Cygnus Gold Limited
Annual Report 2020

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Cygnus Gold Limited Annual Report 2020 An Australian Gold and Base Metals Exploration Group Corporate Directory Principal Place of Business & Registered Office Ground Floor, 24 Outram Street, West Perth, WA 6005 Contact information Phone: +61 (0)8 6118 1627 Email: info@cygnusgold.com Website: www.cygnusgold.com Australian Business Number 80 609 094 653 Directors Mr Michael Bohm Non-Executive Chairman Mr Simon Jackson Executive Director Mr Raymond Shorrocks Non-Executive Director Mr Shaun Hardcastle Non-Executive Director Joint Company Secretaries Mr Michael Naylor Ms Susan Field Auditors Grant Thornton Audit Pty Ltd Central Park, Level 43 152-158 St Georges Terrace Perth WA 6000 Bankers National Australia Bank 100 St Georges Terrace Perth WA 6000 Stock Exchange Listing Solicitors Primary listing: Australian Securities Exchange HWL Ebsworth Lawyers ASX Code: CY5 Share Register Computershare Investor Services Pty Ltd GPO Box 2975, Melbourne VIC 3001 Phone: +61 3 9415 5000 Fax: +61 3 9473 250 Level 20, 240 St Georges Terrace Perth WA 6000 2 Contents 02 Corporate Directory 04 Chairman’s Statement 05 Directors’ Report 36 Auditor’s Independence Declaration 37 Consolidated Statement of Profit and Loss and Other Comprehensive Income 38 Consolidated Statement of Financial Position 39 Consolidated Statement of Changes in Equity 40 Consolidated Statement of Cash Flows 41 Notes to the Financial Statements 67 Directors’ Declaration 68 Independent Auditor’s Report 71 ASX Additional Information 3 Chairman’s Statement Dear Shareholder, 2020 has certainly been a challenging year across the globe with the Covid-19 pandemic impacting lives and business globally. For Cygnus Gold Limited (ASX: CY5) it has been a year of transition as we moved from grass roots exploration in the wheatbelt of Western Australia (WA) to focus on the opportunity to acquire a more advanced asset and to strengthen our balance sheet. In parallel with this we continued to support the excellent gold exploration work in WA being carried out by our joint venture partner Gold Road Resources. The joint ventures provide Cygnus shareholders with potentially meaningful exposure to gold exploration success in the wheatbelt via the world-class exploration team at Gold Road. Rounding out the transition of our business focus was the appointment of experienced non-executive directors Ray Shorrocks and Shaun Hardcastle to the Cygnus board during 2020. Ray and Shaun bring a wealth of Industry and Corporate experience to the board, as well as a track record of success, which will be utilised by Simon Jackson who transitioned to an Executive role, leading Cygnus’ search for an advanced asset. In addition to that search, and the work of our JV partner Gold Road, the Group is looking at opportunities to unlock value from its WA nickel and base-metals prospects which we believe, whilst early stage, show promise in an area gaining attention due to the growing demands in the battery-metals sector. I would like to thank shareholders for supporting the changes made to the business as we moved to transition the Group away from a sole focus on grass-roots exploration, whilst navigating the challenges presented - to everyone - by the pandemic. We are still on that journey and plan to deliver on a new business outlook as a priority during 2021. In closing, I wish for all of our shareholders and stakeholders to remain safe and well during these challenging times. Michael Bohm Chairman 4 Directors’ Report The directors’ of Cygnus Gold Limited (Cygnus or the Company) and the entities controlled (Group) present their report, together with the financial statements for the year ended 31 December 2020. Directors The names and details of the Group’s directors in office during the financial year and until the date of this report (unless otherwise stated) are as follows: Mr Michael Bohm - Non-Executive Chairman Appointed 30 September 2016 Mr Bohm is a qualified mining professional with significant corporate and operations experience. He has had extensive minerals industry experience in Australia, South East Asia, Africa, Chile, Canada and Europe. A graduate of WA School of Mines, Mr Bohm has worked as a mining engineer, mine manager, study manager, project manager, project director and managing director and has been directly involved in a number of new mine developments. Mr Bohm currently serves as a Director of a number of ASX-listed companies and sits on their Audit & Risk Committees and Chairs their Remuneration Committees. Prior to this, he has held a number of directorships including those with Perseus Mining Limited, Argyle Diamonds Mines, Sally Malay Mining Limited and Ashton Mining of Canada. Over the past three years, Mr Bohm has also held directorships with the following ASX listed companies: Other current directorships Commenced Ceased Mincor Resources Limited 1 January 2017 Ramelius Resources Limited 29 November 2012 Riedel Resources Limited 11 December 2020 - - - Former directorships in the last 3 years Perseus Mining Limited 15 October 2009 31 May 2018 5 Mr Simon Jackson – Executive Director Appointed Executive Director on 31 August 2020, previously appointed Non-Executive Director on 17 November 2017. Mr Jackson is a Chartered Accountant with 30 years' experience in the gold industry. He is currently Managing Director of ASX listed copper explorer Kopore Metals Limited. He previously held positions as CEO and MD of ASX-listed Brazilian-focused gold producer Beadell Resources Limited and President & CEO of the TSXV-listed Orca Gold Inc, a junior exploration company with multiple gold discoveries in Sudan. From 1999 to 2010, he was an integral part of the senior management team at Red Back Mining Inc, which grew from a small West Perth-based junior to a TSX-listed intermediate producer that was taken over by Kinross Gold Corp in 2010. Mr Jackson's career includes corporate transactions and equity financings involving assets in Australia, Africa, Asia and South America. Over the past three years, Mr Jackson has also held directorships with the following ASX listed companies: Other current directorships Commenced Ceased CZR Resources Limited (formerly Coziron Resources Limited) 30 January 2019 Sarama Resources Limited Kopore Metals Limited 11 March 2011 7 March 2019 - - - Former directorships in the last 3 years Beadell Resources Limited 9 November 2015 14 July 2018 Orca Gold Inc 4 April 2013 30 May 2019 6 Mr Raymond Shorrocks - Non-Executive Director Appointed 30 June 2020 Mr Shorrocks has over 27 years’ experience working in the investment banking industry. He is highly conversant and experienced in all areas of mergers and acquisitions and equity capital markets, including a significant track record of transactions in the metals and mining sectors. He was past Chairperson of ASX listed Bellevue Gold Limited and Republic Gold Limited. Mr Shorrocks is Executive Chairman of Auteco Minerals Limited and is former Director and head of the Corporate Finance department of a major Australian investment services company based in Sydney. Over the past three years, Mr Shorrocks has also held directorships with the following ASX listed companies: Other current directorships Commenced Ceased Auteco Minerals Limited Galilee Energy Limited HCD Limited Alicanto Minerals Limited Former directorships in the last 3 years 28 January 2020 02 December 2013 12 June 2016 07 August 2020 - - - - Bellevue Gold Limited 31 December 2015 19 September 2019 Estrella Resources Limited 24 June 2015 01 February 2019 7 Mr Shaun Hardcastle - Non-Executive Director Appointed 30 June 2020 Mr Hardcastle has over 15 years’ experience as a corporate lawyer and extensive experience in corporate governance, risk management and compliance. He has been involved in a broad range of cross border and domestic transactions including equity capital markets, mergers & acquisitions, corporate governance and project finance. Mr Hardcastle has practised law both in Australia and overseas and currently works as a Partner with HWL Ebsworth. He graduated from the University of Western Australia in 2005 with a Bachelor of Laws and Bachelor of Arts. Over the past three years, Mr Hardcastle has also held directorships with the following ASX listed companies: Other current directorships Commenced Ceased Rare X Limited Schrole Group Ltd 01 December 2017 04 October 2017 - - Former directorships in the last 3 years Hawkstone Mining Ltd Pure Foods Tasmania Ltd Mr James Merrillees – Managing Director Resigned as director on 30 June 2020 Dr Oliver Kreuzer – Non-Executive Director Resigned as director on 30 June 2020 23 February 2015 14 July 2020 23 August 2018 28 April 2020 Interests in the shares and options of the Company As at the date of this report, the interests of the directors in the shares (direct and indirect) of the Company were: Name Number of ordinary shares Unlisted Options Mr Michael Bohm Mr Simon Jackson Mr Ray Shorrocks 5,337,780 2,515,557 2,051,281 Mr Shaun Hardcastle 829,060 2,000,000 2,000,000 2,000,000 2,000,000 8 Joint Company Secretaries Mr Michael Naylor Mr Naylor has 27 years’ experience in corporate advisory and public company management since commencing his career and qualifying as a Chartered Accountant with Ernst & Young. He has been involved in the financial management of mineral and resource focused public companies serving on the board and in the executive management team focusing on advancing and developing mineral resource assets and business development. Ms Susan Field Susan is a Chartered Accountant with over 27 years’ experience in the corporate sector and in public practice. Since qualifying as a Chartered Accountant with Ernst & Young, Ms Field has worked in several management roles in both the public and private sector. Prior to entering public practice, Ms Field also spent over 11 years in the financial services and retail banking industry where she held various positions in several operational management roles. Operating results The Group’s consolidated net loss for the year ended 31 December 2020 after providing for income tax amounted to $7,720,430 (2019: $870,917). The loss included the following items: (cid:120) (cid:120) Share-based payment expense of $,1,174,396 (2019: $29,442) Exploration expenditure written off of $3985,457 (2019: $437,351) (cid:120) Options valued using Black-Scholes option pricing formula issued to a combination of management and consultants of $2,260,524 (2019: Nil) Review of financial position The net assets are $3,376,826 as at 31 December 2020 (2019: $5,084,373). Principal activities Cygnus is an exploration company focused on the discovery of gold and base metals deposits in the south west Yilgarn of Western Australia. There have been no significant changes in the nature of these activities during the period. 9 Review of Operations Overview Cygnus has assembled a significant team of stakeholders including an experienced Board of Directors and several strategic industry shareholders. This combination will hold shareholders in good stead as Cygnus moves forward. Cygnus is conducting a detailed internal review of the various exploration licences that it holds in the Southwest Terrane of Western Australia. The results of this review will lead Cygnus as it looks to progress exploration work in this region and form new partnerships. The Company is also actively searching for new, more advanced opportunities in precious and base metals and has reviewed a number or potential opportunities during the year. This work is ongoing. Figure 1: Cygnus Gold 100% and Joint Venture tenements and applications in the Southwest Terrane, WA 10 Bencubbin Project Cygnus Gold’s 675km2 Bencubbin Project comprises three granted tenements (E70/4988, Bencubbin, E70/5169, Bencubbin North and E70/5168, Bencubbin South). The project, approximately 200km northeast of Perth, covers the Bencubbin Greenstone Belt – a suite of rocks extending over a strike length of 70km and up to 5km in width - where the Company’s review of historical exploration confirmed the belt’s prospectivity for (refer Figure 2 and Cygnus Gold ASX announcement 30/11/2018)1: (cid:120) ‘Kambalda-style’, komatiite-hosted magmatic nickel-copper sulfides; and (cid:120) Volcanogenic massive sulfide (VMS) base metals (lead-zinc-copper) mineralisation associated with the Mandiga gossan where exploration by previous explorers included best results of (Refer ASX announcement on 25 February 2020)1: (cid:120) (cid:120) (cid:120) 18m @ 0.14% Ni from 32m in Hole DMA4; 2m @ 0.63% Pb from 52m in Hole DMA2; and 2m @ 1.7% Zn from 176m in Hole DMA5. Figure 2: Bencubbin North, geology, targets and Cygnus Dec. 2019-Jan 2020 aircore program and historical drilling (refer ASX Announcement 7 October 2019)1. 11 A 76-hole (2,643m) drilling program to test high priority nickel and base metals targets was completed in early 2020, The program at Bencubbin North intersected target geology and alteration systems on several of the high priority nickel and base metals targets tested. Drilling highlights include: (cid:120) (cid:120) Thick (up to 800m wide) komatiite sequences were intersected in the shallow drilling over the Bencubbin North nickel targets, the first ultramafic rocks described in the belt and analogous to the rocks that host the Kambalda nickel deposits Several zones of Pb and Zn mineralisation were intersected at the Mandiga lead-zinc-copper target, including: o 4m @ 0.12% Pb + Zn from 12m in BNAC0023 o 1m @ 0.13% Pb + Zn from 18m in hone BNAC0041 o 1m @ 0.45% Pb + Zn in hole BNAC0042. The Mandiga-Grylls system is confirmed as a strike extensive (more than 7km long) and broadly stratabound Ag-Pb-Zn-Cu anomaly including strong sericite-chlorite and pathfinder mineral assemblages consistent with a VMS style mineralised system. The Group’s regional-scale drilling at Bencubbin North has now confirmed the prospectivity of the bedrock stratigraphy below the extensive Ni-Cu, Cu-Pb-Zn & Cu-Zn soil anomalies identified in historical soil sampling. In particular, no electrical geophysics such as electromagnetics (EM) has been undertaken on the Ni targets, and no modern (i.e. post 1980) EM has been completed on the VMS targets, including Mandiga. For the Ni targets, further sampling of Cu anomalous samples and EOH samples in the ultramafics are warranted, looking for evidence of a sulphur saturation event in the ultramafic rock. If this can be established, ground TEM would be warranted looking for blind accumulate hosted Ni-sulphide systems. In particular, the anomalous Cu results in ferruginous saprolite will be re- assayed for PGE’s. Cygnus is reviewing options for advancing this project, which may include joint venture funding. 12 Stanley Project Cygnus’ ~160km2 Stanley tenement covers a ~20km length of prospective greenstone including numerous prospects where previous explorers intersected high-grade gold mineralisation. The Group’s exploration at Stanley is focused on the discovery of high-grade gold mineralisation at the Keppler and McDougalls prospects (Figure 3). Figure 3: Cygnus Gold’s Stanley Project highlighting the Kepler Zone and McDougalls, Western Australia. Refer CY5 ASX announcement 28 May 20191 for drill results and target descriptions. 13 Kepler The Group’s initial exploration focus at Stanley was on extensions to the Bottleneck prospect, a historical prospect where previous explorers had intersected shallow high-grade gold. The Group’s early drilling confirmed this high-grade Bottleneck zone. Analysis of drill results subsequently identified that mineralisation is preferentially concentrated in a distinct metadacite unit (the Kepler Zone) which extended well north and west of Bottleneck and was poorly lightly tested by deeper drilling. Follow up drilling at Kepler intersected a broad zone of mineralisation in a section 220m along strike from Bottleneck, with hole STRC0020 intersecting (refer Figure 4 and CY5 ASX announcement 28 May 2019)1: (cid:120) 6m @ 1.95 g/t Au from 81m, which included 2m @ 5.49 g/t Au from 81m. A large extent of the metadacite unit at Kepler remains untested by drilling, and Cygnus has undertaken a strategic review to guide the forward program on this target (refer discussion below). Figure 4: Cygnus Gold’s Kepler Zone in the Stanley Project. Background image is 1VD of the Bouguer gravity where red colours define denser rock units (refer CY5 ASX announcement 28 May 20191 for drill results and target descriptions). McDougalls The McDougalls prospect includes McDougalls South, where Cygnus drilling intersected anomalous gold over wide intervals including (see ASX announcement 2 April 2019)1: (cid:120) STRC0007: 4m @ 0.25g/t Au from 32m (cid:120) STRC0008: 16m @ 0.19g/t Au from 32m (cid:120) STRC0016: 10m @ 0.37g/t Au from 50m. Follow-up aircore drilling by the Group demonstrated these mineralised zones are associated with a shallow, 1,000m x 500m zone of anomalous gold within a NW-trending structural zone. 14 To test this zone for higher grades, Cygnus drilled six RC holes (STRC0022-0027) that intersected more widespread gold mineralisation with intersections including (refer Figure 8 and ASX announcement 28 May 2019)1: (cid:120) STRC0023: 9m @ 0.40g/t Au from 42m 2 (cid:120) STRC0024: 5m @ 0.34g/t Au from 32m (cid:120) STRC0025: 3m @ 0.31g/t Au from 90m and (cid:120) STRC0027: 11m @ 0.14g/t Au from 64m. A technical review of the McDougalls prospect has identified several targets to test for higher gold grades in this broad mineralised system. The Group is in discussions regarding potential JV partners for the Stanley Project. Gold Road JV Projects In addition to the 100% projects, Cygnus is also in joint venture (JV) with ASX-listed developer Gold Road Resources Ltd (Gold Road, ASX:GOR) over the Lake Grace (diluting to 10%) and Yandina (diluting to 10%) JVs (Figure 1). The JV tenements cover an area of approximately 3,000km² targeting gold mineralisation associated with the prospective Yandina Shear which is known to host gold mineralisation elsewhere in the Southwest Terrane (SWT). In October 2020, Gold Road took over management of the Lake Grace and Yandina JV’s. Cygnus is currently planning to maintain its 10% interest in these JV’s. The Hammerhead Project (Figure 5) is part of a more than 20km long belt where the JV is targeting gold mineralisation within a prospective greenstone package associated with the regional Yandina Shear. The Yandina Shear Zone is a regional geological structure extending over hundreds of kilometres and interpreted to control the distribution of gold mineralisation regionally. A 336-hole (15,737m) program targeting more than 20km long Hammerhead greenstone belt was completed in March 2020. The results from the early 2020 air-core (AC) drilling defined at least eight discrete gold anomalous zones associated with a 20km long section of the Yandina Shear, with best results returned from the Gunsmoke, Lakeside and Hammerhead prospects, including: (cid:120) Gunsmoke: o 12m @ 0.78 g/t Au from 30m, incl. 8m @ 1.06 g/t Au from 30m in LGAC0332 (cid:120) Hammerhead: o 1m @ 0.16g/t Au from 39m (end of hole sample) in LGAC0138 o 3m @ 0.24g/t Au from surface and 2m @ 0.15g/t Au from 32m in LGAC0140. (cid:120) Lakeside: o 6m @ 0.59g/t Au from 49m in LGAC0418 o 3m @ 0.20g/t Au from 25m in LGAC0429. In June, the JV commenced follow up drilling at Hammerhead and this program was completed during the third quarter for a total of 9,081m of aircore (AC) and 736m of reverse circulation (RC) drilling targeting the Hammerhead, Lakeside, Gunsmoke and Holland Rock prospects. This program was inclusive of 1,300m of AC drilling at the Hideaway Prospect on the Lake Grace JV approximately 50km to the northwest of Hammerhead. Hideaway is a large historical gold-in-soils anomaly coincident with a 1.1km-long mafic-felsic granulite contact. Limited, shallow drilling at Hideaway by previous explorers included 11m at 1.3 g/t Au from 7m (HRC1) and 1m at 1.0 g/t Au from 31 m and 1m at 0.83 g/t Au from 37m (HRC7). During the year Cygnus was once again successful in securing Western Australian Government co-funding to support diamond core drilling of several prospects on the Hammerhead Project. The co-funding of up to $150,000 in direct drilling costs is part of the Exploration Incentive Scheme (EIS), a competitive award by the State Government to support technically driven mineral exploration in Western Australia (WA). 15 Figure 5: Hammerhead Project, Western Australia. Aircore drilling with significant intervals (>0.1 g/t Au) on ground gravity. Refer ASX Announcement 7/10/2019 for intercept details1. Burracoppin Project (Cu-Pb-Zn) Cygnus’ Burracoppin tenements, ~25km east-northeast of Merredin, are along strike from the Edna May gold mine, owned and operated by Ramelius Resources Ltd (ASX:RMS). Exploration by previous explorers at Burracoppin identified a more than 2.5km long by 0.7km wide gold-in-soil anomaly at Anomaly 47. This anomaly is open to the east where it is obscured by a paleochannel system. The geochemical signature of mineralisation at Anomaly 47 is similar to that of known volcanogenic massive sulphide (“VMS”) deposits globally, and Cygnus’ detailed ground gravity and airborne electromagnetic (AEM) surveys identified several anomalies with signatures comparable with known VMS systems and which warrant follow up drill testing (for details refer ASX Announcement 22/10/2018)1. 16 Panhandle Project The ~100km2 Panhandle tenement (approximately 300km north of Kalgoorlie in the Central Yilgarn of Western Australia) covers a ~13km long section of the Panhandle Greenstone Belt where the Group’s review of historical exploration has revealed limited surface sampling and geophysical surveys with no previous drilling (Figure 6). The Group considers the Panhandle tenement prospective for: (cid:120) Volcanogenic massive sulfide (VMS) base metals (lead-zinc-copper) mineralisation analogous to Cobre Ltd’s (ASX:CBE) Perrinvale Project which includes an intersection of 5m @ 9.75% Cu, 3.2g/t Au, 34g/t Ag, 3.1% Zn on the Schwabe prospect (refer CBE ASX Announcement 31/1/2020) (cid:120) Orogenic gold mineralisation similar to ASX-listed TSC Ltd’s (ASX:TSC) Rover Project intersected high grade gold including 5m @ 9g/t Au (refer TSC ASX Announcement 25/2/2020) (cid:120) Magmatic nickel-copper sulfides hosted in mafic/ultramafic rocks identified in the Panhandle Greenstone. Figure 6: Cygnus’ Panhandle project interpreted geology with adjacent Cobre prospects highlighted. Drill intersections quoted are from CBE ASX Announcement 31 January 20201. 17 Corporate During the year Cygnus underwent a significant change in Management, Board and welcomed some significant new shareholders to the register. Founding Directors, James Merrillees and Oliver Kreuzer resigned from the Board and Ray Shorrocks and Shaun Hardcastle became non-executive Directors. Simon Jackson transitioned into a part time executive Director role. The Group undertook two equity placements in 2020 and welcomed some new substantial shareholders: (cid:120) (cid:120) In July 2020, the Group completed a placement to raise approximately $1,370,000 (before costs) through the issue of up to 30,455,556 fully paid ordinary shares in the Group at an issue price of $0.045 per share. In August 2020 the Group received commitments from sophisticated and professional investors to raise approximately $1.2 million (before costs) through the issue of up to 9,363,461 fully paid ordinary shares in the Group at an issue price of $0.13 per share. In October 2020, the Group’s registered address and principal place of business changed to Ground Floor, 24 Outram Street, West Perth and in December 2020 it appointed Susan Field as joint Company Secretary joining Michael Naylor in this role. At year end the Group remains well financed with $3,385,934 in cash. Share placements and issues During the financial year, the Group issued 39,819,017 as detailed in the below table to raise $2,587,750 before issue costs. Date 07/07/2020 27/08/2020 23/09/2020 16/11/2020 16/11/2020 Total Number of Shares 10,000,000 6,825,000 19,900,000 555,556 2,538,461 39,819,017 Price per Share $ 0.045 0.130 0.045 0.045 0.130 Amount raised before issue costs $ 450,000 887,250 895,500 25,000 330,000 2,587,750 Unlisted options issued Grant Date Date of Exercise Expiry Price $ 22/09/20 22/09/23 $0.08 Total Balance 1 January 2020 - - Granted Exercised Balance Vested and 31 December Exercisable 2020 29,500,000 - 29,500,000 29,500,000 29,500,000 - 29,500,000 29,500,000 18 Change of Registered Address In September, the Group changed its registered address to Ground Level, 24 Outram Street, West Perth, WA 6005. Resignation of Non-Executive Director On 30 June 2020, Mr James Merrillees and Dr Oliver Kreuzer resigned. Dividends paid or recommended The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. Subsequent Events There not been any events that have arisen between 31 December 2020 and the date of this report or any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to materially affect the operations of the Group, the results of those operations or the state of affairs of the Group, in subsequent financial years. Likely Developments and Expected Results The Group is committed to: • • • exploration of the Group’s key assets in the Wheatbelt region of Western Australia; continue to negotiate further access with private landholders in relation to areas of interest identified by the above activities; and implement a strategy to seek out further exploration, acquisition and joint venture opportunities. Environmental issues The Group is aware of its environmental obligations with regards to its exploration activities and ensures that it complies with all regulations when carrying out any exploration work. The directors have considered the National Greenhouse and Energy Reporting Act 2007 (‘the NGER Act’) and at the current stage of development and based on the locations of the Group’s operations, the directors have determined that the NGER Act will have no effect on the Group for the current or subsequent financial year. The directors will reassess this position as and when the need arises. No environmental breaches have occurred or have been notified by any Government agencies during the year ended 31 December 2020. Significant changes in the state of affairs There have been no changes in the state of affairs of the Group other than those outlined in the Review of Operations. Corporate Governance The directors of Cygnus believe that effective corporate governance improves company performance, enhances corporate social responsibility and benefits all stakeholders. Changes and improvements are made in a substance over form manner, which appropriately reflect the changing circumstances of the company as it grows and evolves. Accordingly, the Board has established a number of practices and policies to ensure that these intentions are met and that all shareholders are fully informed about the affairs of the Group. 19 The Company reviews all of its corporate governance practices and policies on an annual basis to ensure they are appropriate for the Company’s current stage of development. This year, the review was made against the new ASX Corporate Governance Council’s Principles and Recommendations (4th edition). The Board has reviewed and approved its Corporate Governance Statement on 31 March 2021, and this is available on the Company’s website at www.cygnusgold.com/corporate-governancedetail The Company has a corporate governance section on the website which includes details on the Company’s governance arrangements and copies of relevant policies and charters. 20 Remuneration Report (Audited) This remuneration report for the year ended 31 December 2020 outlines the remuneration arrangements of the Company and its’ controlled entities (Group) in accordance with the requirements of the Corporations Act 2001 (Cth) (the Act) and its Regulations. This information has been audited as required by section 300A of the Corporations Act. The remuneration report details the remuneration arrangements for Key Management Personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and Group, directly or indirectly including any director (whether executive or otherwise) of the parent. The table below outlines the KMP of the Company during the financial year ended 31 December 2020. Unless otherwise indicated, the individuals were KMP for the entire financial year. For the purposes of this report, the term “executive” includes the Executive Directors and senior executives of the Company. Executive director Simon Jackson Executive Director (appointed Executive Director on 31 August 2020, previously Non-Executive Director appointed 17 November 2017) James Merrillees * Managing Director (resigned 30 June 2020) Non Executive director Michael Bohm Non-Executive Chairman (appointed 30 September 2016) Raymond Shorrocks Non-Executive Director (appointed 30 June 2020) Shaun Hardcastle Non-Executive Director (appointed 30 June 2020) Oliver Kreuzer Senior executive Non-Executive Director (resigned 30 June 2020) Michael Naylor Joint Company Secretary (appointed 4 October 2016) Susan Field Joint Company Secretary (appointed 23 December 2020) *Remuneration paid to James Merrillees as an employee or consultant after 30 June 2020 has not been included in this report as he was not considered Key Management personnel from this date on. There were no other changes to KMP after reporting date and before the date the financial report was authorised for issue. 21 Remuneration governance Due to the current size of the Group, it is more efficient and effective for the functions otherwise undertaken by a remuneration committee to be performed by the Board. All directors are therefore responsible for determining and reviewing compensation arrangements for key management personnel, including periodically assessing the appropriateness of the nature and amount of remuneration by reference to relevant market conditions and prevailing practices. The Board may obtain professional advice where necessary to ensure that the Group attracts and retains talented and motivated directors, executives and employees who can enhance Group performance through their contributions and leadership. Remuneration framework The Board recognises that the Group’s performance and ultimate success in project delivery depends on many factors including its ability to attract and retain highly skilled, qualified and motivated people. At the same time, remuneration practices must be transparent to shareholders and be fair and competitive, taking into account the nature and size of the organisation and its current stage of activities, funding and general market conditions. The approach to remuneration has been structured with the following objectives: • • Fairness: provide a fair level of reward to all employees; Transparency: establish transparent links between reward and performance; • Alignment: promote mutually beneficial outcomes by aligning employee, and shareholder interests; and • Culture: drive leadership performance and behaviours that promote safety, diversity and employee engagement. The remuneration for executives may have several components, including: • • • Fixed remuneration, inclusive of superannuation and allowances; Short Term Incentives (“STI”) under a performance-based cash bonus incentive plan; and Long Term Incentives (“LTI”) through participation in the Company’s approved equity incentive plan. These three components comprise each executive’s total annual remuneration. To link executive remuneration with the Company’s performance, the Company’s policy is to endeavour to provide a portion of each executive’s total remuneration as “at risk”. 22 2020 mix of remuneration for Directors and KMP percentage of total remuneration James Merrillees and Oliver Kreuzer resigned 30 June 2020. Overview of Company Performance In considering the Company’s performance and benefits for shareholder wealth, the Board has regard to the following indices in respect of the current and the previous three financial years: 2017 2018 2019 2020 Income $3,262 $198,317 $231,203 $439,311 Net loss after tax $784,721 $638,119 $870,917 $7,720,430 Share price 31 December N/A $0.065 $0.044 $0.18 Currently, there is a portion of remuneration of key management personnel that is linked to performance via share based awards which is linked to individual performance, the volume weighted average price, tenure with the Company, and total of shareholder return as measured against the performance of a Company of peer exploration companies. The rationale for this approach is that the Group is in the exploration phase, and it is currently not appropriate to link remuneration to factors such as profitability. 23 Executive Director Remuneration A combination of fixed and variable reward may be provided to executives, based on their responsibility within the Company in relation to the achievement of its strategic objectives and capacity to contribute to the generation of long term shareholder value. The components of executive remuneration may consist of: Fixed Remuneration Executives receive a fixed base cash salary and other associated benefits. Executives also receive statutory superannuation guarantee contribution required by Australian legislation which was 9.5% on 31 December 2020. No executives receive any other retirement benefits. Fixed remuneration of executives will be set by the Board each year and is based on a number of factors. In setting fixed remuneration for executives, individual performance, skills, expertise and experience are also taken into account as well as the Company’s current level of activity and funding. Where appropriate, external remuneration consultants may be engaged to assist the Board. No external consultants were engaged during the year. Long Term Incentives The objective of LTI’s is to provide potential reward to executives and directors in a manner which aligns this element of remuneration with the creation of shareholder wealth. As such LTIs can be made to executives and directors who are able to influence the generation of shareholder wealth and thus have an impact on the Company’s performance. Included in the 29,500,000 Incentive Options issued on 22 September 2020 are 10,000,000 Incentive Options which were granted during the year to Simon Jackson, Michael Bohm, Shaun Hardcastle, Ray Shorrocks and Michael Naylor (or their respective nominees) as follows; 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Mr Simon Jackson (or his nominee) Mr Michael Bohm (or his nominee) Mr Shaun Hardcastle (or his nominee) Mr Ray Shorrocks (or his nominee) Mr Michael Naylor (or his nominee) The Incentive Options were approved by shareholders at General Meeting held on 7 September 2020 at an exercise price of $0.08 each, and with an expiry date three years from the issue date, being 22 September 2023. There were no performance rights issued during the year. 24 Non-Executive director remuneration Non-Executive directors’ fees are paid within an aggregate limit which is approved by the shareholders from time to time. Retirement payments, if any, are determined in accordance with the rules set out in the Company’s Constitution and the Corporations Act at the time of the director’s retirement or termination. Non-Executive directors’ remuneration may include an incentive portion consisting of performance rights/options, as considered appropriate by the Board, which is subject to shareholder approval in accordance with the ASX Listing Rules. The aggregate remuneration, and the manner in which it is apportioned amongst Non-Executive directors, is reviewed annually. The Board considers the amount of director fees being paid by comparable companies with similar responsibilities and levels of experience of the Non-Executive directors when undertaking the annual review process. The current maximum amount of Non-Executive directors’ fees payable is fixed at $300,000 in total, for each 12-month period commencing 1 January each year, until varied by ordinary resolution of shareholders. Non-Executive directors are not entitled to any termination payments. The Company prohibits directors or executives from entering arrangements to protect the value of any Cygnus shares, options or performance rights that the director or executive has become entitled to as part of his/her remuneration package. This includes entering contracts to hedge their exposure. Use of remuneration consultants During the year ended 31 December 2020 the Board did not engage the services of remuneration consultants. This was considered appropriate whilst the Group is in exploration phase. 25 The remuneration of the Directors The Directors and KMP of Cygnus are set out in the following tables: Short Term Benefits Post- Share based Employment payments Non-Executive Directors s e e F t n a t l u s n o C s e e F / y r a a S l e v a e L l a u n n A s u n o B 2020 10,000 38,325 - Mr Michael Bohm 2019 43,333 - Dr Amanda Buckingham 2020 - - (resigned 20 September 2019) 2019 26,667 1,750 Dr Oliver Kreuzer (resigned 30 June 2020) 2020 16,000 - 2019 34,667 - - - - - - Mr Ray Shorrocks (appointed 30 June 2020) 2020 - 20,000 - Mr Shaun Hardcastle 2019 - - - 2020 - 20,333 - 2019 - - - - - - - - - - - - - i s t h g R e c n a m r o f r e P ) h s a c - n o n ( s n o i t p O d e t s i l n U ) h s a c - n o n ( n o i t a u n n a r e p u S % d e s a b e c n a m r o f r e P n o i t a r e n u m e r f o l a t o T 950 78 291,680 341,033 85.6 4,117 3,376 - - 2,533 2,845 1,520 78 3,293 3,376 - - - - - 50,826 6.6 - - 33,795 8.4 17,598 0.4 41,336 8.2 - - - - - - - - 291,680 311,680 93.6 - - - 291,680 312,013 93.5 - - - 26 Executives James Merrillees (resigned 30 June 2020) Mr Simon Jackson (appointed Executive Director 31 August 2020, 2020 112,500 - 8,654 - 10,688 3,838 2019 225,000 - 17,308 - 23,019 16,469 - - 135,680 2.8 281,796 5.8 2020 62,667 - 3,077 - 5,953 78 291,680 363,455 80.3 formerly Non Executive 2019 34,667 - - Director) Michael Naylor1 Susan Field (appointed 23 December 2020) Total Remuneration 2020 2019 2020 2019 - - - - 81,000 - 78,000 - - - - - - - - - - 3,293 3,376 - 41,336 8.2 - - - - - - - - 291,680 372,680 78.3 - - - 78,000 - - - - - 2020 201,167 159,658 11,731 - 19,111 4,072 1,458,400 1,854,139 78.9 2019 364,334 79,750 17,308 - 36,255 29,442 - 527,089 5.6 1Amount owing on 31 December 2020, $7,500 and at 31 December 2019, $6,000. Shares Issued on Exercise of Options and Performance Rights 2020 There were no shares issued on exercise of options or performance rights during the year. However, subsequent to year end former Director James Merrillees is to be issued 350,000 shares pertaining to having met the hurdles required for Class A and B Performance Rights during the 2020 financial period. These Performance Rights hurdles were disclosed within the 2019 annual report. 2019 750,000 performance rights to the value of $11,822 was granted as part of the former MD’s remuneration during the year ended 31 December 2019 of which 400,000 lapsed during the same period. 27 Shares held by directors and key management personnel, including their related parties, as set out below: Balance at Balance at Received Other Balance Balance at during start of the date of the year on acquisition/ at date of end of year appointment exercise of disposal of shares resignation the year options during the year Non-Executive directors Mr Michael Bohm 4,226,669 Mr Raymond Shorrocks (appointed 30 June 2020) Mr Shaun Hardcastle (appointed 30 June 2020) Dr Oliver Kreuzer (resigned 30 June 2020) Executives Mr James Merrillees (resigned 30 June 2020) Mr Simon Jackson - - 2,008,334 200,000 (appointed Executive Director 31 August 2020, formerly Non Executive 404,446 Director) Mr Michael Naylor 2,241,667 Ms Susan Field Total - 9,081,116 - - - - - - - - - - - - - - - - - - 1,495,726 2,051,281 829,060 - - - 5,722,395 2,051,281 829,060 - (2,008,334) - (200,000) - - 2,111,111 - 2,515,557 2,883,263 - - - 5,124,930 - 9,370,441 (2,208,334) 16,243,223 28 Performance rights held by Directors and key management personnel There were no Performance Rights granted to the Managing Director, Executive Director or Non-Executive Directors during the year. Balance at Granted as Received during Lapsed/ Held at Vested and start of the remuneration the year on forfeited 31 December 2020 exercisable at 31 year exercise of options or date of resignation December 2020 Non-Executive Directors Mr Michael Bohm 100,000 Mr Raymond Shorrocks (Appointed 30 June 2020) Mr Shaun Hardcastle (Appointed 30 June 2020) - - Dr Oliver Kreuzer (Resigned 30 June 2020) 100,000 Executives Mr James Merrillees (resigned 30 June 2020) 700,000 Mr Simon Jackson (appointed Executive Director 31 August 2020, 100,000 formerly Non Executive Director) Mr Michael Naylor Ms Susan Field - - Total 1,000,000 - - - - - - - - - - - - - - - - (100,0001) - - (100,0001) - - (350,000)1 350,000 2 (100,0001) - - - - - (650,000)1 350,000 - - - - - - - - 1 650,000 performance rights from tranche 2 were not achieved and were cancelled on 15 January 2020 2 Subsequent to year end 350,000 share are to be issued pertaining to Class A and B performance rights issued to former Director James Merrillees with the hurdles required for Class A and B Performance Rights issued during the 2019 financial period having been met. 29 Unlisted options held by Directors and key management personnel Grant Date Date of Expiry Fair Value Exercise Price Issued Balance 1 Jan 2020 Exercised Balance 31 Dec 2020 22/09/2020 22/09/2023 $0.1458 $0.08 22/09/2020 22/09/2023 $0.1458 $0.08 22/09/2020 22/09/2023 $0.1458 $0.08 22/09/2020 22/09/2023 $0.1458 $0.08 22/09/2020 22/09/2023 $0.1458 $0.08 - - - - - 2,000,0001 2,000,0001 2,000,0001 2,000,0001 2,000,0001 - - - - - Michael Bohm Raymond Shorrocks Shaun Hardcastle Simon Jackson Michael Naylor Total 1 No consideration is paid on issue of Options. 2019 There were no options granted to KMPs as compensation in prior period. Vested and Exercisable 31 Dec 2020 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 10,000,000 10,000,000 10,000,000 30 Performance Rights Subject to the vesting criteria being met, directors will be entitled to exercise the number of performance rights vesting and be issued with a corresponding number of ordinary shares in the Company. s t h g i r e c n a m r o f r e p e h t g n i r u d d e t n a r g ) $ ( 1 r a e y Year of grant d e d r a w a . o n l a t o T e t a d d r a w A e t a d g n i t s e V e t a d y r i p x E e c n a m r o f r e p f o e u a v l r i a F ) $ ( e t a d d r a w a t a t h g i r e c i r p e s i c r e x E / d e l l e c n a c / d e s p a l . o N r a e y g n i r u d d e t i e f r o f Mr Bohm 2018 100,0001 25 May 18 NA 15 Jan 20 0.19 Nil (100,000)2 Mr Jackson 2018 100,0001 25 May 18 NA 15 Jan 20 0.19 Nil (100,000)2 Dr Kreuzer 2018 100,0001 25 May 18 NA 15 Jan 20 0.19 Nil (100,000)2 Mr Merrillees 2018 350,0001 25 May 18 NA 15 Jan 20 0.19 Nil (350,000)2 2019 175,0001, 3 27 May 19 NA 31 Dec 20 0.05 Nil 2019 175,0001, 3 27 May 19 NA 31 Dec 20 0.05 Nil Total 1,000,000 - - (650,000)2 r a e y g n i r u d d e t n a r g . o N - - - - - - - f o e u a v l l a t o T - - - - - - - d e s i n g o c e r t n u o m A ) $ ( d o i r e p g n i t s e v n o d e s a b 0 2 0 2 n i 78 78 78 274 2,176 1,388 4,072 1. The total value has been determined using management’s estimates and judgments, applying weighted probabilities to determine the most likely outcome of the vesting criteria that will be met during the vesting period and multiplying the quantity of rights expected to vest by the fair value at award date. These estimates were made based on how the company has historically performed relative to the peer Company and future considerations. The total value attributable to each key management personnel is first determined and then expensed evenly over the vesting period (herein the period between the Award date and Expiry date) and thus only a portion is recognised in the current period. 650,000 performance rights from tranche 2 were not achieved and were cancelled on 15 January 2020. These performance rights were not cancelled, as the performance hurdles were achieved and shares are to be issued 2. 3. subsequent to 31 December 2020. 31 Employment contracts of Directors and senior executives Mr Simon Jackson, Executive Director, has an employment contract with the Company that specifies his employment as an Executive Director and provides for an annual review of remuneration. Mr Jackson received a fixed annual based remuneration of $131,400 (inclusive of superannuation). Prior to his executive appointment on 30 August 2020, Mr Jackson was a Non-Executive Director for the Company. Mr Jackson is required to give the Company is required to give the Company 3 months written notice and the Company is required to give Mr Jackson 3 months’ notice to terminate the contract or payment in lieu. The Company has an agreement with Blue Leaf Corporate Pty Ltd, a company associated with Mr Naylor, which commenced on 15 January 2018 for the provision of company secretarial and financial management services. Mr Naylor is required to give the Company 90 days’ notice to terminate the contract and the Company is required to give Mr Naylor 90 days’ notice to terminate the contract or payment in lieu. Mr James Merrillees, previously Managing Director, had an employment contract with the Company that specified duties and obligations to be fulfilled and provides for an annual review of remuneration. Mr Merrillees received a fixed annual based remuneration of $246,375 (inclusive of superannuation). Mr Merrillees was required to give the Company a minimum of six weeks’ notice to terminate the agreement and the Company was required to give Mr Merrillees three months’ notice to terminate the contract or payment in lieu. Mr Merrillees resigned as Managing Director effective 30 June 2020 and as an employee effective 30 September 2020. Loans to key management personnel There were no loans to key management personnel of the Company, including their personally related parties, as at 31 December 2020 or 31 December 2019. Other transactions with key management personnel Mr Hardcastle is a Partner of the following related party which transacted with the Company. Entity Services provided 2020 2019 HWL Ebsworth Company secretarial and financial management services *Amount owing at 31 December 2020, $1,012 and at 31 December 2019 $Nil. $49,587.50* -* There were no other transactions with key management personnel. Voting and comments made at the Company’s last Annual General Meeting Cygnus received a 99.98% “yes” votes on its Remuneration Report for the year ended 31 December 2019. The Company received no specific feedback on its Remuneration Report at the Annual General Meeting. END OF REMUNERATION REPORT 32 Meetings of directors During the financial year, six meetings of directors were held and attendances by each director during the year were as follows: Director’s names Number attended Number eligible to attend Michael Bohm Simon Jackson Ray Shorrocks Shaun Hardcastle James Merrillees (Resigned 30 June 2020) Dr Oliver Kreuzer (Resigned 30 June 2020) 5 5 1 1 4 4 5 5 1 1 4 4 Given the size of the Board the Company has decided that there are no efficiencies to be gained from forming separate committees. Share options and performance rights There are 29,500,000 share options on issue (2019: Nil) and there were 350,000 performance rights on issue (2019: 350,000) at the date of this report. Indemnifying officers In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every officer of the Company shall be indemnified out of the property of the Company against any liability incurred by him in his capacity as officer or agent of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal. The terms of the policy prevent disclosure of the amount of the premium payable and the level of indemnification under the insurance contract. Indemnifying of auditors In accordance with the constitution, except as may be prohibited by the Corporations Act 2001, every officer to the extent permitted by law, the Company has agreed to indemnify its auditors, Grant Thornton, as part of the terms of its audit engagement agreement, against claims by third parties arising from the audit (for an unspecified amount). No payments have been made to indemnify Grant Thornton to the date of this report. 33 Proceedings on behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of these proceedings. The Company was not a party to any such proceedings during the year. Non-audit services During the year, related practices to Grant Thornton Audit Pty Ltd, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non-audit services during the year is compatible with, and 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 of Directors to ensure they do not impact upon the impartiality and objectivity of the auditor the non-audit services 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 The total remuneration for audit and non-audit services provided during the prior and current financial years is set out in note 10 of the financial statements. Auditor’s independence declaration The lead auditor’s independence declaration for the year ended 31 December 2020 has been received and is attached to this Directors’ Report. This report is made in accordance with a resolution of the directors. Simon Jackson Executive Director Dated in Perth this 31 day of March 2021. Notes 1. 2. Refer ASX announcement on the said date for full details of these exploration results. Cygnus is not aware of any new information or data that materially affects the information included in the said announcement. Information on historical results from the Stanley Project, including JORC Code Table 1 information, is contained in the Independent Technical Assessment Report within Cygnus’ Prospectus dated 22 November 2017. Cygnus is not aware of any new information or data that materially affects the information included in the Prospectus. 34 Competent Persons Statement The information in this annual report that relates to Exploration Results is based on information and supporting documentation compiled by Mr James Merrillees, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy. Mr Merrillees was previously the Managing Director up until 30 June 2020 and a previous employee of Cygnus and holds shares in the Company. Mr Merrillees has sufficient experience relevant to the style of mineralisation 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 Merrillees consents to the inclusion in this annual report of the matters based on this information in the form and context in which it appears. Forward Looking Statement This report may contain certain forward-looking statements and projections regarding estimated, resources and reserves; planned production and operating costs profiles; planned capital requirements; and planned strategies and corporate objectives. Such forward looking statements/ projections are estimates for discussion purposes only and should not be relied upon. They are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors many of which are beyond the control of Cygnus Gold Limited. The forward-looking statements/projections are inherently uncertain and may therefore differ materially from results ultimately achieved. Cygnus Gold Limited does not make any representations and provides no warranties concerning the accuracy of the projections, and disclaims any obligation to update or revise any forward-looking statements/projects based on new information, future events or otherwise except to the extent required by applicable laws. While the information contained in this report has been prepared in good faith, neither Cygnus Gold or any of its directors, officers, agents, employees or advisors give any representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. Accordingly, to the maximum extent permitted by law, none of Cygnus Gold Limited, its directors, employees or agents, advisers, nor any other person accepts any liability whether direct or indirect, express or limited, contractual, tortuous, statutory or otherwise, in respect of, the accuracy or completeness of the information or for any of the opinions contained in this presentation or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this report. 35 Central Park, Level 43 152-158 St Georges Terrace Perth WA 6000 Correspondence to: PO Box 7757 Cloisters Square Perth WA 6000 T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Cygnus Gold Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Cygnus Gold Limited for the year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants L A Stella Partner – Audit & Assurance Perth, 31 March 2021 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 36 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2020 REVENUE Other income EXPENSES Audit and accounting Borrowing costs Consultants and contractors Corporate costs Depreciation and amortisation Depreciation on right of use assets Employee benefits expense Exploration and evaluation written off Exploration and evaluation costs Interest expense of lease liability Listing and compliance Share based payments – unlisted options Share based payments – performance rights Office rental & outgoings Travel and accommodation Results from operating activities Finance income Loss before income tax Income tax expense Loss after income tax for the year Other comprehensive loss Total comprehensive loss for the year, net of tax Notes 2020 $ 2019 $ 3 8.3 18 19 17 7 8.3 8.4 20 434,685 434,685 (30,617) (136) (2,374,074) (136,393) (41,157) (6,192) (261,350) (3,985,457) (55,384) (1,354) (69,921) (1,166,720) (7,676) (23,196) (114) 208,098 208,098 (37,122) - (86,300) (143,263) (42,869) - (220,272) (437,351) (8,872) - (50,833) - (29,442) (41,364) (4,432) (8,159,741) (1,102,120) (7,725,056) 4,626 (7,720,430) - (894,022) 23,105 (870,917) - (7,720,430) (870,917) - - (7,720,430) (870,917) Loss per share attributable to equity holders of the Company: Basic and diluted loss per share (cents per share) 9 (9.49) (1.42) This statement above should be read in conjunction with the Notes to the Financial Statements. 37 Consolidated Statement of Financial Position As at 31 December 2020 Notes 2020 $ 2019 $ ASSETS Current Cash and cash equivalents Trade and other receivables Total current assets Non-current assets Exploration & evaluation Property, plant and equipment Right of Use Assets Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables Provisions Lease liabilities Total current liabilities Non-current liabilities Provisions Lease liabilities Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Accumulated losses TOTAL EQUITY 4 5 17 18 19 6 7 7 8 8.1 3,385,934 39,580 3,425,514 - 52,674 68,119 120,793 3,546,307 97,006 3,369 13,087 113,462 - 56,019 56,019 169,481 3,376,826 9,130,519 4,313,389 (10,067,082) 3,376,826 1,774,659 161,461 1,936,120 3,445,813 68,298 - 3,514,111 5,450,231 338,076 18,952 - 357,028 8,830 - 8,830 365,858 5,084,373 7,427,596 28,129 (2,371,352) 5,084,373 This statement above should be read in conjunction with the Notes to the Financial Statements. 38 Consolidated Statement of Changes in Equity For the year ended 31 December 2020 Other Share Based Share Contributed Payment Accumulated s e t o N Capital Equity Reserve Losses Total Equity $ $ $ $ $ Balance at 1 January 2019 7,128,373 Loss for the year Other comprehensive loss Total comprehensive loss Transactions with owners Issue of share capital Share issue expense Transfer of reserve upon forfeit of performance rights Share based payment expensed Balance at 31 December 2019 Balance at 1 January 2020 Loss for the year Other comprehensive loss Total comprehensive loss Transactions with owners Issue of share capital Share issue expense Transfer of reserve upon forfeit of performance rights Share based payment expensed – Performance Rights Share based payment expensed – Unlisted Options - - - 8 8 302,710 (3,487) - - 7,427,596 7,427,596 - - - 2,587,750 (884,827) - - - 8 8 8.4 8.4 8.2 8.3 Balance at 31 December 2020 9,130,519 - - - - - - - - - - - - - - - - - - - 2,596 (1,504,344) 5,626,625 - - - - - (870,917) (870,917) - - (870,917) (870,917) - - 302,710 (3,487) (3,909) 3,909 - 29,442 - 29,442 28,129 (2,371,352) 5,084,373 28,129 (2,371,352) 5,084,373 - - - - - (7,720,430) (7,720,430) - - (7,720,430) (7,720,430) - - 2,587,750 (884,827) (24,700) 24,700 7,676 4,302,284 - - - 7,676 4,302,284 4,313,389 (10,067,082) 3,376,826 This statement above should be read in conjunction with the Notes to the Financial Statements. 39 Consolidated Statement of Cash Flows For the year ended 31 December 2020 Notes 2020 $ 2019 $ Operating activities Payments to suppliers and employees (554,418) (863,144) Payments for exploration expenditure Interest received Other income Net cash used in operating activities Investing activities - 5,422 434,685 (114,311) (5,983) 24,445 208,098 (636,584) 3 11 Payments for acquisition of mining tenements (26,840) (14,574) Payments for capitalised exploration expenditure (2,642,143) (1,466,092) Purchase of property plant and equipment EIS Grant-Co-funded Exploration Drilling Program Funds received for joint venture (25,533) 51,952 1,790,187 (8,815) 89,362 - Net cash used in investing activities (852,377) (1,400,119) Financing activities Proceeds from share issued Costs of shares issued Net cash provided by financing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of year 8 8 4 2,587,750 (9,787) 2,577,963 1,611,275 1,774,659 3,385,934 302,710 (3,487) 299,223 (1,737,480) 3,512,139 1,774,659 This statement above should be read in conjunction with the Notes to the Financial Statements. 40 Notes to the Financial Statements 1. Company information The financial statements of Cygnus Gold Limited and its’ subsidiaries, together referred to as the Group or Cygnus for the year ended 31 December 2020 and authorised for issue in accordance with a resolution of the directors on 31 March 2021. Cygnus is a for-profit Company incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange. The address of its registered office and its principal place of business is Ground Floor, 24 Outram Street, West Perth, WA 6005. The nature of the operations and principal activities include the exploration for gold and base metals deposits in Western Australia and are described further in the Directors’ Report. 2. General information and statement of compliance The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis. The financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. 3. Other income Joint venture management fee COVID Cashflow Boost Other Income 2020 $ 334,685 100,000 434,685 2019 $ 208,098 - 208,098 41 4. Cash and cash equivalents Cash at bank and on hand Short-term deposits Cash and cash equivalents 2020 $ 785,934 2,600,000 3,385,934 2019 $ 774,659 1,000,000 1,774,659 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. 5. Trade and other receivables Trade and other receivables Gold Road funds receivable Prepayments 2020 $ 33,312 - 6,268 39,580 2019 $ 45,979 16,370 99,112 161,461 All amounts are short-term. The carrying values of trade and other receivables are considered to be a reasonable approximation of fair value. 6. Trade and other payables Trade and other payables 2020 $ 97,006 97,006 2019 $ 338,076 338,076 All amounts are short-term. The carrying values of trade and other payables are considered to be a reasonable approximation of fair value 42 7. Lease liabilities Current Non Current Amount recognised in profit or loss Interest expense incurred on lease liability 2020 $ 13,087 56,019 69,106 1,354 Lease Liability Maturity Within 1 Year 1 – 2 years 2 – 3 Years 3 – 4 Years 4 – 5 Years 15,931 16,384 16,851 17,331 10,276 Lease payments Finance Charges 2019 $ - - - - Total 76,773 (2,844) (2,234) (1,574) (863) (152) (7,667) Net Present Value 13,087 14,150 15,277 16,468 10,124 69,106 8. Contributed equity and reserves The share capital of Cygnus consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of the Company. Shares issued and fully paid: Beginning of the year Share issue Share issue costs 2020 Shares 2019 Shares 2020 $ 2019 $ 68,251,081 60,683,341 7,427,596 7,128,373 39,819,017 7,567,740 2,587,750 302,710 - - (884,827)1 (3,487) Total contributed equity at 31 December 108,070,098 68,251,081 9,130,519 7,427,596 1 During the period the Company issue 6,000,000 unlisted options to sponsoring brokers which have been collectively valued using Black-Scholes option pricing formula valuing them at $875,040 which have been treated as share issue expenses. Each share has the same right to receive dividend and the repayment of capital and represents one vote at the shareholders’ meeting of Cygnus Gold Limited. 43 8.1 Reserves Share based payments reserve Balance at the beginning of the period Movement in share based payments reserve Notes 2020 $ 2019 $ 28,129 2,596 Share based payment expense – Unlisted Option 8.2, 8.3 4,302,284 - Share based payment expense – Performance rights - Key Management 8.4 7,676 29,442 Personnel Transfer out of reserve upon: Cancellation of performance rights Balance at the end of the period 8.2 Share options (24,700) 4,313,389 (3,909) 28,129 As approved by shareholders at General Meeting of Shareholders held on 7 September 2020 and on 22 September 2020 the Company issued a total of 29,500,000 unlisted options on the terms and conditions as detailed below to a combination of Directors and advisors. The following table illustrates option movement during the year ended 31 December 2020. Grant Date Date of Expiry Exercise Balance Granted Exercised Balance Vested and Price 1 January 31 December Exercisable 22/09/20 22/09/23 $ $0.08 2020 - 29,500,000 Total 29,500,000 2020 29,500,000 29,500,000 29,500,000 29,500,000 - - The fair value at grant date stated in the table for remaining options was determined using the Black-Scholes valuation methodology for options granted and takes into account the following inputs: Number Fair value Option Risk Free Notes Grant date & Vesting date Expiry date of option exercise Interest Expected at grant date $ price $ Rate % Volatility % Total Value $ 29,500,000 22/09/20 22/09/23 0.1458 0.08 0.28 101 8.3 4,302,284 44 8.3 Share based payments – Unlisted options Share based payment expense – Unlisted Option - Share issue expenses Share based payment expense – Unlisted Options - Consultants 2020 $ 875,040 2,260,5241 Share based payment expense – Unlisted options – Key Management Personnel 1,166,720 4,302,284 2019 $ - - - - 1 The fair value determined for these Options is Included in consultants and contractor expenses for the year of $2,374,074 as disclosed in the Statement of Profit or Loss and Other Comprehensive Income on Page 37. 8.4 Performance rights The table below discloses the number of performance rights granted, vested or lapsed during the year. Each performance rights converts to one ordinary share in the Company upon satisfaction of the performance conditions linked to the rights. The rights do not carry any other privileges. The fair value of the performance rights granted is determined based on the number of rights awarded multiplied by the share price of the Company on the date awarded. Management has assessed the most probable outcomes to be achieved by the expiry date and has used weighted probabilities to determine the value of the rights accordingly. The expense recorded as share based payments is recognized straight-line over the vesting period (in this case, from the award date to the expiry). 1 r a e y e h t g n i r u d d e t n a r g s t h g i r e c n a m r o f r e p Year of grant . o n l a t o T d e d r a w a e t a d d r a w A e t a d g n i t s e V e t a d y r i p x E d r a w a t a t h g i r ) $ ( e t a d e c i r p e s i c r e x E . o N / d e l l e c n a c / d e s p a l g n i r u d d e t i e f r o f r a e y d e t n a r g . o N r a e y g n i r u d f o e u a v l l a t o T f o e u a v l r i a F e c n a m r o f r e p Mr Bohm 2018 100,0001 25 May 18 NA 15 Jan 20 0.19 Nil (100,000)2 - Mr Jackson 2018 100,0001 25 May 18 NA 15 Jan 20 0.19 Nil (100,000)2 - Dr Kreuzer 2018 100,0001 25 May 18 NA 15 Jan 20 0.19 Nil (100,000)2 - Mr Merrillees 2018 350,0001 25 May 18 NA 15 Jan 20 0.19 Nil (350,000)2 - 2019 175,0001, 3 27 May 19 NA 31 Dec 20 0.05 2019 175,0001, 3 27 May 19 NA 31 Dec 20 0.05 Total 1,000,000 Nil Nil - - - - (650,000)2 - - - - - - - - n o d e s a b 0 2 0 2 n i d e s i n g o c e r d o i r e p g n i t s e v ) $ ( ) $ ( t n u o m A 78 78 78 274 2,791 4,377 7,676 45 8.4 Performance rights continued 1 The total value has been determined using management’s estimates and judgments, applying weighted probabilities to determine the most likely outcome of the vesting criteria that will be met during the vesting period and multiplying the quantity of rights expected to vest by the fair value at award date. These estimates were made based on how the company has historically performed relative to the peer Company and future considerations. The total value attributable to each key management personnel is first determined and then expensed evenly over the vesting period (herein the period between the Award date and Expiry date) and thus only a portion is recognised in the current period. 2 650,000 performance rights from tranche 2 were not achieved and were cancelled on 15 January 2020. 3 These performance rights were not cancelled, as the performance hurdles were achieved and shares issued subsequent to 31 December 2020. 9. Loss per share Both the basic and diluted loss per share have been calculated using the loss attributable to shareholders of the Company as the numerator (i.e. no adjustments to loss were necessary in 2020). 2020 $ 2019 $ Net loss attributable to ordinary equity holders of the Company (7,720,430) (870,917) Weighted average number of ordinary shares outstanding during the year used in calculating basic and diluted loss per share 81,336,028 61,265,475 Basic and diluted loss per share (cents per share) (9.49) (1.42) 10. Auditor remuneration Audit and review of financial statements 2020 $ 2019 $ Auditors of Cygnus Gold Limited - Grant Thornton Audit Pty Ltd 30,617 37,122 Non-audit services Tax compliance Total auditor’s remuneration 4,650 5,800 35,267 42,922 46 11. Reconciliation of cashflows from operating activities Notes 2020 $ 2019 $ Cash flows from operating activities Loss for the period Depreciation and amortisation Depreciation on right of use assets Exploration and evaluation impairment and costs Share based payment expense – Unlisted Options - Consultants Share based payment expense – Unlisted options - Key Management Personnel Share based payment expense – Performance rights - Key Management Personnel Transfer of reserve upon forfeit of performance rights 8.3 8.3 8.4 Other Net changes in working capital: Change in trade and other receivables Change in employee benefits provisions Change in trade and other payables Net cash used in operating activities (7,720,430) (870,917) 41,157 42,869 6,192 - 3,985,487 446,223 2,260,524 29,442 1,166,720 7,676 24,700 (2,330) - - - 121,881 (257,742) (24,413) (1,569) 18,525 (24,890) (114,311) (636,584) 47 12. Related Party Transactions a) Names and positions of key management personnel in office at any time during the financial year: Michael Bohm Simon Jackson Non-Executive Chairman Executive Director (Appointed Executive Director on 31 August 2020, previously Non-Executive Director) Raymond Shorrocks Non-Executive Director (Appointed 30 June 2020) Shaun Hardcastle Non-Executive Director (Appointed 30 June 2020) Oliver Kreuzer Non-Executive Director (Resigned 30 June 2020) James Merrillees Managing Director (Resigned 30 June 2020) Michael Naylor Joint Company Secretary Susan Field Joint Company Secretary (Appointed 23 December 2020) b) Key management personnel remuneration Short term employee benefits Post-employment benefits Share based payments (non-cash) Total 2020 $ 372,556 19,111 1,462,472 1,854,139 2019 $ 461,392 36,255 29,442 527,089 Individual Directors and executive’s compensation disclosures Information regarding individual directors and executive’s compensation and some equity instruments disclosures as required by Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of the Directors’ Report on pages 21 to 32. Apart from the details disclosed in this note, no Director has entered into a material contract with the Company since the end of the previous financial year and there were no material contracts involving directors’ interests existing at the end of the period. 12.1 Other related party transactions Key management of the Company are the executive members of Cygnus’s Board of Directors and members of the Executive Council. All transactions with other related parties are made on normal commercial terms and conditions and at deemed market – rates. Mr Hardcastle is a Partner of the following related party which transacted with the Company. Entity Services provided HWL Ebsworth Legal services 2020 $49,587.50* 2019 -* *Amount owing at 31 December 2020, $1,012 and at 31 December 2019 $Nil. 48 12.1 Other related party transactions continued Mr Naylor is a Director of the following related party entity which transacted with the Company. – Entity Services provided Blue Leaf Corporate Pty Ltd Company secretarial and financial management services *Amount owing at 31 December 2020, $7,500 and at 31 December 2019 $6,000. 2020 2019 $81,000* $78,000* 13. Subsidiaries Name of Entity Parent Entity Country of Incorporation 2020 2019 Cygnus Gold Limited Australia 100 100 Subsidiary Deneb Resources Pty Ltd Cygnus Gold (Projects) Pty Ltd Cygnus (JV Projects) Pty Ltd Australia Australia Australia 100 100 100 100 100 100 49 14. Parent entity disclosure Result of the parent entity Loss for the year Other comprehensive expenses 2020 2019 7,722,029 870,917 - - Total Comprehensive loss for the year 7,722,029 870,917 Financial Position of the parent entity at year end: Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total Liabilities 3,410,747 1,936,120 116,005 3,514,111 3,526,752 5,450,231 93,907 357,028 56,019 8,830 149,926 365,858 Total equity of the parent entity comprising of: 3,376,826 5,084,373 Contributed equity Share option reserve Accumulated losses Total equity 9,130,519 7,427,596 4,313,389 28,129 (10,067,082) (2,371,352) 3,376,826 5,084,373 50 15. Financial Risk Management Credit risk The carrying amount of the Group’s financial assets represents the Group’s maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Trade and other receivables Notes 4 5 2020 $ 3,385,934 39,580 2019 $ 1,774,659 161,461 Risks associated with market risk, credit risk and liquidity risk are not considered material with respect to the above items. The Group’s cash and cash equivalents and term deposits at call are held with bank and financial institution counterparties, which are rated at least AA-, based on rating agency S&P Global Ratings. Trade and other receivables include, accrued interest receivable from Australian accredited banks, JV receivables and tax amounts receivable from the Australian Taxation Office. The Group has elected to measure loss allowances for trade and other receivables at an amount equal to the 12 month Expected Credit Loss (ECL). When determining the credit risk of a financial asset, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both the quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment, including forward-looking information. 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. As at 31 December 2020, no receivables were more than 30 days past due. No receivables are considered to have a material credit risk. Liquidity Risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages liquidity risk by monitoring forecast cash flows, only investing surplus cash with major financial institutions; and comparing the maturity profile of financial liabilities with the realisation profile of financial assets. The Board meets on a regular basis to analyse financial risk exposure and evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The Board’s overall risk management strategy seeks to assist the Group in managing its cash flows. Financial liabilities are expected to be settled within 12 months. Notes Carrying Amount $ Contractual Cash Flows $ 6 Months or less $ 2020 Trade and other payables 2019 Trade and other payables 6 6 97,006 338,076 97,006 338,076 97,006 338,076 51 Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates 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 not exposed to significant foreign currency risk on transactions that are denominated in a currency other than the respective functional currencies of the Group entities being the Australian Dollar (AUD). Interest Rate Risk The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s cash. Cash includes funds held in term deposits and cheque accounts during the year, which earned variable interest at rates ranging between 0.05% and 0.62% (2019: 0.9 % and 1.5%), depending on the bank account type and account balances. The Group has no loans or borrowings. At the reporting date the interest rate sensitivity for the Group interest-bearing financial instrument was: Variable rate financial assets Carrying Amount 31 Carrying Amount 31 December 2020 December 2019 $ 3,385,934 $ 1,774,659 A change of 100 basis points in the interest rates at the end of the reporting period would have increased (decreased) profit and loss by the amounts shown below. The analysis assumes that all other variables remain constant. This analysis is performed on the same basis for 2020. 100bp increase 100bp decrease 3,386 1,775 (3,386) (1,775) Capital management policies and procedures The Board policy is to maintain a capital base to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares and retained earnings (or accumulated losses). The Board of Directors manages the capital of the Group to ensure that the Group can fund its operations and continue as a going concern. There are no externally imposed capital requirements. 52 16. Commitments and contingent assets and liabilities Due to the nature of the Group’s operations in exploring and evaluating areas of interest, it is difficult to accurately forecast the nature or amount of future expenditure, although it will be necessary to incur expenditure in order to retain present interests in mineral tenements. Annual rent on exploration licenses held by the Group are $201,174 (2019: $205,333) with a minimum exploration commitment of $1,149,000 (2019: $1,303,500) per annum. The Group is not aware of any other contingent commitments. 17. Exploration and evaluation Opening balance Expenditure incurred during the year Exploration and evaluation expenditures written off Reimbursement from Farm in Exploration expenditure State Government Co-Funded exploration drilling support Closing balance Impairment 2020 $ 3,445,813 3,237,204 (3,985,457) (2,645,608) (51,952) 2019 $ 2,555,261 2,856,946 (437,351) (1,411,851) (117,192) - 3,445,813 Impairment of specific exploration and evaluation assets during the year have occurred where Directors have concluded that capitalised expenditure is unlikely to be recovered by sale or future exploitation. At each reporting date the Group undertakes an assessment of the carrying amount of its exploration and evaluation assets. During the year indicators of impairment were identified on certain exploration and evaluation assets in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources. As a result of this review, an impairment loss of $3,985,457 has been recognised in relation to areas of interest where the directors have concluded that capitalised expenditure is unlikely to be recovered by sale or future exploitation. 53 18. Property, plant and equipment Assets at cost Accumulated depreciation Carrying value 31 December 2020 $ 165,524 (112,850) 52,674 2019 $ 139,991 (71,693) 68,298 Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current year, is as follows: IT equipment Field equipment Motor vehicles $ $ $ Total $ 10,610 4,252 (10,174) 4,688 13,025 15,599 (17,388) 11,236 44,663 68,298 5,682 25,533 (13,595) (41,157) 36,750 52,674 Balance at 1 January 2020 Additions Depreciation expense Balance at 31 December 2020 19. Right of use assets On initial recognition Right of use assets at cost Depreciation for the period Accumulated depreciation Net carrying amount Amount recognised in profit or loss Depreciation expense on right to use assets 2020 $ 74,311 74,311 6,192 6,192 68,119 6,192 2019 $ - - - - - - 54 20. Income tax expense The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate is at 27.5% (2019: 27.5%) and the reported tax expense in profit or loss are as follows: Accounting loss before tax At Australia’s statutory income tax rate of 26.0% (2019: 27.5%) Expenditure not allowed for income tax purposes Non deductible Option expense Deferred income tax at balance date relates to the following: Deferred tax assets not brought to account Income tax expense attributable to entity 2020 $ 2019 $ 7,720,430 870,917 (2,007,311) (239,502) (24,876) 893,079 9,082 - 1,139,108 230,420 - - Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have been recognised are attributable to the following: Unrecognised deferred tax asset losses Unrecognised deferred tax asset other Unrecognised deferred tax liability as a result of other 21. Operating segments 1,804,093 1,646,309 74,048 87,286 (19,376) (975,111) 1,858,765 758,484 The Group has identified its operating segments based on the internal reports that are reviewed and used by the directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Group operates in one segment being Exploration and Evaluation of Minerals in Western Australia. 55 22. Significant accounting policies 22.1 New accounting standards and interpretations The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current period. Any new or Amended Standards or Interpretations that are not mandatory have not been early adopted. Accounting Policy - AASB 16 Leases During the year the Group entered into a sub-lease for part of office space located at Ground Floor, 24 Outram Street, West Perth and as such has been required to account for this in accordance with AASB 16: Leases for the first time. This note describes the nature and effect of the adoption of AASB 16: Leases on the Group’s financial statements and discloses the new accounting policies that have been applied from 1 August 2020 being the initial date covered by the sub lease. The Group as lessee At inception of a contract the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-use asset and a corresponding liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. leases with a remaining lease term of 12 months or less and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially, the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows; - - - - - - fixed lease payments less any lease incentives; variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; the amount expected to be payable by the lessee under residual value guarantees; the exercise price of purchase options if the lessee is reasonably certain to exercise the options; lease payments under extension options, if the lessee is reasonably certain to exercise the options; and payments of penalties for terminating the lease, if the lease term reflects the exercise of options to terminate the lease. Impact of standards issued but not yet applied: Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. 22.2 Functional and presentation currency The functional currency of Group is measured using the currency of the primary economic environment in which that entity operates. The financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. 56 22.3 Parent entity disclosure The financial information for the parent entity, Cygnus Gold Limited, disclosed in Note 14 has been prepared on the same basis as the consolidated financial statements, other than investments in subsidiaries, which have been recorded at cost less impairments. 22.4 Principles of consolidation The consolidated financial statements comprise the financial statements of the Group. A list of significant controlled entities (subsidiaries) at year end is contained in note 13. The financial statements of subsidiaries are prepared for the same reporting period a the parent entity, using consistent accounting policies. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. 22.5 Operating expenses Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised. 22.6 Financial instruments Financial instruments (cid:4)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:349)(cid:374)(cid:400)(cid:410)(cid:396)(cid:437)(cid:373)(cid:286)(cid:374)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:258)(cid:374)(cid:455)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:336)(cid:349)(cid:448)(cid:286)(cid:400)(cid:3)(cid:396)(cid:349)(cid:400)(cid:286)(cid:3)(cid:410)(cid:381)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:381)(cid:296)(cid:3)(cid:381)(cid:374)(cid:286)(cid:3)(cid:286)(cid:374)(cid:410)(cid:349)(cid:410)(cid:455)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:381)(cid:396)(cid:3)(cid:286)(cid:395)(cid:437)(cid:349)(cid:410)(cid:455)(cid:3)(cid:349)(cid:374)strument of another entity. Other receivables Other receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently carried at amortised cost using the effective interest method, less an allowance for any estimated shortfall in receipt. An estimate of any shortfall in (cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:393)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:373)(cid:258)(cid:282)(cid:286)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:349)(cid:400)(cid:3)(cid:381)(cid:271)(cid:361)(cid:286)(cid:272)(cid:410)(cid:349)(cid:448)(cid:286)(cid:3)(cid:286)(cid:448)(cid:349)(cid:282)(cid:286)(cid:374)(cid:272)(cid:286)(cid:3)(cid:258)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400)(cid:3)(cid:346)(cid:258)(cid:400)(cid:3)(cid:271)(cid:286)(cid:286)(cid:374)(cid:3)(cid:349)(cid:374)(cid:272)(cid:437)(cid:396)(cid:396)(cid:286)(cid:282)(cid:856)(cid:3)(cid:17)(cid:258)(cid:282)(cid:3)(cid:282)(cid:286)(cid:271)(cid:410)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:449)(cid:396)(cid:349)(cid:410)(cid:410)(cid:286)(cid:374)(cid:3)(cid:381)(cid:296)(cid:296)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374)(cid:3)(cid:349)(cid:282)(cid:286)(cid:374)(cid:410)(cid:349)(cid:302)(cid:286)(cid:282)(cid:856) Trade and other payables Liabilities for creditors and other amounts are carried at amortised cost, which is the present value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity. The carrying period is dictated by market conditions but is generally less than 45 days. Initial recognition and measurement 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(cid:100)(cid:346)(cid:286)(cid:3)(cid:272)(cid:367)(cid:258)(cid:400)(cid:400)(cid:349)(cid:302)(cid:272)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:258)(cid:410)(cid:3)(cid:349)(cid:374)(cid:349)(cid:410)(cid:349)(cid:258)(cid:367)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:282)(cid:286)(cid:393)(cid:286)(cid:374)(cid:282)(cid:400)(cid:3)(cid:381)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:859)(cid:400)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:437)(cid:258)(cid:367)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:3)(cid:272)(cid:346)(cid:258)(cid:396)(cid:258)(cid:272)(cid:410)(cid:286)(cid:396)(cid:349)(cid:400)(cid:410)ics and the Group(cid:859)(cid:400)(cid:3)(cid:271)(cid:437)(cid:400)(cid:349)(cid:374)(cid:286)(cid:400)(cid:400)(cid:3)(cid:373)(cid:381)(cid:282)(cid:286)(cid:367)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:373)(cid:258)(cid:374)(cid:258)(cid:336)(cid:349)(cid:374)(cid:336)(cid:3)(cid:410)(cid:346)(cid:286)(cid:373)(cid:856)(cid:3)(cid:116)(cid:349)(cid:410)(cid:346)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:286)(cid:454)(cid:272)(cid:286)(cid:393)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)(cid:410)(cid:396)(cid:258)(cid:282)(cid:286)(cid:3)(cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:448)(cid:258)(cid:271)(cid:367)(cid:286)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:282)(cid:381)(cid:3)(cid:374)(cid:381)(cid:410)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:258)(cid:349)(cid:374)(cid:3)(cid:258)(cid:3)(cid:400)(cid:349)(cid:336)(cid:374)(cid:349)(cid:302)(cid:272)(cid:258)(cid:374)(cid:410)(cid:3) (cid:302)(cid:374)(cid:258)(cid:374)cing component or for which the Group has applied the practical expedient, the Group (cid:349)(cid:374)(cid:349)(cid:410)(cid:349)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:373)(cid:286)(cid:258)(cid:400)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:258)(cid:410)(cid:3) its fair (cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:3)(cid:393)(cid:367)(cid:437)(cid:400)(cid:853)(cid:3)(cid:349)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:272)(cid:258)(cid:400)(cid:286)(cid:3)(cid:381)(cid:296)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:374)(cid:381)(cid:410)(cid:3)(cid:258)(cid:410)(cid:3)(cid:296)(cid:258)(cid:349)(cid:396)(cid:3)(cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)(cid:346)(cid:3)(cid:393)(cid:396)(cid:381)(cid:302)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400)(cid:853)(cid:3)(cid:410)(cid:396)(cid:258)(cid:374)(cid:400)(cid:258)(cid:272)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:272)(cid:381)(cid:400)(cid:410)(cid:400)(cid:856)(cid:3)(cid:100)(cid:396)(cid:258)(cid:282)(cid:286)(cid:3)(cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:448)(cid:258)(cid:271)(cid:367)(cid:286)(cid:400)(cid:3)(cid:410)hat 57 (cid:282)(cid:381)(cid:3)(cid:374)(cid:381)(cid:410)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:258)(cid:349)(cid:374)(cid:3)(cid:258)(cid:3)(cid:400)(cid:349)(cid:336)(cid:374)(cid:349)(cid:302)(cid:272)(cid:258)(cid:374)(cid:410)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:374)(cid:336)(cid:3)(cid:272)(cid:381)(cid:373)(cid:393)(cid:381)(cid:374)(cid:286)(cid:374)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:449)(cid:346)(cid:349)(cid:272)(cid:346)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)Group has applied the practical expedient are measured at the transaction price determined under AASB 15. (cid:47)(cid:374)(cid:3)(cid:381)(cid:396)(cid:282)(cid:286)(cid:396)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:410)(cid:381)(cid:3)(cid:271)(cid:286)(cid:3)(cid:272)(cid:367)(cid:258)(cid:400)(cid:400)(cid:349)(cid:302)(cid:286)(cid:282)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:373)(cid:286)(cid:258)(cid:400)(cid:437)(cid:396)(cid:286)(cid:282)(cid:3)(cid:258)(cid:410)(cid:3)(cid:258)(cid:373)(cid:381)(cid:396)(cid:410)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:272)(cid:381)(cid:400)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:296)air value through OCI, it needs to give rise to cash (cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:858)(cid:400)(cid:381)(cid:367)(cid:286)(cid:367)(cid:455)(cid:3)(cid:393)(cid:258)(cid:455)(cid:373)(cid:286)(cid:374)(cid:410)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:393)(cid:396)(cid:349)(cid:374)(cid:272)(cid:349)(cid:393)(cid:258)(cid:367)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:349)(cid:374)(cid:410)(cid:286)(cid:396)(cid:286)(cid:400)(cid:410)(cid:3)(cid:894)(cid:94)(cid:87)(cid:87)(cid:47)(cid:895)(cid:859)(cid:3)(cid:381)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:393)(cid:396)(cid:349)(cid:374)(cid:272)(cid:349)(cid:393)(cid:258)(cid:367)(cid:3)(cid:258)(cid:373)(cid:381)(cid:437)(cid:374)(cid:410)(cid:3)(cid:381)(cid:437)(cid:410)(cid:400)(cid:410)(cid:258)(cid:374)(cid:282)(cid:349)(cid:374)(cid:336)(cid:856)(cid:3)(cid:100)(cid:346)(cid:349)(cid:400)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:400)(cid:400)(cid:373)(cid:286)(cid:374)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:396)(cid:286)(cid:296)(cid:286)rred to as the SPPI test and is performed at an instrument level. The Group’s (cid:271)(cid:437)(cid:400)(cid:349)(cid:374)(cid:286)(cid:400)(cid:400)(cid:3)(cid:373)(cid:381)(cid:282)(cid:286)(cid:367)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:373)(cid:258)(cid:374)(cid:258)(cid:336)(cid:349)(cid:374)(cid:336)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:396)(cid:286)(cid:296)(cid:286)(cid:396)(cid:400)(cid:3)(cid:410)(cid:381)(cid:3)(cid:346)(cid:381)(cid:449)(cid:3)(cid:349)(cid:410)(cid:3)(cid:373)(cid:258)(cid:374)(cid:258)(cid:336)(cid:286)(cid:400)(cid:3)(cid:349)(cid:410)(cid:400)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:349)(cid:374)(cid:3)(cid:381)(cid:396)(cid:282)(cid:286)(cid:396)(cid:3)(cid:410)(cid:381)(cid:3)(cid:336)(cid:286)(cid:374)(cid:286)(cid:396)(cid:258)(cid:410)(cid:286)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3) (cid:327)(cid:381)(cid:449)(cid:400)(cid:856)(cid:3)(cid:100)(cid:346)(cid:286)(cid:3)(cid:271)(cid:437)(cid:400)(cid:349)(cid:374)(cid:286)(cid:400)(cid:400)(cid:3)(cid:373)(cid:381)(cid:282)(cid:286)(cid:367)(cid:3)(cid:282)(cid:286)(cid:410)(cid:286)(cid:396)(cid:373)(cid:349)(cid:374)(cid:286)(cid:400)(cid:3)(cid:449)(cid:346)(cid:286)(cid:410)(cid:346)(cid:286)(cid:396)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:449)(cid:349)(cid:367)(cid:367)(cid:3)(cid:396)(cid:286)(cid:400)(cid:437)(cid:367)(cid:410)(cid:3)(cid:296)(cid:396)(cid:381)(cid:373)(cid:3)(cid:272)(cid:381)(cid:367)(cid:367)(cid:286)(cid:272)(cid:410)(cid:349)(cid:374)(cid:336)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:437)(cid:258)(cid:367)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:853)(cid:3)(cid:400)(cid:286)(cid:367)(cid:367)(cid:349)(cid:374)(cid:336)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367) assets, or both. Subsequent measurement (cid:38)(cid:381)(cid:396)(cid:3)(cid:393)(cid:437)(cid:396)(cid:393)(cid:381)(cid:400)(cid:286)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:400)(cid:437)(cid:271)(cid:400)(cid:286)(cid:395)(cid:437)(cid:286)(cid:374)(cid:410)(cid:3)(cid:373)(cid:286)(cid:258)(cid:400)(cid:437)(cid:396)(cid:286)(cid:373)(cid:286)(cid:374)(cid:410)(cid:853)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:272)(cid:367)(cid:258)(cid:400)(cid:400)(cid:349)(cid:302)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:3)(cid:296)(cid:381)(cid:437)(cid:396)(cid:3)(cid:272)(cid:258)(cid:410)(cid:286)(cid:336)(cid:381)(cid:396)(cid:349)(cid:286)(cid:400)(cid:855) • • • • Financial assets at amortised cost (debt instruments) Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) (cid:38)(cid:349)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:258)(cid:410)(cid:3)(cid:296)(cid:258)(cid:349)(cid:396)(cid:3)(cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)(cid:346)(cid:3)(cid:393)(cid:396)(cid:381)(cid:302)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400) Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group. The Group (cid:373)(cid:286)(cid:258)(cid:400)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:258)(cid:410)(cid:3)(cid:258)(cid:373)(cid:381)(cid:396)(cid:410)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:272)(cid:381)(cid:400)(cid:410)(cid:3)(cid:349)(cid:296)(cid:3)(cid:271)(cid:381)(cid:410)(cid:346)(cid:3)(cid:381)(cid:296)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:296)(cid:381)(cid:367)(cid:367)(cid:381)(cid:449)(cid:349)(cid:374)(cid:336)(cid:3) conditions are met: • • (cid:100)(cid:346)(cid:286)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:346)(cid:286)(cid:367)(cid:282)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:349)(cid:374)(cid:3)(cid:258)(cid:3)(cid:271)(cid:437)(cid:400)(cid:349)(cid:374)(cid:286)(cid:400)(cid:400)(cid:3)(cid:373)(cid:381)(cid:282)(cid:286)(cid:367)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:381)(cid:271)(cid:361)(cid:286)(cid:272)(cid:410)(cid:349)(cid:448)(cid:286)(cid:3)(cid:410)(cid:381)(cid:3)(cid:346)(cid:381)(cid:367)(cid:282)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367) assets in order to collect (cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:437)(cid:258)(cid:367)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:258)(cid:374)(cid:282) (cid:100)(cid:346)(cid:286)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:437)(cid:258)(cid:367)(cid:3)(cid:410)(cid:286)(cid:396)(cid:373)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:336)(cid:349)(cid:448)(cid:286)(cid:3)(cid:396)(cid:349)(cid:400)(cid:286)(cid:3)(cid:381)(cid:374)(cid:3)(cid:400)(cid:393)(cid:286)(cid:272)(cid:349)(cid:302)(cid:286)(cid:282)(cid:3)(cid:282)(cid:258)(cid:410)(cid:286)(cid:400)(cid:3)(cid:410)(cid:381)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:400)(cid:381)(cid:367)(cid:286)(cid:367)(cid:455)(cid:3)(cid:393)(cid:258)(cid:455)(cid:373)(cid:286)(cid:374)(cid:410)(cid:400)(cid:3)(cid:381)(cid:296) principal and interest on the principal amount outstanding Financial assets at amortised cost are subsequently measured (cid:437)(cid:400)(cid:349)(cid:374)(cid:336)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:286)(cid:296)(cid:296)(cid:286)(cid:272)(cid:410)(cid:349)(cid:448)(cid:286)(cid:3)(cid:349)(cid:374)(cid:410)(cid:286)(cid:396)(cid:286)(cid:400)(cid:410)(cid:3)(cid:894)(cid:28)(cid:47)(cid:90)(cid:895)(cid:3)(cid:373)(cid:286)(cid:410)(cid:346)(cid:381)(cid:282)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:400)(cid:437)(cid:271)(cid:361)(cid:286)(cid:272)(cid:410)(cid:3)(cid:410)(cid:381)(cid:3)(cid:349)(cid:373)(cid:393)(cid:258)(cid:349)(cid:396)(cid:373)(cid:286)(cid:374)(cid:410)(cid:856)(cid:3)(cid:39)(cid:258)(cid:349)(cid:374)(cid:400)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400)(cid:286)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:3)(cid:393)(cid:396)(cid:381)(cid:302)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400) (cid:449)(cid:346)(cid:286)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:282)(cid:286)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:853)(cid:3)(cid:373)(cid:381)(cid:282)(cid:349)(cid:302)(cid:286)(cid:282)(cid:3)(cid:381)(cid:396)(cid:3)(cid:349)(cid:373)(cid:393)(cid:258)(cid:349)(cid:396)(cid:286)(cid:282)(cid:856) The Group(cid:859)(cid:400)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)al assets at amortised cost includes trade and other receivables. Derecognition (cid:4)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:894)(cid:381)(cid:396)(cid:853)(cid:3)(cid:449)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:258)(cid:393)(cid:393)(cid:367)(cid:349)(cid:272)(cid:258)(cid:271)(cid:367)(cid:286)(cid:853)(cid:3)(cid:258)(cid:3)(cid:393)(cid:258)(cid:396)(cid:410)(cid:3)(cid:381)(cid:296)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:393)(cid:258)(cid:396)(cid:410)(cid:3)(cid:381)(cid:296)(cid:3)(cid:258)(cid:3)Group (cid:381)(cid:296)(cid:3)(cid:400)(cid:349)(cid:373)(cid:349)(cid:367)(cid:258)(cid:396)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:895)(cid:3)(cid:349)(cid:400)(cid:3)(cid:393)(cid:396)(cid:349)(cid:373)(cid:258)(cid:396)(cid:349)(cid:367)(cid:455)(cid:3) derecognised (i.e., removed from the Group’s sta(cid:410)(cid:286)(cid:373)(cid:286)(cid:374)(cid:410)(cid:3)(cid:381)(cid:296)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:393)(cid:381)(cid:400)(cid:349)(cid:410)(cid:349)(cid:381)(cid:374)(cid:895)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374)(cid:855) • • (cid:100)(cid:346)(cid:286)(cid:3)(cid:396)(cid:349)(cid:336)(cid:346)(cid:410)(cid:400)(cid:3)(cid:410)(cid:381)(cid:3)(cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:448)(cid:286)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:296)(cid:396)(cid:381)(cid:373)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:346)(cid:258)(cid:448)(cid:286)(cid:3)(cid:286)(cid:454)(cid:393)(cid:349)(cid:396)(cid:286)(cid:282)(cid:3)(cid:381)(cid:396) The Group (cid:346)(cid:258)(cid:400)(cid:3)(cid:410)(cid:396)(cid:258)(cid:374)(cid:400)(cid:296)(cid:286)(cid:396)(cid:396)(cid:286)(cid:282)(cid:3)(cid:349)(cid:410)(cid:400)(cid:3)(cid:396)(cid:349)(cid:336)(cid:346)(cid:410)(cid:400)(cid:3)(cid:410)(cid:381)(cid:3)(cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:448)(cid:286)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:296)(cid:396)(cid:381)(cid:373)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:346)(cid:258)(cid:400)(cid:3)(cid:258)(cid:400)(cid:400)(cid:437)(cid:373)(cid:286)(cid:282)(cid:3)(cid:258)(cid:374)(cid:3)(cid:381)(cid:271)(cid:367)(cid:349)(cid:336)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:410)(cid:381)(cid:3)(cid:393)(cid:258)(cid:455)(cid:3)(cid:410)(cid:346)(cid:286) (cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:448)(cid:286)(cid:282)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:349)(cid:374)(cid:3)(cid:296)(cid:437)(cid:367)(cid:367)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:381)(cid:437)(cid:410)(cid:3)(cid:373)(cid:258)(cid:410)(cid:286)(cid:396)(cid:349)(cid:258)(cid:367)(cid:3)(cid:282)(cid:286)(cid:367)(cid:258)(cid:455)(cid:3)(cid:410)(cid:381)(cid:3)(cid:258)(cid:3)(cid:410)(cid:346)(cid:349)(cid:396)(cid:282)(cid:3)(cid:393)(cid:258)(cid:396)(cid:410)(cid:455)(cid:3)(cid:437)(cid:374)(cid:282)(cid:286)(cid:396)(cid:3)(cid:258)(cid:3)(cid:858)(cid:393)(cid:258)(cid:400)(cid:400)-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset 58 When the Group (cid:346)(cid:258)(cid:400)(cid:3)(cid:410)(cid:396)(cid:258)(cid:374)(cid:400)(cid:296)(cid:286)(cid:396)(cid:396)(cid:286)(cid:282)(cid:3)(cid:349)(cid:410)(cid:400)(cid:3)(cid:396)(cid:349)(cid:336)(cid:346)(cid:410)(cid:400)(cid:3)(cid:410)(cid:381)(cid:3)(cid:396)(cid:286)(cid:272)(cid:286)(cid:349)(cid:448)(cid:286)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)ws from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability ar(cid:286)(cid:3)(cid:373)(cid:286)(cid:258)(cid:400)(cid:437)(cid:396)(cid:286)(cid:282)(cid:3)(cid:381)(cid:374)(cid:3)(cid:258)(cid:3)(cid:271)(cid:258)(cid:400)(cid:349)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:396)(cid:286)(cid:327)(cid:286)(cid:272)(cid:410)(cid:400)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:396)(cid:349)(cid:336)(cid:346)(cid:410)(cid:400)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:381)(cid:271)(cid:367)(cid:349)(cid:336)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets (cid:28)(cid:454)(cid:393)(cid:286)(cid:272)(cid:410)(cid:286)(cid:282)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400)(cid:286)(cid:400)(cid:3)(cid:894)(cid:28)(cid:18)(cid:62)(cid:400)(cid:895)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:258)(cid:367)(cid:367)(cid:3)(cid:282)(cid:286)(cid:271)(cid:410)(cid:3)(cid:349)(cid:374)(cid:400)(cid:410)(cid:396)(cid:437)(cid:373)(cid:286)(cid:374)(cid:410)(cid:400)(cid:3)(cid:374)(cid:381)(cid:410)(cid:3)(cid:346)(cid:286)(cid:367)(cid:282)(cid:3)(cid:258)(cid:410)(cid:3)(cid:296)(cid:258)(cid:349)(cid:396)(cid:3)(cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)(cid:346)(cid:3)(cid:393)(cid:396)(cid:381)(cid:302)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400)(cid:3)(cid:449)(cid:349)(cid:367)(cid:367)(cid:3)(cid:271)(cid:286)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)h an (cid:258)(cid:367)(cid:367)(cid:381)(cid:449)(cid:258)(cid:374)(cid:272)(cid:286)(cid:856)(cid:3)(cid:28)(cid:18)(cid:62)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:271)(cid:258)(cid:400)(cid:286)(cid:282)(cid:3)(cid:381)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:282)(cid:349)(cid:296)(cid:296)(cid:286)(cid:396)(cid:286)(cid:374)(cid:272)(cid:286)(cid:3)(cid:271)(cid:286)(cid:410)(cid:449)(cid:286)(cid:286)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:437)(cid:258)(cid:367)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:282)(cid:437)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:258)(cid:272)(cid:272)(cid:381)(cid:396)(cid:282)(cid:258)(cid:374)(cid:272)(cid:286)(cid:3)(cid:449)(cid:349)(cid:410)(cid:346)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:258)(cid:367)(cid:367)(cid:3)(cid:410)(cid:346)(cid:286) (cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)Group expects to receive, discounted at an approximation of the original effective interest rate. The expected (cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:449)(cid:349)(cid:367)(cid:367)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:3)(cid:296)(cid:396)(cid:381)(cid:373)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:400)(cid:258)(cid:367)(cid:286)(cid:3)(cid:381)(cid:296)(cid:3)(cid:272)(cid:381)(cid:367)(cid:367)(cid:258)(cid:410)(cid:286)(cid:396)(cid:258)(cid:367)(cid:3)(cid:346)(cid:286)(cid:367)(cid:282)(cid:3)(cid:381)(cid:396)(cid:3)(cid:381)(cid:410)(cid:346)(cid:286)(cid:396)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:286)(cid:374)(cid:346)(cid:258)(cid:374)(cid:272)(cid:286)(cid:373)(cid:286)(cid:374)(cid:410)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:349)(cid:374)(cid:410)(cid:286)(cid:336)(cid:396)(cid:258)(cid:367)(cid:3)(cid:410)(cid:381)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3) contractual terms. (cid:28)(cid:18)(cid:62)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:3)(cid:410)(cid:449)(cid:381)(cid:3)(cid:400)(cid:410)(cid:258)(cid:336)(cid:286)(cid:400)(cid:856)(cid:3)(cid:38)(cid:381)(cid:396)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:286)(cid:454)(cid:393)(cid:381)(cid:400)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:449)(cid:346)(cid:349)(cid:272)(cid:346)(cid:3)(cid:410)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:346)(cid:258)(cid:400)(cid:3)(cid:374)(cid:381)(cid:410)(cid:3)(cid:271)(cid:286)(cid:286)(cid:374)(cid:3)(cid:258)(cid:3)(cid:400)(cid:349)(cid:336)(cid:374)(cid:349)(cid:302)(cid:272)(cid:258)(cid:374)(cid:410)(cid:3)(cid:349)(cid:374)(cid:272)(cid:396)(cid:286)(cid:258)(cid:400)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:396)(cid:349)(cid:400)(cid:364)(cid:3)(cid:400)(cid:349)(cid:374)ce initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-(cid:373)(cid:381)(cid:374)(cid:410)(cid:346)(cid:3)(cid:28)(cid:18)(cid:62)(cid:895)(cid:856)(cid:3)(cid:38)(cid:381)(cid:396)(cid:3)(cid:410)(cid:346)(cid:381)(cid:400)(cid:286)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:286)(cid:454)(cid:393)(cid:381)(cid:400)(cid:437)(cid:396)(cid:286)(cid:400)(cid:3)(cid:296)(cid:381)(cid:396)(cid:3)(cid:449)(cid:346)(cid:349)(cid:272)(cid:346)(cid:3)(cid:410)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:346)(cid:258)(cid:400)(cid:3)(cid:271)(cid:286)(cid:286)(cid:374)(cid:3)(cid:258)(cid:3)(cid:400)(cid:349)(cid:336)(cid:374)(cid:349)(cid:302)(cid:272)(cid:258)(cid:374)(cid:410)(cid:3)(cid:349)(cid:374)(cid:272)(cid:396)(cid:286)(cid:258)(cid:400)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:396)(cid:349)(cid:400)(cid:364)(cid:3)(cid:400)(cid:349)(cid:374)(cid:272)(cid:286)(cid:3)(cid:349)(cid:374)(cid:349)(cid:410)(cid:349)(cid:258)(cid:367)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:410)(cid:349)(cid:381)n, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). (cid:38)(cid:381)(cid:396)(cid:3)(cid:381)(cid:410)(cid:346)(cid:286)(cid:396)(cid:3)(cid:282)(cid:286)(cid:271)(cid:410)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:894)(cid:349)(cid:856)(cid:286)(cid:856)(cid:853)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:381)(cid:374)(cid:3)(cid:282)(cid:286)(cid:393)(cid:381)(cid:400)(cid:349)(cid:410)(cid:3)(cid:258)(cid:410)(cid:3)(cid:271)(cid:258)(cid:374)(cid:364)(cid:895)(cid:856)(cid:3)The ECL is based on the 12-month ECL. The 12-month ECL is the (cid:393)(cid:381)(cid:396)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)(cid:367)(cid:349)(cid:296)(cid:286)(cid:410)(cid:349)(cid:373)(cid:286)(cid:3)(cid:28)(cid:18)(cid:62)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:396)(cid:286)(cid:400)(cid:437)(cid:367)(cid:410)(cid:400)(cid:3)(cid:296)(cid:396)(cid:381)(cid:373)(cid:3)(cid:282)(cid:286)(cid:296)(cid:258)(cid:437)(cid:367)(cid:410)(cid:3)(cid:286)(cid:448)(cid:286)(cid:374)(cid:410)(cid:400)(cid:3)(cid:381)(cid:374)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:349)(cid:374)(cid:400)trument that are possible within 12 months after the reporting date. However. When (cid:410)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:346)(cid:258)(cid:400)(cid:3)(cid:271)(cid:286)(cid:286)(cid:374)(cid:3)(cid:258)(cid:3)(cid:400)(cid:349)(cid:336)(cid:374)(cid:349)(cid:302)(cid:272)(cid:258)(cid:374)(cid:410)(cid:3)(cid:349)(cid:374)(cid:272)(cid:396)(cid:286)(cid:258)(cid:400)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:272)(cid:396)(cid:286)(cid:282)(cid:349)(cid:410)(cid:3)(cid:396)(cid:349)(cid:400)(cid:364)(cid:3)(cid:400)(cid:349)(cid:374)(cid:272)(cid:286)(cid:3)(cid:381)(cid:396)(cid:349)(cid:336)(cid:349)(cid:374)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:853)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:258)(cid:367)(cid:367)(cid:381)(cid:449)(cid:258)(cid:374)(cid:272)(cid:286)(cid:3)(cid:449)(cid:349)(cid:367)(cid:367)(cid:3)(cid:271)(cid:286)(cid:3)(cid:271)(cid:258)(cid:400)(cid:286)(cid:282)(cid:3) on the lifetime ECL. The Group (cid:272)(cid:381)(cid:374)(cid:400)(cid:349)(cid:282)(cid:286)(cid:396)(cid:400)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:349)(cid:374)(cid:3)(cid:282)(cid:286)(cid:296)(cid:258)(cid:437)(cid:367)(cid:410)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374) contractual payments are 90 days past due. However, in certain cases, the Group (cid:373)(cid:258)(cid:455)(cid:3)(cid:258)(cid:367)(cid:400)(cid:381)(cid:3)(cid:272)(cid:381)(cid:374)(cid:400)(cid:349)(cid:282)(cid:286)(cid:396)(cid:3)(cid:258)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:410)(cid:381)(cid:3)(cid:271)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:282)(cid:286)(cid:296)(cid:258)(cid:437)(cid:367)(cid:410)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374)(cid:3)(cid:349)(cid:374)(cid:410)(cid:286)(cid:396)(cid:374)(cid:258)(cid:367)(cid:3)(cid:381)(cid:396)(cid:3)(cid:286)(cid:454)(cid:410)(cid:286)(cid:396)(cid:374)(cid:258)(cid:367)(cid:3)(cid:349)(cid:374)(cid:296)(cid:381)(cid:396)(cid:373)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:349)(cid:374)(cid:282)(cid:349)(cid:272)(cid:258)(cid:410)(cid:286)(cid:400)(cid:3)(cid:410)(cid:346)(cid:258)(cid:410)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group(cid:856)(cid:3)(cid:4)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:449)(cid:396)(cid:349)(cid:410)(cid:410)(cid:286)(cid:374)(cid:3)(cid:381)(cid:296)(cid:296)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:349)(cid:400)(cid:3)(cid:374)(cid:381)(cid:3)(cid:396)(cid:286)(cid:258)(cid:400)(cid:381)(cid:374)(cid:258)(cid:271)(cid:367)(cid:286)(cid:3)(cid:286)(cid:454)(cid:393)(cid:286)(cid:272)(cid:410)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:448)(cid:286)(cid:396)(cid:349)(cid:374)(cid:336)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:272)(cid:381)(cid:374)(cid:410)(cid:396)(cid:258)(cid:272)(cid:410)(cid:437)(cid:258)(cid:367)(cid:3)(cid:272)(cid:258)(cid:400)(cid:346)(cid:3)(cid:327)(cid:381)(cid:449)(cid:400)(cid:856) i) Financial liabilities Initial recognition and measurement (cid:38)(cid:349)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:272)(cid:367)(cid:258)(cid:400)(cid:400)(cid:349)(cid:302)(cid:286)(cid:282)(cid:853)(cid:3)(cid:258)(cid:410)(cid:3)(cid:349)(cid:374)(cid:349)(cid:410)(cid:349)(cid:258)(cid:367)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:410)(cid:349)(cid:381)(cid:374)(cid:853)(cid:3)(cid:258)(cid:400)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)(cid:3)(cid:258)(cid:410)(cid:3)(cid:296)(cid:258)(cid:349)(cid:396)(cid:3)(cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:3)(cid:410)(cid:346)(cid:396)(cid:381)(cid:437)(cid:336)(cid:346)(cid:3)(cid:393)(cid:396)(cid:381)(cid:302)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)(cid:367)(cid:381)(cid:400)(cid:400)(cid:853)(cid:3)(cid:367)(cid:381)(cid:258)ns and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. (cid:4)(cid:367)(cid:367)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:349)(cid:410)(cid:349)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:258)(cid:410)(cid:3)(cid:296)(cid:258)(cid:349)(cid:396)(cid:3)(cid:448)(cid:258)(cid:367)(cid:437)(cid:286)(cid:856) The Group(cid:859)(cid:400)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)(cid:3)(cid:349)(cid:374)(cid:272)(cid:367)(cid:437)(cid:282)(cid:286)(cid:3)(cid:410)(cid:396)(cid:258)(cid:282)(cid:286)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:381)(cid:410)(cid:346)(cid:286)(cid:396)(cid:3)(cid:393)(cid:258)(cid:455)(cid:258)(cid:271)(cid:367)(cid:286)(cid:400)(cid:856) 59 Derecognition (cid:4)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:349)(cid:400)(cid:3)(cid:282)(cid:286)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:449)(cid:346)(cid:286)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:381)(cid:271)(cid:367)(cid:349)(cid:336)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:437)(cid:374)(cid:282)(cid:286)(cid:396)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:349)(cid:400)(cid:3)(cid:282)(cid:349)(cid:400)(cid:272)(cid:346)(cid:258)(cid:396)(cid:336)(cid:286)(cid:282)(cid:3)(cid:381)(cid:396)(cid:3)(cid:272)(cid:258)(cid:374)(cid:272)(cid:286)(cid:367)(cid:367)(cid:286)(cid:282)(cid:3)(cid:381)(cid:396)(cid:3)expires. When an existing (cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:349)(cid:400)(cid:3)(cid:396)(cid:286)(cid:393)(cid:367)(cid:258)(cid:272)(cid:286)(cid:282)(cid:3)(cid:271)(cid:455)(cid:3)(cid:258)(cid:374)(cid:381)(cid:410)(cid:346)(cid:286)(cid:396)(cid:3)(cid:296)(cid:396)(cid:381)(cid:373)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:400)(cid:258)(cid:373)(cid:286)(cid:3)(cid:367)(cid:286)(cid:374)(cid:282)(cid:286)(cid:396)(cid:3)(cid:381)(cid:374)(cid:3)(cid:400)(cid:437)(cid:271)(cid:400)(cid:410)(cid:258)(cid:374)(cid:410)(cid:349)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:282)(cid:349)(cid:296)(cid:296)(cid:286)(cid:396)(cid:286)(cid:374)(cid:410)(cid:3)(cid:410)(cid:286)(cid:396)(cid:373)(cid:400)(cid:853)(cid:3)(cid:381)(cid:396)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:410)(cid:286)(cid:396)(cid:373)(cid:400)(cid:3)(cid:381)(cid:296)(cid:3)(cid:258)(cid:374)(cid:3)(cid:286)(cid:454)(cid:349)(cid:400)(cid:410)(cid:349)(cid:374)(cid:336)(cid:3)liability (cid:258)(cid:396)(cid:286)(cid:3)(cid:400)(cid:437)(cid:271)(cid:400)(cid:410)(cid:258)(cid:374)(cid:410)(cid:349)(cid:258)(cid:367)(cid:367)(cid:455)(cid:3)(cid:373)(cid:381)(cid:282)(cid:349)(cid:302)(cid:286)(cid:282)(cid:853)(cid:3)(cid:400)(cid:437)(cid:272)(cid:346)(cid:3)(cid:258)(cid:374)(cid:3)(cid:286)(cid:454)(cid:272)(cid:346)(cid:258)(cid:374)(cid:336)(cid:286)(cid:3)(cid:381)(cid:396)(cid:3)(cid:373)(cid:381)(cid:282)(cid:349)(cid:302)(cid:272)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:349)(cid:400)(cid:3)(cid:410)(cid:396)(cid:286)(cid:258)(cid:410)(cid:286)(cid:282)(cid:3)(cid:258)(cid:400)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:282)(cid:286)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)the original liability and the (cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:381)(cid:296)(cid:3)(cid:258)(cid:3)(cid:374)(cid:286)(cid:449)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:856)(cid:3)(cid:100)(cid:346)(cid:286)(cid:3)(cid:282)(cid:349)(cid:296)(cid:296)(cid:286)(cid:396)(cid:286)(cid:374)(cid:272)(cid:286)(cid:3)(cid:349)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:396)(cid:286)(cid:400)(cid:393)(cid:286)(cid:272)(cid:410)(cid:349)(cid:448)(cid:286)(cid:3)(cid:272)(cid:258)(cid:396)(cid:396)(cid:455)(cid:349)(cid:374)(cid:336)(cid:3)(cid:258)(cid:373)(cid:381)(cid:437)(cid:374)(cid:410)(cid:400)(cid:3)(cid:349)(cid:400)(cid:3)(cid:396)(cid:286)(cid:272)(cid:381)(cid:336)(cid:374)(cid:349)(cid:400)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:400)(cid:410)(cid:258)(cid:410)(cid:286)(cid:373)(cid:286)(cid:374)(cid:410)(cid:3)(cid:381)(cid:296)(cid:3)(cid:393)(cid:396)(cid:381)(cid:302)(cid:410)(cid:3)(cid:381)(cid:396)(cid:3)loss. ii) Offsetting of financial instruments (cid:38)(cid:349)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:258)(cid:400)(cid:400)(cid:286)(cid:410)(cid:400)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:367)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:349)(cid:286)(cid:400)(cid:3)(cid:258)(cid:396)(cid:286)(cid:3)(cid:381)(cid:296)(cid:296)(cid:400)(cid:286)(cid:410)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:374)(cid:286)(cid:410)(cid:3)(cid:258)(cid:373)(cid:381)(cid:437)(cid:374)(cid:410)(cid:3)(cid:349)(cid:400)(cid:3)(cid:396)(cid:286)(cid:393)(cid:381)(cid:396)(cid:410)(cid:286)(cid:282)(cid:3)(cid:349)(cid:374)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:400)(cid:410)(cid:258)(cid:410)(cid:286)(cid:373)(cid:286)(cid:374)(cid:410)(cid:3)(cid:381)(cid:296)(cid:3)(cid:302)(cid:374)(cid:258)(cid:374)(cid:272)(cid:349)(cid:258)(cid:367)(cid:3)(cid:393)(cid:381)(cid:400)(cid:349)(cid:410)(cid:349)(cid:381)(cid:374)(cid:3)(cid:349)(cid:296)(cid:3)(cid:410)(cid:346)(cid:286)(cid:396)(cid:286)(cid:3)(cid:349)(cid:400)(cid:3)(cid:258) currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. 22.7 Income taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office (‘ATO’) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Group’s forecast of future operating results which is adjusted for significant non- taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively. 60 22.8 Cash and cash equivalents Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short- term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows (Exploration and evaluation expenditure is net of $2.6M that was received and spent on behalf of Gold Road (Projects) Pty Ltd), cash and cash equivalents consist of cash and short- term deposits, as defined above, are considered an integral part of the Group’s cash management. 22.9 Equity and reserves Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Retained earnings include all current and prior period retained profits. The Group maintains a share base payments reserve which accumulates the value recognised as a result of share based awards issued to employees or contractors for services rendered. Where amounts have accumulated in the reserve and the underlying instruments expire, amounts are transferred from the reserve to retained earnings. Where amounts have accumulated in the reserve and the underlying instruments have vested or been exercised, amounts are transferred from the reserve to share capital. 22.10 Provisions, contingent liabilities and contingent assets Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognised for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is recognised. 61 22.11 Exploration and Development expenditure Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest. Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. 22.12 Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing and financing activities, which are disclosed as operating cash flows. 22.13 Critical Accounting Estimates and Judgements The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing this Annual Financial Report, the significant judgements and estimates made by management in applying the Entity’s accounting policies and the key sources of estimation uncertainty are detailed below. 62 Critical Estimates Exploration and Evaluation Expenditure – Impairment Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with the Group’s accounting policy requires 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 is estimates and assumptions as to the presence of mineral reserves, timing of expected cash flows, exchange rates, commodity prices and future capital requirements. Changes in these estimates and assumptions as new information about the presence or recoverability of a mineral reserve becomes available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after having capitalised the expenditure a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the statement profit or loss and other comprehensive income. Performance Rights The Group makes judgments around the value of awarded performance rights based on the historical performance of the Group as the vesting conditions are linked to peer Group comparison via Total Shareholder Returns (TSR). Management determines the total value of the award based on weighted probabilities of the vesting criteria being achieved. In addition to historical performance compared to its peers, management further considers how the Group is tracking towards the vesting criteria based on subsequent performance with reference to subsequent events up to balance date, as well as any other expected improvements in the share price based on operational knowledge. Critical Judgments Exploration and Evaluation Expenditure The entity capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet been conducted. 22.14 Going Concern The financial statements have been prepared on a going concern basis of accounting which assumes that the Group will be able to meet its commitments, realise its assets, discharge its liabilities in the ordinary course of business and meet exploration budgets. In arriving at this position, the Directors recognise the Group is dependent on various funding alternatives to meet these commitments which may include share placements and suitable project funding arrangements including earn-ins, joint ventures or project divestment. During the current year the Group the cash outflows from operating and investing activities equated to $966,688 (2019: $2,036,703) and held $3,385,934 of cash and cash equivalents and net and net assets of $3,376,826 at balance date. The Directors are, however, confident that further funding will be obtained to meet the groups objectives. In addition, the Directors have considered the minimum expenditure requirements necessary in order to maintain tenements in good standing and to meet the committed expenditures for the 12 month period from the date of this report and consider the going concern basis of preparation as appropriate. 63 22.15 Employee benefits Wages and salaries and annual leave: Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. 22.16 Property, plant and equipment Recognition and Measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Costs include expenditures that are directly attributable to the acquisition of the asset. Subsequent Costs Subsequent expenditure is only capitalised when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance are expensed as incurred. Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The expected useful lives in the current and comparative period are as follows: IT equipment 2 – 3 years Plant and equipment 2 – 3 years Motor vehicle 5 years The estimated useful lives, depreciation methods and residual values are reviewed at the end of each reporting period. 22.17 Share based payments The Group operates equity-settled share-based remuneration plans for its employees. None of the Group’s plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share option reserve. Where vesting periods exist, the total expense is recognised straight-line over the vesting period. Where vesting conditions are non-market based, the expense is based on the best available estimate of the number of instruments expected to vest. Where the vesting conditions are market based, the Group uses a pricing model to determine fair value of each instrument. 64 22.18 Other income Other income recognises the management fee charged for managing joint operations, this is recognised on an accruals basis at a point in time, which is defined as the moment in which the Group spends the JV partner’s contributions to the earn-in arrangement and thus is entitled to the management fee that attaches to the expenditure. 22.19 Joint Operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group has recognised its share of jointly held assets, liabilities, revenues and expenses of joint operations. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group has recognised its share of jointly held assets, liabilities, revenues and expenses of joint operations. The Group currently has two joint operations with the listed ASX company Gold Road Resources Limited (“Gold Road”) as follows: 1. The Lake Grace Project Cygnus owns 100% of the tenement rights and Gold Road can earn-in to a maximum of 75% of interest in the tenements. In order to do so, Gold Road must spend as much as $3.7M over the four year period from the commencement of the operation in October 2017. During the year Cygnus received cash calls from Gold Road and managed the exploration and evaluation activity at their discretion, deriving a management fee of 15% of the expenditure that has spent from Gold Road funds until 30 September 2020 when Gold Road took over the management. Given the accounting policies noted above, none of the amounts spent by Cygnus on behalf of Gold Road are included in the exploration and evaluation asset on the Consolidated Statement of Financial Position. The Group only capitalises qualifying expenditure on the projects as exploration and evaluation asset where it is the Group’s cash used. The Group is currently diluting to 10% and it then is planning to maintain its 10% interest in the Lake Grace Project. 2. The Yandina Project In this joint operation, Cygnus’s hold 10% and Gold Road hold 90% of the interest in the Yandina Project tenements. The expenditure incurred is capitalised as exploration and evaluation asset based on the percentage of in held. During the year Cygnus managed the cash calls and the exploration and evaluation activity at their discretion, deriving a management fee of 15% of the expenditure that has spent, until 30 September 2020 when Gold Road took over the management. The Group is planning to maintain its 10% interest in the Yandina Project. 65 22.20 Government grants The Group receives government grants for qualifying exploration and evaluation activity. The amounts are paid in arrears as a reimbursement. All expenditures incurred by the Group that are covered by the grant are capitalized exploration and evaluation expenditure. For this reason, the Group applies the grant amounts received as an off- set against its evaluation and exploration asset balance on the Consolidated Statement of Financial Position. In the current period, this treatment occurred for the EIS Grant - a co-funded exploration drilling program - totalling to $51,952 (2019: 89,362). 23 Post reporting date events There have not been any events that have arisen between 31 December 2020 and the date of this report or any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to materially affect the operations of the Group, the results of those operations or the state of affairs of the Group, in subsequent financial years. 66 Directors’ Declaration 1. In the opinion of the Directors of Cygnus Gold Limited: a. The financial statements and notes of Cygnus Gold Limited are in accordance with the Corporations Act 2001, including: I. Giving a true and fair view of its consolidated financial position as at 31 December 2020 and of its performance for the year ended on that date; and II. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and b. There are reasonable grounds to believe that Cygnus Gold Limited will be able to pay its debts as and when they become due and payable. 2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing Director and Chief Financial Officer for the year ended 31 December 2020. 3. Note 2 confirms that the financial statements also comply with International Financial Reporting Standards. Signed in accordance with a resolution of the directors: Simon Jackson Executive Director Perth, 31 March 2021 67 Central Park, Level 43 152-158 St Georges Terrace Perth WA 6000 Correspondence to: PO Box 7757 Cloisters Square Perth WA 6000 T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Cygnus Gold Limited Report on the audit of the financial report Opinion We have audited the financial report of Cygnus Gold Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the 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, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 68 Key audit matter Exploration and evaluation assets - Notes 17 & 22.11 At 31 December 2020 the carrying value of exploration and evaluation assets was $nil. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group is required to assess at each reporting date if there are any triggers for impairment which may suggest the carrying value is in excess of the recoverable value. The process undertaken by management to assess whether there are any impairment triggers in each area of interest involves an element of management judgement. This area is a key audit matter due to the significant judgement involved in determining the existence of impairment triggers. How our audit addressed the key audit matter Our procedures included, amongst others: (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) o obtaining the management reconciliation of capitalised exploration and evaluation expenditure and agreeing to the general ledger; reviewing management’s area of interest considerations against AASB 6; conducting a detailed review of management’s assessment of trigger events prepared in accordance with AASB 6 including; o tracing projects to statutory registers, exploration licenses and third party confirmations to determine whether a right of tenure existed; enquiring of management regarding their intentions to carry out exploration and evaluation activity in the relevant exploration area, including review of management’s budgeted expenditure; understanding whether any data exists to suggest that the carrying value of these exploration and evaluation assets are unlikely to be recovered through development or sale; assessing the accuracy of impairment recorded for the year as it pertained to exploration interests; evaluating the competence, capabilities and objectivity of management’s experts in the evaluation of potential impairment triggers; and assessing the appropriateness of the related financial statement disclosures. o Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 31 December 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 69 Responsibilities of the Directors’ for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Company’s/Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company/Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf. This description forms part of our auditor’s report. Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 21 to 32 of the Directors’ report for the year ended 31 December 2020. In our opinion, the Remuneration Report of Cygnus Gold Limited, for the year ended 31 December 2020 complies with section 300A of the Corporations Act 2001. Responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. GRANT THORNTON AUDIT PTY LTD Chartered Accountants L A Stella Partner – Audit & Assurance Perth, 31 March 2021 70 Top 20 holders of ordinary shares In accordance with ASX Listing Rule 4.10, the following information is provided as at 23 March 2020. Rank Name HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SOUTHERN CROSS CAPITAL PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED Units 7,669,677 7,384,588 6,658,721 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total SYMORGH INVESTMENTS PTY LTD 5,789,494 MS CHARMAINE LINDA LOBO MR ALAN FRANK CLELAND GLEESON MINING PTY LTD MR TIMOTHY MCCORMACK MR JAMES MICHAEL THOMSON DR OLIVER PIERRE KREUZER 5,722,395 3,066,668 2,465,813 2,386,944 2,184,444 2,130,556 BIGJAC INVESTMENTS PTY LTD 2,111,111 GOLD LEAF CORPORATE PTY LTD 1,991,453 MR MICHAEL DYLAN NAYLOR + MS SARAH MCALPINE MR GAVIN JEREMY DUNHILL FATHOM GEOPHYSICS AUSTRALIA PTY LTD 1,959,999 1,850,000 1,666,667 SYMORGH INVESTMENTS PTY LTD 1,666,667 SPRING STREET HOLDINGS PTY LTD THE DUTCHINA INVESTMENTS PTY LTD MR RONALD WILLIAM BILLYARD + MS FIONA CURREY SLAM CONSULTING PTY LTD 1,606,837 1,465,154 1,332,000 1,300,000 62,409,188 % of issued capital 7.10 6.83 6.16 5.36 5.30 2.84 2.28 2.21 2.02 1.97 1.95 1.84 1.81 1.71 1.54 1.54 1.49 1.36 1.23 1.20 57.75 71 Range of shares Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 Over Total Substantial Holders Total holders 24 85 77 302 116 604 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SOUTHERN CROSS CAPITAL PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED Units 6,692 283,811 645,610 13,131,700 94,002,285 108,070,098 Units 7,669,677 7,384,588 6,658,721 SYMORGH INVESTMENTS PTY LTD 5,789,494 MS CHARMAINE LINDA LOBO 5,337,780 % of issued capital 0.01 0.26 0.60 12.15 86.98 100.00 % of issued capital 7.10 6.83 6.16 5.36 5.30 Unmarketable Parcels There were 59 shareholders with less than a marketable parcel of shares, based on the closing price $0.17 Restricted Securities There are no restricted securities. Voting Rights In accordance with the Company’s constitution, on a show of hands every member present in person or by proxy or attorney or duly appointed representative has one vote. On a poll every member present or by proxy or attorney or duly authorised representative has one vote for every fully paid share held. ASX Listing Rule 4.10.19 In accordance with Listing Rule 4.10.19, the company states that it has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. The business objective is primarily mineral exploration. 72 Schedule of tenements A listing of the Entity’s tenements: Tenement Location Registered Owner Structure and Ownership Cygnus Gold Limited E77/2564 Western Australia Cygnus Gold Limited Pending, 100% Cygnus Gold (Projects) Pty Ltd E70/4787 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/4854 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/4911 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/4939 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/4989 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/4990 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/5131 Western Australia Cygnus Gold (Projects) Pty Ltd 100% E70/5137 Western Australia Cygnus Gold (Projects) Pty Ltd 100% Deneb Resources Pty Ltd E29/1075 Western Australia Deneb Resources Pty Ltd E70/4988 Western Australia Deneb Resources Pty Ltd E70/4992 Western Australia Deneb Resources Pty Ltd E70/5050 Western Australia Deneb Resources Pty Ltd E70/5168 Western Australia Deneb Resources Pty Ltd E70/5169 Western Australia Deneb Resources Pty Ltd E70/5196 Western Australia Deneb Resources Pty Ltd E70/5397 Western Australia Deneb Resources Pty Ltd E70/5409 Western Australia Deneb Resources Pty Ltd E70/5410 Western Australia Deneb Resources Pty Ltd 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 73 Tenement Location Registered Owner Structure and Ownership Deneb Resources Pty Ltd E70/5413 Western Australia Deneb Resources Pty Ltd 100% E70/5492 Western Australia Deneb Resources Pty Ltd Pending 100% E70/5617 Western Australia Deneb Resources Pty Ltd Pending 100% E70/5618 Western Australia Deneb Resources Pty Ltd Pending 100% E77/2405 Western Australia Deneb Resources Pty Ltd E77/2463 Western Australia Deneb Resources Pty Ltd 100% 100% E77/2720 Western Australia Deneb Resources Pty Ltd Pending 100% Lake Grace Joint Venture Project – Managed by Gold Road Resources Limited E70/4853 Western Australia Cygnus (JV Projects) Pty Ltd E70/4855 Western Australia Cygnus (JV Projects) Pty Ltd E70/4991 Western Australia Cygnus (JV Projects) Pty Ltd E70/5017 Western Australia Cygnus (JV Projects) Pty Ltd E70/5188 Western Australia Cygnus (JV Projects) Pty Ltd E70/5251 Western Australia Cygnus Gold Limited Cygnus (diluting to 10%), Gold Road Projects Pty Ltd (earning 90%) Cygnus (diluting to 10%), Gold Road Projects Pty Ltd (earning 90%) Cygnus (diluting to 10%), Gold Road Projects Pty Ltd (earning 90%) Cygnus (diluting to 10%), Gold Road Projects Pty Ltd (earning 90%) Cygnus (diluting to 10%), Gold Road Projects Pty Ltd (earning 90%) Pending, Cygnus (diluting to 10%), Gold Road Projects Pty Ltd (earning 90%) E70/5320 Western Australia Gold Road Projects Pty Ltd (75%), Cygnus (diluting to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earning 90%) Yandina Joint Venture Project – Managed by Gold Road Resources Limited E70/5098 Western Australia E70/5099 Western Australia E70/5100 Western Australia E70/5101 Western Australia Gold Road Projects Pty Ltd (75%), Cygnus (diluted to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earned 90%) Gold Road Projects Pty Ltd (75%), Cygnus (diluted to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earned 90%) Gold Road Projects Pty Ltd (75%), Cygnus (diluted to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earned 90%) Gold Road Projects Pty Ltd (75%), Cygnus (diluted to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earned 90%) 74 Tenement Location Registered Owner Structure and Ownership Yandina Joint Venture Project E70/5230 Western Australia E70/5231 Western Australia E70/5232 Western Australia Gold Road Projects Pty Ltd (75%), Cygnus (diluting to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earning 90%) Gold Road Projects Pty Ltd (75%), Cygnus (diluting to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earning 90%) Gold Road Projects Pty Ltd (75%), Cygnus (diluting to 10%), Gold Road Projects Pty Cygnus (JV Projects) Pty Ltd (25%) Ltd (earning 90%) 75

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