ANNUAL REPORT 2021 www.centaurus.com.au STOCK EXCHANGE LISTING Centaurus Metals Limited’s shares are listed on the Australian Securities Exchange Ordinary fully paid shares (ASX code: CTM) PRINCIPAL & REGISTERED OFFICE Australia Level 2, 1 Ord Street West Perth WA 6005 PO Box 975 West Perth WA 6872 Telephone: (08) 6424 8420 Email: office@centaurus.com.au Website: www.centaurus.com.au Brazil Avenida Barao Homem de Melo, 4391 Salas 606 and 607 – Estoril Belo Horizonte - MG - CEP: 30.494.275 BRAZIL Telephone: +55 31 3194 7750 Corporate Directory DIRECTORS Mr D M Murcia AM, B. Juris, LL.B Non-Executive Chair Mr D P Gordon B.Bus, FCA, AGIA, ACIS, MAICD Managing Director Mr B R Scarpelli M.Sc, PMP Executive Director Mr M D Hancock B.Bus, CA, FFin Non-Executive Director Mr C A Banasik B.App.Sc (Physics), M.Sc (Geology), Dip Ed, GAICD Non-Executive Director COMPANY SECRETARY Mr J W Westdorp B.Bus, CPA, Grad Dip App Sc, MAICD Chief Financial Officer / Company Secretary SHARE REGISTRY Advanced Share Registry Limited 150 Stirling Highway Nedlands WA 6009 Telephone: (08) 9389 8033 AUDITORS KPMG Chartered Accountants 235 St Georges Terrace Perth WA 6000 BANKERS Australia National Australia Bank Level 14, 100 St Georges Tce Perth WA 6000 Brazil Banco Inter Avenida Barbacena, 1219 – Santo Agostinho Belo Horizonte - MG – CEP: 30190-924 BRAZIL Telephone: +55 31 2101 7006 CENTAURUS METALS ANNUAL REPORT 2021 CENTAURUS METALS ANNUAL REPORT 2021 Contents Highlights ..................................................................................................... 04 Chair’s Report ......................................................................................... 06 Focus for the Year Ahead .......................................................... 08 Nickel Market & Price ................................................................... 09 Environmental, Social & Governance ......................... 11 Strategy & Key Assets in Brazil ........................................ 14 Corporate ..................................................................................................... 24 Mineral Resources & Ore Reserves ............................. 26 Tenement List .......................................................................................... 28 Additional Shareholder Information ............................. 29 Corporate Governance Statement .................................. 30 Financial Report 31 December 2021 ............................. 31 CENTAURUS METALS LIMITED ANNUAL REPORT 3 CENTAURUS METALS ANNUAL REPORT 2021 Highlights EXPLORATION & DEVELOPMENT → In March 2021, the Company lifted the JORC 2012 Mineral Resource Estimate (MRE) at the Jaguar Nickel Sulphide Project to: • GLOBAL MRE: 58.9Mt @ 0.96% Ni for 562,600t of contained nickel → The Global MRE at this time included an Indicated component of: • INDICATED: 20.1Mt @ 1.12% Ni for 225,800t of contained nickel → This resource supported the delivery of the Value-Add (Nickel Sulphate) Scoping Study for the Jaguar Project and highlighted the potential for outstanding economic returns from the production of battery-grade nickel sulphate. → Key Scoping Study results, using conservative nickel price assumption of US$7.50/lb (US$16,530/t) and a sulphate premium of only US$0.50/lb (US$1,102/t), were: • Production of +20,000 tpa of recovered nickel-in-sulphate and +9,600 tpa of a mixed sulphide precipitate (MSP) over an initial 13-year mine life • Post-tax NPV8 of ~A$1.11 billion (~US$831 million) and post-tax IRR of ~52% • Post-tax capital payback of ~1.8 years from first nickel sulphate production • Net Revenue totalling ~A$6.04 billion (~US$4.53 billion) • EBITDA totalling ~A$3.25 billion (~US$2.44 billion) • Average Annual Free Operating Cash Flow (Pre-tax) of ~A$252 million (~US$189 million) • High LOM Cash Operating Margin of ~US$4.27/lb of Ni • Pre-production CAPEX of ~US$288 million (including contingency) → The Jaguar Project has significant leverage to the nickel price given the extensive amount of nickel metal available in the MRE. At US$11/lb, the scoped project would see the post-tax NPV lift to over A$2.5 billion, the post-tax IRR lift to over 100% and the EBITDA rise to over A$500m per annum. → Extensive ongoing drilling programs since the delivery of the Scoping Study underpinned a significant increase in the JORC 2012 Mineral Resource Estimate (MRE) at the Jaguar Nickel Sulphide Project in December 2021, confirming Jaguar as the world’s premier near-surface nickel sulphide development project and highlighting the opportunity to increase the currently scoped production rate: • GLOBAL MRE: 80.6Mt @ 0.91% Ni for 730,700t of contained nickel → Importantly, the Indicated component of the Global MRE has increased to: • INDICATED: 43.4Mt @ 0.92% Ni for 397,000t of contained nickel → A Nickel Sulphate Definitive Feasibility Study (DFS) is now advancing on multiple fronts and on-track for completion by the end of 2022. Leading global engineering group Ausenco has been appointed as Lead Engineer for the study. → Key environmental approval document, the Environmental Impact Assessment (“EIA/RIMA”), lodged with the Pará State environmental authority (SEMAS), with approval targeted for Q3 2022. → Updated Mining Lease Application lodged, meaning all key statutory reports required for the development of the Jaguar Project have now been submitted. → Three key properties secured at Jaguar, providing security of land possession. Centaurus now has possession rights and access to over 2,000 hectares of land at Jaguar. → Jaguar Nickel Sulphide Project selected as a Strategic Minerals Project by the Brazilian Federal Government as part of a new program designed to support projects deemed strategic to Brazil. CENTAURUS METALS LIMITED ANNUAL REPORT 4 ENVIRONMENT, SOCIAL & GOVERNANCE (ESG) CORPORATE → Independent ESG assessment confirms Jaguar’s credentials as a world-leading, low-emission nickel project, with a life-of-mine CO2 footprint estimated to be lower than 97% of global nickel production. → Cash at 31 December 2021 of $8.3 million, with a $75 million institutional placement completed subsequent to the end of the reporting period to drive the continued growth and development of the Jaguar Project. → Centaurus shares commenced trading in the US on the OTCQX platform under the ticker OTCQX: CTTZF on 30 December 2021. → Centaurus continued to build its senior leadership team, with the appointment of experienced international executives Wayne Foote as General Manager – Operations, Júlia Oliveira as Legal and Commercial Manager in Brazil and Fabio Borges as Finance Manager in Brazil. → Adoption of a formal ESG policy framework, based on the recommendations and principles of the Towards Sustainable Mining (TSM) Principles and the Principles of Responsible Investment (PRI). → Positive contributions to local communities in Brazil, with key programs including: • Public road infrastructure upgrade completed by Centaurus between the municipalities of São Félix do Xingu and Tucumã, delivering a significantly better road for local residents. • New 20,000L water tank donated to the village of Minerasul. • Contribution to the local municipal health services of Tucumã and São Félix do Xingu through the purchase of masks, gowns, hand sanitiser and COVID-19 test kits to better equip them for the delivery of health services in these communities. • More than 90% of the current project workforce, including employees and outsourced labour, are from the south-eastern region of the State of Pará. • More than 80% of the Company’s investment expenditure relating to exploration and development work at the Jaguar Project to date has been awarded to the local community through drilling contracts, engagement of consultants and services and the purchase of equipment and supplies. → Effective controls maintained in response to the COVID-19 pandemic to help protect the health and safety of Centaurus’ in-country workforce, their families and the local community, as well as to help maintain business continuity, which can be seen by the extensive work completed on the Project since the start of the COVID-19 pandemic. CENTAURUS METALS LIMITED ANNUAL REPORT 5 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 CENTAURUS METALS ANNUAL REPORT 2021 Chair’s Report “ Our strong position and the clear direction we are taking is due to the hard work, dedication and commitment of our exceptionally hardworking and highly skilled team. Dear Shareholders, I am pleased to report on what has been another year of outstanding progress for Centaurus Metals, with the Company taking significant steps towards becoming a major new global nickel sulphide producer through the development of our flagship Jaguar Nickel Sulphide Project, located in the world-class Carajás mining district of north-eastern Brazil. This has been reflected in the strong growth in our market capitalisation (which was approaching $600 million at the time of finalising this report), the depth and quality and our share register, our growing profile in global investment markets, our ability to attract quality, high-calibre people to join our team (both in Australia and Brazil) and the rapid progress we are making in the vital area of Environmental, Social and Governance (ESG). The work completed over the past 12 months can leave no doubt that Jaguar is a truly world-scale asset, with a Mineral Resource that represents one of the largest undeveloped nickel sulphide deposits anywhere in the world. Since acquiring the project from Vale in September 2019, Centaurus has moved rapidly to establish Jaguar as the world’s premier near-surface nickel sulphide development project, with our drilling and exploration programs over 2021 underpinning the delivery of an updated Mineral Resource Estimate (MRE) in December totalling 80.6 million tonnes grading 0.91% nickel for 730,700 tonnes of contained nickel. Importantly, 54% of this MRE is in the higher-confidence Indicated Resource category (43.4Mt grading 0.92% Ni for 397,000 tonnes of contained nickel). And we’re confident we still have plenty of growth ahead of us. At the time of writing this report, we have 15 drill rigs operating at Jaguar on double shift, with this level of activity set to be sustained over much of 2022. Centaurus expects to deliver our next resource update in Q3 2022, with this resource to underpin a Definitive Feasibility Study (DFS) due by the end of December 2022, which will in turn pave the way for a Final Investment Decision (FID) in 2023. Centaurus delivered a positive Scoping Study for the Jaguar Project in May 2021, confirming strong technical parameters and outstanding financial returns from the production of nickel sulphate from a 13-year open pit and underground mining operation. The production of nickel sulphate is proposed to be delivered by a conventional nickel flotation plant, followed by a Pressure Oxidation circuit to further value-add the nickel concentrate to deliver more than 20,000 tonnes of nickel in sulphate per annum over the initial 13-year mine life. Following the robust and compelling economics seen in the Jaguar Nickel Sulphate Scoping Study, the Company elected to move straight to a Definitive Feasibility Study on the Project, a reflection of our confidence in the Project. Importantly, our latest MRE upgrade in December delivered a substantial 30% increase in contained nickel metal over the previous MRE used in the Scoping Study, allowing the Company to consider an increase in the annual production rate and/or an extended mine life as part of the DFS. Centaurus is already well advanced on many of the key components of the proposed project development, positioning the Company to complete the DFS by the end of this year. We have recently appointed leading global engineering group Ausenco as Lead Engineer, with Ausenco bringing extensive experience across nickel sulphide operations and hydrometallurgy, as well as in-country experience operating in Brazil. 6 CENTAURUS METALS LIMITED ANNUAL REPORT Through the development of the Jaguar Project, Centaurus’ goal is to become a new-generation nickel sulphide mining company, capable of delivering more than 20,000 tonnes per annum of Class-1 nickel to global markets over the long term, and to do so in a sustainable and responsible manner that ensures the Company meets the highest possible ESG standards. Our aspirations in this regard are strongly supported by Jaguar’s forecast exceptionally low carbon emissions, with a report commissioned during the year assessing the project’s life-of-mine CO2 footprint to be lower than 97% of global nickel production, once the mine is in production. These low emission levels are a function of the relatively high-grade nickel coming from open pit mining sources and, importantly, the fact that 80% of grid power in Brazil stems from renewable sources. There is an expectation that, once in operation, Jaguar’s power requirements could well be met from 100% renewable sources, which will reduce carbon emissions even further. Our ability to deliver Class-1 nickel products with an exceptionally low carbon footprint is expected to make Jaguar a highly attractive source of sustainable nickel for use in the burgeoning green energy sector, particularly for use in lithium-ion batteries in the rapidly growing electric vehicle (EV) industry. “ Several leading forecasters expect the nickel market to almost double in size over the next decade, with much of this growth driven by new demand from the EV sector. Our ESG initiatives in-country have also included important community programs, including donations of supplies to local health services to assist with their response to the COVID-19 pandemic, as well as upgrades to road and water infrastructure in nearby towns. We intend to work closely with the communities surrounding Jaguar to continue to extend and enhance these programs over the coming years as we move towards development and production. Towards the end of 2021, the Company’s Board adopted an overarching ESG framework for Centaurus, building on the Towards Sustainable Mining (TSM) Principles and the Principles of Responsible Investment (PRI). The framework will provide an important structure within which the Company can pursue the development of Jaguar in a responsible and sustainable manner. Given supply constraints and the scarceness of new nickel sulphide projects globally, substantial new long-life projects such as Jaguar – particularly those with attractive ESG credentials – are expected to attract growing interest from global investors. This was reflected in the strong support for the Company’s A$75 million institutional share placement completed in January 2022, which introduced over 20 high-quality Australian and international institutional investors to the Company’s share registry. The raising was also well supported by existing shareholders, with the funds to support the completion of the ongoing DFS. Outside of the Company’s Jaguar Nickel Sulphide Project, Centaurus continues to explore avenues to realise the significant value of the advanced Jambreiro Iron Ore Project. Our strong position and the clear direction we are taking is due to the hard work, dedication and commitment of our exceptionally hardworking and highly skilled team – led as always from the front by our Managing Director Darren Gordon – and I take this opportunity to thank all of them, as well as our shareholders for your continued support. Centaurus is now in the box seat to deliver the world’s premier near-surface nickel sulphide development project with class-leading CO2 emission credentials, at the perfect time in the nickel market cycle – a truly exciting opportunity. I look forward to the coming year with great enthusiasm. Didier Murcia CHAIR 7 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Focus for the Year Ahead To continue to advance the Jaguar Nickel Sulphide Project towards development → Undertake all activities safely in an environmentally and socially sustainable manner → Maintain aggressive drilling program at the Jaguar Nickel Sulphide Project to continue to build the global Resource as well as maximise the existing Resource into Measured and Indicated categories and make new discoveries. → Complete a → Complete offtake agreement Definitive Feasibility Study and inaugural Ore Reserve Estimate. in respect to the supply of nickel sulphate from the Jaguar Project. → Have the Environmental Impact Assessment (EIA/RIMA) and Mining Lease Application approved. → Deliver value to Shareholders in respect to the Jambreiro Iron Ore Project. CENTAURUS METALS LIMITED ANNUAL REPORT 8 8 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Nickel Market & Price Nickel has outstanding physical and chemical properties, which make it essential in many thousands of products. Today, its biggest use is in producing metal alloys, with approximately 70% of global nickel production currently used to manufacture stainless steel. However, it is nickel’s vital contribution to the production of lithium-ion (Li-ion) batteries that is expected to deliver exceptional demand growth for the metal over the coming years. Li-ion batteries – used in Electric Vehicles – are a key element of the global transition to ‘green energy’. Concern over climate change, the drive towards energy efficiency and the adoption of carbon dioxide emissions targets by governments are all helping to increase interest in renewable energy technologies involving batteries and energy storage. While nickel is not always in the name, its presence in many battery technologies is helping to reduce greenhouse gas emissions - enabling clean energy solutions to be a central part of our effort to tackle global warming. While luxury brands have taken the lead in the manufacture of electric only vehicles, the majority of car manufacturers have now announced plans to aggressively transition from the production of internal combustion engine vehicles to electric only. While the timeframes vary between companies and geographical locations, major manufacturers that sell mainstream models are investing heavily in the industrial transition needed for the coming decades. American car maker Ford has said its passenger cars in Europe will be all-electric by 2030. The company expects 40 to 50 per cent of its global sales to be battery electric vehicles by that same year. Ford and Korean battery partner SK Innovation announced in September that they would build an electric assembly plant and three battery plants in the US to open in 2025. The $US11.6 billion (A$15.7 billion) plan is the single-largest manufacturing investment in Ford’s 118-year history. Growth in the adoption of EVs has increased significantly over the last three years, even as the global pandemic shrank the market for conventional cars. In 2019, 2.2 million electric cars were sold, representing just 2.5% of global car sales. In 2020, the overall car market contracted but electric car sales increased to 3 million, representing 4.1% of total car sales. In 2021, electric car sales more than doubled to 6.6 million, representing close to 9% of the global car market and more than tripling their market share from two years earlier. All the net growth in global car sales in 2021 came from electric cars. Current nickel market size ~2.6Mtpa Stainless Steel currently accounts for 70% of global consumption UBS projects that the increasing adoption of EVs will see demand for nickel grow to 5.8Mtpa by 2030 High-performance batteries require high-grade Class 1 nickel feed-stocks (such as will be produced at the Jaguar Nickel Sulphide Project) UBS projects that by 2027, EV demand will exceed the global supply of all Class 1 nickel products Bloomberg New Energy Finance expects EV sales to reach 54 million units by 2040 (up from 1.7M in 2020) Nickel in batteries helps to deliver higher energy density and greater storage capacity at a lower cost 9 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 s n o i t a r t s i g e r n o i l l i m 10 9 8 7 6 5 4 3 2 1 0 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Others China United States Europe Global market share Figure 1 - Global Sales & Sales Market Share of Electric Cars Source - iea.org A platform of the Biden administration’s greenhouse gas emissions reduction strategy is an executive order aimed at making half of all new vehicles sold in the US in 2030 electric, coupled with more stringent rules for vehicle emissions that will further support the EV take up in the US. The US Government is also focussed on a review of strategies to reduce supply chain vulnerabilities in US battery manufacturing including recommending that Congress make critical investments to grow America’s ability to produce high-capacity batteries and products that use batteries, like EVs and stationary storage. Until recently, nickel sulphate represented a relatively niche product, with production of the material amounting to less than 50ktpa of contained nickel up until 2010, or approx. 3% of the total nickel market. Since then, demand for class 1 nickel has driven a fundamental change in the market for nickel sulphate given its key role in the chemistry of cathode active materials for use in batteries. Lithium-ion batteries utilising nickel-rich cathodes require high purity nickel, typically in the form of nickel sulphate. One of the primary issues facing the nickel industry is the need to develop new high-grade sulphide nickel deposits, which are the most economic and cleanest way to deliver class 1 nickel. Centaurus’s goal is to have the Jaguar Nickel Sulphide Project in production by early 2025, which is expected to coincide with the surging demand for nickel from EV production across the globe. The graph below shows the nickel price over the past five years. Nickel prices increased strongly over 2021, starting the year at around US$17,400 per tonne and closing the year at around US$20,700 per tonne. The nickel price has risen substantially over the early months of 2022, reaching a high of more than US$48,000 per tonne in March. $50,000 $40,000 $30,000 $20,000 $10,000 $0.00 April 1 2017 Jan 1 2018 Jan 1 2019 Jan 1 2020 Jan 1 2021 Jan 1 2022 Figure 2 - Nickel Price USD/tonne Source - www.mining.com 10 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Environmental, Social & Governance INDEPENDENT CARBON EMISSIONS ASSESSMENT The Jaguar Project has the potential to become one of the world’s foremost nickel projects in terms of its carbon footprint. Centaurus commissioned a study by specialist metals and mining ESG research company, Skarn Associates, to study the emission levels forecast to be generated from the production of nickel sulphate at Jaguar. The Skarn assessment is based on the operating parameters set out in the Jaguar Project Nickel Sulphate Scoping Study. The results of the study are compelling and demonstrate clearly that the Jaguar Project is expected to be class-leading in terms of its carbon footprint, reflecting its unique attributes as a high-grade nickel sulphide project powered largely by renewable energy from the local grid and producing a finished (value-add) nickel sulphate product on site which can be used directly in the production of lithium-ion batteries. When in operation, the E1 (Scope 1+2+Downstream) emissions for the production of nickel sulphate on site at Jaguar are expected to be extremely low at 4.69 tonnes of CO2/tonne of nickel equivalent, which is lower than 97% of existing global nickel production and demonstrates the investment quality of Jaguar from an emissions perspective as well a financial perspective. The graph below shows where Jaguar ranks on a global basis on the Skarn Associates GHG Nickel Intensity Curve. The low emission levels are a function of the relatively high-grade nickel coming from open pit mining sources and the fact that 80% of grid power in Brazil stems from renewable sources. There is an expectation that, once in operation, Jaguar’s power requirements could well be met from 100% renewable sources. This has not yet been considered in the emission assessment by Skarn Associates. Despite this, the assessed emission levels per the Scoping Study are already 85% lower than the industry average (production weighted) of 33 tonnes of CO2/tonne of nickel equivalent. Since the delivery of the Scoping Study, further metallurgical testwork has shown that Partial Oxidation of the sulphides at Jaguar can be considered resulting in lower pressures and temperatures in the pressure oxidation circuit. This important result will allow the energy draw the be significantly decreased as well as the amount of limestone needed for residue neutralisation which in turn will further significantly reduce the already low level of CO2 emissions from the Project. GHG Intensity Curve - Nickel (E1 GHG Emission Metrics®) Jaguar Nickel Sulphate Project 4.69t of CO2/t of NiEq Figure 3 - Jaguar GHG Intensity 11 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Industry Average E1 GHG Emissions by Nickel Product Figure 4 - Jaguar GHG Emissions ESG PROGRAM Late in 2021, the Company was able to formally adopt its formal environmental, social and governance (ESG) policy framework. The framework is based on the recommendations and principles of two different sources: → Towards Sustainable Mining (TSM) Principles → Principles of Responsible Investment (PRI) TSM is the Mining Association of Canada’s (MAC) commitment to responsible mining. It is a set of tools and indicators to drive performance and ensure that key mining risks at any operation are managed responsibly. The PRI defines responsible investment as a strategy and practice to incorporate environmental, social and governance factors in investment decisions and active ownership. The PRI is a global organisation that encourages and supports the uptake of responsible investment practices in the investment industry. Centaurus’ ESG program combines the TSM with PRI principles with actions to be implemented during exploration and other actions to be implemented during operations. The following initiatives have already been undertaken by the Company to date at the Jaguar Project region: → All Centaurus employees working on the Jaguar Project live in the local town with their families, solidifying the relationship between the Company and the local community. → More than 90% of the current project workforce, including employees and outsourced labour, are from the south-eastern region of the State of Pará. → More than 80% of the Company’s investment expenditure relating to exploration and development work at the Jaguar Project to date has been awarded to the local community through drilling contracts, engagement of consultants and services and purchase of equipment and supplies. → Centaurus has constructed bridges, installed culverts and upgraded the road between the town and the Jaguar site, with further upgrades now underway in conjunction with local municipalities. The improved roads make travel for local residents significantly safer and less time consuming, particularly during the annual wet season. → Centaurus donated a new 20,000L water tank to the Minerasul, the closest town to the project site. → Collection of extensive flora, fauna, hydrological and social data in the region, which will be used to prepare the environmental and social programs to be put in place during the construction and operation of the Jaguar Project. These programs are aimed at minimising the negative impacts and maximising the positive impacts of the project. → During the collection of social data, more than 95% of the local community interviewed was in favour of the project. Since January 2022 the Company has been monitoring scope 2 greenhouse gas (GHG) emissions and sinks associated with the Jaguar Project. The main carbon sinks are the standing forest and the cattle that was removed from the properties after securing possession. The main source of carbon from the Project at present is the combustion of diesel to run drill rigs. In summary, the Jaguar Project currently represents a carbon sink, removing about 12,000 tonnes of GHG annually from the atmosphere, which is equivalent to removing circa 2,570 passenger vehicles (4.6 tonne GHG/year) from the streets. 12 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 COVID-19 RESPONSE With the continuing evolution of the COVID-19 pandemic throughout CY2021, Centaurus continued to maintain stringent health and safety protocols to protect its workers, their families and the wider community while at the same time maintaining business continuity. These protocols include retaining a dedicated nurse to conduct regular COVID-19 testing, revised working arrangements, supply of suitable PPE and social distancing practices. Furthermore, the Company made a significant contribution to the local municipal health services of Tucumã and São Félix do Xingu through the purchase of masks, gowns, hand sanitiser and COVID-19 test kits to better equip them for the delivery of community health services. HEALTH & SAFETY There was one Lost Time Injury (LTI) during the 12-month period ended 31 December 2021. The key LTI measure is the LTI Frequency Rate (LTIFR) and this was 2.47 (accidents/million hours worked) in 2021. The LTIFR is a key metric in measuring the Group’s drive to achieve a zero-harm work environment. One medical treatment injury occurred during the 12-month period to 31 December 2021 and the Total Recordable Injury Frequency Rate for the Group’s operations in Brazil was 2.47 for the same period representing a significant improvement to the prior year’s outcome of 12.50. Health and safety has always been the Company’s foremost priority and the historical OHS statistics demonstrate how well Centaurus has performed. This is the result of the Implementation of detailed safety procedures and safety reporting framework measures such as: → documentation of all safety meetings – all safety meetings (daily safety talks and fortnightly safety presentations) are registered with an attendance list that is signed by all participants. → key safety topics covered at all meetings – the topics of all meetings are registered. An upgrade to the site camp was completed earlier in 2021 to assist in protecting workers and their families from the impacts of COVID-19. Having employees stay on site during the week and limiting contact with the broader local communities proved to be effective in protecting workers from the virus. At the end of the reporting period, 100% of all employees and contractors working on site had received their second vaccination to protect against COVID-19. To date, COVID-19 has had relatively minimal impact on the Company’s operations and the tight protocols adopted by the Company have been highly effective in managing the risk of transmission. → measurement of PPE use and consumption – all employees sign a PPE form when they receive new PPE and when the PPE stock is updated. → evidence of developing workers safety knowledge – several role-specific and general work safety training events were held during the year. Moreover, the safety incentive program, foster the participation of all employees in regular safety inspections, which are registered. → evidence of a documented safety management plan – Centaurus’ OHS management policy is regularly updated in order to adapt to the projects the Company is currently working on. This OHS management policy is based on 4 programs: 1) OHS risk elimination program; 2) OHS incentive program; 3) OHS performance monitoring program; and 4) OHS training program. No fatality, permanent disabling injury and/or material environmental breach occurred during the 2021 year. CENTAURUS METALS LIMITED ANNUAL REPORT 13 CENTAURUS METALS ANNUAL REPORT 2021 CENTAURUS METALS ANNUAL REPORT 2021 Strategy & Key Assets in Brazil Centaurus’ key focus throughout the 2021 calendar year was on the exploration and development of the advanced Jaguar Nickel Sulphide Project, located in the world-class Carajás Mineral Province in Brazil, which was acquired from global mining giant, Vale S.A. (“Vale”) in September 2019 and formally closed in April 2020. Centaurus delivered a positive Value-Added Scoping Study for the Jaguar Project in May 2021, confirming strong technical parameters and outstanding financial returns from the production of nickel sulphate from a 13-year open pit and underground mining operation. The production of nickel sulphate is proposed to be delivered by a conventional nickel flotation plant, followed by a pressure oxidation circuit to further value-add the nickel concentrate produced in the flotation plant to produce +20,000 tonne of nickel per annum over the initial 13-year mine life. Following the robust and compelling economics seen in the Jaguar Value-Add Scoping Study, the Company has elected to move straight to a Definitive Feasibility Study (DFS) on the Project focused on the production of a nickel sulphate product. Centaurus is already well advanced on many of the key components of the proposed project development, positioning the Company to complete the DFS by the end of December 2022. At the end of 2021, Centaurus updated its Mineral Resource Estimate (MRE) for the Jaguar Project to 80.6Mt @ 0.91% Ni for 730,700t of contained nickel, with 54% of the MRE in the higher-confidence Indicated Resource category (43.4Mt grading 0.92% Ni for 397,000 tonnes of contained nickel). A further MRE update is planned for Q3 2022 which will be the Resource used for completion of the DFS and the conversion of Resource to Reserve. Through the development of the Jaguar Project, Centaurus’ goal is to become a new-generation nickel sulphide mining company in Brazil, capable of delivering more than 20,000 tonne per annum of Class-1 nickel to global markets over the long term, and to do so in a sustainable and responsible manner that ensures the Company meets the highest possible ESG standards. In addition to Jaguar, Centaurus also holds the development-ready Jambreiro Iron Ore Project, where a May 2020 Pre-Feasibility Study update confirmed low costs and strong economics for a 1Mtpa mining operation. 1 Refer to the Value-Add Scoping Study released to the market on 31 May 2021 for full details of the Production Target and the material assumptions underlying the Study. All the material assumptions underpinning the Production Target continue to apply and have not materially changed. CENTAURUS METALS LIMITED ANNUAL REPORT CENTAURUS METALS LIMITED ANNUAL REPORT 14 1414 CENTAURUS METALS LIMITED ANNUAL REPORT Figure 5 - Location of the Jaguar Nickel Sulphide Project in the world-class Carajás Mineral Province, Brazil JAGUAR NICKEL SULPHIDE PROJECT Assumption Units Value-Add Case The Jaguar Nickel Sulphide Project hosts multiple nickel sulphide deposits and exploration targets within a 30km2 land package in the western portion of the world-class Carajás Mineral Province. The Jaguar Project is ideally located close to existing infrastructure, just 35km north of the regional centre of Tucumã (population +35,000), where a 138kV sub-station is located. The Project is also only 15km north west of Vale’s huge Onça Puma Ferronickel operation. SCOPING STUDIES Average LOM Exchange Rate Average LOM Exchange Rate Average LOM Exchange Rate Ni Price Ni Sulphate Premium Ni Price Ni Sulphate Premium Corporate tax rate, Year 1-10 Corporate tax rate, Year 11 Onwards Centaurus completed independent Scoping Studies for the development of the Jaguar Project during the year, an initial Base Case Study based on a conventional nickel flotation plant and a Value-Add Scoping Study for the production of high-value nickel sulphate. Discount Rate - Real Physicals Production Target Results from the Value-Add Scoping Study highlighted the outstanding financial and economic returns that would be generated by Centaurus becoming a globally significant sustainable, long-term and low-cost producer of battery-grade nickel sulphate for the growing electrification supply chain. The Value-Add Scoping Study considered open pit and underground mining over an initial 13-year mine life, delivering nickel sulphide feed to a 2.7Mtpa conventional nickel sulphate plant to produce +20,000 tonnes of recovered nickel in sulphate and +9,600 tonnes of a mixed sulphide precipitate (MSP) per year. Mill Feed Contained Ni in Mill Feed Mill Feed Head Grade Recovered Ni to Concentrate Nickel Recovery to Concentrate Recovered Ni in Sulphate Recovered Zn in MSP Recovered Co in MSP Recovered Ni in MSP USD/BRL USD/AUD EUR/BRL US$/t US$/t US$/lb US$/lb % % % 5.00 0.75 5.80 16,530 1,102 7.50 0.50 15 34 8 45.0Mt @ 0.80% Ni for 361,700t Contained Ni Mt t % Ni t % t t t t 33.7 341,300 1.01% 278,300 81.5% 262,100 80,500 7,300 3,100 Table 1 - Value-Add Case Financial Model Assumptions & Production Target CENTAURUS METALS LIMITED ANNUAL REPORT 15 CENTAURUS METALS ANNUAL REPORT 2021 The Key Assumptions underpinning the Jaguar Value-Add Scoping Study economics (Table 1) and the key financial results from the study (Table 2 and Table 3) are summarised below: The results of the Value-Add Scoping Study provide the Company with a high level of confidence that the production of a nickel sulphate product on site at Jaguar is a highly viable option and one that should be aggressively pursued. The results have also allowed the Centaurus Board to commit to proceeding directly to a Definitive Feasibility Study (DFS) for the production of +20,000 tonnes per annum of nickel sulphate at the Jaguar Project over an initial mine life of ~13 years. The DFS by its very nature will also incorporate the study of the production of nickel concentrate, as this will be the product feed to the hydrometallurgical (nickel sulphate) circuit. Comparison of the Base Case Scoping Study (nickel concentrate product) and the Value-Add Scoping Study are summarised in Table 4. The investment in the downstream processing of an additional ~US$110 million (including US$18.2 million contingency) adds considerable value to the project via the recovery of additional nickel from Resource to Production Target and higher nickel sulphide recoveries to concentrate. When combined, these higher recoveries raise the recovered nickel to product by approximately 30% to 262,000 tonnes of nickel. This additional contained nickel (in sulphate) then attracts a higher product payability, raising the total revenue by 87% to ~A$6.04 billion (~US$4.53 billion). Work to be undertaken through the course of the DFS has the ability to further improve the already robust economics by optimising factors such as mine sequencing, fleet selection and process route selection. Full details of the Value-Add Scoping Study were provided in the Company’s ASX Announcement dated 31 May 2021, with details of the Base Case Scoping Study provided in the Company’s ASX Announcement dated 29 March 2021. Key Cost Information Units Value-Add Case Capital Costs Pre-Production Development Capital Sustaining and Deferred Capital US$M US$M Average LOM Exchange Rate EUR/BRL Physicals Operating Costs (100% payable basis) C1 Cash Costs Royalties Total Operating Costs Sustaining and Deferred Capital All-in Sustaining Costs (AISC) Pre-Production Development Capital All-in Costs US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb 288 213 5.80 3.29 0.28 3.57 0.36 3.94 0.49 4.43 Table 2 - Value-Add Case Key Project Results – Capital and Operating Costs Key Financial Outcomes Total Net Revenue EBITDA Project Cashflow – pre-Tax NPV8 - pre-Tax IRR – pre-Tax Tax Paid Project Cashflow – post Tax NPV8 – post Tax Project Cashflow – post Tax NPV8 – post Tax IRR – post Tax Capital Payback Period – post Tax Units US$M US$M US$M US$M % US$M US$M US$M A$M A$M % Years Mid-Point 4,532 2,443 1,942 1,030 60% 376 1,566 831 2,088 1,108 52% 1.8 Table 3 - Value-Add Case Key Project Results – Financial Outcomes CENTAURUS METALS LIMITED ANNUAL REPORT 16 CENTAURUS METALS ANNUAL REPORT 2021 Key Physical Results Production Target - Physicals Units Base Case Value-Add Case Mining Grade Contained Nickel Milling Grade Contained Nickel Production Nickel Concentrate/Sulphate Grade Contained Nickel Production of by-products Zinc Cobalt Nickel Project Life Key Capital & Operating Cost Results Capital Costs Development Capital Sustaining and Deferred Capital Operating Costs (100% payable basis) C1 Cash Costs Royalties Total Operating Costs Sustaining and Deferred Capital All-in Sustaining Costs (AISC) Development Capital All-in Costs Cash Operating Margin Key Financial Outcomes Total Revenue EBITDA Average Annual pre-tax Operating Cash Flow Project Cashflow - pre-Tax NPV8 - pre-Tax IRR - pre-Tax Tax Paid Project Cashflow - post Tax NPV8 - post Tax Project Cashflow - post Tax NPV8 - post Tax IRR - post Tax t t t t Years Units US$M US$M US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb US$/lb Units US$M US$M US$M US$M US$M % US$M US$M US$M A$M A$M % Capital Payback Period – post Tax Years Mt % t Mt % t t 32.8 0.84 45.0 0.80 275,600 361,700 24.0 1.08 33.7 1.01 260,300 341,300 1,285,000 1,175,500 % Ni 15.8 203,300 In Conc N/A 2,800 N/A 10.0 22.3 262,100 In MSP 80,500 7,300 3,100 12.9 Base Case Value-Add Case 178 138 2.41 0.25 2.66 0.31 2.97 0.40 3.37 2.74 Base Case 2,422 1,230 123 914 543 62% 137 778 452 1,036 603 54% 1.9 288 213 3.29 0.28 3.57 0.36 3.94 0.49 4.43 4.27 Value-Add Case 4,532 2,443 189 1,942 1,030 60% 376 1,566 831 2,088 1,108 52% 1.8 Table 4 - Comparison of Jaguar Base Case and Value-Add Scoping Studies 17 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 UPDATED JORC MINERAL RESOURCE ESTIMATE Centaurus announced a further substantial increase in the Mineral Resource for the Jaguar Project in December 2021, confirming Jaguar’s status as one of the largest nickel sulphide resources held by an ASX-listed company and the largest outside of the majors. of contained nickel since the Company’s maiden Resource in June 2020 (see Figure 2 below), reflecting an impressive track record of defining new resources at the rate of ~140,000 tonnes of contained nickel per annum with sustained and focused drilling at Jaguar. The updated JORC 2012 Mineral Resource Estimate (MRE), comprising 80.6Mt @ 0.91% Ni for 730,700 tonnes of contained nickel (Table 5), reflects the success of Centaurus’ intensive resource in-fill, extensional and step-out drilling programs completed during 2021 and further reinforces the Tier-1 potential of the Jaguar Project. The success of the in-fill resource development program has also resulted in an increase in the Indicated component of the Resource to 43.4Mt @ 0.92% Ni for 397,000t of contained nickel, representing 54% of the Global MRE. It is expected that the Indicated component of the MRE, which will be available for conversion to Ore Reserves as part of the Definitive Feasibility Study (DFS) due for completion in Q4 2022, will continue to grow as further in-fill drilling is completed. The Indicated Resource commences from surface and is predominantly located within the open pit limits of the May 2021 Nickel Sulphate Scoping Study. More than 500,000 tonnes of the contained nickel of the Global MRE lies within 200m of surface, representing +70% of the total contained metal. The mineralisation remains open down-dip at all deposits and locally along strike, with outstanding potential to continue strong resource growth driven by step-out and extensional drilling targeting DHEM conductor plates and greenfields drilling of the extensive regional exploration pipeline. The total MRE at Jaguar has increased by 30% since the Scoping Study Resource Estimate was announced in March 2021 and more than 40% since the Company’s maiden Resource was announced in June 2020. Successful step-out and extensional drilling, together with recent exploration success, has delivered an exceptional 168,000 tonnes of additional contained nickel metal since the previous estimate in March 2021. In addition, Centaurus has added 213,000 tonnes Figure 6 - The Jaguar JORC Mineral Resource Estimate (MRE) Growth – December 2021 The new, larger resource has allowed mine optimisation and production profile studies to commence in the early part of 2022 and these studies will determine the optimal mine capacity for the development of the Project. Any expansion of the processing plant capacity and/or production profile is likely to have a material positive impact on the project economics and delivery of nickel-in-sulphate, which currently stands at 20,000tpa for 13 years. The success of the Company’s in-fill drilling strategy has further de-risked the Project by increasing confidence in the shallow open pit mineralisation that will underpin early payback in any future mining operation at Jaguar. Full details of the updated MRE were provided in the Company’s ASX Announcement dated 13 December 2021. Tonnes Grade Contained Metal Classification* Ore Type Indicated Transition Suplhide Fresh Sulphide Total Indicated Inferred Transition Sulphide Fresh Sulphide Total Inferred Mt 0.9 42.4 43.4 1.0 36.3 37.2 Ni % 0.86 0.92 0.92 0.77 0.90 0.90 Cu % Co ppm Zn % 0.07 0.06 0.06 0.08 0.07 0.07 225 260 259 251 252 251 0.45 0.41 0.41 0.24 0.31 0.31 Ni 8,000 389,000 397,000 7,500 326,100 333,700 Cu 600 23,400 24,000 800 25,300 26,100 Co 200 11,000 11,300 200 9,100 9.400 Zn 4,200 174,000 178,000 2,300 113,400 115,700 Total 80.6 0.91 0.06 256 0.36 730,700 50,100 20,600 293,900 Table 5 - The Jaguar JORC Mineral Resource Estimate (MRE) – December 2021 * Within pit limits cut-off grade 0.3% Ni; below pit limits cut-off grade 0.7% Ni; Totals are rounded to reflect acceptable precision, subtotals may not reflect global totals. All oxide material is considered as waste and therefore not reported as Resources. 18 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 RESOURCE IN-FILL, STEP-OUT AND EXTENSIONAL DRILLING PROGRAM Resource in-fill, extensional and step-out drilling continued at the Jaguar Project throughout the reporting period, with drilling completed up to early November 2021 feeding into the MRE update outlined above, and subsequent drilling set to feed into the next MRE update scheduled for early Q3 2022. At the time of writing this report, there are currently 15 rigs on site (13 diamond and two RC) drilling double shift with the drilling currently focused on upgrading the maximum amount of MRE into the Measured and Indicated categories. TARGETS FOR ONGOING MINERAL RESOURCE GROWTH The December 2021 JORC MRE update for the Jaguar Nickel Project is for the six Jaguar deposits, two Onça deposits and the maiden Resource from the Tigre discovery made in May 2021. Importantly, significant potential remains to expand both the shallow and deeper high-grade Resources within the Project. The nature of the hydrothermal mineralisation at the Jaguar Project points to a deep plumbing system which remains to be tested. Importantly, DHEM surveys continue to indicate that the high-grade mineralisation is continuous and open at depth across all deposits. There is also significant potential to extend all of the key deposits along strike in some directions. Drilling in 2022 will have dual focus on project development (including in-fill, geotechnical, sterilisation and metallurgical drilling) and resource growth focus on multiple target areas ahead of the next MRE upgrade expected in Q3 2022 that will underpin the DFS. Since the delivery of the December 2021 MRE Update, positive step-out and extensional drilling results have been returned from the Jaguar South, Jaguar West, Jaguar Northeast and Onça Preta deposits (see ASX Announcements 27 January 2022 and 9 March 2022). PROJECT DEVELOPMENT AND INFRASTRUCTURE INITIATIVES During the year, the Company undertook a number of project development initiatives and work on a number of aspects in relation to future infrastructure access as follows. Mine Production Planning The updated Mineral Resource Estimate (MRE) announced on 13 December 2021 will underpin an update of the open-pit and underground optimisations and a suite of production profile trade-off studies that commenced in January 2022. These studies will investigate what the new MRE can deliver in terms of production scalability, given that the current plant production capacity stands at 2.7Mtpa1. Any expansion of the processing plant capacity and/or production profile is likely to have a materially positive impact on the project economics set out in the Nickel Sulphate Scoping Study delivered to the market at the end of May 2021. Geotechnical An update to the project geotechnical model is well advanced with a comprehensive geotechnical core logging program and correlation to updated geological lithological modelling completed. This work has defined a number of geotechnical domains for both open pit and underground mine planning. In addition, drilling, test pitting and auger drilling commenced in October to provide information for infrastructure foundation design and to define clay sources for construction materials. The program, which at the date of this report is almost 50 % complete, has defined several potential construction material sources, with samples sent to a geotechnical laboratory for mechanical testing. Tailings Storage Facility A conceptual design for the Tailings Storage Facility has been completed, with an Integrated Waste Landform (IWL) tailings facility selected as it offers the highest level of safety against embankment failure (outside of depositing tailings into a completed pit) and is well suited to the local climatic conditions. The design has been developed in conjunction with tailings expert, Mr Chris Lane of Land & Marine Geological Services, and allowance has been made to store an additional 20% more tailings than what is currently expected from the Project to allow for future exploration success and production growth. Figure 7 depicts the final tailings storage structure which is constructed in stages over the duration of the project under the industry best practice downstream methodology. Figure 7 - Tailings Storage Facility Design 19 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Processing Power Supply Significant work has been completed since the release of the Nickel Sulphate Scoping Study to increase the understanding of key project value drivers – including mineralogy, comminution, ore sorting, flotation response and pressure leaching conditions. All testwork undertaken to date has returned positive results that reinforce the outstanding quality of the Jaguar ore body. A detailed overview of the Company’s metallurgical testwork program was released on 25 January 2022 as part of the December 2021 Quarterly Activities Report. Site Road Access The public road infrastructure between site and Tucumã is being upgraded by the Company. For the portion of the road in the São Felix do Xingu Municipality, the work undertaken by the Company is part of a Public Private partnership with the Municipality and this partnership has worked extremely well to deliver a significantly better road for the residents in the local community. Significant road upgrade work was also undertaken in the Tucumã municipality, with this work fully funded by Centaurus. The generation of power for the national power grid in north-eastern Brazil consists of hydro, solar, wind and thermal power generation facilities supplying the national network through a fully interconnected distribution system. The Tucumã substation, located 40km south of the Project, is serviced by a 138kV power line. Electrical power will be provided to site from the national power grid sourced from the Tucumã 138kV sub-station via a new, dedicated line to the processing facilities. This new line will broadly follow the existing access road, however, will require separate right of use tenure. A study to finalise the power line alignment has been completed and the engineering design of the powerline has been lodged with the State Power Distributor, Equatorial, for approval. Discussions with landowners and other stakeholders regarding the proposed power line route has commenced. CENTAURUS METALS LIMITED ANNUAL REPORT 20 CENTAURUS METALS ANNUAL REPORT 2021 APPROVALS Environmental Approvals Mining Lease Application Centaurus lodged an updated Mining Lease Application (MLA) with the ANM (Agência Nacional de Mineração/National Mining Agency) in November 2021, revising the original MLA lodged by Vale in 2013. The MLA update accounts for the revision of the scale and scope of the mining and processing activities based on the Jaguar Nickel Sulphate Project outlined in the Scoping Study released in May 2021. The primary document in the MLA process is the PAE (Plano de Aproveitamento Econômico/Economic Utilization Plan), which demonstrates both the commercial viability of the Project as well as the Company’s capacity to implement it. The Company presented the detail of the PAE and Mining Lease Application to the ANM in Belem with the presentation being very well received. The first stage in the environmental approval process is to complete and lodge the Environmental Impact Assessment (EIA/RIMA), with the lodgement of this document with the Pará State Environmental Agency (SEMAS) dependent on the collection of all wet and dry season data in respect to water and air quality, noise and vibration, flora and fauna. All wet and dry season data was collected during CY2020 and the EIA/RIMA was lodged with the Pará State Environmental Agency (SEMAS/PA) in August 2021. The EIA/RIMA should take approximately 12 months to be approved with a Preliminary Licence (LP) to be issued on approval of the EIA/RIMA. This is the key approval in the Environmental Approval Process. The Company is targeting approval of the EIA/RIMA and grant of a Preliminary Licence (“LP”) for the Project during Q3 2022, in line with its overall development timetable for the Jaguar Project. Once the Preliminary License (LP) is issued, the Company can make application for the LI, the approval of which allows the commencement of construction of the processing plant. The chart below in Figure 8 presents the schedule of both the environmental approvals process and the mining lease approval process. It is important to note that the formal grant of the mining lease is conditional upon the issuance of the environmental Installation License (LI). Years <2021 2021 2022 CTM ANM Process (Mines Department) SEMAS Process (Environmental Agency) Final Exploration Report Approved Lodge PAE (Mining Lease Application) Lodge EIA/RIMA Technical Approval of Mining Lease Conditioned on issue of Li by SEMAS Approval Preliminary Licence (LP) Lodge RCA/PCA Approval Installation Licence (Li) 2023 Debt Finance Formal Issue of Mining Lease 2024 Build Project Construction Complete Inspection by SEMAS Operating Licence (LO) Figure 8 - Mines Department and Environmental Agency Approvals Process and anticipated timing for the Jaguar Project 21 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Property Acquisitions During the year Centaurus secured possession over three key pieces of land covering the Jaguar Project. The three separate Possession Agreements (see ASX releases of 25 March, 23 April and 22 October 2021) provide the Company with possession rights and access to over 2,000 hectares of land at Jaguar. Securing full possession rights to the key properties de-risks the Company’s development pathway at Jaguar. The possession rights have been secured for total consideration of R$30.6 million (~A$8.5 million), with the consideration to be paid in instalments. At the date of this report ~R$10 million has been paid to the vendors with the further payments to be made to the three vendors over the next 18 months. The land payments have been budgeted for as part of planned Feasibility Study activities. GREENFIELDS EXPLORATION PIPELINE The discovery of the Tigre Deposit in September 2021 and the rapid conversion of the discovery into the December 2021 MRE demonstrates the outstanding exploration potential that lies within economic haulage distance from the proposed Jaguar nickel sulphate plant location. The Project sits at the intersection of two of the most important mineralising structures in the Carajás Mineral Province, the Canãa and McCandless Faults. At Jaguar, the close association of semi-massive and massive sulphides with magnetite means that, when targeting new mineralisation, coincident geochemical, electromagnetic and magnetic anomalies are the highest priority targets. This is evidenced in the Ground Magnetics surveys in Figure 9 below. At the date of this report, more than 140,000m of drilling has been completed at Jaguar (Diamond and RC) with less than 10% of these metres outside the known deposit limits (black outline in the figure below). Multiple prospects and targets located along the main mineralisation structures and characterised by ground magnetic and airborne and/or ground electromagnetic (EM) anomalies coincident with significant soil geochemical anomalies remain to be tested. Drilling of the greenfields exploration pipeline will be ongoing for the next 18 months, with a second RC rig arriving on site in February 2022. Any new discoveries will be followed up immediately and, like the Tigre discovery, are expected to contribute future resource updates. Figure 9 - The Jaguar Nickel Project – Soils Geochemistry (Ni) over Ground Magnetics (Analytic Signal) 22 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 CENTAURUS METALS ANNUAL REPORT 2021 JAMBREIRO IRON ORE PROJECT The Company’s 100%‐owned Jambreiro Project, located in south‐ east Brazil (Figure 10), represents a strategic asset in the Brazilian domestic iron ore and steel sector, particularly with the premium pricing that exists in the market for high-grade ore (+65% Fe) such as that which could be produced at Jambreiro. Centaurus completed a Pre-Feasibility Study (PFS) in July 2019, with the key financial and technical outcomes announced to the market on 5 July 2019. The 1Mtpa start-up project PFS outlined a A$59.8 million development, life-of-mine revenues of A$1.05 billion and EBITDA of A$533 million over its initial 18-year life to deliver a A$114.9 million post-tax NPV8 and IRR of 32%. The PFS was based on the JORC 2012 Proven and Probable Ore Reserves estimate of 43.3Mt grading 29.1% Fe, which was also released to the market on 5 July 2019. The Ore Reserve delivers 17.9Mt of high-grade (65% Fe), low-impurity (4.3% SiO2, 0.8% Al2O3 & 0.01% P) sinter product to support the initial 18-year mine life once operations commence. The Jambreiro Project’s potential economics have continued to improve since the July 2019 PFS was completed. Revised PFS project economics were released to the market in the June 2020 Quarterly on 29 July 2020 using domestic iron ore pricing based on a 62% Fe CFR China Price of only US$75/tonne, updated capital costs for the modularised plant from CDE Global and prevailing foreign exchange rates. This work delivered a post-tax NPV8 of A$147.2 million and an IRR of 37% over an 18-year mine life. Jambreiro retains significant value for Centaurus and the Company continues to explore avenues to realise that value. The Company has commenced the process to refresh all environmental licenses required to develop the project and as part of this process has applied for the renewal of the original Jambreiro Installation Licence (LI). The Agency has agreed to issue a joint LP/LI for the project and Centaurus has updated and lodged the EIA/RIMA (required for the LP) and the PCA (required for the LI) in July 2021. The main changes to the project design that was originally approved in 2012 are: → Elimination of the tailings dam through the inclusion of centrifuges at the back end of the process flowsheet to dewater the tailings and stockpile them on the waste dumps; → Transforming the original tailings dam into a water storage dam, with a much smaller footprint; → Development of two additional small open pits that are feasible due to current iron ore prices; and → Reducing the project’s overall project footprint by ~50% via the removal of the tailings dam. The Company has also lodged the documentation to re-apply for all water permits necessary to operate the project. All water permits and environmental licences to build the Project were previously granted and are expected to be granted again after the applications have been dually considered by the relevant agencies. Figure 10 - Location of the Jambreiro Iron Ore Project 23 CENTAURUS METALS LIMITED ANNUAL REPORT CENTAURUS METALS ANNUAL REPORT 2021 CORPORATE SENIOR MANAGEMENT APPOINTMENTS Centaurus announced two new appointments to its senior leadership team during the year, with a third being made early in 2022, as it continues to build its in-house technical, commercial, legal and operational expertise to progress the Jaguar Project towards financing, development and operations. oversight over the coordination and delivery of the Company’s exploration and growth plans for Jaguar and in Brazil more generally, provide input to ongoing Jaguar DFS work including resource definition, assess potential new growth opportunities and provide strong technical support for Centaurus’ Brazil-based Exploration Manager and the growing exploration team. Highly-experienced international mining executive Mr Wayne Foote has been appointed as General Manager - Operations, commencing with the Company in late July, while the Company’s external legal counsel, Ms Júlia Oliveira, has joined Centaurus’ in-house team in Brazil as Legal and Commercial Manager. In early 2022, Mr Fabio Borges was appointed as Finance Manager in Brazil. Mr Foote has extensive operational experience in a number of senior executive roles both in Australia and overseas, including more than 2 years living in Brazil, and brings a strong skill-set in building and leading effective, disciplined teams. He has initially commenced with the Company in Perth leading the team undertaking the current Definitive Feasibility Study (DFS) on the Jaguar Project, but intends to return to Brazil as the Project moves into construction and operations. Ms Oliveira has been working with Centaurus as external counsel for several years and provided extensive legal advice and commercial support to the Company during the negotiations for acquisition of the Jaguar Project. She is an accomplished commercial lawyer with extensive experience in contractual, commercial and natural resources law – having worked for over a decade with several global resource companies with operations in Brazil. Mr Foote’s appointment has seen Roger Fitzhardinge transition from the role of Operations Manager – Nickel to General Manager - Exploration & Growth. In this role, Mr Fitzhardinge will have Mr Fabio Borges was appointed to the position of Finance Manager – Brazil in February 2022. Mr Borges is a Certified Accountant with more than twenty five years’ experience, fifteen of which have been in the mining and manufacturing sectors. Mr Borges has had exposure to a number of mineral commodities including nickel, lime, gold and diamonds. Most recently, Mr Borges held the position of Finance Director and Board member with Lipari Diamonds, a privately owned Company operating the first kimberlite diamond mine in South America. Mr Borges was a key contributor to the business from exploration through construction, commissioning and operation of the mine. $75M INSTITUTIONAL SHARE PLACEMENT Subsequent to the end of the reporting period, Centaurus completed an institutional equity raise of A$75 million to underpin the next phase of growth and development of the Jaguar Project. Specifically, the funds raised will be used to complete a Definitive Feasibility Study (DFS) for Jaguar and maintain the Company’s very strong existing drilling momentum. A 90,000m drill program planned for 2022 will include significant ongoing diamond drilling designed to maximise the Measured and Indicated components of the extensive Resource inventory ready for Reserve conversion. Funds will also be used for pre-development and financing activities ahead of a planned Final Investment Decision (FID) on the Project. 24 CENTAURUS METALS LIMITED ANNUAL REPORT CENTAURUS METALS ANNUAL REPORT 2021 The proceeds of the Placement significantly strengthened the Company’s balance sheet and places it in a very strong financial position as it completes DFS activities and advances the Project through to FID. COMMENCEMENT OF TRADING ON OTCQX MARKET Centaurus’ shares commenced trading in the US on the OTCQX platform under the ticker OTCQX: CTTZF on 30 December 2021. The OTCQX Best Market is the highest tier of OTC Markets Group’s market platforms, on which 11,000 US and global securities trade. In order to be eligible for the OTCQX, companies must meet high financial standards, follow best practice corporate governance and demonstrate compliance with applicable US securities law. Trading on the OTXQX will enhance the visibility and accessibility of Centaurus to the extensive market of North American retail, high net worth and institutional investors. The primary advantages to North American investors of Centaurus’ inclusion on the OTCQX platform include: → It allows trading of Centaurus’ securities in the local timezone; → Trades and settlements are conducted in US Dollars with no exchange rate risk or additional FX fees; and → The OTCQX share is the same class of Ordinary Share to ASX traded stock (ASX: CTM). Centaurus’ primary listing will continue to be the Australian Securities Exchange (“ASX”) with its shares now also tradeable on the OTCQX market (www.otcmarkets.com). CASH POSITION At 31 December 2021, the Company held cash reserves of A$8.3 million. As outlined above, the Company completed a A$75 million institutional share placement subsequent to the end of the reporting period. CENTAURUS METALS LIMITED ANNUAL REPORT 25 Mineral Resources & Ore Reserves TOTAL MINERAL RESOURCES & ORE RESERVES STATEMENT The Company’s JORC Mineral Resource Estimate for the Jaguar Project is shown in the following table. Mineral Resources as at 31 December 2021* Mineral Resources as at 31 December 2020** Project Jaguar Project Indicated Inferred TOTAL Million Tonnes 43.4 37.2 80.6 Ni % 0.92 0.90 0.91 Cu % 0.06 0.07 0.06 Co ppm 259 251 256 Million Tonnes 20.1 38.8 58.9 Ni % 1.12 0.87 0.96 Cu % 0.07 0.06 0.07 Co ppm 323 230 262 Table 6 - Mineral Resource Estimate - Jaguar * Within optimized pit limits cut-off grade 0.3% Ni; below pit limits cut-off grade 0.7% Ni; ** Within 200m of surface cut-off grade 0.5% Ni; more than 200m from surface cut-off grade 1.0% Ni Totals are rounded to reflect acceptable precision. Subtotals may not reflect global totals. The Company’s JORC Ore Reserves and Mineral Resource for its iron ore holdings are shown in the following tables. Ore Reserves as at 31 December 2021 Ore Reserves as at 31 December 2020 Project Million Tonnes Fe % SiO2 % Al2O3 % P % Jambreiro Project* Proved Probable TOTAL 35.4 13.1 48.5 28.5 27.2 28.1 49.6 49.0 49.4 4.3 5.3 4.6 0.04 0.04 0.04 LOI % 1.7 2.4 1.9 Million Tonnes Fe % SiO2 % Al2O3 % P % 35.4 13.1 48.5 28.5 27.2 28.1 49.6 49.0 49.4 4.3 5.3 4.6 0.04 0.04 0.04 Table 7 - Ore Reserves - Iron Ore *20% Fe cut-off grade applied; Mine Dilution - 2%; Mine Recovery - 98%; Mineral Resources as at 31 December 2021 Mineral Resources as at 31 December 2020 Project Million Tonnes Fe % SiO2 % Al2O3 % P % Jambreiro Project* Measured Indicated Inferred TOTAL Canavial Project* Indicated Inferred TOTAL Passabém Project** Indicated Inferred TOTAL TOTAL COMBINED 44.3 37.7 45.1 127.1 6.5 21.1 27.6 2.8 36.2 39.0 193.7 29.2 27.5 27.3 28.0 33.6 29.6 30.5 33.0 30.9 31.0 29.0 50.5 51.1 52.7 51.4 33.6 38.0 37.0 48.8 54.0 53.6 49.8 3.9 3.7 3.3 3.7 7.1 5.7 6.0 1.9 0.7 0.8 3.4 0.04 0.04 0.05 0.05 0.10 0.07 0.07 0.03 0.07 0.07 0.05 LOI % 1.6 1.7 1.3 1.5 7.9 5.9 6.4 0.6 0.1 0.1 1.9 Million Tonnes Fe % SiO2 % Al2O3 % P % 44.3 37.7 45.1 127.1 6.5 21.1 27.6 2.8 36.2 39.0 193.7 29.2 27.5 27.3 28.0 33.6 29.6 30.5 33.0 30.9 31.0 29.0 50.5 51.1 52.7 51.4 33.6 38.0 37.0 48.8 54.0 53.6 49.8 3.9 3.7 3.3 3.7 7.1 5.7 6.0 1.9 0.7 0.8 3.4 0.04 0.04 0.05 0.05 0.10 0.07 0.07 0.03 0.07 0.07 0.05 Table 8 - Mineral Resource Estimate – Iron Ore *20% Fe cut-off grade applied; ** 27% Fe cut-off grade applied; Mineral Resources are reported inclusive of Ore Reserves. Totals are rounded to reflect acceptable precision, subtotals may not reflect global totals. LOI % 1.7 2.4 1.9 LOI % 1.6 1.7 1.3 1.5 7.9 5.9 6.4 0.6 0.1 0.1 1.9 26 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 MINERAL RESOURCES AND ORE RESERVES ANNUAL STATEMENT AND REVIEW APPROVAL OF MINERAL RESOURCES AND ORE RESERVE STATEMENT The Company carries out an annual review of its Mineral Resources and Ore Reserves as required by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) 2012 edition and the ASX Listing Rules. An update of the Jaguar Nickel Project Mineral Resource was completed on 13 December 2021 and a review was carried out as at 31 December 2021. The Jaguar Resource estimates have been reported in accordance with the JORC Code 2012 edition and the ASX Listing Rules. The review of the iron ore Mineral Resources and Ore Reserves was carried out as at 31 December 2021. The Jambreiro Resources and Reserve estimate have been reported in accordance with the JORC Code 2012 edition and the ASX Listing Rules. The remaining Mineral Resource estimates were prepared and disclosed under the JORC Code 2004 edition. The information prepared for the Canavial, and Passabém Resource estimates have not been updated to comply with the JORC Code 2012 edition on the basis that the information has not materially changed since it was last reported. The Company is not aware of any new information or data that materially affects the information included in this Annual Statement and confirms that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. ESTIMATION GOVERNANCE STATEMENT The Company ensures that all Mineral Resource and Ore Reserve calculations are subject to appropriate levels of governance and internal controls. Exploration Results are collected and managed by competent qualified staff geologists and overseen by the Exploration General Manager. All data collection activities are conducted to industry standards based on a framework of quality assurance and quality control protocols covering all aspects of sample collection, topographical and geophysical surveys, drilling, sample preparation, physical and chemical analysis and data and sample management. Mineral Resource and Ore Reserve estimates are prepared by qualified independent Competent Persons and further verified by the Company’s technical staff. If there is a material change in the estimate of a Mineral Resource, the modifying factors for the preparation of Ore Reserves, or reporting an inaugural Mineral Resource or Ore Reserve, the estimate and supporting documentation in question is reviewed by a suitably qualified independent Competent Person The Company reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the JORC Code 2012 Edition. The Ore Reserves and Mineral Resources Statement is based on and fairly represents information and supporting documentation prepared by competent and qualified independent external professionals and reviewed by the Company’s technical staff. The Ore Reserves and Mineral Resources Statement has been approved by Roger Fitzhardinge, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Roger Fitzhardinge is a permanent employee of Centaurus Metals Limited. Mr Fitzhardinge has consented to the inclusion of the Statement in the form and context in which it appears in this Annual Report. COMPETENT PERSON’S STATEMENT Jaguar Nickel Project The information in this Annual Report that relates to Exploration Results is based on information compiled by Mr Roger Fitzhardinge who is a Member of the Australasia Institute of Mining and Metallurgy. Mr Fitzhardinge is an employee and shareholder of Centaurus Metals Limited. Mr Fitzhardinge has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Fitzhardinge consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this Annual Report that relates to the December 2021 Mineral Resources is based on information compiled by Mr Lauritz Barnes (consultant with Trepanier Pty Ltd) and Mr Roger Fitzhardinge (an employee and shareholder of Centaurus Metals Limited). Mr Barnes and Mr Fitzhardinge are both members of the Australasian Institute of Mining and Metallurgy. Mr Barnes and Mr Fitzhardinge have sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Specifically, Mr Fitzhardinge is the Competent Person for the database (including all drilling information), the geological and mineralisation models and site verification. Mr Barnes is the Competent Person for the construction of the 3-D geology / mineralisation model plus the estimation. Mr Barnes and Mr Fitzhardinge consent to the inclusion in this report of the matters based on their information in the form and context in which they appear. 27 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Jambreiro Iron Ore Project The information in this Annual Report that relates to Mineral Resources is based on information compiled by Roger Fitzhardinge, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and Volodymyr Myadzel, a Competent Person who is a Member of Australian Institute of Geoscientists. Roger Fitzhardinge is an employee of Centaurus Metals Limited and Volodymyr Myadzel was the Senior Resource Geologist of Micromine BNA Consultoria e Sistemas Limited, independent resource consultants engaged by Centaurus Metals. Roger Fitzhardinge and Volodymyr Myadzel have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Roger Fitzhardinge and Volodymyr Myadzel consent to the inclusion in the report of the matters based on their information in the form and context in which it appears. The information in this Annual Report that relates to Ore Reserves is based on information compiled by Beck Nader, a Competent Person who is a professional Mining Engineer and a Fellow of Australian Institute of Geoscientists. Beck Nader is a Senior Technical Advisor to Micromine BNA Consultoria e Sistemas Ltda and is a consultant to Centaurus. Beck Nader has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Beck Nader consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Tenement List The Group’s tenements are detailed in Table 9 and Table 10 below. Tenement 831.638/2004 831.639/2004 831.649/2004 833.409/2007 834.106/2010 831.645/2006 830.588/2008 833.410/2007 856.392/1996 850.130/2013 850.475/2016 851.571/2021 Project Name Canavial Canavial Jambreiro (Mining Lease) Jambreiro (Mining Lease) Jambreiro (Mining Lease) Passabém Passabém Regional Guanhães Jaguar (Mining Lease Application) Pebas Itapitanga Jaguar Regional Table 9 - Brazilian Tenements Tenement EPM14233 Project Name Mt Isa Location Minas Gerais Minas Gerais Minas Gerais Minas Gerais Minas Gerais Minas Gerais Minas Gerais Minas Gerais Pará Pará Pará Pará Location Queensland Interest 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Interest 10% (1) (1) Subject to a Farm-Out and Joint Venture Exploration Agreement with Summit Resources (Aust) Pty Ltd. Summit has earned a 90% interest in the Project. Aeon Metals Limited has acquired 80% of Summits Interest giving them a total interest of 72% of the tenement. Table 10 - Australian Tenements 28 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Additional Shareholder Information The shareholder information set out below was applicable as at 30 March 2022. SUBSTANTIAL SHAREHOLDERS The Company had the following substantial shareholders. → McCusker Holdings Pty Ltd 11.9% → Sprott Inc 9.6% → Dundee Goodman 5.1% As at the above date the Company had the following unlisted options over 13,473,077 ordinary shares. There are no voting rights attached to the unissued ordinary shares. Voting rights will attach to the unissued ordinary shares when the options have been exercised. Restricted Securities There are currently no restricted securities or securities subject to voluntary escrow on issue. CLASS OF SHARES & VOTING RIGHTS On-market Buy Back The number of holders of each class of equity securities as at the above date is shown below. There were 3,262 holders of ordinary shares in the Company as at the above date. The voting rights attaching to the ordinary shares, set out in Clause 41 of the Company’s Constitution, are; (i) On a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and (ii) On a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares, shall have a fraction of a vote for each partly paid share. The fraction shall be equivalent to the proportion which the amount paid is of the total amounts paid and payable, excluding amounts credited, provided that the amounts paid in advance of a call are ignored when calculating a true portion. There is no current on-market buy back. Number of Holders Number of Options Exercise Price $ Expiry Date Vested 1 5 3 1 3 4 1 3 7 8 116,667 0.180 31/05/22 2,233,335 0.225 31/05/22 1,400,000 0.378 31/05/22 116,667 0.180 31/05/23 1,400,000 0.392 31/05/23 3,952,402 - 31/12/23 233,334 0.180 31/05/24 1,400,000 0.405 31/05/24 1,395,452 1,225,220 - - 31/12/24 31/12/25 No No No No No Yes No No Yes Yes Table 11 - Unlisted Options on Issue DISTRIBUTION OF EQUITY SECURITIES The distribution of numbers of equity security holders by size of holding is shown in the table below. There were 286 holders of less than a marketable parcel (being a minimum $500 parcel at $1.395 per share) of ordinary shares. From 1 1,001 5,001 10,001 100,001 To 1,000 5,000 10,000 100,000 and over Table 12 - Distribution of Shareholdings Ordinary Shares Listed Options Unlisted Options Unlisted Options (ESOP) Performance Rights 569 764 547 1,099 283 3,262 - - - - - - - - - - 5 5 - - - 2 3 5 - - - - - - CENTAURUS METALS LIMITED ANNUAL REPORT 29 CENTAURUS METALS ANNUAL REPORT 2021 SHAREHOLDERS The names of the twenty largest holders of ordinary shares (CTM) are listed below: Name Number Held Percentage of Issued Shares (%) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Citicorp Nominees Pty Limited McCusker Holdings Pty Ltd HSBC Custody Nominees Harmanis Holdings Pty Ltd UBS Nominees Pty Ltd BNP Paribas Nominees Pty Ltd Mr Bradley George Bolin Zero Nominees Pty Ltd J P Morgan Nominees Australia Pty Limited Orimco Resources Pty Ltd Jayleaf Holdings Pty Ltd Mr Darren Gordon Mr Roger Fitzhardinge Atlas Iron Limited BPM Capital Limited Precision Opportunities Fund Ltd HS Superannuation Pty Ltd Solway Finance Ltd Brispot Nominees Pty Ltd Mr Luigi Reghelin Total Top 20 Shareholders Other Shareholders Total Number of Issued Shares Table 13 - Top 20 Shareholders 82,186,425 50,201,556 28,103,150 20,330,000 20,185,806 17,612,603 12,139,706 9,900,893 9,171,043 7,985,238 6,500,000 6,118,879 6,100,724 4,021,351 3,500,000 3,125,374 2,800,017 2,586,207 2,320,930 2,000,000 296,889,902 126,466,369 423,356,271 Corporate Governance Statement A copy of Centaurus’ 2021 Corporate Governance Statement, which provides detailed information about governance, and a copy of Centaurus’ Appendix 4G which sets out the Company’s compliance with the fourth edition of the ASX Corporate Governance Council’s Principles and Recommendations is available on the corporate governance section of the Company’s website at www.centaurus. com.au/corporate-governance. 19.41% 11.86% 6.64% 4.80% 4.77% 4.16% 2.87% 2.34% 2.17% 1.89% 1.54% 1.45% 1.44% 0.95% 0.83% 0.74% 0.66% 0.61% 0.55% 0.47% 70.13% 29.87% 100.00% 30 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 FINANCIAL REPORT 31 December 2021 31 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Centaurus Metals Limited ABN 40 009 468 099 And its controlled entities Contents Directors’ Report .................................................................................................................................................................. 3 33 Consolidated Statement of Profit or Loss and Other Comprehensive Income ................................................................... 21 51 Consolidated Statement of Financial Position .................................................................................................................... 22 52 Consolidated Statement of Changes in Equity.................................................................................................................... 23 53 Consolidated Statement of Cash Flows .............................................................................................................................. 24 54 Notes to the Consolidated Financial Statements ............................................................................................................... 25 55 Directors’ Declaration ......................................................................................................................................................... 49 79 Independent Auditor’s Report ............................................................................................................................................ 50 80 32 Page 2 of 53 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Directors’ Report Your directors present their report on the Consolidated Entity (“Group”) consisting of Centaurus Metals Limited (“Centaurus” or “the Company”) and the entities it controlled at the end of, or during, the year ended 31 December 2021 together with the consolidated financial report and audit report thereon. 1 Directors The directors of the Company at any time during or since the end of the year are: Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Independent Non-Executive Chair Managing Director Executive Director Independent Non-Executive Director Independent Non-Executive Director Unless otherwise disclosed, all directors held their office from 1 January 2021 until the date of this report. 2 Directors and Officers Mr Didier M Murcia, AM, B.Juris, LL.B Non-Executive Chair, Age 59 Independent non-executive director appointed 16 April 2009 and appointed Chair 28 January 2010. Lawyer with over 30 years’ legal and corporate experience in the mining industry. Mr Murcia is currently Honorary Australian Consul for the United Republic of Tanzania. He is Chair and founding director of Perth-based legal group MPH Lawyers. He is Chair of Strandline Resources Limited. During the last three years Mr Murcia has held directorships in the following ASX listed companies: Alicanto Minerals Limited (appointed 30 May 2012) - Non-Executive Director Strandline Resources Limited (appointed 23 October 2014) - Non-Executive Chair Mr Darren P Gordon, B.Bus, FCA, AGIA, ACG, MAICD Managing Director, Age 50 Managing Director appointed 4 May 2009. Chartered Accountant with over 25 years’ resource sector experience as a senior finance and resources executive. Mr Gordon was formerly Chief Financial Officer for Gindalbie Metals Limited (1999-2008). Mr Bruno R Scarpelli, M.Sc., PMP Executive Director, Age 44 Executive Director appointed 3 September 2015. Mr Scarpelli is an engineer with over 15 years’ experience in the mining sector, specifically in the environmental approvals, health and safety and human resources fields. He was formerly environmental manager for Vale’s world class S11D Iron Ore Project. Mr Scarpelli is Administrator of Centaurus’ Brazilian subsidiaries and the Country Manager – Brazil. Mr Mark D Hancock, B.Bus, CA, F Fin Non-Executive Director, Age 53 Independent non-executive director appointed 23 September 2011. Mr Hancock is a Company Director and consultant to the resource industry with a focus on commercial advisory and commodity marketing. He has over 30 years’ experience in senior commercial and financial roles across a number of leading companies in Australia and South East Asia, including most recently spending 13 years with Atlas Iron as CFO and CCO and prior to that with oil and gas industry participants Woodside Petroleum Ltd and Premier Oil Plc. Page 3 of 53 33 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 During the last three years Mr Hancock has held directorships in the following ASX listed companies: Cyclone Metals Ltd (formerly Cape Lambert Resources Ltd, appointed 11 February 2020; resigned 4 August 2020) CuFe Ltd (Appointed 1 September 2019) Strandline Resources (Appointed 11 August 2020) Mr Hancock is Chair of the Audit & Risk Committee Mr Chris A Banasik, B.App.Sc (Physics), M.Sc (Geology), Dip Ed, GAICD Non-Executive Director, Age 60 Independent non-executive director appointed 28 February 2019. Mr Banasik is a geologist with more than 30 years’ experience across multiple disciplines and commodities. He was a founding Director of WA gold producer Silver Lake Resources (ASX: SLR), where he held the key role of Director of Exploration and Geology from 2007 to 2014. He has held a range of senior geological and executive roles for companies including Consolidated Minerals, Reliance Nickel and Western Mining Corporation. He has extensive experience in nickel exploration, project development and operations, having held several geological and management positions with WMC (1986-2001). He was also Senior Mine Geologist with Goldfields Mine Management (2001-2004) and Chief Geologist at the Beta Hunt nickel operations (2004-2007). Mr Banasik is the Chair of the Remuneration Committee Mr Johannes W Westdorp, B.Bus, CPA, MAICD, GradDip App Sc Chief Financial Officer & Company Secretary, Age 58 Mr Westdorp was appointed as Chief Financial Officer on 11 November 2019 and Company Secretary on 15 January 2020. Mr Westdorp is a Certified Practicing Accountant. He was previously Chief Financial Officer and Company Secretary of Centaurus between 2012 and 2015. He has over 30 years’ experience in the resources sector and has most recently held the roles of Chief Financial Officer and Interim Chief Executive Officer of mineral sands producer, MZI Resources Ltd. Mr Westdorp has held senior roles with Murchison Metals Ltd and Burrup Fertilisers Pty Ltd and has financial, commercial and operations experience across a number of commodities including iron ore, gold, base metals and mineral sands. 3 Director & Committee Meetings The number of meetings of the Company’s Board of Directors and its Committees held during the year ended 31 December 2021 and the number of meetings attended by each director are shown in the table below. Director Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Board Audit & Risk Committee Remuneration Committee Held1 Attended Held1 Attended Held1 Attended 7 7 7 7 7 7 7 7 7 7 2 n/a n/a 2 2 2 n/a n/a 2 2 2 n/a n/a 2 2 2 n/a n/a 2 2 (1) Denotes the number of meetings held during the time the director held office (excluding circular resolutions) The Company does not have a formal Nomination Committee. The function is performed by the full Board. There is no additional remuneration for committee members. The Company’s remuneration policy consists of: a clear structure that distinguishes remuneration of non-executive directors from that of executive directors and senior management; balancing the Company’s desire to attract and retain personnel with the need to manage financial resources; providing an appropriate balance between fixed and incentive pay to reflect short and long term performance objectives appropriate to the Company’s circumstances and goals; motivating personnel to pursue the long-term growth and success of the Company; and demonstrating a clear relationship between employee performance and remuneration. Further information on directors’ and executives’ remuneration is set out in the Remuneration Report. Page 4 of 53 34 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 4 Operating and Financial Review A summary of consolidated results is set out below Interest Income Other Income Loss before income tax Loss attributable to members of Centaurus Metals Limited 4.1 Financial Performance 31 December 2021 $ 31 December 2020 $ 235,207 265,862 501,069 174,436 487,289 661,725 (16,994,715) (16,994,715) (11,468,825) (11,468,825) During the year ended 31 December 2021 the Group expensed Exploration and Evaluation costs totalling $13,198,599 (2020: $7,288,408) in accordance with the Group’s accounting policy. The Exploration and Evaluation costs primarily comprise costs in relation to exploration at the Jaguar Nickel Sulphide Project in Brazil. Subsequent to year end the Group raised $71,959,044 net of fees, increasing the cash balance and net assets by the same amount. 4.2 Financial Position At the end of the year the Group had a cash balance of $8,259,389 (2020: $24,089,281) and net assets of $16,750,646 (2020: $26,118,316). Total liabilities amounted to $10,099,118 (2020: $7,734,426) and consisted of trade and other payables, financial liabilities, lease liabilities and employee benefits. 4.3 Strategy Centaurus’ key focus throughout the 2021 calendar year was on the continued exploration and development of the advanced Jaguar Nickel Sulphide Project, located in the world-class Carajás Mineral Province in Brazil. Scoping studies were completed for both a base case concentrate production scenario and a value-add case producing nickel sulphate with both cases returning exceptional economic results. A JORC Resource update was completed in December 2021 and resulted in a significant increase in contained nickel metal. Early development activities continued and included securing possession of key land holdings and completing access road upgrades. 4.4 Jaguar Nickel Sulphide Project Centaurus’ key focus throughout the 2021 calendar year was on the continued exploration and development of the advanced Jaguar Nickel Sulphide Project. The Jaguar Nickel Sulphide Project hosts multiple nickel sulphide deposits and exploration targets within a 30km2 land package in the western portion of the world-class Carajás Mineral Province in Brazil. The Company delivered a positive Value-Added Scoping Study in May 2021 confirming strong technical parameters and outstanding financial returns from the production of nickel sulphate from a 13-year open pit and underground mining operation. The production of nickel sulphate is proposed to be delivered by a conventional nickel flotation plant, followed by a pressure oxidation circuit to produce +20,000 tonne of nickel per annum over the initial 13-year mine life. Following the robust and compelling economics delivered by the Jaguar Value-Add Scoping Study, the Company elected to move straight to a Definitive Feasibility Study (DFS) focused on the production of a nickel sulphate product. At the end of 2021, Centaurus updated its Mineral Resource Estimate (MRE) for the Jaguar Project to 80.6Mt @ 0.91% Ni for 730,700t of contained nickel, with 54 per cent of the MRE in the higher-confidence Indicated Resource category (43.4Mt grading 0.92% Ni for 397,000 tonnes of contained nickel). Through the development of the Jaguar Project, Centaurus’ goal is to become a new-generation nickel sulphide mining company in Brazil, capable of delivering more than 20,000 tonne per annum of Class-1 nickel to global markets over the long term, and to do so in a sustainable and responsible manner that ensures the Company meets the highest possible ESG (Environmental, Social and Governance) standards. Page 5 of 53 35 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 A geotechnical diamond drilling program commenced to support mechanical strength testwork and design parameters for open pit and underground mining. Drilling, test pitting and auger drilling commenced in October to provide information for infrastructure foundation design and to define sources for construction materials. Significant work was completed subsequent to the release of the Value Add Scoping Study to increase the understanding of key project value drivers including mineralogy, comminution, ore sorting, flotation response and pressure leaching conditions. Work continued on key infrastructure components of the project including the conceptual design of the Integrated Waste Landform (IWL) tailings facility. The public road infrastructure between site and Tucumã was progressively upgraded during the year in co-operation with the São Felix do Xingu Municipality. A study to finalise the power line alignment was advanced and discussions with landowners and stakeholders commenced. lodged an updated Mining Lease Application (MLA) with the ANM (Agência Nacional de The Company Mineração/National Mining Agency), revising the original MLA lodged by Vale in 2013. The MLA update accounts for the revision of the scale and scope of the mining and processing activities based on the Jaguar Nickel Sulphate Project outlined in the Value-Add Scoping Study released in May 2021. During the year, the Company secured possession rights over 3 key properties comprising over 2,000 hectares of land at Jaguar. Securing full possession rights to the key properties significantly de-risks the Company’s development pathway at Jaguar. 4.5 Greenfields Exploration Greenfields exploration drilling at the Jaguar Project delivered a significant new discovery at the Tigre Prospect during the second half of the year. The Tigre Prospect is interpreted to be the south-western extension of the McCandless Fault, one of the most important regional scale mineralising structures in the Carajás. The discovery of the Tigre Deposit and the rapid conversion of the discovery into the MRE demonstrates the outstanding exploration potential that lies within economic haulage distance from the proposed Jaguar nickel sulphate plant location. Approximately 95% of the drilling undertaken at Jaguar has taken place within the known deposit limits. Multiple prospects and targets which are located along the main mineralisation structures and characterised by ground magnetic and airborne and/or ground electromagnetic (EM) anomalies coincident with significant soil geochemical anomalies remain to be drill-tested. Drilling of the greenfields exploration pipeline will be ongoing for the next 18 months, with additional RC rigs mobilised to increase drilling resources. Any new discoveries will be followed up immediately and, like the Tigre discovery, are expected to contribute to the next resource update that will underpin the DFS due to be completed by the end of 2022. 4.6 Health & Safety One Lost Time Injury occurred during the year resulting in an LTIFR 12-month moving average of 2.47. The average LTI Frequency Rate for the West Australian Exploration Industry for the 2019/20 Period was 4.2. Three medical treatment injuries occurred during the year. The Total Recordable Injury Frequency Rate for the Group’s operations in Brazil was 2.87, a significant improvement compared to the prior year result of 12.50. 4.7 COVID-19 Response The Company successfully maintained the continuity of its business for the second full year of the global COVID-19 pandemic. Working protocols designed to protect employees, their families and the local communities have resulted in the Company experiencing limited disruption to its ongoing operations in both Australia and Brazil. 4.8 Jambreiro Iron Ore Project The Company has commenced the process to refresh all environmental licenses required to develop the project and as part of this process has applied for the renewal of the original Jambreiro Installation Licence (LI). The environmental regulator has agreed to issue a joint LP/LI for the project. The Company lodged the updated EIA/RIMA (required for the LP) and the PCA (required for the LI) in July 2021. Page 6 of 53 36 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 The main changes to the project design that was originally approved in 2012 are: Elimination of the tailings dam through the inclusion of centrifuges at the back end of the process flowsheet to dewater the tailings and stockpile them on the waste dumps; Transforming the original tailings dam into a water storage dam, with a much smaller footprint; Development of two additional small open pits that are feasible due to higher iron ore prices; and Reducing the project’s overall project footprint by ~50% via the removal of the tailings dam. The Company has also lodged the documentation to re-apply for all water permits necessary to operate the project. The Company continues to assess opportunities to realise value from the Jambreiro Iron Ore Project and carried out a number of activities focused on this goal during the year. Realising value from the project remains contingent on the completion of off-take or partnering arrangements and discussions remain open in this regard. 4.9 ESG Program Centaurus completed development of its initial formal environmental, social and governance (ESG) policy framework, which is based on the recommendations and principles of two different sources, being: Towards Sustainable Mining Principles (TSM); and Principles of Responsible Investment (PRI) The Framework addresses key issues within the domain of ESG and maps out a high level management plan for the exploration and operational and closure phases of the Jaguar Project. From an environmental perspective, the framework addresses waste and water management, land use, bio diversity and energy use and GHG reporting for the Project. More than 80% of the investment the Company is making in respect to the exploration and development work on the Jaguar Project has been awarded to the local community through drilling contracts, engagement of consultants and services and purchase of equipment and supplies. More than 90% of the workforce currently working on the project, including employees and outsourced labour, are from the south eastern region of the State of Pará and all Jaguar Project employees and their families now reside in Tucumã. 4.10 Corporate Subsequent to the end of the period, the Company undertook a placement to raise A$75m (before fees). The placement was very well supported and demand for allocations significantly exceeded the amount raised. The register has been materially strengthened with the addition of a number of high quality institutional investors in addition to the continued support provided by existing significant shareholders. The funds will be used to complete a Definitive Feasibility Study (DFS) for Jaguar and maintain the Company’s very strong existing drilling momentum. A 90,000m drill program planned for 2022 will include significant ongoing diamond drilling designed to maximise the Measured and Indicated components of the extensive Resource inventory ready for Reserve conversion. Funds will also be used for pre-development and financing activities ahead of a planned Final Investment Decision (FID) on the Project. Centaurus’ shares commenced trading in the US on the OTCQX platform under the ticker OTCQX: CTTZF on 30 December 2021. The OTCQX Best Market is the highest tier of OTC Markets Group’s market trading platforms, on which 11,000 US and global securities trade. Trading on the OTCQX should enhance the visibility and accessibility of Centaurus to the extensive market of North American retail, high net worth and institutional investors and allows trading of Centaurus’ securities in the local timezone with trades and settlements conducted in US Dollars. The Company made two key appointments to its senior leadership team during the year as it continued to build its in- house technical, commercial, legal and operational expertise to progress the Jaguar Project towards financing, development and operations. Highly experienced international mining executive Mr Wayne Foote was appointed as General Manager - Operations, commencing with the Company in late July, while the Company’s external legal counsel, Ms Júlia Oliveira, has joined Centaurus’ in-house team in Brazil as Legal and Commercial Manager. Page 7 of 53 37 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 4.11 Factors and Business Risks Affecting Future Business Performance The following factors and business risks could have a material impact on the Company’s success in delivering its strategy: 4.11.1 Access to Funding The Company’s ability to further develop the Jaguar Nickel Sulphide Project and successfully develop future projects is contingent on the ability to fund those projects from operating cash flows or through affordable debt and equity raisings. Ongoing exploration of the Company’s Projects is contingent on developing appropriate funding solutions. 4.11.2 Commodity Prices Commodity prices fluctuate according to changes in demand and supply. The Company is exposed to changes in the price of a number of commodities, which could affect the future profitability of the Company’s projects. Significant adverse movements in commodity prices could also affect the ability to raise debt and equity to fund future exploration and development of projects. 4.11.3 Exchange Rates The Company is exposed to changes in the US Dollar and the Brazilian Real. Sales of most commodities are denominated in US Dollars. The Company’s CAPEX and OPEX costs will be primarily denominated in Brazilian Real. 4.11.4 COVID-19 Disruptions as a result of the requirement to isolate infected or close contact employees has had an impact on some of the Company’s service providers, with laboratories particularly experiencing delays in sample assay turnaround times. These impacts expose the Company to delays in the delivery of study programs. 5 Significant Changes in the State of Affairs In the opinion of directors, other than as outlined in this report, there were no significant changes in the state of affairs of the Group that occurred during the financial year under review. 6 Principal Activities During the period the principal activities of the Group consisted of exploration and evaluation activities related to mineral resources in Brazil. There were no significant changes in the nature of the activities of the Group during the year. 7 Events Subsequent to Reporting Date The Company completed a placement on 1 February 2022 raising $75 million (before fees). There was very strong demand for the Placement from over 20 Australian and international institutional investors as well as existing substantial shareholders, including affiliates of the Sprott Group, McCusker Holdings, Dundee Goodman Merchant Partners and Harmanis Holdings. Institutional bidding under the placement significantly exceeded the $75 million Placement amount and bids were scaled to accommodate the strong demand. Other than outlined above, there has not arisen, in the interval between the end of the financial year and the date of this report an item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. 8 Likely Developments Other than likely developments contained in the “Operating and Financial Review” and “Events Subsequent to Reporting Date”, further information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group. Page 8 of 53 38 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 9 Environmental Regulation The Group is subject to environmental laws and regulations under Brazilian (State and Federal) legislation depending on the activities undertaken. Compliance with these laws and regulations is regarded as a minimum standard for the Group to achieve. There were no known breaches of these regulations during the year. 10 Dividends No dividend was declared or paid by the Company during the current or previous year. 11 Directors’ Interests The relevant interest of each director in the shares and options over such shares issued by the companies within the Group and other related bodies corporate, as notified by the directors to the ASX in accordance with S205G (1) of the Corporations Act 2001, at the date of this report is as follows: Directors Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Ordinary Shares Options 1,338,633 6,118,879 666,667 728,920 583,334 2,133,334 2,820,239 1,374,451 1,433,334 1,666,668 12 Share Options At the date of this report unissued ordinary shares of the Company under unlisted option are: Employee Options Expiry Date 31/05/2022 31/05/2022 31/05/2022 31/05/2023 31/05/2023 31/05/2023 31/05/2024 31/05/2024 31/12/2024 Exercise Price $0.225 $0.378 $0.180 $0.180 $0.392 - $0.180 $0.405 - Vested 2,233,335 1,400,000 116,667 116,667 - - 233,334 - - 4,100,003 Unvested - - - - 1,400,000 3,952,402 - 1,400,000 1,395,452 8,147,854 Total Number of Shares Under Option 2,233,335 1,400,000 116,667 116,667 1,400,000 3,952,402 233,334 1,400,000 1,395,452 12,247,857 13 Indemnification and Insurance of Officers and Auditors During the period, the Company paid insurance premiums to insure the directors, executive officers and Company Secretary of the Group. The amount of premiums paid has not been disclosed due to confidentiality requirements under the contract of insurance. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Group. Page 9 of 53 39 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 14 Non- Audit Services During the period KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties. The Board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the Board, is satisfied that the provision of those non-audit services during the year by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Board to ensure they do not impact the integrity and objectivity of the auditor; and the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards. Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services provided during the year are set out below. 31 December 2021 $ 31 December 2020 $ Audit Services Auditors of the Company Audit and review of financial reports – KPMG 58,861 52,080 Services other than statutory audit Taxation compliance services – KPMG 6,986 14,818 15 Auditor’s Independence Declaration The auditor’s independence declaration is set out at page 50 and forms part of the directors’ report for the period ended 31 December 2021. Page 10 of 53 40 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 16 Remuneration Report – Audited 16.1 Principles of Remuneration The primary objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board considers the recommendations of the Remuneration Committee in ensuring that executive reward satisfies the following key criteria: competitiveness and reasonableness; acceptability to shareholders; performance linked executive compensation; transparency; and capital management. The Group has structured an executive remuneration framework that is market competitive and consistent with the reward strategy of the organisation. The framework seeks to align the interests of shareholders with that of programme participants as described below. Alignment to shareholders’ interests: focuses on the creation of shareholder value and returns; and attracts and retains high calibre executives with an inherent knowledge of the Company’s ongoing business and activities. Alignment to program participants’ interests: rewards capability and experience; reflects competitive reward for contribution to growth in shareholder wealth; provides a clear structure for earning rewards; provides recognition for contribution; and seeks to retain experienced and competent individuals in key executive roles. The remuneration framework consists of base salary and short and long-term incentives. Whilst intended to be settled in cash, the Board retains the discretion to settle short term incentives with equity. An Employee Share Option Plan was approved by shareholders at the AGM in May 2019 and incentives settled in equity may be offered under this plan. The overall level of executive reward takes into account the performance of the Group over a number of years, with greater emphasis given to the current and prior year. Over the past 5 years, the Group was involved in mineral exploration and pre-development activities and therefore growth in earnings is not considered a relevant measure. Shareholder wealth is currently primarily dependent upon exploration and development success in addition to being influenced by broader market factors and has fluctuated accordingly. The performance of the Group in respect of the current period and the previous four financial years is set out below: 2021 $ 2020 $ 2019 $ 2018 $ 2017 $ Net Loss (16,994,715) (11,468,825) (4,275,397) (4,197,361) (3,632,809) Change in share price (1) Change in share price $0.290 35% $0.625 321% $0.090 86% $0.000 - $0.010 10% (1) In April 2020 the Company completed a 15-for-1 share consolidation, comparatives have been restated. Page 11 of 53 41 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 16.2 Remuneration Framework The executive remuneration and reward framework currently has four components: base salary; short term incentives (STIs) long term incentives (LTIs); and other remuneration such as superannuation and insurances. The combination of these components comprises the executive’s total remuneration. 16.2.1 Base Salary Executives are offered a competitive base salary that is reflective of current market conditions. Base salary for senior executives is reviewed annually to ensure the executive’s remuneration is competitive with the market. An executive’s base salary is also reviewed on promotion. There are no guaranteed base salary increases included in any senior executive contracts. 16.2.2 Short Term Incentives The STI Plan is designed to reward executives for the achievement of annual performance targets. The STI Plan and the annual performance targets under the STI Plan are reviewed annually by the Remuneration Committee and approved by the Board. All awards to KMP are assessed and recommended by the Remuneration Committee and approved by the Board. For 2021 Key Management Personnel, other than the Managing Director, can earn up to 35% of Total Fixed Remuneration (TFR) under the STI Plan whilst the Managing Director can earn up to 50% of TFR. Other Managers of the Group can earn up to 15-27.5% of TFR under the Plan. The annual performance targets are based on challenging goals with a mix of both Company performance and project specific targets. The Group’s key STI performance measures for the year ending 31 December 2021 are summarised below. Effective management of environmental conditions and safety performance. Community and land owner engagement in Brazil. Achievement of defined targets for the Jaguar Project with respect to exploration activity performance, Mineral Resource definition and new target definition. Achievement of a number of key deliverables in relation to the licensing, feasibility study and other development activities of the Jaguar Nickel Project. Achievement of value adding outcome for the Jambreiro Iron Ore project. Market capitalisation growth targets. Details of STI incentives awarded during the year are detailed in Section 16.6.4. 16.2.3 Long Term Incentives LTIs may be granted from time to time to reward performance in the realisation of strategic outcomes and long-term growth in shareholder wealth. Options or performance rights may be utilised to deliver long term incentive awards. The Board has discretion to grant options or performance rights for no consideration. Options or performance rights do not carry voting or dividend entitlements. Information on share options granted during the year is set out in Section 16.6 During the period, Key Management Personnel were granted Options with no exercise price which are subject to vesting conditions related to achieving performance targets measured over a three-year period. The options are issued under the Company’s Employee Share Option Plan and under ASX Listing Rule 10.11 for Executive Directors. Key Management Personnel, other than the Managing Director, were issued with options up to the value of 50% of TFR whilst the Managing Director was issued with options up to the value of 75% of TFR. Page 12 of 53 42 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 The terms and conditions of the zero exercise priced Options affecting remuneration during the reporting period are set out below. Grant Date Performance Measurement period Expiry Date Vesting Conditions Executive Directors 19 February 2021 1 January 2021 to 31 December 2023 31 December 2024 19 February 2021 29 May 2020 1 January 2021 to 31 December 2023 1 January 2020 to 31 December 2022 31 December 2024 31 December 2023 29 May 2020 Executives 13 July 2021 13 July 2021 25 January 2021 25 January 2021 14 February 2020 1 January 2020 to 31 December 2022 31 December 2023 1 January 2021 to 31 December 2023 31 December 2024 1 January 2021 to 31 December 2023 1 January 2021 to 31 December 2023 1 January 2021 to 31 December 2023 1 January 2020 to 31 December 2022 31 December 2024 31 December 2024 31 December 2024 31 December 2023 14 February 2020 1 January 2020 to 31 December 2022 31 December 2023 50% of Options vest based on Total Shareholder Return relative to a peer group of companies determined by the Board. 50% based upon Absolute Total Shareholder Return. 50% of Options vest based on Total Shareholder Return relative to a peer group of companies determined by the Board. 50% based upon entry by the Company into the ASX300 Index. 50% of Options vest based on Total Shareholder Return relative to a peer group of companies determined by the Board. 50% based upon entry by the Company into the ASX300 Index. 50% of Options vest based on Total Shareholder Return relative to a peer group of companies determined by the Board. 50% based upon entry by the Company into the ASX300 Index. 50% of Options vest based on Total Shareholder Return relative to a peer group of companies determined by the Board. 50% based upon entry by the Company into the ASX300 Index. Value per Option at grant date $0.7833 $0.6756 $0.2482 $0.2013 $0.6900 $0.5774 $0.7188 $0.6212 $0.1582 $0.1174 Each milestone will be assessed at the end of the 3-year assessment period and the options will not vest or be capable of being exercised until after this assessment period has closed, other than in the case of a successful change of control transaction in which case the options will immediately vest. Participants in the LTI plan must remain in employment during the assessment period. To achieve the relative Total Shareholder Return (TSR) performance measure, the Company must outperform, on a TSR basis, at least 49.9% of the peer group established by the Board. The peer group for the LTI granted during the year ended 31 December 2021 is comprised of the following companies. Adriatic Metals PLC Ardea Resources Limited Emerald Resources NL Galena Mining Limited New Century Resources Limited Panoramic Resources Limited Australian Mines Limited Greenland Minerals Limited Piedmont Lithium Inc AVZ Minerals Limited Azure Minerals Limited Big River Gold Ltd Hot Chilli Limited Jervois Global Limited Legend Mining Limited Poseidon Nickel Limited Red River Resources Limited St George Mining Limited Blackstone Minerals Limited Liontown Resources Limited Stavely Minerals Limited Clean TeQ Water Limited Mincor Resources NL Western Areas Limited The assessment of the relative TSR performance measure will be made at the end of the assessment period with vesting to occur in line with the table below. Percentile Ranking compared to Peers <50th Percentile Amount of ZEPO to Vest Zero B/t 50th and 75th Percentile Pro Rata B/t 50% and 100% >75th percentile 100% Page 13 of 53 43 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 TSR has been defined as the financial gain that results from a change in the Company’s share price plus any dividends paid by the Company during the assessment period divided by the share price at the start of the assessment period. The achievement of the Absolute TSR performance measure will be made at the end of the assessment period, and vesting will be in line with the table below. Assessment Table Threshold TSR Level over Assessment Period Amount of ZEPOs which will vest and become exercisable Less than 30% B/t 30% and 40% B/t 40% and 50% 50% or greater Zero 50% 75% 100% Vested options can be exercised any time between vesting and the expiry date. 16.2.4 Superannuation In accordance with regulatory requirements, Directors and employees are permitted to nominate a superannuation fund of their choice to receive superannuation contributions. 16.3 Employment Agreements Remuneration and other terms of employment for executives are formalised in employment agreements which are reviewed annually. The agreements provide for the provision of other benefits and participation, at the discretion of the Board in Short and Long-Term Incentive Plans (refer to sections 16.2.2 and 16.2.3). Other major provisions of the current employment agreements, as at the date of this report, relating to remuneration are set out below: Name D P Gordon W E Foote J W Westdorp B R Scarpelli R J Fitzhardinge Salary Incl of Superannuation $485,000 pa $374,000 pa $350,000 pa $337,800 pa $254,400 pa Notice Period Company 12 months 3 months 4 months 2 months 2 months Notice Period Employee 6 months 3 months 2 months 2 months 2 months Redundancy 12 months 6 months 6 months 6 months 6 months 16.4 Non- Executive Directors Fees and payments to Non-Executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-Executive directors’ fees and payments are reviewed at least annually by the Board. The Chair’s fees are determined independently to the fees of Non-Executives directors based on comparative roles in the external market and prevailing market conditions. Non-Executive directors’ remuneration consists of set fee amounts. The current level of fees, applicable from 1 January 2022, for Non-Executive directors is $70,000 per annum. The Non-Executive Chair’s fees are $105,000 per annum. Directors do not receive additional committee fees. Non-Executive directors’ fees are subject to an aggregate pool limit, which is periodically recommended for approval by shareholders. The approved pool limit is currently $400,000. There is no provision for retirement allowances for Non-Executive directors. Non-Executives Directors may be granted options from time to time to provide a meaningful additional incentive for their ongoing commitment and dedication to the continued growth of the Group and to assist the Company in attracting and retaining the highest calibre of Non-Executive Director, whilst maintaining the Group’s cash reserves. There were no options granted or issued to Non-Executive Directors in the current period. Refer to Section 16.6 for options issued during prior periods. Prior to issuing incentives the Board considers whether the issue is reasonable in the circumstances. Page 14 of 53 44 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 d e s a B e r a h S s t n e m y a P m r e T g n o L s t i f e n e B t s o P t n e m y o p m E l s t i f e n e B s t i f e n e B m r e T t r o h S p u o r G e h t f o l e n n o s r e p t n e m e g a n a m y e k r e h t o d n a e v i t u c e x e y n a p m o C d e m a n d n a r o t c e r i d h c a e r o f n o i t a r e n u m e r f o t n e m e e l j r o a m h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D : e r a n o i t a r e n u m e R ’ s r e c i f f O e v i t u c e x E d n a ’ s r o t c e r i D 5 . 6 1 1 2 0 2 r e b m e c e D 1 3 – t r o p e R l a i c n a n i F % 7 . 6 5 % 5 . 0 6 % 8 . 6 5 % 0 . 0 6 % 4 . 8 5 % 3 . 5 6 % 3 . 6 2 % 2 . 7 1 % 9 . 0 2 % 9 . 3 1 % 1 . 9 % 8 . 9 1 % 0 . 9 % 2 . 8 1 % 1 . 0 1 - - % 0 . 7 4 % 4 . 1 4 % 4 . 8 3 % 6 . 1 3 % 1 . 6 3 % 9 . 7 2 % 0 . 5 3 % 8 . 7 2 % 4 . 5 3 ) i v ( ) e ( ) 1 ( A 0 0 3 S s a s n o i t p O f o e u a V l f o n o i t r o p o r P % n o i t a r e n u m e R ) i ( ) e ( ) 1 ( A 0 0 3 S f o n o i t r o p o r P n o i t a r e n u m e R e c n a m r o f r e P % d e t a e R l 3 5 1 , 3 7 1 7 3 9 , 3 6 1 5 3 2 , 5 1 1 1 9 2 , 9 0 1 5 2 8 , 9 1 1 1 2 6 , 4 2 1 4 2 0 , 4 1 9 1 2 2 , 4 3 7 8 5 2 , 9 6 4 1 1 6 , 6 6 3 2 4 9 , 2 9 3 4 8 9 , 4 7 3 6 1 2 , 1 9 4 9 2 9 , 1 3 4 3 5 1 , 8 9 7 3 1 , 9 9 5 3 4 , 5 6 1 9 0 , 6 6 5 2 0 , 0 7 1 2 4 , 1 8 2 0 3 , 0 4 2 2 8 0 , 6 2 1 1 4 1 , 8 9 2 4 9 , 0 5 1 6 9 , 7 7 7 6 9 , 3 3 0 2 6 , 9 8 2 4 0 , 9 3 1 8 7 , 3 3 2 2 1 6 , 3 2 - - - - - - 0 0 3 , 9 2 1 7 , 0 2 - - 3 1 3 , 9 6 1 9 , 5 - - - 4 3 4 , 9 0 9 , 2 4 9 5 5 0 3 , , 2 9 4 2 , 3 6 7 2 8 6 , 6 9 4 5 2 0 , 0 3 6 1 2 , 5 1 - - - - - - - - 0 5 2 , 6 2 0 0 0 , 5 2 2 9 9 , 1 2 4 4 6 , 2 2 0 5 2 , 6 2 7 0 7 , 3 2 3 5 0 , 2 1 5 4 5 , 6 8 1 5 3 , 1 7 - - - - - - 4 2 9 , 7 2 9 3 6 , 4 2 7 6 0 , 9 1 7 5 1 , 4 1 1 3 6 , 3 ) 7 6 3 , 6 ( 1 8 3 , 4 4 8 5 , 0 2 4 0 8 , 2 9 0 8 , 7 4 1 1 0 , 3 6 - - - - - - 6 8 4 , 9 8 1 0 0 2 , 8 7 1 5 1 2 , 2 8 0 0 8 , 4 6 8 6 8 , 3 6 0 7 4 , 0 7 5 1 2 , 2 8 0 0 0 , 1 8 0 6 1 , 9 5 4 4 9 , 6 7 4 0 7 4 , 4 9 3 0 0 0 , 5 7 0 0 8 , 4 6 0 0 8 , 9 4 0 0 2 , 3 4 0 0 8 , 9 4 0 0 2 , 3 4 0 5 3 , 9 0 4 0 0 0 , 1 7 3 5 3 8 , 9 6 2 2 1 7 , 6 3 2 5 7 1 , 6 2 2 6 5 3 , 8 3 2 0 5 7 , 8 8 2 6 9 5 , 7 6 2 2 5 1 , 6 3 1 2 6 8 , 4 0 5 , 1 4 6 8 4 6 2 , , 1 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 0 2 0 2 1 2 0 2 e c i v r e S g n o L n o i t a u n n a r e p u S ) 1 ( s t i f e n e B r e h t O $ l a t o T $ ) 3 ( s n o i t p O $ ) 2 ( e v a e L $ $ $ s e s u n o B I T S $ s e e F & y r a a S l r a e Y s r o t c e r i D e v i t u c e x E - n o N a i c r u M M D r M k c o c n a H D M r M s r o t c e r i D e v i t u c e x E n o d r o G P D r M k i s a n a B A C r M i e g n d r a h z t i F J R r M s e v i t u c e x E i l l e p r a c S R B r M p r o d t s e W W J r M ) 1 2 0 2 y l u J 6 2 d e t n o p p A ( i e t o o F E W r M 1 2 0 2 l a t o T 0 2 0 2 l a t o T m o r f d o i r e p e h t r e v o y l n e v e d o i r e p g n i t r o p e r h c a e o t d e t a c o l l a s i l e u a v r i a f e h t d n a l e d o m g n i c i r p - n o i t p o s e o h c S k c a B e h t l l r o o l r a C e t n o M e h t r e h t i e g n i s u t n a r g f o e t a d e h t t a d e t a u c l a c l s i s n o i t p o e h t l f o e u a v r i a f e h T . s i s a b s l a u r c c a n a n o d e r u s a e m e v a e l e c i v r e s g n o l a t a r o r p o t s e t a e R l 3 5 f o 5 1 e g a P . d o i r e p g n i t r o p e r s i h t n i d e s n e p x e s n o i t p o e h t l f o e u a v r i a f e h t f o n o i t r o p e h t s i l d e s o l c s i d e u a v e h T . e t a d g n i t s e v o t e t a d t n a r g . l i z a r B n i d e t a c o l s e v i t u c e x e r o f s t i f e n e b r o n m i r e h t o d n a , s i s a b s l a u r c c a n a n o d e r u s a e m , d o i r e p h t n o m - 2 1 e h t r e v o s t n e m e l t i t n e e v a e l l a u n n a n i t n e m e v o m e h t e d u l c n i s t i f e n e b r e h t O ) 1 ( ) 2 ( ) 3 ( 45 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 16.6 Equity Instruments Options may be granted under the Employee Share Option Plan (ESOP) which was approved by shareholders at the 2019 Annual General Meeting. Eligibility to participate in the ESOP (including participation by Executive and Non-Executive directors) is determined by the Board in its absolute discretion. The vesting and exercise conditions of options granted are also determined by the Board in its absolute discretion. Employees must remain in employment during the vesting period. Options may also be granted by the Company outside of the ESOP, but under similar terms and conditions. The Group has a policy that prohibits directors and employees who are granted share options as part of their remuneration from entering into arrangements that limit their exposure to losses that would result from share price decreases. 16.6.1 Analysis of Options over Equity Instruments Granted as Compensation Details of vesting profiles of the options granted as remuneration both during the current and in prior years to Key Management Personnel of the Group are detailed below. There were no options forfeited during the year. A total of 1,116,668 options previously granted as compensation with a weighted average exercise price of $0.21 were exercised in 2021 raising $234,500. Number of Options Issued Grant Date Expiry Date Exercise Price Fair value per option at grant date % Vest in Year Financial Year in Which Grant Vests/Vested (!) Directors Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Executives Mr R J Fitzhardinge Mr J W Westdorp Mr W E Foote 333,334 600,000 600,000 600,000 666,667 841,479 841,479 235,307 235,307 500,000 339,992 339,991 97,234 97,234 233,334 400,000 400,000 400,000 116,667 116,667 233,334 400,000 400,000 400,000 500,000 369,741 369,741 98,675 98,675 424,990 424,989 113,440 113,440 97,955 97,955 31/05/17 29/05/20 29/05/20 29/05/20 31/05/17 29/05/20 29/05/20 19/02/21 19/02/21 31/05/17 29/05/20 29/05/20 19/02/21 19/02/21 31/05/17 29/05/20 29/05/20 29/05/20 31/05/19 31/05/19 31/05/19 29/05/20 29/05/20 29/05/20 31/05/17 14/02/20 14/02/20 25/01/21 25/01/21 14/02/20 14/02/20 25/01/21 25/01/21 31/05/22 31/05/22 31/05/23 31/05/24 31/05/22 31/12/23 31/12/23 31/12/24 31/12/24 31/05/22 31/12/23 31/12/23 31/12/24 31/12/24 31/05/22 31/05/22 31/05/23 31/05/24 31/05/22 31/05/23 31/05/24 31/05/22 31/05/23 31/05/24 31/05/22 31/12/23 31/12/23 31/12/24 31/12/24 31/12/23 31/12/23 31/12/24 31/12/24 13/07/21 13/07/21 31/12/24 31/12/24 $0.225 $0.378 $0.392 $0.405 $0.225 $0.000 $0.000 $0.000 $0.000 $0.225 $0.000 $0.000 $0.000 $0.000 $0.225 $0.378 $0.392 $0.405 $0.180 $0.180 $0.180 $0.378 $0.392 $0.405 $0.220 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.1080 $0.1189 $0.1461 $0.1667 $0.1080 $0.2482 $0.2013 $0.7833 $0.6756 $0.1080 $0.2482 $0.2013 $0.7833 $0.6756 $0.1080 $0.1189 $0.1461 $0.1667 $0.0616 $0.0868 $0.0952 $0.1189 $0.1461 $0.1667 $0.1080 $0.1582 $0.1174 $0.7188 $0.6212 $0.1582 $0.1174 $0.7188 $0.6212 $0.6900 $0.5774 - 100% - - - - - - - - - 100% - - - - 100% 100% - - - - - - - - - - - - - 2019 2021 2022 2023 2019 2022(2) 2022(3) 2023(4) 2023(5) 2019 2022(2) 2022(3) 2023(4) 2023(5) 2019 2021 2022 2023 2019 2020 2021 2021 2022 2023 2019 2022(2) 2022(3) 2023(4) 2023(5) 2022(2) 2022(3) 2023(4) 2023(5) 2023(4) 2023(5) (1) Options are subject to the satisfaction of service conditions except for those issued to Mr C A Banasik which vested in 2019, these options were not subject to a service condition. (2) Options will vest on 31 December 2022 subject to the Company gaining entry into the ASX 300 Index and to meeting a three year service condition to 31 December 2022. Page 16 of 53 46 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 (3) Options will vest on 31 December 2022 subject to the achievement of the relative TSR measure detailed in the 2020 Annual Report and to meeting a three year service condition to 31 December 2022. (4) Options will vest on 31 December 2023 subject to the achievement of the absolute TSR measure detailed in Section 16.2.3 and to meeting a three year service condition to 31 December 2023. (5) Options will vest on 31 December 2023 subject to the achievement of the relative TSR measure detailed in Section 16.2.3 and to meeting a three year service condition to 31 December 2023. 16.6.2 Options Over Equity Instruments Granted as Compensation The movement during the reporting period, by number of options over ordinary shares in Centaurus Metals Limited held, directly, indirectly and beneficially, by each key management person, including their related parties, is as follows: Held 1 January 2021 Exercised Granted Held 31 December 2021 Vested During the Period Vested and Exercisable 31 December 2021 2,300,001 (166,667) - 2,133,334 600,000 2,682,959 (333,334) 1,429,983 (250,000) 470,614 194,468 1,550,001 (116,667) 1,666,668 - - - 1,489,482 (250,000) 849,979 - 197,350 226,880 195,910 2,820,239 1,374,451 1,433,334 1,666,668 1,436,832 1,076,859 195,910 - - 400,000 633,334 - - - 933,334 666,667 500,000 633,334 866,668 500,000 - - Directors Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Executives Mr R J Fitzhardinge Mr J W Westdorp Mr W E Foote 16.6.3 Analysis of Movements in Options The movement during the reporting period, by value, of options over ordinary shares in the Company held by each director, key management person and each of the Company executives and relevant Group executives is detailed below: Director Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Executives Mr R J Fitzhardinge Mr J W Westdorp Mr W E Foote Value of Options Granted $(1) Value of Options Exercised in Year $(2) Value of Options Lapsed in Year $(3) - 343,289 141,855 - - 132,225 152,010 124,153 89,167 178,334 133,750 62,417 133,750 - - - - - - - - - (1) (2) (3) The value of options granted in the year is the fair value of the options calculated at grant date using either a Black Scholes option-pricing model or a Monte Carlo option pricing model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting period. The value of options exercised during the year is calculated as the market price of shares of the Company as at close of trading on the date the options were exercised after deducting the price paid to exercise the option. The value of unvested options that lapsed during the year represents the benefit forgone and is calculated at the date the options lapsed using the Black Scholes option-pricing model assuming the performance criteria had been achieved. To the extent that the options are out of the money upon lapsing, the value is nil. Page 17 of 53 47 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 16.6.4 Performance Based Remuneration Granted and Forfeited During the Year Subsequent to 31 December 2021, the Board determined to pay STIs to executives in recognition of the achievement of performance targets for the year ended 31 December 2021. A summary of STIs for the period is shown below. Executive Mr D P Gordon Mr B S Scarpelli Mr R J Fitzhardinge Mr J W Westdorp Mr W E Foote Target STI Quantum (% of Base Salary) Target FY21 STI Quantum $ 50% 35% 30% 30% 20% 217,800 94,500 73,412 94,500 68,000 STI Quantum Earned $ 189,486 82,215 63,868 82,215 59,160 STI Quantum Forfeited $ 28,314 12,285 9,544 12,285 8,840 16.6.5 Key Management Personnel Transactions (a) Loans to Key Management Personnel and Their Related Parties No loans have been made to directors or other key management personnel of Centaurus Metals Limited or the Group. (b) Key Management Personnel and Director Transactions Key Management Personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of these entities. One of these entities transacted with the Group in the reporting period. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows: Key Management Person Mr D M Murcia (1) Total and current liabilities Transaction Legal fees Transaction Value 2021 $ 2020 $ Balance Outstanding as at 31 Dec 2021 $ 31 Dec 2020 $ 8,156 17,575 - - - - (1) Payable to MPH Lawyers, a firm in which Mr Murcia is a partner. 16.6.6 Shareholdings of Key Management Personnel The movement during the reporting period of ordinary shares in Centaurus Metals Limited held, directly, indirectly and beneficially, by each Key Management Person, including their related parties, is as follows: Directors Mr D M Murcia Mr D P Gordon Mr B R Scarpelli Mr M D Hancock Mr C A Banasik Executives Mr R J Fitzhardinge Mr J W Westdorp Mr W E Foote Held 1 January 2021 Received on exercise of options Other Changes Held at 31 December 2021 1,171,966 5,785,545 416,667 612,253 316,666 5,365,071 126,800 - 166,667 333,334 250,000 166,667 266,667 - - - - - 850,000 35,653(1) - - - - 1,338,633 6,118,879 666,667 728,920 583,333 6,250,724 126,800 - (1) Relates to shares received in an off-market transfer Page 18 of 53 48 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 All equity transactions with Key Management Personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arms-length. 16.6.7 Listed Option Holdings of Key Management Personnel The movement during the reporting period of the listed options (CTMOC) in Centaurus Metals Limited held, directly, indirectly and beneficially, by each key management person, including their related parties, is as follows: Held 1 January 2021 Purchase Exercised Expired Other Held at 31 December 2021 Directors Mr D M Murcia Mr D P Gordon Mr B R Scarpelli - - - Mr C A Banasik 266,667 Mr M D Hancock - Executives Mr R J Fitzhardinge 600,000 Mr J W Westdorp Mr W E Foote - - - - - - - - - - - - - (266,667) - (600,000) - - - - - - - - - - - - - - - - - - - - - - - - - - This report is signed in accordance with a resolution of the directors. D P Gordon Managing Director Perth 29 March 2022 Page 19 of 53 49 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Centaurus Metals Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Centaurus Metals Limited for the financial year ended 31 December 2021 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Graham Hogg Partner Perth 29 March 2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 50 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2021 31 December 2021 $ 31 December 2020 $ Profit or Loss Other income Note 7 265,862 487,289 Exploration expenditure Loss on Financial Liability at fair value through the profit or loss Impairment of other receivables Employee benefits expense Share based payments expense Occupancy expenses Listing and share registry fees Professional fees Depreciation Other expenses Results from operating activities Note 17 Note 15 Note 8 Note 9 Interest income Finance expense Net finance income Loss before income tax Loss for the period Other Comprehensive Income Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Other comprehensive loss for the period Total comprehensive loss for the period (13,198,599) - (707,729) (1,840,182) (781,107) (47,749) (121,082) (321,052) (131,342) (339,041) (17,222,021) 235,207 (7,901) 227,306 (7,288,408) (1,607,166) (289,751) (1,632,342) (496,680) (54,632) (103,107) (234,821) (40,866) (330,485) (11,590,969) 174,436 (52,292) 122,144 (16,994,715) (16,994,715) (11,468,825) (11,468,825) (13,896) (1,927,839) (13,896) (17,008,611) (1,927,839) (13,396,664) Earnings per Share Basic loss per share Diluted loss per share Note 12 Note 12 cents (5.04) (5.04) cents (4.04) (4.04) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying Notes. Page 21 of 53 51 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Consolidated Statement of Financial Position As at 31 December 2021 Cash and cash equivalents Other receivables and prepayments Total current assets Non-current assets Other receivables and prepayments Property, plant and equipment Exploration and evaluation assets Total non-current assets Total assets Current liabilities Trade and other payables Financial liability Lease liability Employee benefits – annual leave Total current liabilities Non-current liabilities Financial liability Lease liability Employee benefits – long service leave Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Accumulated losses Total equity Note 13 Note 15 Note 15 Note 16 Note 17 Note 18 Note 19 Note 20 Note 19 Note 20 31 December 2021 $ 31 December 2020 $ 8,259,389 529,725 8,789,114 8,156 6,004,233 12,048,261 18,060,650 26,849,764 2,893,287 5,161,448 86,576 379,516 8,520,827 1,325,267 29,334 223,690 1,578,291 10,099,118 16,750,646 24,089,281 201,549 24,290,830 12,765 784,994 8,764,153 9,561,912 33,852,742 1,940,965 2,400,000 88,599 317,946 4,747,510 2,734,569 65,510 186,837 2,986,916 7,734,426 26,118,316 162,962,306 (7,697,790) (138,513,870) 16,750,646 155,905,034 (8,267,563) (121,519,155) 26,118,316 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying Notes. Page 22 of 53 52 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 6 1 3 , 8 1 1 , 6 2 ) 5 5 1 , 9 1 5 , 1 2 1 ( ) 7 9 4 , 2 2 2 , 9 ( 4 3 9 , 4 5 9 4 3 0 , 5 0 9 , 5 5 1 y t i u q E l a t o T $ l d e t a u m u c c A s e s s o L $ n o i t a l s n a r T e v r e s e R $ s t n e m y a P e v r e s e R $ y c n e r r u C n g i e r o F d e s a B - e r a h S l a t i p a C d e u s s I $ 7 0 1 1 8 7 , , 0 0 0 0 0 4 1 , , 9 2 6 2 6 4 5 , - ) 5 9 7 2 ( , 1 4 9 , 0 4 6 , 7 6 4 6 , 0 5 7 , 6 1 - - - - - - , ) 5 1 7 4 9 9 6 1 ( , , ) 5 1 7 4 9 9 6 1 ( , ) 6 9 8 3 1 ( , - ) 1 1 6 , 8 0 0 , 7 1 ( ) 5 1 7 , 4 9 9 , 6 1 ( - - - - - - - ) 6 9 8 3 1 ( , ) 6 9 8 , 3 1 ( ) 0 7 8 , 3 1 5 , 8 3 1 ( ) 3 9 3 , 6 3 2 , 9 ( - - - - - - 7 0 1 1 8 7 , 9 6 6 , 3 8 5 , ) 8 3 4 7 9 1 ( 3 0 6 , 8 3 5 , 1 - - - - , 0 0 0 0 0 4 1 , , 9 2 6 2 6 4 5 , ) 5 9 7 2 ( , 8 3 4 7 9 1 , 2 7 2 , 7 5 0 , 7 6 0 3 , 2 6 9 , 2 6 1 1 6 3 , 6 9 7 , 1 1 ) 0 4 5 , 3 2 1 , 0 1 1 ( ) 8 5 6 , 4 9 2 , 7 ( 4 0 9 , 5 7 6 5 5 6 , 8 3 5 , 8 2 1 , ) 5 2 8 8 6 4 1 1 ( , , ) 5 2 8 8 6 4 1 1 ( , - , ) 9 3 8 7 2 9 1 ( , - , ) 9 3 8 7 2 9 1 ( , ) 4 6 6 , 6 9 3 , 3 1 ( ) 5 2 8 , 8 6 4 , 1 1 ( ) 9 3 8 , 7 2 9 , 1 ( 0 0 2 0 1 3 , 0 8 6 6 9 4 , , 0 5 7 8 1 2 8 2 , , ) 1 1 0 7 0 3 1 ( , - - 9 1 6 , 8 1 7 , 7 2 6 1 3 , 8 1 1 , 6 2 - - - - - 0 1 2 3 7 , 0 1 2 , 3 7 - - - - - - - ) 5 5 1 , 9 1 5 , 1 2 1 ( ) 7 9 4 , 2 2 2 , 9 ( - - - - - - 0 8 6 6 9 4 , ) 0 1 2 3 7 ( , 0 3 0 , 9 7 2 4 3 9 , 4 5 9 , ) 0 4 4 4 4 1 ( - - - 0 0 2 0 1 3 , , 0 5 7 8 1 2 8 2 , , ) 1 1 0 7 0 3 1 ( , - 0 4 4 4 4 1 , 9 7 3 , 6 6 3 , 7 2 4 3 0 , 5 0 9 , 5 5 1 . s e t o N g n i y n a p m o c c a e h t h t i w n o i t c n u n o c n j i y t i u q E n i s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C 1 2 0 2 r e b m e c e D 1 3 d e d n e r a e y e h t r o F 1 2 0 2 r e b m e c e D 1 3 – t r o p e R l a i c n a n i F n o i t a r e p o n g e r o f i r o f e c n e r e f f i d n o i t a l s n a r t y c n e r r u c n g e r o F i d o i r e p e h t r o f s s o l e v i s n e h e r p m o c l a t o T s n o i t c a s n a r t t n e m y a p d e s a b - e r a h S 1 2 0 2 y r a u n a J 1 t a e c n a a B l d o i r e p e h t r o f s s o L s n o i t p o f o e s i c r e x e n o r e f s n a r T s r e n w o h t i w s n o i t c a s n a r t l a t o T 1 2 0 2 r e b m e c e D 1 3 t a e c n a a B l s e r a h s i y r a n d r o f o s e u s s I d e s i c r e x e s n o i t p o e r a h S s t s o c e u s s i e r a h S 0 2 0 2 y r a u n a J 1 t a e c n a a B l d o i r e p e h t r o f s s o L d a e r e b d u o h s l y t i u q E n i s e g n a h C f o t n e m e t a t S d e t a d i l o s n o C e v o b a e h T . x a t f o t e n d e s o l c s i d e r a y t i u q e n i y l t c e r i d d e s i n g o c e r s t n u o m a e h T n o i t a r e p o n g e r o f i r o f e c n e r e f f i d n o i t a l s n a r t y c n e r r u c n g e r o F i d o i r e p e h t r o f s s o l e v i s n e h e r p m o c l a t o T s n o i t c a s n a r t t n e m y a p d e s a b - e r a h S s n o i t p o f o e s i c r e x e n o r e f s n a r T d e s p a l s n o i t p o f o r e f s n a r T s r e n w o h t i w s n o i t c a s n a r t l a t o T 0 2 0 2 r e b m e c e D 1 3 t a e c n a a B l s e r a h s i y r a n d r o f o s e u s s I d e s i c r e x e s n o i t p o e r a h S s t s o c e u s s i e r a h S 3 5 f o 3 2 e g a P 53 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Consolidated Statement of Cash Flows For the year ended 31 December 2021 31 December 2021 $ 31 December 2020 $ Note Cash flows from operating activities Exploration and evaluation expenditure Payments to suppliers and employees (inclusive of GST) Other receipts Interest received Net cash used in operating activities Note 14 Cash flows from investing activities Payments for property plant & equipment Payment for exploration acquisitions Buy back of project royalty Net cash from /(used in) investing activities Cash flows from financing activities Proceeds from issue of equity securities Proceeds from the exercise of options Capital raising costs Payment for lease liability Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 31 December Note 13 (12,898,881) (2,560,610) - 240,659 (15,218,832) (3,323,381) (1,485,458) (1,000,000) (5,808,839) - 5,462,629 (2,795) (109,991) 5,349,843 (15,677,828) 24,089,281 (152,064) 8,259,389 (6,809,988) (1,572,840) 105,323 176,203 (8,101,302) (284,365) (873,025) - (1,157,390) 25,500,000 310,200 (986,784) (47,100) 24,776,316 15,517,624 9,703,718 (1,132,061) 24,089,281 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes. Page 24 of 53 54 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Notes to the Consolidated Financial Statements For the year ended 31 December 2021 Note 1. Reporting Entity Centaurus Metals Limited (“the Company”) is a company domiciled in Australia. The Company’s registered office is at Level 2, 1 Ord Street, West Perth WA 6005. The consolidated financial statements of the Company as at and for the year ended 31 December 2021 comprise the Company and its subsidiaries (collectively the “Group” and individually “Group entities”). The Group is a for-profit entity and is primarily involved in exploration for and evaluation of mineral resources. Note 2. Basis of Preparation Statement of Compliance The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS’s) adopted by the International Accounting Standards Board (IASB). The consolidated financial statements were authorised for issue by the Board of Directors on 29 March 2022. Basis of Measurement The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the statement of financial position: Derivative financial instruments are measured at fair value; and Share based payments are measured at fair value. Going Concern The financial statements for the year ended 31 December 2021 have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. Note 3. Functional and Presentation Currency These consolidated financial statements are presented in Australian Dollars, which is the Company’s functional currency. The functional currency of the Brazilian subsidiaries is the Brazilian Real. Note 4. Use of Judgements and Estimates In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Judgements Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the consolidated financial statements is included below and also in the following notes: Note 15 - Other Receivables and Prepayments; Note 17 - Exploration and Evaluation Assets. The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement to determine whether future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves; and Note 25 - Financial Instruments – Fair Values and Risk Management. Page 25 of 53 55 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Assumptions and Estimation Uncertainties Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the year ending 31 December 2021 is included in Note 17 – Exploration and Evaluation Assets. In addition to applying judgement to determine whether future economic benefits are likely to arise from the Group’s Exploration and Evaluation assets or whether activities have not reached a stage that permits a reasonable assessment of the existence of Reserves, the Group has to apply a number of estimates and assumptions. The Group is required to make estimates and assumptions as to future events and circumstances, in particular, whether successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be achieved. Critical to this assessment are estimates and assumptions as to Ore Reserves, the timing of expected cash flows, exchange rates, commodity prices and future capital requirements. Changes in these estimates and assumptions as new information about the recoverability of Ore Reserves becomes available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after the expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the relevant capitalised amount is written off to profit or loss in the period when that information becomes available. Measurement of Fair Values A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the methods described below. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (a) Trade and Other Receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. (b) Share-based Payment Transactions The fair value of the employee share options is estimated using the applicable valuation methodology. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and performance conditions attached to vesting are not taken into account in determining fair value. Where the service period commences prior to grant date the fair value is provisionally calculated and subsequently revised upon grant date. Note 5. Significant Accounting Policies The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements. Basis of Consolidation (a) Subsidiaries Subsidiaries are entities controlled by the Group. The Group 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 subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with policies adopted by the Group. (b) Transactions Eliminated on Consolidation Inter-Group balances and transactions and any unrealised income and expenses arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements. Page 26 of 53 56 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Foreign Currency (a) Foreign Currency Transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the foreign exchange rate at the reporting date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of financial instruments, a financial liability designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognised in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. (b) Foreign Operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Australian dollars at exchange rates at reporting date. The income and expenses of foreign operations are translated to Australian dollars at average exchange rates for the period. Foreign currency differences are recognised in other comprehensive income and presented in the foreign currency translation reserve (translation reserve, or FCTR) within equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss as part of the profit or loss on disposal. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income and are presented within equity in the FCTR. Financial Instruments The Group classifies non-derivative financial assets into the following categories at fair value through profit and loss, at fair value through other comprehensive income and measured at amortised cost. The Group classifies non-derivative financial liabilities into the other financial liabilities category. (a) Non- derivative Financial Assets and Financial Liabilities – Recognition and Derecognition The Group initially recognises loans, receivables and deposits on the date when they are originated. All other financial assets and financial liabilities are recognised initially on the trade date. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group has the following non-derivative financial assets: receivables and cash and cash equivalents. (i) Receivables Receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method, less any impairment losses. Page 27 of 53 57 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 (ii) Cash and Cash Equivalents Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. (b) Non derivative Financial Liabilities – Measurement Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. (c) Share Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares or share options are recognised as a deduction from equity, net of any tax effect. Property, Plant and Equipment (a) Recognition and Measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Any gains or loss on disposal of an item of property, plant and equipment are recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings. (b) Depreciation Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives and is generally recognised in profit or loss. Land is not depreciated. The estimated useful lives of property, plant and equipment are 3 to 15 years. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Exploration and Evaluation Expenditure Exploration and evaluation costs are expensed in the year they are incurred. Acquisition costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest have not reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Where an area of interest is abandoned, or the directors decide that it is not commercial, any accumulated acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences. Exploration and evaluation assets are transferred to Development Assets once technical feasibility and commercial viability of an area of interest is demonstrable. Exploration and evaluation assets are assessed for impairment and any impairment loss is recognised prior to being reclassified. The carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective area of interest. Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount. Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist: The term of exploration license in the specific area of interest has expired during the reporting period or will expire in the near future and is not expected to be renewed; Substantive expenditures on further exploration for and evaluation of mineral resources in the specific area are not budgeted nor planned; Page 28 of 53 58 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Exploration for and evaluation of mineral resources in the specific area has not led to the discovery of commercially viable quantities of mineral resources and the decision was made to discontinue such activities in the specified area; or Sufficient data exists to indicate that although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Where a potential impairment is indicated, an assessment is performed for each cash-generating unit which is no larger than the area of interest. The Group performs impairment testing in accordance with the Accounting Policy as detailed below. Leases 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. The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset recognised by the Group is initially measured at cost, comprised of the initial measurement of the related lease liability, any lease payments made at or before the commencement of the contract, less any lease incentives received, any initial direct costs and any restoration costs. Subsequently the asset is measured at cost less any accumulated depreciation and impairment losses and adjusted for certain re-measurements of the lease liability. Right-of-use assets are depreciated over the shorter period of either the useful life of the underlying asset or the lease term. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be determined the lessee’s incremental borrowing rate is used, being the rate the lessee would have to pay to borrow funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. The lease liability is subsequently increased by the interest costs on the lease liability and decreased by lease payments made. It is re-measured where there is a change in future lease payments arising from a change in an index rate, or as appropriate, changes in the assessment of whether an extension option is reasonably certain to be exercised. The Group applies the low-value assets and the short-term lease exemptions to leases that are considered low value. Lease payments on short term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. Asset Acquisition When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned a carrying amount based on their relative fair values. No deferred tax is recognised in relation to the acquired assets and assumed liabilities as the initial recognition exemption for deferred tax under AASB 112 applies. No goodwill will arise on the acquisition of the net assets and transaction costs relating to the asset acquisition will be included in the capitalised cost of the asset. Any contingent consideration arising from the acquisition will be recognised at fair value at the acquisition date. Contingent consideration classified as a liability that is a financial instrument and within the scope of AASB 9 is measured at fair value, with changes in fair value recognised in profit or loss in the statement of profit or loss and other comprehensive income in accordance with AASB 9. Impairment (a) Non-derivative Financial Assets A loss allowance for expected credit loss (ECL) is recognised on financial assets measured at amortised cost. The loss allowances are measured at an amount equal to lifetime ECLs, except for, bank balances which are measured at 12-month ECLs, for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowances for trade receivables are always measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information. Page 29 of 53 59 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Group considers a financial asset to be in default when the financial asset is more than 90 days past due. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12- month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. (i) Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset. (ii) Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised costs are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets measured at amortised costs are deducted from the gross carrying amount of the assets. (iii) Write-off The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. (b) Non-financial Assets The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. The group of assets is referred to as the Cash Generating Unit or CGU. The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. In respect of assets, other than goodwill, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Page 30 of 53 60 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Employee Benefits (a) Defined Contribution Plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. (b) Other Long-term Employee Benefits The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. (c) Short-term Benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (d) Share-based Payment Transactions The fair value of share-based payment awards granted to employees is recognised as an expense at grant date with a corresponding increase in equity, over the period that employees become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Group. When the Company grants options over its shares to employees of subsidiaries, the fair value at grant date is recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the vesting period of the grant. Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost. Revenue Revenue is recognised when the goods are delivered and have been accepted by customers at their premises. For contracts that permit the customer to return an item, revenue is recognised to the extent that it is highly probably that a significant reversal in the amount of cumulative revenue recognised will not occur. Therefore, the amount of revenue recognised is adjusted for expected returns, which are estimated based on the historical data. In these circumstances, a refund liability and a right to recover returned goods asset are recognised. Finance Income and Finance Costs Finance income comprises interest income on funds invested, dividend income, gains on the disposal of debt securities measured at fair value through other comprehensive income, changes in the fair value of financial assets at fair value through profit and loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is established, which in the case of quoted securities is the ex- dividend date. Page 31 of 53 61 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Finance costs comprise interest expense on borrowings, losses on the disposal of debt securities measured at fair value through other comprehensive income, changes in the fair value of financial assets at fair value through profit or loss and losses on hedging instruments that are recognised in profit or loss. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis. Income Tax Income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Goods and Services Tax and Equivalent Indirect Taxes Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST) and equivalent indirect taxes, except where the amount of tax incurred is not recoverable from the taxation authority. In these circumstances, the tax is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of tax included. The net amount of tax recoverable from, or payable to, the taxation authority is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The tax components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the tax authority are classified as operating cash flows. Earnings per Share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise listed options and share options granted to employees. Segment Reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segment operating results are regularly reviewed by the Group’s Managing Director to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the Managing Director include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise minimal, not material corporate assets (primarily the Group’s headquarters), head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. Page 32 of 53 62 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Government Grants Government grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the periods in which the expenses are recognise, unless the conditions for receiving the grant are met after the related expenses have been recognised. In this case, the grant is recognised when it becomes receivable. Changes in Accounting Policies The Group has adopted the amendment to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2021. New Standards and Interpretations Not Yet Adopted A number of new standards are effective for annual periods beginning after 1 January 2021 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these financial statements. The following amended standards and interpretations are not expected to have a significant impact on the Group’s financial statements. Standard Effective Date Key Requirements AASB 2014-10 Amendments to Australian Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 Jan 2022 AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 AASB 2017-5 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments 1 Jan 2022 The amendments require the full gain or loss to be recognised when the assets transferred meet the definition of a “business” under AASB 3 (whether housed in a subsidiary or not). Amendments to existing accounting standards, particularly in relation to: • • • • • AASB 1 – simplifies the application of AASB 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences. AASB 3 – to update a reference to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. AASB 9 – to clarify the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. AASB 116 – to require an entity to recognise the sales proceeds from selling items produced while preparing property, plant and equipment for its intended use and the related cost in profit or loss, instead of deducting the amounts received from the cost of the asset. AASB 137 Provisions, Contingent Liabilities and Contingent Assets –to specify the costs that an entity includes when assessing whether a contract will be loss-making. AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current 1 Jan 2023 Amends AASB 101 to 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 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current – Deferral of Effective Date AASB 2020-6 defers the mandatory effective date of amendments that were originally made in AASB 2020-1 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2023 instead of 1 January 2022. Page 33 of 53 63 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of Accounting Estimates 1 January 2023 AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction 1 January 2023 In November 2021, the IASB published the Exposure Draft Non-current Liabilities with Covenants to propose amendments to IAS 1 Presentation of Financial Statements. The amendments specify that compliance with conditions after the reporting period would not affect whether the liability is classified as current or non- current. AASB 2021-2 amendments provide a definition of and clarifications on accounting estimates and clarify the concept of materiality in the context of disclosure of accounting policies. The amendments narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences and clarify that the exemption does not apply to transactions such as leases and decommissioning obligations. All other pending standards and interpretations issued are either not applicable or have no material effect to the Group. Note 6. Operating Segments The Group operates in the mineral exploration industry. For management purposes the Group is organised into one main operating segment which involves the exploration of minerals. All of the Group’s activities are interrelated and financial information is reported to the Managing Director (Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions are based upon an analysis on the Group as one segment. The financial results and financial position from this segment are largely equivalent to the financial statements of the Group as a whole. Geographical Segment Information Brazil Australia Total Note 7. Other Income R&D tax refund Gain on sale of mineral asset Government grants Other Note 8. Employee Benefits Expense Salaries, fees and other benefits Superannuation Recognised in exploration expenditure expense Total Note 9. Share-based Payments 2021 Non-current Assets $ 17,968,727 91,923 18,060,650 2020 Non-current Assets $ 9,402,661 159,251 9,561,912 31 December 2021 $ 265,862 - - - 265,862 31 December 2020 $ - 381,966 100,000 5,323 487,289 31 December 2021 $ 3,910,049 170,709 (2,240,576) 1,840,182 31 December 2020 $ 3,110,104 128,777 (1,606,539) 1,632,342 From time to time the Group may make share-based payments in connection with its activities. These payments may comprise the issue of options under various terms and conditions. Options granted carry no dividend or voting rights. When exercisable, each option is converted into one ordinary share of the Company with full dividend and voting rights. Page 34 of 53 64 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 During the reporting period 1,395,452 options were issued to employees and directors (2020: 8,152,402). Options issued to employees were issued under the Employee Share Option Plan approved by shareholders at the Annual General Meeting on 31 May 2019. Options issued to directors and executive directors were approved by shareholders under ASX Listing Rule 10.11. Reconciliation of Outstanding Share Options The number and weighted average exercise prices of share options issued are as follows: Outstanding at start of period Exercised during the period Lapsed during the period Issued during the period Outstanding at balance date Exercisable at balance date Weighted Average Exercise Price 2021 $0.2172 $0.0021 - $0.0000 $0.1822 $0.2721 Number of Options 2021 12,085,733 (1,233,335) - 1,395,452 12,247,857 4,100,003 Weighted Average Exercise Price 2020 $0.2010 $0.1723 - $0.2018 $0.2061 $0.2172 Number of Options 2020 5,733,333 (1,800,002) - 8,152,402 12,085,733 3,700,004 The options outstanding at 31 December 2021 have exercise prices ranging from $0.000 to $0.405 (2020: $0.000-$0.405) and the weighted average remaining contractual life is 1.61 years (2020: 2.23 years). There were 1,233,335 options exercised during the year (2020: 1,800,002). There were 1,395,452 options issued during the year (2020: 8,152,402). Details of the options issued during the year are as follows: Grant Date Number of Options Vesting Period(1) Option Term Directors 19/02/21 19/02/21 Total Employees 25/01/21 25/01/21 01/07/21 01/07/21 13/07/21 13/07/21 332,541 332,541 665,082 234,645 234,645 32,585 32,585 97,955 97,955 730,370 36 months(2) 36 months(3) 48 months 48 months 36 months(2) 36 months(3) 36 months(2) 36 months(3) 36 months(2) 36 months(3) 48 months 48 months 48 months 48 months 48 months 48 months (1) (2) From 1 January 2021 subject to continued employment. Options will vest in the future subject to performance and services based vesting conditions being met. The Company’s share price performance is measured via relative Total Shareholder Return (TSR). The Company’s TSR is measured against a peer group of companies. Vesting will occur subject to meeting a three-year service condition to 31 December 2023 and the performance condition tested against the relative TSR measure for the period 1 January 2021 to 31 December 2023. (3) Vesting will occur subject to meeting a three-year service condition to 31 December 2023 and the performance condition tested against the absolute TSR measure for the period 1 January 2021 to 31 December 2023. The following table sets out the vesting outcome based on the Company’s relative TSR performance. TSR percentile compared to peer group Percentage Options that vest <50th percentile 0% Between 50th and 75th percentile Pro-rata between 50% and 100% >75th percentile 100% No options will vest unless the percentile ranking of the Company’s TSR for the relevant performance year, as compared to the TSRs for the Peer Group companies, is at or above the 50th percentile. The following table sets out the vesting outcome base on the Company’s Absolute TSR performance Page 35 of 53 65 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Assessment Table Threshold TSR Level over Assessment Period Amount of ZEPOs which will vest and become exercisable Less than 30% B/t 30% and 40% B/t 40% and 50% 50% or greater Zero 50% 75% 100% Inputs for Measurement of Grant Date Fair Values The fair value at grant date of the share-based payments is charged to the income statement over the period which the benefits of the employee services are expected to be derived. The fair values of awards granted were estimated using a either a Monte Carlo simulation or a Black-Scholes option pricing technique taking into account the following inputs: Grant Date 25/01/21 25/01/21 19/02/21 19/02/21 01/07/21 01/07/21 13/07/21 13/07/21 Expiry Date 31/12/24 31/12/24 31/12/24 31/12/24 31/12/24 31/12/24 31/12/24 31/12/24 Exercise Price $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 $0.000 Life of option 4 years 4 years 4 years 4 years 4 years 4 years 4 years 4 years Share price at grant date $0.840 $0.840 $0.880 $0.880 $0.805 $0.805 $0.800 $0.800 Expected share price volatility 100% 100% 100% 100% 100% 100% 100% 100% Risk-free interest rate 0.110% 0.110% 0.115% 0.115% 0.195% 0.195% 0.165% 0.165% Fair Value at grant date $0.7188 $0.6212 $0.7833 $0.6756 $0.6212 $0.5738 $0.6900 $0.5774 Expenses Arising from Share Based Payment Transactions Total expense recognised as share-based payment – share options 31 December 2021 $ 781,107 31 December 2020 $ 496,680 Page 36 of 53 66 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Note 10. Income Tax Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable Loss from continuing operations before income tax expense Tax at the Australian tax rate of 27.5% (2020: 27.5%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Overseas project generation and review costs Share-based payments Non assessable grant income Sundry items Effect of tax rates in foreign jurisdictions Under provision from prior year Deferred tax assets not recognised 31 December 2021 $ (16,994,715) (4,673,547) 31 December 2020 $ (11,468,825) (3,153,927) 822,525 214,805 (73,113) 9,918 (3,699,412) (8,886) (761,674) 4,469,972 1,037,319 136,587 17,859 (1,962,162) (92,610) (112,511) 2,167,283 Income tax benefit, being deferred tax - - Tax Losses Tax losses Potential tax benefit (between 27.5-34%) 31 December 2021 $ 61,188,366 18,096,045 31 December 2020 $ 61,822,922 18,412,999 The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of remaining tax losses because it is not probable that future taxable profit will be available against which the Group can utilise the benefit. Deferred Tax Assets The following deferred tax balances have not been recognised: Deferred Tax Assets Exploration expenditure Accrued expenses/provisions Transaction costs relating to issue of capital Tax losses carried forward (net of tax losses utilised) 31 December 2021 $ 31 December 2020 $ 9,931,563 10,916,869 80,887 18,096,045 39,025,364 5,848,075 10,249,662 117,768 18,412,999 34,628,504 The tax benefits of the above deferred tax assets will only be obtained if: The Company derives future assessable income of a nature and of an amount sufficient to enable the benefit to be utilized; The Company continues to comply with the conditions for the deductibility imposed by law; and No changes in income tax legislation adversely affect the Company in utilising the benefits. Note 11. Dividends There were no dividends paid or declared during the period (2020: nil). Page 37 of 53 67 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Note 12. Earnings/(Loss) per Share Basic Loss per Share The calculation of basic and diluted earnings per share at 31 December 2021 was based on the loss attributable to ordinary shareholders of $16,994,715 (2020: $11,468,825) and a weighted average number of ordinary shares outstanding of 337,081,397 (2020: 284,019,357), calculated as follows: Loss Attributable to Ordinary Shareholders Loss attributable to the shareholders Weighted Average Number of Ordinary Shares Issued ordinary shares at beginning of the period Effect of shares issued Weighted average number of ordinary shares at the end of the period Diluted Earnings per Share 31 December 2021 $ 31 December 2020 $ (16,994,715) (11,468,825) 2021 Number 325,857,160 11,224,237 337,081,397 2020 Number 252,732,392 31,286,965 284,019,357 Potential ordinary shares were not considered to be dilutive as the Group made a loss for the year ended 31 December 2021 and the exercise of potential shares would not increase that loss. Note 13. Cash and Cash Equivalents Cash at bank and on hand Deposits - short term 31 December 2021 $ 31 December 2020 $ 9,154 8,250,235 8,259,389 6,501 24,082,780 24,089,281 The deposits are bearing floating and fixed interest rates between 0.06% and 4.79% (2020: between 0.25% and 2.8%). Note 14. Reconciliation of Cash Flows from Operating Activities Loss for the period Adjustments for: Depreciation Non-cash employee benefits expense– share based payments Loss from financial liability at fair value through profit and loss Impairment of other receivables Foreign currency loss Gain on sale of mineral asset (Profit)/Loss on sale of plant and equipment Operating loss before changes in working capital and provisions Change in other receivables Change in trade creditors and provisions Net cash used in operating activities 31 December 2021 $ 31 December 2020 $ (16,994,715) (11,468,825) 222,395 781,107 - 707,729 - - - (15,283,484) (1,029,504) 1,094,156 15,218,832 98,035 496,680 1,607,166 289,751 49,370 (381,967) 4,381 (9,305,409) 97,481 1,106,626 8,101,302 Page 38 of 53 68 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Note 15. Other Receivables and Prepayments Current R&D tax refund Other Receivables Security deposits Prepayments Non – Current Prepayments Other Receivables Provision for impairment 31 December 2021 $ 31 December 2020 $ 265,862 67,446 33,648 162,769 529,725 - 1,008,755 (1,000,599) 8,156 - 56,347 33,648 111,554 201,549 7,172 372,771 (367,178) 12,765 Non-current Other Receivables include Brazilian federal VAT (“PIS-Cofins”) levied on the Group’s purchases. Recoverability of PIS-Cofins assets is dependent upon the Group generating a federal company tax liability, which may be offset against the Group’s PIS-Cofins assets if the Group elects to do so. As at balance date taxable profits in the ordinary course of business are not considered probable though one-off taxable profits may be generated on specific transactions. During the period the entity wrote off $3,388 which was previously provided for due to credits expiring (2020: $5,575). An impairment expense of $707,729 was recognised in profit and loss in 2021 (2020: $289,751). Information about the Group’s exposure to credit and market risk and impairment losses for other receivables is included in Note 25. Note 16. Property, Plant and Equipment At Cost Accumulated depreciation Movements in Carrying Amounts 31 December 2021 $ 6,526,942 (522,709) 6,004,233 31 December 2020 $ 1,083,995 (299,001) 784,994 Movements in the carrying amounts for each class of property, plant and equipment between beginning and end of the current financial year. Plant and Equipment Carrying amount at beginning Additions Disposals Depreciation Effect of movements in exchange rates Carrying amount at end Land and buildings Carrying amount at beginning Additions Depreciation Effect of movements in exchange rates Carrying amount at end 31 December 2021 $ 31 December 2020 $ 457,064 549,727 (4,105) (116,079) (5,948) 880,659 175,901 4,885,835 (1,915) (49,765) 5,010,056 238,892 348,834 (14,053) (47,059) (69,550) 457,064 249,347 - - (73,446) 175,901 Page 39 of 53 69 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Right-of-use assets (see also Note 20) Carrying amount at beginning Additions Depreciation Effect of movements in exchange rates Carrying amount at end Total 152,029 68,218 (104,400) (2,329) 113,518 6,004,233 116,356 119,639 (50,976) (32,990) 152,029 784,994 Additions to Land include the allocation of the fair value of 3 properties at the Jaguar Project which Centaurus has secured possession of. Note 17. Exploration and Evaluation Assets Opening net book value Additions Disposals Effect of movements in exchange rate 31 December 2021 $ 8,764,153 3,402,083 - (117,975) 12,048,261 31 December 2020 $ 2,265,049 7,762,898 (40,000) (1,223,794) 8,764,153 The ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful development and commercial exploitation or, alternatively, sale of the respective project areas. During the period Centaurus secured the possession of 3 properties covering the Jaguar project. Acquisition of Jaguar Nickel Project (Prior Year) The Jaguar Sale & Purchase Agreement formally closed (settled) on 8 April 2020. Total consideration for the acquisition of Jaguar consisted of: Up-front consideration on closing US$250,000 cash; and The transfer of all Salobo West Exploration Licenses to Vale. Deferred consideration US$1.75 million on the commencement of a Bankable Feasibility Study, or construction funding being secured, or 3 years from agreement signing, whichever occurs first; US$5.0 million on First Commercial Production; A Net Operating Revenue production royalty of 0.75% on all concentrate production from the project; and Centaurus to take on Vale’s obligation to BNDES for a 1.8% Net Operating Revenue production royalty. A key component of the purchase consideration for the Jaguar Project acquisition was the unencumbered transfer of Centaurus’ Salobo West Copper-Gold Project to Vale. The original owner of Salobo, Terrativa Minerais SA, retained a 2% production royalty over the tenements or the right to elect to receive a 25% share of sale proceeds in the event Centaurus divested the Project to a third party. Terrativa elected to convert its royalty interest and Centaurus agreed to pay Terrativa up to A$3.5 million over a period of 2.5 years via the following payment arrangement. A$1.0 million settled through the issue of ordinary shares in Centaurus on 9th April 2020. A$500k in cash every six months over 30 months. Terrativa was also entitled to receive two bonus payments which were contingent on the achievement of market capitalisation milestones. Milestone Payment 1 was triggered on 30 September 2020 and was settled with the issue of 2,834,008 Shares. Milestone Payment 2 was settled via the issue of Shares which was approved by shareholders on 19 February 2021. The transaction was not a business combination as the assets acquired did not meet the definition of a business as per AASB 3 at the date of acquisition. The fair value of the purchase consideration was allocated to the asset acquired as Page 40 of 53 70 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 shown below. The fair value of the contingent consideration included in the asset was the fair value at acquisition date with the movement in fair value of $1,607,166 recognised in the consolidated statement of profit or loss in 2020. Assets Exploration and evaluation assets additions Foreign exchange Consideration Consideration settled in equity Consideration settled in cash Consideration to be settled Fair value of contingent consideration at acquisition Fair value of purchase consideration Note 18. Trade and Other Payables Current Trade and other creditors Accrued expenses Note 19. Financial Liability Current Consideration due to Vale for Jaguar acquisition Up-front consideration due to Terrativa for Salobo West Royalty buy back Deferred consideration due to Terrativa for Salobo West Royalty buy back Land possession Non-Current Consideration due to Vale for Jaguar acquisition Land possession 31 December 2020 $ 7,762,898 (594,205) 7,168,693 1,000,000 914,482 4,061,377 1,192,834 7,168,693 31 December 2021 $ 31 December 2020 $ 1,270,026 1,623,261 2,893,287 881,867 1,059,098 1,940,965 31 December 31 December 2021 $ 2020 $ 2,400,840 933,534 - 1,827,074 5,161,448 - 1,000,000 1,400,000 - 2,400,000 - 1,325,267 1,325,267 2,734,569 - 2,734,569 Note 17 provides additional information on the consideration components relating to the acquisition of the Jaguar Nickel Project. Terrativa elected to receive the deferred consideration in shares. Shareholder approval for Milestone Payment 2 shares was received on 19 February 2021. Page 41 of 53 71 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Note 20. Leases The Group leases offices and warehouse facilities. The leases are typically for a period of 1 to 3 years. In 2020 the Group entered into a lease for its corporate office for a 2-year period with the option to extend for a further 2 years. A right of use asset and lease liability have been recognised as a result of this lease. The Group has applied the exemptions available under AASB 16 for short term leases and leases of low value. Current Non-Current Lease payments are payable as follows Less than one year Between one to three years Amounts Recognised in Profit or Loss Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short term leases of low value assets Note 21. Capital and Reserves On issue at beginning of period Issue of ordinary shares for Salobo West royalty buy back at $0.6108 per share Issue of ordinary shares on exercise of unlisted options at $0.21 per share Issue of ordinary shares on exercise of listed options at $0.18 per share Share consolidation 1-for-15 Issue of ordinary shares for Salobo West royalty buy back at $0.1425 per share Issue of ordinary shares on exercise of unlisted options at $0.1230 per share Issue of ordinary shares on exercise of unlisted options at $0.1950 per share Issue of ordinary shares for placement at $0.4200 per share Issue of ordinary shares for Salobo West royalty buy back at $0.4940 per share Issue of shares as part of placement fee at $0.4200 per share On issue at the end of the period – Fully paid Ordinary Shares 31 December 2021 $ 31 December 2020 $ 86,576 29,334 115,910 88,599 65,510 154,109 31 December 2021 $ 31 December 2020 $ 86,576 29,334 115,910 88,599 65,510 154,109 31 December 2021 $ 31 December 2020 $ 7,901 297,124 41,106 7,199 292,195 40,141 2021 Number of Shares 325,857,160 2,292,076 1,233,335 28,909,045 - - - - - - - 358,291,616 2020 Number of Shares 3,790,971,362 - - - (3,538,238,970) 7,017,544 566,667 1,233,335 60,714,286 2,834,008 758,928 325,857,160 On 31 March 2020, shareholders approved the consolidation of the Company’s capital on a 15-for-1 basis. The consolidation took effect from 2 April 2020. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Page 42 of 53 72 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Employee Share Options Information relating to the Employee Share Option Plan, including details of options issued, exercised or lapsed during the financial year and outstanding at the end of the financial year are set out in Note 9. Listed Options There were 28,909,045 listed options exercised during the year (2020: nil). There were 30,995 options which expired during the year (2020: nil). Weighted average exercise price $0.18 $0.18 $0.18 - 2021 Number of Listed Options 28,940,040 (28,909,045) (30,995) - Weighted average exercise price $0.18 - - $0.18 2020 Number of Listed Options 28,940,040 - - 28,940,040 On issue at beginning of period Options exercised – CTMOC Options expired -CTMOC On issue at the end of the period Unlisted Options On 31 January 2020 167,500,000 unlisted options with a pre consolidation exercise price of $0.015 expired. Share-based Payments Reserve The share-based payments reserve is used to recognise the fair value of options issued but not exercised. Translation Reserve The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net investment in a foreign subsidiary. Note 22. Contingent Liabilities Guarantees The Company has given guarantees in respect of bank security bonds amounting to $33,648 (2020: $33,648), secured by cash deposits lodged as security with the bank. Jaguar Project Acquisition The terms of the Jaguar Sale and Purchase Agreement with Vale give rise to the following contingent liabilities related to the Jaguar Project Acquisition. US$5.0 million on first commercial production from the project payable to Vale; a royalty of 0.75% on Net Operating Revenue generated from any future concentrate production from the project payable to Vale; and a royalty of 1.8% on Net Operating Revenue generated from any future concentrate production from the project payable to BNDES. No material losses are anticipated in respect of any of the above contingent liabilities. There are no other contingent liabilities that require disclosure. Note 23. Capital Commitments The Group has no capital commitments as at the year ended 31 December 2021 (2020: $41,406). Page 43 of 53 73 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Note 24. Related Parties Key Management Personnel Key Management Personnel compensation is comprised of the following: Short term employee-benefits (Salaries and STI Plan) Long term employee benefits Post–employment benefits Share-based payments expense 31 December 2021 $ 2,029,615 30,025 86,545 763,249 2,909,434 31 December 2020 $ 1,722,345 15,216 71,351 496,682 2,305,594 Individual Directors and Executives Compensation Disclosures Information regarding individual directors’ and executives’ compensation and equity instruments disclosures as required by Corporations Regulation 2M.3.03 is provided in the Remuneration Report section of the Directors’ Report. Key Management Personnel and Director Transactions A member of key management personnel, or their related parties, held positions in other entities that resulted in them having control or significant influence over the financial or operating policies of these entities. This entity transacted with the Group in the reporting period. The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows: Key Management Person Mr D M Murcia (1) Total and current liabilities Transaction Legal fees Transaction Value 2021 $ 8,156 2020 $ 17,575 Balance Outstanding as at 31 Dec 2021 $ 31 Dec 2020 $ - - - - (1) Payable to MPH Lawyers, a firm in which Mr Murcia is a partner. Transactions with Related Parties Transactions between the parent company and its subsidiaries which are related parties of that company are eliminated on consolidation and are not disclosed in this note. Note 25. Financial Instruments – Fair Values and Risk Management Financial Risk Management The Group has exposure to the following risks arising from the use of financial instruments: Credit Risk Liquidity Risk Market Risk Currency Risk. This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and their management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. Page 44 of 53 74 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 (a) Risk Management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their role and obligations. (b) Credit Risk 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 obligations and arises principally from the Group’s other receivables and investment securities. (c) Other Receivables The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each counterparty. However, management also considers the default risk of the industry and country in which counterparties operate, as these factors may have an influence on credit risk. Other receivables also include refundable deposits and tax credits which include Brazilian federal VAT (PIS-Cofins). The recoverability of PIS-Cofins assets is dependent upon the Group generating a federal company tax liability, which may be offset against the Groups PIS-Cofins assets. As at 31 December 2021, the PIS-Cofins tax asset has been fully impaired as taxable profits in the ordinary course of business are not considered probable though one-off taxable profits may be generated on specific transactions. During the prior year the Company did utilise the PIS-Cofins asset to compensate for the PIS-Cofins liability on the sale of the Salobo West project. Exposure to Credit Risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents (1) Other receivables 31 December 2021 $ 8,259,389 375,113 8,634,502 31 December 2020 $ 24,089,281 95,604 24,184,885 (1) The cash and cash equivalents are held with bank and financial institution counterparties, which are rated BB- to AA based on rating agency Standard and Poor’s rating. The Group’s maximum exposure to credit risk for other receivables at the reporting date by geographic region was: Australia Brazil Carrying Amount 31 December 2021 $ 31 December 2020 $ 299,700 75,413 375,113 40,359 55,245 95,604 These balances are net of provision for impairment (refer to Note 15). Liquidity Risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with the financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Page 45 of 53 75 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 As at 31 December 2021, the Group has current trade and other payables of $2,893,287 (31 December 2020: $1,940,965), Current Financial Liabilities of $5,161,448 (31 December 2020: $2,400,000) and Non-Current Financial Liabilities of $1,325,267 (31 December 2020: $2,734,569). The Group believes it will have sufficient cash resources to meet its financial liabilities when due. The following table shows the contractual maturities of financial liabilities, excluding the impact of netting agreements. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts. Carrying amount Contractual cash flows 6 mths or less 6-12 mths 1-2 years 31 December 2021 Financial liabilities Trade and other payables Financial liabilities 31 December 2020 Financial liabilities Trade and other payables Financial liabilities(1) 2,893,287 6,486,715 9,380,002 (2,893,287) (6,710,158) (9,603,445) (2,893,287) (4,088,863) (6,982,150) - (500,000) (500,000) - (2,121,295) (2,121,295) 1,940,965 5,134,569 7,075,534 (1,940,965) (3,734,569) (5,675,534) (1,940,965) (500,000) (2,440,965) - (500,000) (500,000) - (2,734,569) (2,734,569) (1) The Group settled $1,400,000 of the Current Financial Liabilities via the issue of ordinary shares (refer to Note 19). Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Currency Risk The Group is exposed to currency risk on purchases that are denominated in currency other than the respective functional currencies of the Group entities, primarily the Australian dollar (AUD) and Brazilian Real (BRL). The currencies in which these transactions are primarily denominated are AUD and BRL. The Group’s investments in its Brazilian subsidiaries are denominated in AUD and are not hedged as those currency positions are considered to be long term in nature. Interest Rate Risk Profile At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was: Fixed rate instruments Financial assets Variable rate instruments Financial assets 31 December 2021 $ 31 December 2020 $ - 13,900,000 8,251,513 8,251,513 10,215,399 24,115,399 Fair Value Sensitivity Analysis for Fixed Rate Instruments The Group does not account for any fixed rate financial assets at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss or equity. Page 46 of 53 76 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Cash Flow Sensitivity Analysis for Variable Rate Instruments A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2020. 31 December 2021 Variable rate instruments Cash flow sensitivity (net) 31 December 2020 Variable rate instruments Cash flow sensitivity (net) Capital Management Profit or Loss Equity 100bp Increase 100bp Decrease 100bp Increase 100bp Decrease (23,207) (23,207) (17,466) (17,466) 23,207 23,207 17,466 17,466 - - - - - - - - The objectives for managing capital are to safeguard the Group’s ability to continue as a going concern and to provide funding for the Group’s planned exploration activities. Centaurus Metals Limited is an exploration company and it is dependent on its ability to raise capital from the issue of new shares and its ability to realise value from its exploration and evaluation assets. The Board is responsible for capital management. This involves the use of cash flow forecasts to determine future capital management requirements. There were no changes in the Group’s approach to capital management during the period. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. Note 26. Group Entities Country of Incorporation Ownership interest 2020 2019 Parent Entity Centaurus Metals Limited Subsidiaries Centaurus Resources Pty Ltd San Greal Resources Pty Ltd Itapitanga Holdings Pty Ltd Centaurus Brasil Mineração Ltda Centaurus Pesquisa Mineral Ltda Centaurus Gerenciamento Ltda Centaurus Niquel Ltda (Formerly Aliança Mineração Ltda) Itapitanga Mineração Ltda Note 27. Subsequent Events Australia Australia Australia Brazil Brazil Brazil Brazil Brazil 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% The Company completed a placement on 1 February 2022 raising $75 million (before fees). Other than outlined above, there has not arisen, in the interval between the end of the financial year and the date of this report an item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. Page 47 of 53 77 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Note 28. Remuneration of Auditors Audit Services Auditors of the Company Audit and review of financial reports – KPMG Services other than statutory audit Taxation compliance services - KPMG Note 29. Parent Entity Disclosures 31 December 2021 $ 31 December 2020 $ 58,861 52,080 6,986 14,818 As at, and throughout, the financial year ended 31 December 2021 the parent entity of the Group was Centaurus Metals Limited. Results of the Parent Entity Loss for the period (1) Total comprehensive loss for the period 31 December 2021 $ 31 December 2020 $ (16,844,975) (16,844,975) (13,086,953) (13,086,953) (1) During the year ended 31 December 2021 the parent entity provided for an impairment of $11,000,000 (2020: $7,000,000) (relating to loans to subsidiaries based on an assessment of recoverability). Financial Position of the Parent Entity at Year End Current assets Non-current assets (1) Total assets Current liabilities Non-current liabilities Total liabilities Net assets Share capital Reserves Accumulated losses Total equity 31 December 2021 $ 31 December 2020 $ 5,866,948 13,581,590 19,448,538 2,502,355 223,691 2,726,046 16,772,492 5,190,575 6,703,406 11,893,981 3,561,436 963,805 4,525,241 25,926,526 162,962,306 1538603 (147,778,417) 16,772,492 155,905,034 954,934 (130,933,442) 25,926,526 (1) Included within non-current assets are investments in and loans to subsidiaries net of provision for impairment. Ultimate recoupment is dependent on successful development and commercial exploitation or, alternatively, sale of the respective project areas. Page 48 of 53 78 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Financial Report – 31 December 2021 Directors’ Declaration 1. In the opinion of the directors of Centaurus Metals Limited (the “Company”): (a) The consolidated financial statements and notes, and the Remuneration Report in the Directors’ Report are in accordance with the Corporations Act 2001, including: (i) (ii) Giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its performance, for the financial year ended on that date; and Complying with Australian Accounting Standards Interpretations) and the Corporations Regulations 2001; (including the Australian Accounting (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Managing Director and the Chief Financial Officer for the financial year ended 31 December 2021. The financial report also complies with International Financial Reporting Standards as disclosed in Note 2. 2. 3. Signed in accordance with a resolution of the directors. __________________ D P Gordon Managing Director Perth 29 March 2022 Page 49 of 53 79 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Independent Auditor’s Report To the shareholders of Centaurus Metals Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Centaurus Metals Limited (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 31 December 2021 and of its financial performance for the year ended on that date; and • Complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 31 December 2021; • 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 accounting policies; and • 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 the Code. Key Audit Matters The Key Audit Matters we identified are: • Acquisition of possessory rights; and • Valuation of exploration and evaluation assets. Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 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. 80 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Independent Auditor’s Report To the shareholders of Centaurus Metals Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Centaurus Metals Limited (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 31 December 2021 and of its financial performance for the year ended on that date; and • Complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated statement of financial position as at 31 December 2021; • 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 accounting policies; and • 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 the Code. Key Audit Matters The Key Audit Matters we identified are: • Acquisition of possessory rights; and • Valuation of exploration and evaluation assets. Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 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. 81 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Acquisition of possessory rights ($7,560,106) Refer to Notes 16 and 17 to the Financial Report The key audit matter How the matter was addressed in our audit The Group’s acquisition of the three possessory rights as disclosed in Notes 16 and 17 to the financial report, was a significant transaction for the Group. The acquisition is a key audit matter due to: • The significance of the acquisition; and • The level of judgement required in determining the accounting approach as either; - Capitalising as land under AASB 116 Property, Plant and Equipment or an exploration and evaluation asset under AASB 6 Exploration for and Evaluation of Mineral Resources; or - To expense as exploration expenditure. We involved senior team members in assessing this key audit matter. Our procedures included: • • Inspecting the relevant deeds of assignment of possessory rights to understand the structure, key terms and conditions and nature of the purchase consideration. Using this information, we evaluated the accounting treatment of the purchase consideration against the criteria in the accounting standards, and checked the existence of the Group’s rights and access to the properties; Involving senior audit team members to assess the accounting treatment for the transactions. We analysed the conclusions reached by the Group for consistency with the requirements of the accounting standards and interpretations; • Evaluating the Group’s determination of the allocation of purchase consideration between property, plant and equipment and exploration and evaluation assets against the underlying data; and • Evaluating the Group’s disclosures of the transaction, by comparing these disclosures to our understanding of the acquisition and the requirements of the accounting standards. Valuation of exploration and evaluation assets ($12,048,261) Refer to Note 17 to the Financial Report The key audit matter How the matter was addressed in our audit The Group’s policy is to capitalise acquisition costs in relation to an area of interest, less any impairment charges recognised. The valuation of exploration and evaluation assets is a key audit matter due to: • The significance of the activity to the Group’s business; and • The greater level of audit effort to evaluate the Group’s application of the requirements of the accounting standard AASB 6 Exploration for and Evaluation of Mineral Resources, in particular the presence of impairment indicators. The presence of impairment indicators would necessitate a detailed analysis by the Group of the value of exploration and evaluation assets. Our procedures included: • Evaluating the Group’s accounting policy to recognise exploration and evaluation assets against criteria of the accounting standard; • Assessing the Group’s determination of its areas of interest for consistency with the definition in the accounting standards. This involved analysing the licences in which the Group holds an interest and the exploration programs planned for those; • For the significant areas of interest, we assessed the Group’s current rights to tenure. This included checking the ownership of the relevant license for mineral resources or reserves to government registries and/or evaluating rights agreements in place with other parties; 82 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 Given the criticality of this to the scope and depth of our work, we involved senior team members to challenge the Group’s assessment of the presence of impairment indicators. In assessing the presence of impairment indicators, we focused on those which may draw into question the commercial continuation of exploration and evaluation activities where significant carrying value of capitalised exploration and evaluation expenditure exists. • Evaluating the Group’s additions to exploration and evaluation assets for the year against the acquisition agreements, the capitalisation requirements of the Group’s accounting policy and the requirements of the accounting standard; • Evaluating the Group’s documents for consistency with their stated intentions for continuing exploration and evaluation activities in certain areas. This included: Given the financial position of the Group, we paid particular attention to: • Documentation available regarding rights to tenure, via licensing, and compliance with relevant conditions, to maintain current rights to an area of interest; • The Group’s intention and capacity to continue and fund the relevant exploration and evaluation activities; and • The results from latest activities regarding the existence or otherwise of economically recoverable mineral resources or reserves. Other Information - The Group’s internal plans and budgets; - Minutes of board and internal meetings; - Announcements made by the Group to the Australian Securities Exchange including results from latest activities and studies performed; and • Evaluating the capacity of the Group to fund the continuation of activities by assessing underlying documentation including corporate budgets. Other Information is financial and non-financial information in Centaurus Metals Limited’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 Directors’ Report and the Remuneration Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do 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. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • Preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; • Implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; 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. 83 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 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 Centaurus Metals Limited for the year ended 31 December 2021, 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 the Directors’ report for the year ended 31 December 2021. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Graham Hogg Partner Perth 29 March 2022 84 CENTAURUS METALS LIMITED ANNUAL REPORTCENTAURUS METALS ANNUAL REPORT 2021 AUSTRALIA Level 2, 1 Ord Street West Perth, WA 6005 PO Box 975, West Perth, WA 6872 T: +61 8 6424 8420 BRAZIL Centaurus Brasil Mineração Ltda Avenida Barão Homem de Melo, 4391 Salas 606 e 607 - Estoril - CEP:30.494.275 Belo Horizonte MG T: +55 31 3194 7750 ACN 009 468 099 www.centaurus.com.au
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