of these losses was a key audit the significance of the gold forward restructure to the income statement and liabilities of the Group; Compared the inputs of each gold forward to confirmations obtained from counterparties; Checked the partial termination of the gold forwards to source documentation including bank statements; • With the assistance of technical specialists we assessed the accounting treatment of the gold forward restructure against accounting standard requirements which resulted in the recognition of the fair value loss; • With the assistance of valuation specialists, we independently estimated the fair values of the Group’s gold forwards as at 30 June 2023 using recognised market valuation methodologies and inputs. We compared the Group’s valuations recorded in the general ledger to these fair value the judgment required to assess the accounting treatment of the remaining gold forwards; and ranges; and the judgement required in the valuation of the remaining gold forwards as at 30 June 2023. We involved valuation specialists to supplement our senior team members in assessing this key audit requirements. matter. • We evaluated the appropriateness of the classification and the presentation of the open gold forwards and the related risk management disclosures against accounting standard • • • Other Information 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 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, ESG 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. 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. • • 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; and 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. Report on the Remuneration Report Opinion Directors’ responsibilities In our opinion, the Remuneration Report of Capricorn Metals Ltd for the year ended 30 June 2023, 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 12 to 22 of the Directors’ report for the year ended 30 June 2023. 33 to 43 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 7 September 2023 Page I 67 CAPRICORN METALS ANNUAL REPORT 2023 Page I 68 89 AASSXX aaddddiittiioonnaall iinnffoorrmmaattiioonn AASSXX aaddddiittiioonnaall iinnffoorrmmaattiioonn As at 18 September 2023 the following information applied: As at 18 September 2023 the following information applied: 11.. SSeeccuurriittiieess 11.. SSeeccuurriittiieess aa)) The voting rights attached to the ordinary shares are governed by the Constitution. aa)) FFuullllyy ppaaiidd oorrddiinnaarryy sshhaarreess The voting rights attached to the ordinary shares are governed by the Constitution. FFuullllyy ppaaiidd oorrddiinnaarryy sshhaarreess 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 Performance rights have any voting rights. 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 Performance rights have any voting rights. SSiizzee ooff hhoollddiinngg SSiizzee ooff hhoollddiinngg 1 - 1,000 1,001 - 5,000 5,001 - 10,000 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 10,001 - 100,000 100,001 and over 100,001 and over TToottaall TToottaall NNuummbbeerr ooff SShhaarreehhoollddeerr ss NNuummbbeerr ooff NNuummbbeerr ooff SShhaarreehhoollddeerr SShhaarreess ss NNuummbbeerr ooff PPeerrcceennttaaggee %% SShhaarreess PPeerrcceennttaaggee %% 1,447 1,085 350 593 159 1,447 630,599 1,085 2,870,310 350 2,742,258 0.17% 630,599 2,870,310 0.76% 0.73% 2,742,258 19,299,502 593 350,415,507 159 19,299,502 5.13% 350,415,507 93.21% 33,,663344 375,958,176 33,,663344 375,958,176 100.00% There are 197 Shareholders with less than a marketable parcel at a price of $4.41, totalling 7,406 shares. There are 197 Shareholders with less than a marketable parcel at a price of $4.41, totalling 7,406 shares. bb)) TToopp 2200 sshhaarreehhoollddeerrss TToopp 2200 sshhaarreehhoollddeerrss bb)) NNaammee NNaammee HSBC Custody Nominees (Australia) Limited HSBC Custody Nominees (Australia) Limited Citicorp Nominees Pty Limited Citicorp Nominees Pty Limited J P Morgan Nominees Australia Pty Limited J P Morgan Nominees Australia Pty Limited Samoz Pty LtdSamoz Pty Ltd National Nominees Limited National Nominees Limited BNP Paribas Noms Pty Ltd BNP Paribas Noms Pty Ltd Rollason Pty Ltd Rollason Pty Ltd NNuummbbeerr ooff FFuullllyy PPaaiidd OOrrddiinnaarryy SShhaarreess HHeelldd NNuummbbeerr ooff FFuullllyy PPaaiidd OOrrddiinnaarryy SShhaarreess HHeelldd PPeerrcceennttaaggee %% 98,605,602 98,605,602 26.23% 48,972,407 48,972,407 13.03% 39,716,779 39,716,779 10.56% 21,846,154 21,846,154 5.81% 13,829,397 13,829,397 3.68% 12,217,521 12,217,521 3.25% 9,148,299 9,148,299 2.43% HSBC Custody Nominees (Australia) Limited HSBC Custody Nominees (Australia) Limited 7,608,318 7,608,318 2.02% Mutual Investments Pty Ltd Mutual Investments Pty Ltd Piama Pty Ltd Piama Pty Ltd Mr Glyn Evans & Mrs Thi Thu Van Evans Mr Glyn Evans & Mrs Thi Thu Van Evans Macquarie Bank Limited Macquarie Bank Limited Liberty Management Pty Ltd Liberty Management Pty Ltd Nedlands Nominees Pty Ltd Nedlands Nominees Pty Ltd 6,283,360 6,283,360 1.67% 6,200,000 6,200,000 1.65% 5,396,049 5,396,049 1.44% 5,000,000 5,000,000 1.33% 4,615,385 4,615,385 1.23% 4,057,385 4,057,385 1.08% 3,611,5390.96%Topaz Holdings Pty Ltd 3,611,5390.96%Topaz Holdings Pty Ltd 3,611,539 3,611,539 0.96% Cenquest Pty Ltd Cenquest Pty Ltd Mr Kim Andrew Massey Mr Kim Andrew Massey Stephen Grant Evans Stephen Grant Evans Liberty Management Pty Ltd Liberty Management Pty Ltd Third Reef Pty Ltd Third Reef Pty Ltd Avenger Projects Ltd Avenger Projects Ltd TToopp 2200 sshhaarreehhoollddeerrss TToopp 2200 sshhaarreehhoollddeerrss TToottaall iissssuueedd ccaappiittaall TToottaall iissssuueedd ccaappiittaall 90 2,525,000 2,525,000 0.67% 2,153,847 2,153,847 0.57% 2,017,752 2,017,752 0.54% 2,000,000 2,000,000 0.53% 2,000,000 2,000,000 0.53% 1,865,000 1,865,000 0.50% 299,669,794 299,669,794 79.71% 375,958,176 375,958,176 100.00% 79.71% 100.00% 0.17% 0.76% 0.73% 5.13% 93.21% 100.00% PPeerrcceennttaaggee %% 26.23% 13.03% 10.56% 5.81% 3.68% 3.25% 2.43% 2.02% 1.67% 1.65% 1.44% 1.33% 1.23% 1.08% 0.96% 0.67% 0.57% 0.54% 0.53% 0.53% 0.50% CAPRICORN METALS ANNUAL REPORT 2023 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 FY2021 Performance rights (Test date: 30 Sep 2023) Unvested FY2021 Performance rights (Test date: 18 Jan 2024) Unvested FY2021 Performance rights (Test date: 29 Mar 2024) Unvested FY2022 Performance rights (Test date: 4 Oct 2023) Unvested FY2022 Performance rights (Test date: 30 Jun 2023) Unvested FY2022 Performance rights (Test date: 30 Jun 2024) Unvested FY2022 Performance rights (Test date: 10 Dec 2023) Unvested FY2022 Performance rights (Test date: 10 Dec 2024) Unvested FY2022 Performance rights (Test date: 30 Jun 2024) Unvested FY2023 Performance rights (Test date: 30 June 2025) TToottaall NNuummbbeerr ooff OOppttiioonn HHoollddeerrss NNuummbbeerr ooff OOppttiioonnss 2 1 1 1 2 2 27 29 1 1 6677 112,500 100,000 100,000 120,000 139,909 139,909 525,000 565,000 80,907 80,907 11,,996633,,773322 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 18 September 2023 were: SShhaarreehhoollddeerr Van Eck Associates Corporation Paradice Investment Management Pty Ltd Samoz 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 22,052,000 8899,,888811,,446666 10.40 7.74 5.99 2244..1133 CAPRICORN METALS ANNUAL REPORT 2023 91 AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) 55.. MMiinneerraall RReessoouurrcceess && OOrree RReesseerrvveess GGrroouupp MMiinneerraall RReessoouurrcceess The JORC compliant Group Mineral Resources (inclusive of Ore Reserves) as at 31 March 2023 are estimated at 202.2 million tonnes at 0.8g/t Au for 4.98 million ounces of gold compared with the estimate at 30 June 2022 of 179.0 million tonnes at 0.8g/t Au for 4.37 million ounces of gold. The re-estimation of Group Mineral Resources resulted in a 13% increase in tonnes and 14% increase in ounces. The increase in the Group Mineral Resources is primarily due to the results of the drilling programme completed during the year at Mt Gibson Gold Project (‘MGGP’). The Karlawinda Gold Project (‘KGP’) Resource has been updated to include satellite resources at KGP East and to reflect mining depletion. s e c n u O n o i l l i M 6.0 5.0 4.0 3.0 2.0 1.0 0.0 4.37 - 30-Jun-22 Group Mineral Resources 0.68 - 0.04 - 0.10 Depletion Model Update New Deposits 4.98 - 31-Mar-23 Mineral Resources are reported inclusive of Ore Reserves and include all exploration and resource definition drilling information, where practicable, up to 31 March 2023 and have been depleted for mining to 31 March 2023. 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. GGrroouupp OOrree RReesseerrvveess The JORC compliant Group Ore Reserves as at 31 March 2023 are estimated at 97.9 million tonnes at 0.9g/t Au for 2.70 million ounces of gold compared with the estimate at 30 June 2022 of 53.0 million tonnes at 0.8g/t Au for 1.34 million ounces of gold. The re-estimation of the Group Ore Reserves resulted in an 85% increase in tonnes and 101% increase in ounces. The increase in Ore Reserves is primarily due to the inclusion of the MGGP Maiden Ore Reserve Estimate (‘ORE’) of 48.7 million tonnes @ 0.9g/t Au for 1.45 million ounces. The KGP ORE has been updated to reflect mining depletion and a modest model update incorporating in pit drilling only. 92 CAPRICORN METALS ANNUAL REPORT 2023 AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) Group Ore Reserves 1.46 - - 0.10 - Depletion Model Update New Deposits 2.70 - 31-Mar-23 s e c n u O n o i l l i M 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1.34 - 30-Jun-22 KKaarrllaawwiinnddaa GGoolldd PPrroojjeecctt ((‘‘KKGGPP’’)) MMiinneerraall RReessoouurrcceess The KGP JORC compliant Mineral Resource as at 31 March 2023 is 97.4 million tonnes at 0.7g/t Au for 2.23 million ounces, compared to 99.2 million tonnes at 0.7g/t Au for 2.29 million ounces at 30 June 2022. The change in the KGP Mineral Resource from June 2022 to March 2023 reflects a 2% decrease in Mineral Resource tonnes and a 3% decrease in Mineral Resource ounces. OOrree RReesseerrvveess The KGP JORC compliant Ore Reserve as at 31 March 2023 is 49.2 million tonnes at 0.8g/t Au for 1.25 million ounces, compared to 53 million tonnes at 0.8g/t Au for 1.34 million ounces at 30 June 2022. The inclusion of recent in-pit drilling results and mining depletion at KGP resulted in a 7% decrease in Ore Reserve tonnes and 7% decrease in Ore Reserve ounces. MMtt GGiibbssoonn GGoolldd PPrroojjeecctt ((‘‘MMGGGGPP’’)) MMiinneerraall RReessoouurrcceess The MGGP JORC compliant Mineral Resource at 31 March 2023 is 104.9 million tonnes at 0.8g/t Au for 2.75 million ounces, compared to 79.7 million tonnes at 0.8g/t Au for 2.083 million ounces at 30 June 2022. The change in the MGGP Mineral Resource from June 2022 to March 2023 reflects a 32% increase in Mineral Resource tonnes and a 32% increase in Mineral Resource ounces. OOrree RReesseerrvveess A maiden JORC compliant Ore Reserve Estimate was completed at the MGGP in April 2023. The maiden MGGP JORC compliant Ore Reserve as at 30 June 2023 is 48.7 million tonnes at 0.9g/t Au for 1.45 million ounces. GGoovveerrnnaannccee aarrrraannggeemmeennttss aanndd iinntteerrnnaall ccoonnttrroollss The Company has put in place governance arrangements and internal controls with respect to its estimates of Mineral Resources and Ore Reserves and the estimation process, including: • • • • oversight and approval of each annual statement by responsible senior officers; establishment of internal procedures and controls to meet JORC Code 2012 compliance in all external reporting; annual reconciliation with internal planning to validate reserve estimates for operating mines; and board approval of new and materially changed estimates. CAPRICORN METALS ANNUAL REPORT 2023 93 AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) GGrroouupp MMiinneerraall RReessoouurrcceess aass aatt 3311 MMaarrcchh 22002233 GGoolldd DDeeppoossiitt MMeeaassuurreedd IInnddiiccaatteedd IInnffeerrrreedd TToottaall RReessoouurrcceess TTyyppee CCuutt-- ooffff ((gg//tt)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) Bibra Open pit Southern corridor Open pit Easky KGP East Stockpiles KKGGPP TToottaall Mt Gibson Mt Gibson Mt Gibson Mt Gibson MMGGGGPP TToottaall 44 GGRROOUUPP TTOOTTAALL Open pit Open pit Stockpiles Laterite Oxide Transitional Fresh 00..33<< 00..44<< - - - -- -- - - - -- - - - -- -- - - - -- - - - -- -- - - - -- 50.3 22.4 3.0 1.3 3.4 80.4 - 8.3 9.8 57.8 76.0 GGrraadd ee ((gg//tt)) 0.8 0.7 0.5 0.8 0.4 0.7 - 0.8 0.8 0.9 0.9 1,277 4.7 476 11.5 47 33 47 0.7 0.1 - 1,880 17.0 - 217 253 4.2 0.6 1.1 1,636 23.0 2,106 28.9 0.7 0.6 0.5 0.9 - 0.6 0.8 0.8 0.8 0.8 0.7 00..77 106 230 11 2 - 55.0 34.0 3.6 1.4 3.4 349 97.4 79 16 29 4.2 9.0 10.9 526 80.9 649 104.9 0.8 0.6 0.5 0.8 0.4 0.7 0.6 0.8 0.8 0.8 0.8 1,383 706 57 35 47 2,228 79 233 281 2,162 2,755 999988 220022..22 00..88 44,,998833 115566..44 00..88 33,,998866 4455..99 NNootteess:: 1. Mineral Resources are estimated using a gold price of A$2,200/ounce 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. 4. As reported 19th April 2023 GGrroouupp OOrree RReesseerrvveess aass aatt 3311 MMaarrcchh 22002233 GGoolldd DDeeppoossiitt TTyyppee CCuutt--ooffff ((gg//tt)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) TToonnnneess ((MMtt)) GGrraaddee ((gg//tt)) MMeettaall ((kkoozz)) PPrroovveedd PPrroobbaabbllee TToottaall RReesseerrvveess Bibra Open pit Southern corridor Open pit Stockpiles Stockpiles 0.3< 0.3< 0.3< KKGGPP TToottaall MGGP5 GGRROOUUPP TTOOTTAALL Open pit 0.3< - - - -- - -- - - - -- - -- - - - -- - -- 35.1 10.7 3.4 49.2 48.7 0.8 0.7 0.4 0.8 0.9 960 240 47 1,247 1,450 35.1 10.7 3.4 49.2 48.7 0.8 0.7 0.4 0.8 0.9 960 240 47 1,247 1,450 9977..99 00..99 22,,669977 9977..99 00..99 22,,669977 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. 5. As reported 19th April 2023. 94 CAPRICORN METALS ANNUAL REPORT 2023 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 General Manager of Geology and an employee of the Company. Mr. Jarrad Price is a current Fellow 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 Fellow 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 (27/07/2023) 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. The announcements are available to view on the ASX website and on the Company’s website at www.capmetals.com.au. FFoorrwwaarrdd llooookkiinngg ssttaatteemmeennttss This report 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. Such statements include, but are not limited to, statements with regard to capacity, future production and grades, estimated costs, revenues and reserves, the construction costs of new projects and projected capital expenditures, the outlook for minerals and metals prices and the outlook for economic conditions and may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”. 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 report 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. For a more detailed discussion of such risks and other factors, see the Risks section of this report, as well as the Company’s other announcements. 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 report, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. CAPRICORN METALS ANNUAL REPORT 2023 95 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 L52/248 M59/328 M59/402 M59/403 M59/404 M59/772 E59/2439 E59/2450 E59/2594 E59/2606 E59/2655 P59/2286 P59/2287 P59/2290 P59/2291 P59/2306 P59/2309 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 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 Greenmount Resources 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 Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals 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 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 Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted PPeerrcceennttaagg ee 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% 100% 96 CAPRICORN METALS ANNUAL REPORT 2023 AASSXX AAddddiittiioonnaall IInnffoorrmmaattiioonn (Continued) 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 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 Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals Pty Ltd Crimson Metals 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 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% CAPRICORN METALS ANNUAL REPORT 2023 97 98 CAPRICORN METALS ANNUAL REPORT 2023 +61 8 9212 4600 enquiries@capmet.com.au capmetals.com.au Level 3, 40 Kings Park Road, West Perth WA 6000