De Grey Mining Limited
Annual Report 2022

Plain-text annual report

ABN: 65 094 206 292 2022 ANNUAL REPORT De Grey Mining Limited Contents Contents ................................................................................................................................................................................... 1 Corporate Information ............................................................................................................................................................. 2 Chairman’s Letter ..................................................................................................................................................................... 3 Managing Director’s Report and Review of Operations .......................................................................................................... 6 Environment, Social and Governance .................................................................................................................................... 19 Directors’ Report .................................................................................................................................................................... 25 Remuneration Report (Audited) ............................................................................................................................................ 32 Audit Independence Declaration ........................................................................................................................................... 48 Consolidated Statement of Comprehensive Income ............................................................................................................. 49 Consolidated Statement of Financial Position ....................................................................................................................... 50 Consolidated Statement of Changes in Equity ....................................................................................................................... 51 Consolidated Statement of Cash Flows ................................................................................................................................. 52 Notes to the Consolidated Financial Statements ................................................................................................................... 53 Director’s Declaration ............................................................................................................................................................ 85 Audit Report ........................................................................................................................................................................... 86 ASX Additional Information ................................................................................................................................................... 90 Annual Mineral Resources and Ore Reserve Statement ......................................................................................................... 92 Schedule of Interests in Mining Tenements ...........................................................................................................................98 1 De Grey Mining Limited Corporate Information ABN 65 094 206 292 Directors Simon Lill (Non-Executive Chairman) Glenn Jardine (Managing Director) Andrew Beckwith (Technical Director) Paul Harvey (Non-Executive Director) – appointed 4 July 2022 Samantha Hogg (Non-Executive Director) – appointed 28 January 2022 Peter Hood AO (Non-Executive Director) Eduard Eshuys (Non-Executive Director) – resigned 8 September 2022 Bruce Parncutt AO (Non-Executive Director) – resigned 7 September 2022 Chief Financial Officer Peter Canterbury Company Secretaries Craig Nelmes Patrick Holywell – resigned 17 December 2021 Registered Office and Principal Place of Business Ground Level 2 Kings Park Road WEST PERTH WA 6005 Telephone: +61 (0)8 6117 9328 Postal Address PO Box 84, West Perth WA 6872 Share Registry Automic Group Level 5 191 St Georges Terrace Perth WA 6000 Telephone: 1300 288 664 Auditors Ernst & Young 11 Mounts Bay Road PERTH WA 6000 Internet Address www.degreymining.com.au Email Address admin@degreymining.com.au Stock Exchange Listing Australian Securities Exchange (ASX code DEG) Frankfurt Stock Exchange (FRA code WKN 633879) 2 De Grey Mining Limited Chairman’s Letter Sitting down to write a Chairman’s Letter for the Annual Report results in reflection on the year just past, and to contemplate what the Company can achieve in the year ahead. It is with great satisfaction that shareholders should review the year just gone as the Company has proven the potential of the Tier 1 gold discovery at Hemi into perhaps the most exciting Tier 1 gold development project globally. When we announced Aircore drill hole results in February 2020 we knew we were onto something special. We never tire of revisiting those results so I will do so again - 24m @ 7.5g/t Au, 49m @ 3.7g/t Au and 36m @ 4.0g/t at what became the Aquila resource. Early Brolga results were strong with mineralisation continuing at the end of the hole, with the initial RC hole resulting in 93m @ 3.3 g/t. We have continued to enjoy strong drill results through the additional discoveries at Crow, Diucon, Eagle and Falcon resulting in an outstanding maiden Hemi resource in June 2021, a significant resource update in May 2022 and a substantial Maiden Hemi JORC Probable Reserve characterised by excellent conversion of inferred resource to reserve ounce. Project economics through initial Scoping Study and the recently released Pre-Feasibility Study have also shown the Mallina Project (Hemi plus regional resources) to be one of the world's best new mining projects. The maiden Hemi JORC Probable Reserve of 5.1Moz @ 1.5g/t Au, is one of the largest and highest grade maiden Reserves in recent decades. The Pre-Feasibility Study outcomes demonstrated substantial improvements in grade, annual production, mine life, cashflow and NPV since the Scoping Study. These will be covered in greater detail in the Review of Operations but some of the headline numbers showing the scale of what De Grey has achieved are as follows: • • • • • Maiden JORC Probable Ore Reserve of 5.1M oz @ 1.5 g/t Au. Post tax payback of 1.8 years from single starter pit at Brolga. Annual Production of 540,000 oz through years 1 to 10, including 550,000 oz pa in Years 1 to 5 and peak production of 637,000 in Year 5. Average grade of 1.8 g/t through Years 1 to 10. NPV(5%) of $3.9Bn pre-tax, $2.7Bn post tax based on a Capex of $985M, excluding pre-strip of $68M, and an AISC of $1,280/oz (Years 1 – 10). The economics are particularly impressive given the inflationary period seen since the Scoping Study release in October 2021, further proving the robustness of the Project. Analysis indicates the Project resides in the lowest quartile of operating costs and capital intensity. The PFS has also indicated further areas for Project improvement through increasing production rates, grade and mine life. These outstanding results provide a catalyst for the financing of the Mallina project which still scheduled to commence construction, subject to approvals, in the second half of calendar 2023. During the year the Company had some 16 drilling rigs operating on any one day in order to ensure a drill out to achieve the outstanding resource to reserve conversion to substantiate the excellent PFS results. Resources were increased by 1.7M oz through the relatively recent Diucon and Eagle discoveries. However, the infill drilling for PFS purposes did not allow the level of exploration that the Company may have wished. There is a high level of confidence within the Company that the exploration drilling will continue for many years to come. The recent August 2022 announcement of mineralised extensions to Diucon in diamond hole HEDD128 which intersected 359.4 metres at a grade of 1.2 g/t Au, including 19.3m @ 7.4g/t Au and 2.0m @ 22.5g/t Au, 200 metres beneath the May 2022 Resource, provided clear indication that there is substantial upside potential still to come. The Company looks forward to, and will continue, its ongoing exploration activities across and beneath both greater Hemi and Regional areas. Last year’s Chairman’s address also indicated the increase in De Grey’s market capitalisation saw us knocking on the door of the S&P/ASX 200 Market Index which we did indeed enter in March 2022. For a company to commence from the lowly market capitalisation that we had prior to 2020 and enter the ASX 200 within a short 2 1/2 years is an outstanding achievement, perhaps testimony to the excitement that the mining industry can still provide and one in which we take immense pride. We were well aware of the increased scrutiny such a move places on the Company and the Board. A Board transition process commenced during last year which has to date resulted in the appointments of Samantha Hogg in January 2022 and Paul Harvey in July 2022. Both are experienced individuals who have had very successful executive careers and bring a great and additional skill set to the board of the company. 3 De Grey Mining Limited We have enjoyed a supportive shareholder in DGO Gold Limited who entered our register during the period of lowly market capitalisation, grew their interest to approximately 15% and were still involved as we entered the ASX 200. At a time when there was little financial appetite for exploration companies their support has been well acknowledged by myself many times previously. Their shareholders have deservedly also enjoyed the share price upside resulting from the Hemi discovery. Ultimately they chose to move on through an agreed takeover offer from Gold Road Resources Ltd who have since moved to 19.99% of the Company. As an indirect result of these shareholder changes both Mr. Bruce Parncutt and Mr. Ed Eshuys resigned from the Board in early September 2022. Ed is a very experienced gold exploration geologist whilst Bruce has extensive financing experience. Both provided valuable guidance in a transformation period for the company and shareholders owe them a debt of gratitude for their time and efforts on the Board. I personally thank them for their support of the Company and myself and wish them both the best into the future. It is also an appropriate time to thank Mr. Peter Hood who joined the Board in September 2018. Peter is the Company’s Lead Independent Director, and a chemical engineer with significant operational management experience which has been invaluable for the Company as it transitions from an exploration junior into a larger development entity. The AMEC Prospector’s Award is awarded to the individual/s (rather than the Company) who made the most outstanding mineral deposit discovery within recent years. We take great pride in that De Grey’s three senior geologists, Andy Beckwith, Phil Tornatora and Allan Kneeshaw received this prestigious award during the year. Again, the Company thanks Andy, our Technical Director, for putting the technical team together that lead to one of the largest gold discoveries in recent times. That team remains excited about the potential still ahead. Glenn Jardine commenced with De Grey back in May 2020 and has overseen the significant growth the Company has experienced. The last 12 months has been particularly challenging with Covid restrictions creating many issues for all in the mining industry, together with our significant drill out requiring 16 rigs across the project at various stages. This put a lot of stress on infrastructure and human resources all of which was managed with aplomb. Over and above Glenn was able to oversee and produce a quality Pre-Feasibility Study referred to at the commencement of this letter. He is well aware that the hard work is still to commence as we move through Feasibility Studies, financing and on into the construction activities. Through this he needs to build and assimilate a suitable development and operating team around him to ensure that time lines are met and construction activities managed. Shareholders should thank he and his Executive Team for their efforts during the year. Glenn will provide greater detail of the group’s significant achievements of the organisation during the year in the Review of Operations. Other targets included Environmental approvals and the signing of suitable Native Title agreements for infrastructure and mining purposes. I am pleased to note that a very comprehensive Environmental Review Document is to be lodged shortly. Community Engagement is a critical part of the Company’s life as we seek all necessary approvals for the Project development – but also how we treat our Traditional Owners, Shires and Station owners into the future. The Community engagement team has been managed by Ms. Bronwyn Campbell with specific support from Technical Director Andy Beckwith and senior management as required. Relationships between our team and the local community groups have been positive and we particularly thank the Traditional Owner groups – the Kariyarra, Ngarluma, Nyamal, Ngarla and Mallina peoples - with whom we regularly engage as we move forward with ongoing heritage clearances and negotiations for mining agreements. We have been grateful for the manner and mutual respect in which negotiations have been conducted. Widespread community consultation and traditional custodian engagement has been conducted including social impact assessments of the Project. Engagement with the Kariyarra people, the traditional custodians of the land over Hemi, on a Partnership Agreement which will provide business opportunities, employment training and community programs is at an advanced stage. We also thank our key pastoral holders across the De Grey tenement package, but particularly Betty and Colin Brierly of Indee Station. Hemi and most of its infrastructure will be on Indee, and Betty and Colin have been supportive and helpful towards various De Grey management personnel since the Company first commenced life and operations in the region in 2002. 4 De Grey Mining Limited We have been grateful for the support of our brokers during the year through capital raising and research activities. Institutional support has continued to develop on our register, aided by the broking groups with whom we work. We believe the recently released PFS should attract additional institutions to the register, whilst we look forward as well to the continued support of existing shareholders through to production and beyond. De Grey also finds itself in a fortunate position to cope with the burgeoning demands of ESG principles and carbon emission reductions. The Company has conducted extensive environmental baseline studies and test work across the Project area commencing in 2020, well prior to the maiden Mineral Resource being announced in June 2021. Management regimes have been developed and are incorporated into the Project layout and PFS designs. The Mallina Project is in a region with access to gas and probable solar power farms being developed in the near future and will continue to look at drive in drive out options to offer employees a reasonable family life in the well developed townsite at Port Hedland. The Pre-Feasibility Study contains an extensive list of options considered and actions being developed to ensure the Project is built with a strong focus on all aspects of ESG. A company is only as strong as its people, and we are very fortunate to have an outstanding team at De Grey. It is not an easy task to grow from not many staff to over 100 in a Covid world with competing demands for staff from other Mining Companies. Again, testimony to the quality of the Project to attract and retain staff as well as the ESG principles embraced by the Company and the efforts of our HR department supported by our executive team. I would like to express my sincere thanks to all staff and all contractors for their support and exceptional performances along the way. And lastly to our shareholders who have financed our activities I express my gratitude for your support, it has been a privilege to be Chair of the Company during this exciting stage in the Company’s history. Yours sincerely, Simon Lill Non-Executive Chairman 5 De Grey Mining Limited Managing Director’s Report and Review of Operations In last year’s Managing Directors report I talked about the Hemi discovery and the Mallina Gold Project redefining the Pilbara. Whilst this remains true, our last 12 months has really been focussed on the transformation from an explorer into the development stage for our Tier 1 world class Mallina Gold Project (MGP or the Project). During FY2022 our dedicated team at De Grey has made significant strides in transforming the MGP from an exciting world scale deposit to arguably one of the world’s premier gold development projects. This is an incredible achievement for a deposit that was discovered less than three years ago. Our major achievements during the last 12 months have been:  Publishing a Scoping Study which showed a production rate of approximately 430,000oz per year over 10 years with AISC in the lowest quartile, pre-tax NPV5% of $2.8 billion, pre-tax IRR of 60% and a pre-tax payback of 1.6 years  Releasing the JORC Mineral Resource Update completed by Cube Consulting Pty Ltd which increased contained gold by 25% to 8.5Moz including 5.8Moz in the JORC Indicated category, up from 2.8Moz. This resulted in the total MGP JORC MRE increasing by 15% to 10.6Moz and the JORC Measured and Indicated categories increasing by 80% to 6.9Moz  Recently releasing of the MGP Pre-Feasibility Study (PFS) and the declaration of the Maiden Hemi JORC Probable Ore Reserve of 103Mt @ 1.5g/t Au for 5.1Moz. The PFS demonstrated the world class nature of the project with a production rate of approximately 540,000oz per year for the first 10 years with AISC in the lowest quartile, pre- tax NPV5% of $3.9 billion, pre-tax IRR of 51% and a pre-tax payback of 1.6 years Whilst the discovery of Hemi was many years in the making, the transformation from an exciting resource into a world class gold project in a Tier 1 mining jurisdiction has been truly impressive and exciting to be involved in. Figure 1: Hemi Deposits and Regional Deposits Location Map 6 De Grey Mining Limited Project Location The Company has built a dominant position in the prospective Mallina Basin of the Pilbara Craton, located near Port Hedland in the northwest of Western Australia, next to world class infrastructure which is unique in recent history in Australia and in fact globally. The Project is located approximately 1,300 kilometres (km) north of Perth in the Pilbara region of Western Australia and approximately 85km by road south of the regional Pilbara hub of Port Hedland (Figure 1). Existing infrastructure capable of servicing the Project includes:        Two two-lane bitumen highways; the North West Coastal highway and the Great Northern highway Two gas pipelines; the Pilbara Energy gas pipeline and the Wodgina Mine gas pipeline Port Hedland to Karratha 220kV power transmission line fed separately by two gas fired power stations located at Port Hedland and Karratha The port of Port Hedland, a bulk export and materials import facility The international airport at Port Hedland Existing combined mobile (cell) tower and optic fibre/wireless communications Sufficient good quality groundwater at site Port Hedland is the largest economic export port in Australia. The Port also has an operating import terminal which can now receive mining equipment into the region, which will provide substantial transport cost savings to the Project during development and operations. Renewable energy sources are being constructed or planned by energy providers in the Pilbara along with an expanded high voltage distribution network (Figure 2). These initiatives will provide De Grey with the potential to access renewable energy sources as the Project is developed and throughout operations. The Projects’ proximity to world class infrastructure and the import terminal of Port Hedland represents significant advantages compared with other Tier 1 gold projects recently developed in Australia and globally where large scale gold projects use pressure oxidation to recover gold. Figure 2: Hemi Pilbara Energy Interconnect 7 De Grey Mining Limited MGP Scoping Study The MGP Scoping Study, released in October 2021, was the first formal assessment of the development parameters of the Project and confirmed its potential to be a Tier 1 gold operation. Highlights included:  Average gold production ranging from approximately 473,000oz per annum for the first five years to approximately 427,000oz pa over the 10-year evaluation period  Average feed grade of 1.6g/t Au in the first five years and 1.4g/t Au over the 10-year evaluation period  The percentage of JORC Indicated resources of 78.1% (Inferred 21.9%) over the first five years and 70.2% (Inferred 29.8%) over the 10-year evaluation period  Average AISC ranging from $1,111/oz over the first five years to $1,224/oz over the 10-year evaluation period,  placing the Project in the lowest quartile of Australian gold producing peers Estimated capital cost for a 10Mtpa plant and site infrastructure of approximately $835M inclusive of a 25% ($167M) contingency Total pre-production capital of $893M inclusive of $58M pre-stripping and $167M of contingency   Average processing recovery of approximately 93% is based on conventional comminution, flotation, oxidation via one of pressure oxidation, Albion or biological oxidation, and CIL. The optimal oxidation process route will be determined with further studies  Attractive financial outcomes demonstrating the quality of the Project: o Pre-tax undiscounted free cashflow of approximately $3.9 billion (post-tax $2.9 billion) over 10 years o Pre-tax Net Present Value (NPV5%) of approximately $2.8 billion and post-tax NPV5% of $2.0 billion o Pre-tax Internal Rate of Return (IRR) of approximately 60% and post-tax IRR of 49% o Unleveraged payback of approximately 1.6 years (pre-tax) and 1.8 years (post-tax) These Scoping Study estimates were updated in the Pre-Feasibility Study (PFS) released in September 2022. Exploration The Project comprises a landholding of more than 1,500km2, stretching across a contiguous tenement package running SW to NE for 150km and boasts greater than 200km of gold hosting shear zones and numerous intrusion targets (Figure 3). The Project area is yet to be fully tested and significant potential remains to discover new, large scale gold deposits. Figure 3: Mallina Gold Project During the year the exploration team has focussed on infill, geotechinal and metallurgical drilling at the Hemi deposit to support the PFS and Maiden Ore Reserve. Also during the year significant effort was directed at advancing regional exploration efforts targeting near surface intrusives and strucutrally related mineralisation within our relatively underexplored tenement package. The majority of this early stage regional work has focussed on re-evaluation of past exploration results, acquistion of new geophysical data and interpretation, followed by aircore(AC) drilling and following up reverse circulation (RC) drilling. Impacts to our overall exploration efforts due to COVID-19 have been minimal due to the company’s safety and health 8 De Grey Mining Limited management planning. COVID has also caused restrictions to various heritage survey team members which in turned has caused various drilling access delays. Overall the regional drilling programmes have been successful in discovering new gold mineralisation at Withnell South, Calvert, Charity Well, Gemmas and Gillies all revealing significant drill results which will require further work. The results at Withnell South, in particular, provides an immeidate opportunity to grow the existing resource base of approximately 600koz(open pit 5Mt @ 1.8g/t for 282,900oz and underground 2.5Mt @ 3.9g/t for 317,100oz). Further infill and extensional drilling has been planned in this area. At Charity Well, recent drilling demonstrates an interpreted strike length of the mineralised intrusion of at least 1km and has returned multiple mineralised intercepts from both AC and RC drilling. The intrusion remains open to the northeast and gold mineralisation has been intersected to depths of 300m vertically and remains open. Additonal heritage surveys are required to test the mineralisation with drilling to the east. The gold mineralisation at Charity Well is hosted within intervals of predominantly shallowly dipping quartz-pyrite- arsenopyrite veins within broad envelopes of strong sericite alteration in both the intrusion and adjacent sediments which is a simialr geological setting to the nearby 524,100oz Toweranna Gold Deposit and represents an exciting opportunity within the Company’s target portfolio. Importantly, the Charity Well intrusion is over 5 times larger than the Toweranna intrusion providing added potential to define a large resource. At Geemas, encouraging new results have been intersected in a similar style intrusion. The gold mineralisation intersected by drilling is narrower, but also hosted within intervals of predominantly shallowly dipping quartz-pyrite-arsenopyrite veins within broader envelopes of strong sericite alteration in the target intrusion. RC drilling has been completed across five 200m-spaced sections at the main target area, confirming the intrusion with a strike length of approximately 800m and 300m wide with multiple smaller, subordinate intrusions nearby. The exploration results to date at the Charity Well and Geemas areas has confirmed the prospectivity and potential of the western tenement portfolio for the discovery of new intrusion-hosted gold deposits like Toweranna. At Hemi, whilst the focus was on the infill drilling required for the PFS and Maiden Ore Reserve, the Company has been able to demonstrate broad zones of high grade mineralisation near surface at Duicon as well as increasing the overall resources. The potential of deeper mineralisation at Duicon was recently demonstrated in diamond hole HEDD128 which intersected 359.4 metres at a grade of 1.2 g/t Au, including 19.3m @ 7.4g/t Au and 2.0m @ 22.5g/t Au, 200 metres beneath the May 2022 Resource. Hemi Mineral Resource Estimate Update A critical milestone during the year was the updated Hemi MRE. The update was completed by Cube Consulting Pty Ltd and based on additional drilling and assay results to 5 April 2022 at the Hemi gold deposit. The Regional gold deposit MRE’s remain unchanged from the April 2020 Mineral Resource statement. In Summary:  A 25% increase in contained gold of 1.7Moz to 8.5Moz  Diucon and Eagle (combined) increase by 78% contained gold to 2.6Moz at a 30% higher grade  Hemi JORC Indicated category increases by 3Moz from 2.8Moz contained gold to 5.8Moz  Mallina Gold Project Province (MGP) resource increased by 15% to 10.6Moz  MGP JORC Measured and Indicated categories increase by 80% to 6.9Moz 9 Hemi Total Mineral Resource Estimate (JORC 2012) Indicated (68% of ounces) Inferred (32% of ounces) MGP Mineral Resource Estimate (JORC 2012) Measured & Indicated (65% of ounces) Inferred (35% of ounces) 213Mt 1.2g/t Au 8.5Moz 139Mt 74Mt 1.3g/t Au 1.1g/t Au 5.8Moz 2.7Moz 251Mt 1.3g/t Au 10.6Moz 158Mt 97Mt 1.3g/t Au 1.3g/t Au 6.9Moz 3.8Moz (0.3g/t Au Cut-off above 370m depth, 1.5g/t Au Cut-off below 370m depth, assays to 5th April 2022) Global Mineral Resources for the MGP, following the inclusion of Hemi, increased to 10.6Moz. Figure 4: Mallina Gold Project Resource Locations De Grey Mining Limited MGP 10.6Moz 251Mt 1.3g/t Au HEMI +8.5Moz 213Mt 1.2g/t Au Maiden Hemi JORC Probable Reserve The maiden Hemi Ore Reserve leveraged off the Hemi Mineral Resource update announced in May 2022 of 8.5Moz @ 1.2g/t Au of which 5.8Moz @ 1.3g/t Au were classified as JORC Indicated. This increase and the high conversion rate of the Indicated Resource to Probable Reserve was achieved by targeted resource definition drilling within preliminary pit shell optimisations which were regularly conducted over the Hemi deposits during the PFS. The maiden Hemi JORC Probable Reserve of 5.1Moz @ 1.5g/t Au is one of the largest and highest grade maiden Reserves in recent decades from Australia. 10 De Grey Mining Limited Table 1 – Hemi Maiden JORC Probable Reserve Mining Centre Type Proved Probable Total M t Au g/ t Koz M t Au g/ t Koz M t Au g/ t Koz Hemi Mining Centre Oxide Transition Sulphide Total - - - - - - - - - - - - 7.3 6.0 1.7 1.7 403 329 7.3 6.0 1.7 403 1.7 329 90.1 1.5 4,408 90.1 1.5 4,408 103.4 1.5 5,139 103.4 1.5 5,139 Refer to ASX Announcement 8 September 2022: “Prefeasibility Study Outcomes – Mallina Gold Project”. Mallina Gold Project PFS On 8 September 2022 the Company released the results of the PFS into the MGP. This followed on from the release of the Scoping Study in October 2021 and was targeting material improvements in annual gold production rate, grade, mine life, confidence levels and project economics from that initial study. Project Highlights A future top 5 Australian Gold M ine based on production Total production 6.4M oz over 13.6 years M ining physicals 136M t @ 1.6g/ t Au processed at 93.6% recovery Annual production 550koz: first 5 years 540koz: first 10 years M aiden Ore Reserve 5.1Moz @ 1.5g/ t Au Plant throughput 10Mtpa Total production has increased by nearly 50% from the Scoping Study to 6.4Moz within the PFS, with the annual gold production rate increasing by approximately 25% to 540,000ozpa over the first ten years. The increased production has been achieved at increased levels of JORC Measured and Indicated Resources within the production profile, averaging close to 90% over the first ten years of production compared with 70% in the scoping study. 11 The preproduction capital cost of the Project of $985M including $100M of growth/contingency and additional $68M of mine pre-stripping capital costs have increased from the scoping study in line with inflationary expectations. The capital cost excludes the cost of an oxygen plant. Oxygen will be supplied to the POx plant under contract. The location of the project to world class Pilbara infrastructure has significantly reduced capital costs, project complexity and timelines. De Grey Mining Limited Undiscounted free cash flow $5,900M : pre-tax $4,200M : post-tax IRR AISC 51%: pre-tax 41%: post-tax $1,220/ oz: first 5 years $1,280/ oz: first 10 years NPV5% $3,900M : pre-tax $2,700M : post-tax Pre-production capital $985M cost of plant and infrastructure including $100M growth allowance plus $68M pre-stripping cost Unleveraged payback period 1.6 years: pre-tax 1.8 years: post-tax The Company has identified opportunities to improve the PFS outcomes. These include:   Increasing the resource base at the Hemi and Regional deposits through extensional drilling Increasing production potential by conducting new pit shell optimisations in areas where resources have been extended Increasing the percentage of JORC Indicated mineralisation within the open pit designs at Hemi   New discoveries that could result from the Company’s extensive and ongoing exploration activities   Increasing reserves at Hemi through targeted resource definition drilling Converting Regional resources to reserves through additional technical studies and targeted resource definition drilling  Assessing the potential for concurrent underground and open pit mining The PFS did not include extensions to mineralisation at Hemi that have been announced since the assay cut-off date of 5 April 2022 for the completion of the May 2022 MRE, the potential for extensions to the existing resources at Hemi nor new discoveries that could result from the Company’s extensive and ongoing exploration activities. Increases to resources and reserves at Hemi with continued drilling appear likely. The Company announced in August 2022 the results of resource step out drill hole HEDD128 which intersected 359.4 metres at a grade of 1.2 g/t Au at Diucon, including 19.3m @ 7.4g/t Au and 2.0m @ 22.5g/t Au, 200 metres beneath the May 2022 MRE (figure 5). Large scale step- out drill targets exist at each deposit with extensional drilling ongoing. New pit shell optimisations can be conducted on updated resource models. 12 Figure 5: Cross section at Diucon showing drill hole HEDD128 De Grey Mining Limited Increases to the Hemi reserve can be achieved through targeted resource definition drilling to increase JORC Indicated resources. There are currently 0.5Moz JORC Inferred mineralisation within the open pit designs. Aircore and reverse circulation (RC) drilling has continued to identify gold anomalism in the Greater Hemi and Regional areas. Drilling will continue to follow up these targets with the aim of making new, near surface, large scale, intrusion hosted gold deposits. Of note, the Company is following through on previously announced intersections of shallow mineralisation at Antwerp, to the west of Eagle, and at Charity Well in the western part of the Regional tenement package. Mineralisation has been consistently intersected at all Hemi deposits below the PFS open pit designs. The potential for concurrent underground mining with open pit mining is an option for future consideration and centres on the scheduled completion of the Stage 1 starter pit at Brolga early in Year 4 of production. The deposits at Aquila, Crow and Falcon are located respectively within approximately 500m, 550m and 850m of the Brolga Stage 1 starter pit. Along with the potential for moderate increases to plant throughput with de-bottlenecking, this has the potential to lift annual gold production rates. Additional plant throughput of 1Mtpa (10%), combined with production from underground sources at an average mined grade of 5g/t Au or extensions, to current open pit designs at the current LOM average grade, has the potential to lift overall annual gold production respectively by approximately 150,000ozpa or 50,000ozpa. Production The production profile of the Project demonstrates an annual production range up to approximately 636,000 ounces in year five, with average production of 550,000 ounces over the first five years and 540,000 ounces per annum over the first 10 years (Figure 6). Production from the Hemi Mining Centre is sourced from six deposits; Aquila, Brolga, Crow, Falcon and Diucon and Eagle. 13 De Grey Mining Limited Production over the first five years is achieved with 97% coming from JORC Measured and Indicated resource classifications and over the first 10 years coming from 89% JORC Measured and Indicated resource classifications. JORC Measured and Indicated resources comprise 87% of the overall PFS production outcome of 6.4Moz. The Hemi deposits comprise approximately 97% of production over the first five years, 85% of production over the first ten years and 83% of the overall PFS production outcome of 6.4Moz. Production in the PFS falls after year 10 as lower grade mineralisation is mined and low-grade stockpiles are processed. However, the Project continues to generate strong cashflows throughout each of the remaining 3.5 years of its current life of mine. Extensions to existing resources and the new discoveries have the potential to increase gold production above 500,000ozpa beyond year 10. Typically, nameplate plant throughput capacity is exceeded through plant de-bottlenecking and PFS conservatism. The Company would reasonably expect plant throughput to increase by approximately 10% to 15% over the life of mine with minimal capital expenditure. This would bring forward production from the later years of the PFS production profile or make space for additional production from potential new discoveries. Figure 6: PFS Production Profile years 1-10 800koz 700koz 600koz 500koz 400koz 300koz 200koz 100koz 0koz 556 551 503 506 637 595 567 518 524 436 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Production - Inferred Production - M&I Figure 7: Hemi Open Pit Layout 14 De Grey Mining Limited Sensitivity Analysis Sensitivity analysis (Figure 8) shows the Project to be resilient to changes in capital costs and recoveries, with significant leverage to improved head grade, gold price and AISC. The increase in capital cost of the Project of approximately 15% from the Scoping Study has been outweighed by increases in average ore grade of approximately 10% and average annual gold production rate of approximately 25% such that the Project NPV5% (post-tax) has increased by approximately 40%. Figure 8: Sensitivity analysis Grade (+ / -10%) $1,972M Gold Price (+ / -10%) $1,971M $3,400M $3,400M AISC (+ / -10%) $2,320M $3,051M Discount Rate (+ / -1%) $2,468M $2,925M Recoveries (+ / -2%) $2,534M $2,838M Capex (+ / -10%) $2,591M $2,780M $1,700M $1,900M $2,100M $2,300M $2,500M $2,700M $2,900M $3,100M $3,300M $3,500M Project Positioning The PFS has identified that the Project will have potential:  Annual gold production in the top five Australian gold operations  Lowest capital intensities of any large scale undeveloped gold project on a global basis and a low sensitivity to capital cost increases Lowest quartile AISC operating costs Low carbon intensity per ounce of production compared with open pit gold mines in Australia   The Project would be a low-cost producer compared with current Australian producing gold mines, with a projected average AISC of $1,220/oz over the first five years and $1,280/oz over the first 10 years, placing the Project in the lowest quartile of Australian producing gold mine. Increases in unit mine operating costs on a per tonne basis due increased strip ratio and the current inflationary environment have been offset by increased annual gold production rates. The increase in strip ratio follows the completion of a detailed geotechnical study supported by extensive geotechnical drilling. Project Configuration The Project comprises mine production, all currently from open pit mining, from Hemi and Regional deposits. The Hemi deposits of Aquila, Brolga, Crow, Diucon, Eagle and Falcon are clustered together while the Regional deposits are located across the Company’s Mallina tenement package. Toweranna is the most distal Regional deposit, being located approximately 60 kilometres to the west of Hemi. 15 The Company assessed comminution circuit and oxidation circuit options for the process plant during the PFS. The preferred comminution circuit comprises primary and secondary crushing, high pressure grinding roller (HPGR) and ball mills followed by flotation, pressure oxidation (POx) and cyanide leaching. Similar comminution circuits are used in large scale gold projects. Hemi ore has the advantage of generating a low (8%) mass pull sulphide concentrate as feed to the POx circuit. This reduces the POx throughput to 0.8Mtpa compared with the overall plant throughput rate of 10Mtpa. Hemi mineralisation achieves metallurgical recovery of 93.6%. De Grey Mining Limited Figure 9: MGP Simplified Process Flowsheet ESG The Company has conducted extensive environmental baseline studies and testwork across the Project area commencing in 2020, well prior to the maiden Mineral Resource being announced in June 2021. Management regimes have been developed and are incorporated into the Project layout and PFS designs. Widespread community consultation and traditional custodian engagement has been conducted including social impact assessments of the Project. Engagement with the Kariyarra people, the traditional custodians of the land over Hemi, on a Partnership Agreement which will provide business opportunities, employment training and community programs is at an advanced stage. Heritage clearances have been completed over the Project area including at Hemi and over Regional deposits and infrastructure corridors. Heritage surveys will continue over Greater Hemi and Regionally in support of exploration programs. 16 The early adoption of grid based renewable energy sources, augmented by site based renewable energy as appropriate, is planned with multiple options emerging within the North West Interconnected System (NWIS). The Project is one of the largest undeveloped gold projects on a global basis and will have low start-up and future carbon intensities respectively of 0.6 and 0.3t.CO2/oz as shown in Figure 10. The benchmarking shown in Figure 10 references producer’s reported actual carbon intensities for financial year 2021. De Grey, along with other producers referenced in Figure 10, have plans to further reduce carbon intensity over time. De Grey Mining Limited Figure 10: Carbon Intensity Review of Objectives Continue drilling programs with the aim to extend the Mallina Gold Project Resources above the 9-million-ounce JORC resource defined to date Complete the scoping study on the project to deliver a Tier 1 production capability at Hemi Materially advance and evaluate early- stage project de-risking studies including metallurgy, environmental, hydrology and geotechnical aspects of the project to support the completion of a PFS during Calendar year 2022 Pursue a corporate strategy aiming to use the IP knowledge to identify Intrusion style mineralisation targets within our project area and the greater Pilbara region Update 8.5Moz Hemi JORC code compliant MRE announced in May 2022 takes total MGP resources to 10.6Moz Scoping Study results announced October 2021 showing 10 year average annual production of 427,000oz Au PFS and Maiden Hemi Reserve completed and released in September 2022 – Achieved – – Achieved – – Achieved – – Achieved – team and Hemi exploration Regional continue to identify and refine targets with Charity Well and Geemas drilled during 2021/22 year. 17 De Grey Mining Limited Building Organisational Capability The Company has a firm commitment to build the organisational capability to take the MGP from the exploration phase through development and into production. During the year the Company undertook an extensive workforce planning evaluation process and has identified the key roles needed for the design, construction and operations phases. Critical roles and timing of these appointments have been built into the human resource plan and budget. It is anticipated over the coming months a number of project construction related appointments will be made as the Company pursues its objective of taking the MGP project into production. I have been extremely impressed with the skill, dedication, and commitment of our people to the MGP and the teamwork displayed in managing a dynamic world class project. It is a pleasure to be chosen to lead such an exceptional team at De Grey and together we are aiming to achieve the following objectives in FY2023: • • • • • Increase the resource base at the Hemi and Regional deposits through extensional drilling; Increase reserves at Hemi through targeted resource definition drilling; Increase production potential by conducting new pit shell optimisations in areas where resources have been extended; Increase the percentage of JORC Indicated mineralisation within the open pit designs at Hemi Converting Regional resources to reserves through additional technical studies and targeted resource definition drilling; Pursue new discoveries through the Company's extensive and ongoing exploration activities; • • Make environmental approval submissions; • Assessing the potential for concurrent underground and open pit mining; • • Undertake project funding discussions with the aim of providing a funding solution for the construction of the Complete the DFS for the MGP; project during calendar year 2023; and • De-risk the project to enable the Company to make a Financial Investment Decision during Calendar year 2023 I look forward to keeping you updated on our progress. Glenn Jardine Managing Director 18 De Grey Mining Limited Environment, Social and Governance 1. Our Approach to Sustainability We believe that responsible management of environmental, social and governance (ESG) elements are critical for our investors, the communities with whom we interact and our team. Our Project focus for the year was delivery of the Hemi Gold Project Pre-feasibility Study. As we progress this, we recognise that implementation of ESG principles is central to the success of the Project and De Grey Mining as a business. Our overarching Sustainability framework, shown in Figure 1-1, underpins our commitment to undertake business in a manner consistent with the principles of intergenerational equity, environmental responsibility, and ethical practice. To guide implementation of our framework and monitor performance, DEG’s Board resolved to adhere to the International Council of Mining and Metals (ICMM) Mining Principles (ICMM 2022) which are aligned with the United Nations Sustainable Development Goals (Figure 1-2). Figure 1-1: De Grey Mining’s Sustainability Framework Figure 1-2: ICMM Mining with Principles FY2021-2022 saw the continued global focus on climate change with COP26 and release of the Glasgow Climate Pact. At a local level, the WA State Government made several announcements aimed at ensuring the State Climate Policy goal of net zero by 2050 is achieved. De Grey recognises the fundamental role that renewable energy will play in the future sustainable development of its projects. Accordingly, the Board also resolved to adopt the recommendation from the Task Force on Climate-Related Financial Disclosures (TCFD 2017) as part of our ESG reporting framework. The core elements of governance, strategy, risk management, and adoption of metrics and targets (Figure 1-3) have been imbedded in our approach to climate-related planning. This, along with other elements of ESG, has been central to development of the Hemi Gold Project PFS. Figure 1-3: TCFD Core Elements 19 De Grey Mining Limited 2. Corporate Governance, People and Safety De Grey is committed to behaving ethically and ensuring inclusion across the organisation, regardless of gender, marital or family status, sexual orientation, gender identity, age, disabilities, ethnicity, religious beliefs, cultural background, socio-economic background, perspective and experience. FY2021-22 was a transformational period for the De Grey board with the appointment of Samantha Hogg and Paul Harvey as Non-Executive Directors, progressing our commitment to build capability and diversity in the organisation. De Grey is striving towards a target of 30% representation by women at a board level by 30 June 2023. At a senior management level, women currently represent 20% of the full-time positions. The health, safety and wellness of our employees, contractors, and the communities in which we operate is our number one priority. We are therefore pleased to report that in 2021-22 we achieved 110 LTI-free days and a rolling LTI frequency rate of 2.12, in comparison to the benchmark regional exploration industry rate of 2.00. During the reporting period we increased the health and safety workforce capability through the appointment of a Health and Safety Manager, a Health and Safety Superintendent, Safety and Training Coordinator. Additionally, we completed development and deployment of our Health and Safety Management System and Emergency Response Plans. De Grey recognises that as the Hemi Gold Project progresses toward feasibility and operations, the risks and opportunities presented by ESG factors become more profound and complex, and that its management of ESG must evolve accordingly. Consequently, De Grey established an Environmental, Social and Governance (ESG) Sub-Committee of the Board and an ESG Working Group to facilitate the implementation of our adopted frameworks. A third-party gap analysis against the ICMM and TCFD frameworks was also completed to identify where we need to focus our efforts in FY2022-2023 in preparation for operations. 3. Stakeholder and Community Engagement At De Grey, we acknowledge the Traditional Custodians of the land upon which we operate, the Kariyarra, Ngarluma, Nyamal, Ngarla and Mallina peoples. We recognise their unique cultural heritage, beliefs and connection to these lands, waters and communities and the importance of continued protection and preservation of cultural, spiritual, and educational practices. In recognition of the integral role that community plays in De Grey’s business, we established a community relations and heritage team to implement our stakeholder engagement plan. Our approach to community consultation has focused on a “Consult, Involve, Collaborate” framework, informed by the Public Participation Spectrum developed by the International Association of Public Participation (IAP2). 20 De Grey Mining Limited With our focus in FY2021-2022 being on progressing the Hemi PFS, consultation accordingly concentrated on stakeholders with fundamental interests in the Hemi Project. Key consultation undertaken during the year included our inaugural Port Hedland Town Hall meeting, presentations to regulatory decision makers (Department of Mines, Industry Regulation and Safety and the Department of Water and Environmental Regulation), regular liaison with the Indee pastoral managers and weekly meetings with the Karyiarra Aboriginal Corporation, who are the Native Title holders of the land on which Hemi is located. Our strong relationship with the Kariyarra has culminated in the advancement of a Mining Agreement which is in the final stages of execution. We are proud of the Agreement that has been formulated with the Kariyarra and we look forward to delivering on the substantial intergenerational benefits to the traditional owners of the land on which operate. 4. ESG Fundamentals Integrated into PFS At De Grey, we recognise that understanding and mitigating significant impacts to the environment and community from our operations, is fundamental to the business’ bottom line. It also forms part of the values that we are imbedding in our business. Accordingly, central to delivery of the Hemi PFS was integration of sustainability principles into the key components of the Project, these being mine design, processing, power supply, tailings storage and landform design. This was guided by stakeholder consultation and extensive environmental and social baseline data that was gathered during the year, including ecological assessments (flora, fauna, short range endemics, subterranean fauna), hydrological and hydrological assessments, materials characterisation (waste rock, tailings and soils), social impact assessment, and heritage assessments. For each component, the relevant ICMM Principles and associated performance expectations have been mapped out. The design process for each principal component has then been qualitatively assessed against the identified expectations. In addition, the relevant TCFD metrics for each principal component have been identified, with a view to setting targets at a later stage in the Project’s development. A summary of the key ESG outcomes of the PFS are presented below. 21 Mine Design The mine design incorporates overarching goals of reducing scope 1 emissions, avoidance of drinking water sources and management of groundwater and surface water impacts. De Grey Mining Limited Processing Facility The processing circuit delivers the environmentally benign tailings. lowest carbon emissions intensity option and produces 22 Power Supply The Project’s decarbonisation strategy demonstrates that it can achieve significant reductions in GHG emissions relative to the baseline scenario, and can provide a trajectory to Net Zero by 2050 De Grey Mining Limited 23 Waste Storage (Tailing Storage Facility and Mine Waste) The tailings storage facility adopts an Integrated Waste Landform (IWL) design with stability and footprint the key ESG factors influencing the decision. Waste rock characterisation indicates that waste rock produced from mining can be safely stored in stable surface waste rock landforms (WRL). De Grey Mining Limited 24 De Grey Mining Limited Directors’ Report Your directors present their report on the consolidated entity comprising De Grey Mining Limited (“De Grey” or “the Company”) and its controlled entities (“the consolidated entity” or “Group”) for the financial year ended 30 June 2022. All amounts are expressed in Australian dollars unless otherwise stated. De Grey is a company limited by shares that is incorporated and domiciled in Australia. Directors The following persons were Directors of the Company during the whole of the financial year and up to the date of this report, except as otherwise indicated: Simon Lill Glenn Jardine Andrew Beckwith Peter Hood Paul Harvey – appointed 4 July 2022 Samantha Hogg – appointed 28 January 2022 Eduard Eshuys – resigned 8 September 2022 Bruce Parncutt – resigned 7 September 2022 Information on Directors Simon Lill, BSc MBA Non-executive Chairman Mr Lill was appointed to the board in October 2013 and became Executive Chairman in 2014. In May 2020 he was appointed Non-Executive Chairman. He has previously worked with Anaconda Nickel Limited through engineering studies, financing, and construction phases of the Murrin Murrin Nickel mine. He also has extensive experience since the 1980’s with ASX listed companies, spanning small cap companies to larger concerns, involving restructuring, corporate, compliance, marketing, company secretarial and management activities, resulting in his role at De Grey Mining Ltd. During the past three years Mr Lill has also served as a director of the following listed companies: Company Finexia Financial Group Limited (formerly Mejority Capital Limited) Iris Metals Limited Nimy Resources Limited Purifloh Limited XPD Soccer Gear Group Limited Date appointed 18 May 2011 29 December 2020 16 August 2021 2 September 2013 29 March 2018 Date ceased 25 November 2019 - - - 10 October 2021 Interest in shares and rights at the date of this report: 13,369,629 ordinary fully paid shares No unlisted options over ordinary shares in De Grey Mining Limited 500,000 performance rights Committees Audit & Risk Committee Remuneration & Nomination Committee 25 De Grey Mining Limited Glenn Jardine, BE (Mining) FAusIMM Managing Director Mr Jardine was appointed Managing Director in May 2020. He is an experienced mining executive of 35 years with direct experience in growing resource companies from early-stage exploration through to multi-operation entities, including taking projects through feasibility studies, equity funding, debt financing, project development and operations. His experience includes Project Manager & General Manager of the Henty Gold Mine in Tasmania for Goldfields Ltd; Project Manager of the Emily Ann & Maggie Hays nickel mines; General Manager New Business, Chief Operating Officer & Managing Director for Lion Ore Australia. He has more recently been Chief Operating Officer of Azure Minerals Limited. Commodity experience includes precious metals, base metals, and bulk commodities across underground and open pit operations. Processing methods utilised at these projects and operations include CIP/CIL, DMS, sulphide flotation, BIOX, pressure oxidation and SX/EW. Projects developed have received Australian State and Federal recognition for environmental best practice and health and safety and human resources systems. During the past three years Mr Jardine has not served as a director of any other listed companies. Interest in shares, options and rights at the date of this report: 140,846 ordinary fully paid shares 601,425 unlisted options over ordinary shares in De Grey Mining Limited 94,738 performance rights (Tranche 3) Rights issued to Mr Jardine are issued in 3 tranches, T1 140,846 vested in September 2021 and were exercised in August 2022, T2 91,008 were forfeited in September 2022 and T3 94,738 should vest in September 2023. Andrew Beckwith, BSc Geology, Aus IMM Technical Director Mr Beckwith was appointed to the board in October 2017, having commenced his time with De Grey as a Technical Consultant in February 2016. He is a successful and experienced exploration geologist who has previously held senior technical roles with AngloGold Ashanti, Acacia Resources, Helix Resources, Normandy NFM, North Flinders Mines, BP Minerals Australia and Westgold Resources. At Westgold, Mr Beckwith initially held the role of exploration manager before appointment as Managing Director. Additionally, Mr Beckwith was an Executive director of Bulletin Resources Limited until June 2014. During his time at Westgold, he was intimately involved in the Explorer 108 Pb-Zn-Ag and the Au-Cu Rover 1 (1.2Moz) discoveries in the Northern Territory as well as the acquisition of the Central Murchison Gold Project located in Western Australia. During the past three years Mr Beckwith has also served as a director of the following listed companies: Company Carnavale Resources Limited Date appointed 29 July 2014 Date ceased - Interest in shares, options and rights at the date of this report: 6,209,875 ordinary fully paid shares 496,689 unlisted options over ordinary shares in De Grey Mining Limited 400,000 performance rights 26 De Grey Mining Limited Peter Hood AO, BE(Chem), MAusIMM, FlChemE, FAICD Lead Independent Non-executive Director Mr Hood was appointed to the board on 19 November 2018. Mr Hood, a Chemical Engineer, has had a distinguished career in the Australian Mining and Chemical Industries. He held the position of Senior Production Engineer at the Kwinana Nickel Refinery from 1971 to 1981, then Mill Superintendent of the WMC Kambalda Nickel and Gold Operations between 1982 to 1985. In 1985, he joined Coogee Chemicals Pty Ltd in the position of General Manager and then as their CEO between 1998 and 2005. He then held the position of CEO of Coogee Resources Ltd before retiring in 2008. Through that period, he was part of the management team that oversaw significant growth in Coogee Chemicals. In 2020, Mr Hood was recognised as an Officer of the Order of Australia in the Australia Day Honours List for distinguished service to business and commerce at the state, national and international level, and to the resources sector. During the past three years Mr Hood has also served as a Director of the following listed companies: Company Cue Energy Resources Limited GR Engineering Limited Matrix Composites and Engineering Limited Date appointed 23 February 2018 10 February 2011 15 September 2011 Date ceased - - - Interest in shares and options at the date of this report: 3,502,227 ordinary fully paid shares No unlisted options over ordinary shares in De Grey Mining Limited 21,816 performance rights Committees Audit & Risk Committee, including as Committee Chair 28 January 2022 – 24 March 2022 Chair of the ESG Committee Chair of the Remuneration & Nomination Committee, appointed as the Committee Chair 24 March 2022 Paul Harvey, BE (Mining), FAus IMM, GAICD Independent Non-executive Director Mr. Harvey is an experienced resource executive with operational and projects leadership built from over 35 years global experience in the resources sector, including gold. His recent roles include leadership positions at South32 (2015 – 2020) including four years as Chief Operating Officer with accountability for global manganese, base metals, coal for steel operations and all supporting technical and project functions. Prior to that he held the position of Chief Transformation Officer, a founding Executive Committee role established as part of the South32 demerger from BHP. Senior executive roles at BHP included President Nickel West and President and COO BHP Billiton Diamonds. Mr Harvey has since 2021 held the role of Senior Operating Partner with London based Appian Capital Advisory, providing operational oversight to Appian’s portfolio companies and advice with the analysis and evaluation of potential investments. In 2022, Mr Harvey was also appointed to Wyloo Metals Pty Ltd Advisory Committee. During the past three years Mr Harvey has not served as a director of any other listed companies. Interest in shares and options at the date of this report: No ordinary fully paid shares No options or rights over ordinary shares in De Grey Mining Limited Committees Remuneration & Nomination Committee (appointed 7 July 2022) ESG Committee (appointed 7 July 2022) 27 De Grey Mining Limited Samantha Hogg, Bcom Independent Non-executive Director Ms. Hogg has had a distinguished executive career with international experience across the resources and infrastructure sectors. She previously held senior finance and governance leadership positions at Transurban Group (2008 – 2014) including three years as CFO during a significant growth phase when the company entered the S&P/ASX20 Index. Ms. Hogg has also had significant mineral resources experience through executive roles held with Vale (2006 – 2007) and Western Mining Company (1992 – 2005) with experience spanning finance, treasury, strategic projects, marketing, people and corporate services. During the past three years Ms Hogg has also served as a Director of the following listed companies: Company Adbri Limited Cleanaway Waste Management Ltd MaxiTRANS Industries Limited Date appointed 29 March 2022 1 November 2019 28 April 2016 Date ceased - - 19 March 2021 Interest in shares, options and rights at the date of this report: No ordinary fully paid shares No options or rights over ordinary shares in De Grey Mining Limited Committees Chair of the Audit & Risk Committee (appointed 28 January 2022, Committee Chair since 24 March 2022 ESG Committee (appointed 24 March 2022) Remuneration & Nomination Committee Eduard Eshuys, BSc, FAusIMM, FAICD Non-executive Director Mr Eshuys was appointed to the board on 23 July 2019 and on 8 September 2022, being subsequent to the end of the financial year, has resigned from the board. Mr Eshuys is a highly experienced and well credentialled geologist with over 40 years exploration and company management experience in Australia. In the late 1980s and early 1990s he led the teams that discovered the Plutonic, Bronzewing and Jundee gold deposits, and the Cawse Nickel Deposit. During the past three years Mr Eshuys has also served as a director of the following listed companies: Company DGO Gold Limited¹ NTM Gold Limited Dacian Gold Limited Date appointed 15 July 2010 26 March 2019 16 March 2021 Date ceased 24 June 2022 16 March 2021 - ¹On 24 June 2022, Mr. Eshuys resigned as Managing Director of former ASX listed and major De Grey shareholder DGO Gold Limited on their takeover by ASX listed Gold Road Resources Limited. Interest in shares and options at the date of this report: 52,227 ordinary fully paid shares on resignation Committees Audit and Risk Committee (resigned 28 January 2022) ESG Committee (resigned 8 September 2022) Remuneration & Nomination Committee, was Committee Chair 1 July 2021 - 24 March 2022 (resigned 8 September 2022) 28 De Grey Mining Limited Bruce Parncutt AO, BSc, MBA Non-executive Director Mr Parncutt was appointed to the board on 23 July 2019 and on 7 September 2022, being subsequent to the end of the financial year, has resigned from the board. Mr Parncutt holds the Chairman role for investment banking group Lion Capital and has had a career spanning over 40 years in investment management, investment banking and stock broking, where he has previously held roles as Managing Director of McIntosh Securities, Senior Vice President of Merrill Lynch, Director of Australian Stock Exchange Ltd. During the past three years Mr Parncutt has also served as a director of the following listed companies: Company DGO Gold Limited¹ Date appointed 23 May 2018 Date ceased 24 June 2022 ¹On 24 June 2022, Mr. Parncutt resigned as a Director of former ASX listed and major De Grey shareholder DGO Gold Limited on their takeover by ASX listed Gold Road Resources Limited. Interest in shares and options at the date of this report: 52,227 ordinary fully paid shares on resignation Committees Audit and Risk Committee (resigned 28 January 2022) Remuneration & Nomination Committee (resigned 24 March 2022) Company Secretaries The following persons acted as Company Secretary of the Company during the financial year: Craig Nelmes, BBus Mr Nelmes is an Accountant who joined De Grey in October 2013 and has over 30 years’ experience in the provision of finance, secretarial, governance, financial systems and providing accounting services to the mining sector in Australia and overseas. His experiences include over seven years with International Accounting firm Deloitte, nine years with a multi- national resource’s entity as well as ten years with Corporate Consultants Pty Ltd, a Company providing accounting, secretarial and administrative services to ASX and TSX listed entities. Patrick Holywell, FGIA GradDipCA GAICD BCom Mr Holywell is a Chartered Accountant who joined De Grey in July 2018 and resigned as joint Company Secretary on 17 December 2022. He has over 15 years’ experience in corporate governance, finance and accounting including employment with Deloitte and Patersons Securities Ltd. Mr Holywell has been employed by and acted as company secretary, CFO and/or director of several companies in various sectors. Chief Financial Officer Peter Canterbury, BBus CPA Mr Canterbury is an experienced mining executive and Certified Practicing Accountant with substantial experience in leading ASX-listed mining companies, most recently as MD of ASX-listed Triton Minerals and CEO of Bauxite Resources. Peter has as a broad skillset spanning financial and corporate management, accounting, project financing, feasibility studies, contract negotiation and mining operations. He has held senior roles within the mining industry for close to 30 years. Previously CFO and Acting CEO of Sundance Resources, where he played a lead role in rebuilding the company following a plane accident in 2010 and was instrumental in negotiating the Mining and Development convention for Sundance in Cameroon and Republic of Congo for the US$5 billion iron ore mine, rail and port project. His previous positions include CFO of Dadco Europe with its alumina and bauxite operations in Europe and Africa and several positions with Alcoa in finance, marketing and project development. Peter brings highly relevant financial expertise to support De Grey’s ambitions of becoming a Tier 1 gold producer from Hemi. 29 De Grey Mining Limited Principal Activities The principal activity of the consolidated entity during the year was our focus on the 100% owned Mallina Gold Project (MGP) in the Pilbara region of WA, and includes the large scale, high value, near surface 2019 Hemi gold discovery. The Hemi discovery is an intrusion-hosted form of gold mineralisation new to the Pilbara region and shows a scale of mineralisation not previously encountered in the Mallina Basin. Gold mineralisation at Hemi is hosted in a series of intrusions associated with stringer and disseminated sulphide rich zones. The MGP scoping study was completed in October 2021. In September 2022, subsequent to the end of the financial year, the Company completed its Pre-Feasibility study (PFS) a major de-risking milestone in that it provides much greater detail and confidence on the proposed development scenario for the MGP. MGP is a “world class project” representing a newly discovered Tier 1 asset in a top global mining jurisdiction. DEG is targeting the completion of a Definitive Feasibility Study (DFS) and Final Investment Decision (FID) within the coming 12- months and to be then followed by an expected two year construction phase into first production by the 2nd half of calendar 2025. Financial Review The consolidated loss after tax for the year ended 30 June 2022 was $10,536,710 (2021: $5,250,269). Details of our operations is included in the Managing Directors report and operations review, preceding this report. Earnings per share The basic loss per share for the year ended 30 June 2022 was 0.77 cents per share (2021: 0.41 cents per share). Dividends No dividends were paid or declared during the financial year (2021: None). No recommendation for payment of dividends has been made. Significant changes in state of affairs There were no significant changes in the nature of the activities of the Group during the year, other than those included in the Key Highlights within the Review of Operations. Governance We have adopted Corporate Governance policies representing the system of control and accountability for the administration of corporate governance. De Grey Mining’s Board is committed to managing these policies and procedures in a manner which is directed at achieving our objectives in a proper and ethical manner. To the extent they are applicable to De Grey, the Board has adopted the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations 4th Edition. To read the Company’s Corporate Governance Statement and Appendix 4G to 30 September 2022 visit our website at https://degreymining.com.au/corporate-governance/. 30 De Grey Mining Limited Matters subsequent to the end of the financial year Subsequent to the end of the financial year, the Company announced the Prefeasibility Study (PFS) outcomes for the Mallina Gold Project showing a substantial improvement in grade, annual productions, mine life, cashflow and NPV from the release of the scoping study earlier in the financial year. The PFS also resulted in the Company’s maiden 5.1Moz reserve statement. The Mallina Gold Project includes the Hemi and some Regional deposits, and the PFS outcomes boasts gold production of 540,000ozpa over the first 10 years and a total gold production of 6.4Moz over a mine life of 13.6 years. The PFS financial metrics outcomes over the project include a NPV of $3.9 billion pre-tax and $2.7 billion post-tax, IRR of 51% pre-tax and 41% post tax with a payback of 1.6 years pre-tax and 1.8 years post-tax, and an AISC of $1.220/oz in the first 5 years and then $1,280/oz to year 10. The PFS capital costs outcomes for the 10Mtpa plant and site infrastructure estimated to be $985M inclusive of $100M in growth allowance and an additional mine preproduction pre-strip capital cost of $68M. Likely developments and expected results There are no further developments or expected results other than those listed in the PFS which have been reported under matters subsequent to the end of the financial year. 31 De Grey Mining Limited Remuneration Report (Audited) The remuneration report is set out under the following headings: A. Details of Key Management Personnel B. Remuneration Governance C. Company Financial Performance Over Past 5 Years D. Overview of Executive Remuneration E. Executive STI and LTI Remuneration Performance Outcomes F. Executive Service agreements G. Non-executive Director remuneration H. Details of 2021-22 KMP remuneration I. Key Management Personnel - shareholdings, unlisted option holdings and performance rights holdings J. Securities based compensation options and performance rights K. Other transactions and balances with key management personnel A. Details of Key Management Personnel (KMP) The Directors of De Grey Mining Limited present the Remuneration Report for the Group for the year ended 30 June 2022. The report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001. The report details the remuneration arrangements for the Company’s Key Management Personnel (KMP): • Non-executive directors (NEDs) • Executive directors and senior executives KMPS are those persons who, directly or indirectly, have authority and responsibility for planning, directing, and controlling the major activities of the Group including all directors of the Company. The table below outlines each KMP of the Company and their movements during the year. Name Non-Executive directors Mr Simon Lill Mr Peter Hood AO Ms Samantha Hogg Mr Eduard Eshuys² Mr Bruce Parncutt AO¹ Executive Directors Mr Glenn Jardine Mr Andrew Beckwith Position Term Non-Executive Chairman Lead Independent non-Executive Director Independent non-Executive Director Non-Executive Director Non-Executive Director Full financial year Full financial year Appointed 28 January 2022 Full financial year Full financial year Managing Director Technical Director Full financial year Full financial year Other Key Management Personnel Mr Craig Nelmes Mr Patrick Holywell Mr Peter Canterbury Mr Philip Tornatora Company Secretary Company Secretary Chief Financial Officer General Manager - Exploration Full financial year Resigned 17 December 2021 Full financial year Full financial year Mr. Bruce Parncutt¹ and Mr. Eduard Eshuys² resigned subsequent to the end of the year on 7 September 2022 and 8 September 2022 respectively. 32 De Grey Mining Limited B. Remuneration Governance The Remuneration and Nomination Committee is chaired by the Lead Independent Director Peter Hood and as at 30 June 2022 its other members being Samantha Hogg (Independent non-executive Director), Simon Lill (Non-executive Chair of the Board), Eduard Eshuys (Non-executive Director), with a standing invitation made to other directors to attend all or part of Committee meetings but do not participate in recommendations by the Committee to the Board. The Committee meets periodically during the year to review and make recommendations to the full board in accordance with the Remuneration Committee Charter. During the 2021-22 financial year, the Committee reviewed and made recommendations to the board in relation to KMP, other executives and overriding employee remuneration considerations in respect to: Executive remuneration policies; • • Determining the eligibility, awarding and where applicable the vesting of short-term incentives (STI) and long-term incentives (LTI), including the issuing of securities in accordance with existing shareholder approved plans and seeking approval by shareholders (as required); • Non-executive Director remuneration; • • Appropriate remuneration disclosures in ASX releases including the Annual report; and • Other employment retention policies with respect to employees. The aggregate non-executive Remuneration pool and seeking approval by shareholders for changes (as required); Expert advice and recommendations are sought from remuneration consultants whose scope of work, engagement and reporting is directly back to the Remuneration Committee. That advice on the remuneration policy and settings included benchmarking director and key management personnel remuneration against comparable entities to ensure that remuneration packages are consistent with the market and are appropriate for the organisation. During the year, the Remuneration & Nomination Committee approved the engagement of BDO Rewards (WA) Pty Ltd, (“BDO”) to provide advice on the Executive Incentive Framework, Executive Remuneration Benchmarking and Non-Executive Director Remuneration. Both BDO and the Committee are satisfied the advice from BDO is free from undue influence from the KMP to whom the remuneration recommendations apply. The remuneration recommendations were provided to the Committee as an input into decision making only. The Remuneration & Nomination Committee considered the recommendations, along with other factors, in making its decisions. Fees paid to BDO with respect to the advice were $24,750. In addition to providing remuneration recommendations, BDO provided advice on other aspects of remuneration of the Groups employees. Fees for these services amounted to $7,000. The Board will make final decisions after taking into consideration the recommendations of the Remuneration Committee. Voting on the Remuneration Report - 2021 Annual General Meeting The Company received approximately 85.32% of “yes” votes on its remuneration report for the 2021 financial year (2020: 98.39%). 33 De Grey Mining Limited C. Company Financial Performance Over the Past 5 Years The table below sets out information about De Grey Mining’s performance and movements in shareholder wealth for the past four years up to and including the current financial year. Net loss Share price at year end ($) Basic EPS (cents) Total Dividends per share 2022 10,536,710 0.81 (0.77) - 2021 5,250,269 1.24 (0.41) - 2020 3,976,002 0.91 (0.41) - 2019 2,009,130 0.67 (0.50) - 2018 2,476,951 0.16 (0.85) - $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 Share Price & Volume Share Price Volume s n o i l l i M 450 400 350 300 250 200 150 100 50 0 D. Overview of Executive Remuneration The remuneration policy of De Grey has been designed by the board taking into consideration the stage of development of the Group and the activities undertaken. The guidance is to build mutually beneficial outcomes by aligning key management personnel with shareholder and business objectives. The performance of any company depends largely on the quality of its executives, to this end, De Grey Mining Limited endeavours to attract, motivate and retain highly skilled executives and embodies the following principles in its remuneration framework.  Provide competitive rewards to attract high calibre executives  Link executive rewards to shareholder value  Ensure a significant portion of executive remuneration is ‘at risk’, dependent on meeting performance benchmarks  Establish appropriate, demanding performance hurdles in relation to variable executive remuneration Fixed Annual Remuneration We reward executives by providing a mix of fixed remuneration (base salary plus superannuation capped at $27,500 for the 2021-22 financial year) and variable remuneration consisting of short-term (“STI”) and long-term incentives (“LTI”) on key performance areas affecting the Group’s financial results or operational milestones. 34 Measurement tools used in determining fixed annual remuneration include consideration of general market conditions and that includes benchmarking against industry peers for comparable executive roles. The process is incorporated into the periodic remuneration reviews undertaken and with oversight of the Remuneration and Nomination Committee. De Grey Mining Limited Mix of Remuneration (Target) Managing Director Fixed Remuneration STI LTI Other KMP’s Fixed Remuneration STI LTI % 50% 17% 33% 50-53% 17-23% 27-30% Final quantum determination based upon annual performance review, including consideration of their performance against a KPI scorecard. Up to 50% of annual LTI is held at risk and measured against performance Final quantum determination based upon annual performance review, including consideration of their performance against a KPI scorecard. Up to 50% of annual LTI is held at risk and measured against performance During the current financial year, Patrick Hollywell resigned. As he met the criteria and was considered a ‘good leaver’, the 25,714 options granted to him in the 2020-21 financial year vested on 30 June 2022 and have since been exercised. Refer to Section H: Details of KMP Remuneration. Performance Rights and Option Plan (PR&OP), Performance Rights (PRP) and Employee Option Plans (EOP) of De Grey Mining Limited The Performance Rights and Option Plan (PR&OP) was approved by Shareholders at the 2021 Annual General Meeting (“AGM”). This combined plan will supersede the previous and separate shareholder approved Performance Rights Plan (PRP) and Employee Option Plan (EOP). All Directors, full and part time employees, as well as key consultants of De Grey Mining Limited are eligible to participate in each Plan. Any issue of Rights or Options to Directors under either Plan will be subject to Shareholder approval pursuant to the provisions of the ASX Listing Rules and the Corporations Act 2001. The Directors consider that the PR&OP and previously the PRP and EOP collectively represents an appropriate method to: • Reward Directors, Key management personnel and employees for their past performance; • • • • Provide long term incentives for participation in the Company’s future growth; To motivate and retain Directors, KMP and senior employees; Establish a sense of ownership in the Company for the Directors and employees; Enhance the relationship between the Company and its employees for the long-term mutual benefit of all parties; and Enable the Company to attract high calibre individuals who can bring specific expertise to the Company. • 35 De Grey Mining Limited E. Executive STI and LTI Performance Review Outcomes Short-term Incentive (STI) The STI is designed to reward employee performance with respect to a balanced scorecard of financial and non-financial performance measures. The annual STI opportunity exists for all Executives in the form of a cash bonus. The executive must be employed to be eligible to receive the payment and achieve a score of at least 65% in respect to Wealth Creation and Preservation performance metrics used in guiding the annual STI review process. The Key features of the Annual STI review are as follows: • One year performance period covers 1 July 2021 – 30 June 2022; Each Executive is assessed utilising a KPI Scorecard rating process - up to 100% (with 100% being a factor of 1.0); • • Remuneration and Nomination Committee discretion to reward a factor greater than 1.0 for executives considered to • have achieved higher or exceptional performance; and The 2021-22 KPI Scorecard is weighted against the following key measures: o Global resources growth/new discoveries; o Advancing the prefeasibility study (PFS); o Strategy and development opportunities and initiatives, with emphasis on innovation & technology; o Occupational health and safety – leadership, culture and systems; o People & capability – building board and organisational capabilities; o Maintaining robust compliance and asset tenure process; o Community relations – partnering and seeking agreements with key stakeholders o Finances and systems – capable of funding to meet corporate objectives, with strong underlying systems of control; and o governance and reporting systems, including best practice regulatory obligations; These measures were chosen to best align the performance of the KMP with the business objectives included in the strategic plan. The focus this year was to advance the project to the PFS stage whilst ensuring the safety of employees, relationships with stakeholders are maintained and compliance elements are met. KMPs will be assessed using a scorecard that considers a weighted evaluation against these criteria. This is considered the best approach given the size and nature of the company. The Remuneration and Nomination Committee (and ultimately the board for final decision) retain discretion to vary or supplement the STI, following conferral with the executive, to better define and formalise those criteria, having regard to the nature and scale of the business and any other applicable matters relevant to the current transition which is underway from explorer toward development and ultimately as a producer. In carrying out the assessment against the suite of KPI’s and on the recommendation of the Committee, the board took into consideration the following matters: • • • The scale of the project has increased over the year with significant projected annual production metrics improvements from the October 2021 scoping study of ~430,000ozpa for the first 10 years to the PFS of ~540,000ozpa for the first 10 years; The PFS included the higher confidence maiden ore reserve of 5.1Moz at 1.5g/t Au and the value added by the increase in project production rate, mine life and confidence level at the PFS stage have in part outweighed further short-term resource growth metrics; There were many challenges confronted in the year that included the ongoing impacts of Covid-19 restrictions and considerations and keeping people safe, border closures, staffing challenges, the global fuel cost shock, instability from the Ukraine conflict as well as global supply chain impacts, these needed to be taken into consideration and considered to be outside of managements control. The scorecard was used to assess the performance of the KMP and outcomes for the 2021-22 financial year are included within the table below where the amount to be paid in the 2022-23 financial year (STI Awarded) is calculated as the STI base multiplied by the STI Achievement %. 36 De Grey Mining Limited Executive KMP Glenn Jardine Andrew Beckwith Peter Canterbury Craig Nelmes¹ Philip Tornatora STI Base $ $175,000 $150,000 $120,000 $60,000 $120,000 STI Achievement % 80% 79% 85% 77% 84% STI Forfeited % - - - - - STI Awarded $ $140,000 $118,500 $102,000 $46,200¹ $100,800 ¹ The 2021-22 financial year reported bonus of $96,200 reported in section H of the Remuneration Report includes this $46,200 bonus as well as a $55,000 cash bonus relating to the 2020-21 financial year as approved in November 2021. Refer also to Section H: Details of KMP Remuneration. Long-term Incentive (LTI) The annual LTI opportunity consists of zero priced unlisted options (ZEPO’s) and are issued to both executive directors and other key management personnel. The current LTI is designed to reward performance over a three-year period. The ZEPO’s will vest upon satisfaction of all of the following vesting conditions or where, vesting conditions are not satisfied the Board does have overall discretion whether or not to vest the options. • Remain employed by the company until vesting date to be eligible to receive the payment; • Delineation of Mineral Resources (as that term is defined in JORC, 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) of not less than 12 million ounces of gold at the Company’s Mallina Gold Project (inclusive of the existing regional 2.2 million ounces) by 3 December 2024; Completion of a Definitive Feasibility Study (DFS) confirming feasibility for a 500,000 ounces of gold per annum project through a mine life of no less than 12 years, or such other number as approved by the Board following completion of a Pre-Feasibility Study. The DFS is to be signed off in its entirety by a suitably qualified engineering group (with oversight from the Board); and The Company securing debt and/or equity finance for a Board approved Project arising from the DFS. • • Non-market measures are intended to reward executives for aligning their rewards with De Grey’s business outcomes and creating sustainable shareholder value. The objectives for De Grey are to exploit the Mallina Gold project, which entails defining the resource and completing both prefeasibility and definitive feasibility studies, as well as funding the project. The measures identified achieves these objectives and will create significant shareholder value. The successful completion of these vesting conditions will be confirmed by the Board and LTIP will be issued. If the milestones are not achieved by the vesting date, the options will be forfeited. One half of these LTI ZEPOs will be evaluated against the KPI Scorecard in June of each year and upon achieving 65%+ score then the 50% of these ZEPOs having achieved the incentive condition remain eligible to vest. If the executive does not achieve the annual score of 65% or more, then the 50% of the ZEPOs will be cancelled, whilst the balance will vest solely subject to achieving the LTI milestones. The LTI milestones are tested at the end of year three. LTI granted in 2021-22 financial year There were 199,879 ZEPO’s issued to executives as LTI Incentives in FY2022 that have a 3-year term. These additional LTI ZEPO's, issued at the discretion of the board are subject to evaluation over a 2-year period, with 50% at risk based upon the STI annual KPI scorecard result. The incentives issued at the commencement of the remuneration cycle cover a 3-year period, however where additional ZEPOs are issued, they will be evaluated over the remaining period of the remuneration cycle. ZEPOs issued during this financial year will be evaluated over the remaining 2 years of the remuneration cycle. If the executive ceases employment before the STI and LTI payment, they will lose the STI and any LTI award unless the executive is a defined as a "Good Leaver". Where the executive is a "Good Leaver", a pro-rata award may be made, subject to the Board's discretion (and would include consideration of the employment time served during the performance period and the satisfaction of any agreed KPI). The executive loses the award on cessation of employment where they are considered a "Bad Leaver". A good Leaver means: 37 De Grey Mining Limited • The Executive ceases to be employed by the Company because the Executive: dies or is permanently incapacitated so that they are unable to perform their employment duties; Is aged 60 or older and permanently retires from all employment; • • Validly terminates the Employment in accordance with its terms due to material breach by the Company; • has the Employment terminated by the Company other than for reasons justifying summary dismissal, a material breach of contract, underperformance or any other reason specified under the ESA; and/or • Validly terminates the Employment because of a diminution of role after the Company undergoes a Change in Control. Additional LTI – Managing Director The Managing Director also receives an annual LTI $100,000 in the form of performance rights, under his employment agreement and issued on the following dates with an annual performance milestone of the Company’s Shares reaching a price equal to or greater than 120% of the VWAP for the 10 trading days prior to the date of issue of the Performance Rights, as well as remaining employed by the Company as Managing Director as at the annual date of satisfaction of the milestone (15 September). • • • 1st tranche – was issued in September 2020, milestone achieved, and performance rights vested; 2nd tranche – was issued in September 2021; milestone (being the achievement of a share price of $1.318) not achieved, and performance rights forfeited; and 3rd tranche - was issued in September 2022, milestone assessment 15 September 2023. This award was granted in 2021 following approval of Shareholders at the Annual General Meeting held 29th November 2021.The Company will be required to seek fresh Shareholder approval in order to issue further Performance Rights under the terms of the Employment Agreement, beyond Tranche 3. All STI and LTI’s have been awarded for the 2022 financial year except for the additional LTI, performance rights for the Managing Director. To have earned that tranche, the share price needed to reach $1.318 during the 10 days prior to issue date (15 September 2022). No ZEPO’s awarded as LTI’s vested during the year, however 91,008 performance rights granted to Mr Glenn Jardine were forfeited which represents 30% of the LTI opportunity to the Managing Director. Other LTI granted in the 2017-2018 financial year Issued and approved November 2017: As at 30 June 2022, the remaining Tranche 4 is not yet vested, with the vesting condition being that “The Company securing Project Financing for the Pilbara Gold Project at a minimum throughput of 1M tpa” and with an expiry date of 30 November 2022. F. Executive service agreements Remuneration and other terms of employment for the executive directors and other KMP are formalised in employment or service agreements. The major provisions of the agreements relating to remuneration for the year ended 30 June 2022 are set out in the table below: Name Agreement Glenn Jardine Andrew Beckwith Craig Nelmes Patrick Holywell1 Peter Canterbury Philip Tornatora Service Service Service Service Service Service Base Salary /Fees (p.a.) $500,000 $325,000 $260,000 - $375,000 $325,000 STI Base $175,000 $150,000 $60,000 - $120,000 $120,000 LTI Base $325,000 $175,000 $80,000 - $210,000 $180,000 Consulting/Hr Duration - - - $140 - - Ongoing Ongoing Ongoing Terminated¹ Ongoing Ongoing Notice Period 3 months 3 months 3 months 1 month 3 months 3 months Termination 6 months 6 months 6 months 1 month 3 months 3 months 1 Mr Holywell provided Company Secretarial services as a consultant under a service agreement and resigned on 17 December 2021 38 De Grey Mining Limited G. Non-executive Director remuneration The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment, and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Fees for non-executive directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholder interests, the non-executive directors may receive short term performance incentives and longer-term performance incentives as approved by shareholders. NED’s fees are determined within an aggregate NED fee pool limit, which is periodically approved by shareholders. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. The last aggregate pool was approved at the AGM held in November 2021 and is currently $1,500,000. The annual remuneration for each non-executive director was set in the range of $150,000 - $200,000 per annum for the 2021-2022 financial year. These fees have been supported by independent advice from BDO Rewards (WA) Pty Ltd and determined by the Board of the Company. The fees take into consideration factors such as the market rates of industry peer companies, the current level of activity and the experience of the Directors. Where there is a significant change in the size and scale of Company activities these annual fees will be reviewed. Where approved and at the request of the board, any of the Non-Executive Directors may from time to time be required to fulfil certain executive functions. The Non-Executive Directors can elect at the start of each financial year to receive up to a $50,000 portion of their annual remuneration base fee in Share Rights under the Non-Executive Director Share Plan (NED Share Plan) and subject to obtaining shareholder approval. Specific to the 2021-22 financial year, Director Peter Hood made an election to receive a quantum of NED share rights which were granted to the Non-Executive Directors after approved by shareholders was received at the AGM held on 29 November 2021, and at which meeting the NED Share Plan was also approved. 21,816 NED share rights were issued to Peter Hood and was determined by dividing an amount of $25,000 by the face value of Shares (calculated as the 30 day VWAP as at 1 January 2022 of $1.14597). The maximum possible total value of the NED share rights is the assessed fair value at the grant date of the NED Share Rights, calculated in accordance with Accounting Standards. The only vesting condition of this issue of NED share rights is that the individual remains a Non-Executive Director of the Company on 30 June 2022, with pro rata reduction if the directorship ends for any reason prior to 30 June 2022. Performance hurdles are not required on these rights as it is considered part of the fixed remuneration for services provided by the NED. Non-executive Directors Share Plan The objective of the NED Share Plan is to attract, motivate and retain its non-executive directors and the Company considers that the adoption of the Share Plan and the future issue of Shares Rights under the Share Plan will provide non-executive directors with the opportunity to participate in the future growth of the Company. 39 H. Details of 2021-22 KMP remuneration Details of the remuneration of the directors, the key management personnel of the Group. Short-term Post-Employment Share Based Payments Cash, Salary & Fees $ Cash Bonus1 $ Leave Other Termination Payments Super Options Performance/ Share Rights $ $ $ $ $ $ $ $ % 181,819 124,201 - - - - - - - - 18,181 11,799 - 103,800 17,132 17,235 De Grey Mining Limited Long term benefits Long Service Leave Total % of remuneration Performance Based 472,500 370,268 140,000 150,000 25,443 20,567 2022 2021 287,584 261,994 118,500 67,260 (4,148) 11,123 Directors Simon Lill Glenn Jardine 2022 2021 2022 2021 Andrew Beckwith Samantha Hogg2 Peter Hood 2022 2021 2022 2021 57,867 - 117,045 85,845 Bruce Parncutt 2022 2021 136,364 85,845 Eduard Eshuys 2022 2021 Sub-total Directors 2022 2021 136,364 85,845 - - - - - - - - - - - - - - - - 1,389,543 1,013,998 258,500 217,260 21,295 31,690 - - 27,500 25,000 165,840 87,916 (25,957)4 155,355 - - 27,500 24,889 138,452 208,649 13,705 13,788 - - - - 5,787 - 7,955 8,155 - - 13,636 8,155 - - 13,636 8,155 - - - 41,520 - 41,520 - 41,520 - - 27,161 - - - - - - - - - - - - - - - - - - - - - 3,322 - 8,814 - - - - - - - - - 217,132 257,035 808,648 809,106 590,407 587,703 63,654 - 152,161 135,520 150,000 135,520 150,000 135,520 8% 47% 35% 49% 46% 49% 0% 0% 18% 31% 0% 31% 0% 31% - - 114,195 86,153 304,292 524,925 32,041 186,378 12,136 - 2,132,002 2,060,404 40 De Grey Mining Limited Long term benefits Long Service Leave Total % of remuneration Performance Based Short-term Post-Employment Share Based Payments Leave Other Termination Payments Super Options Performance/ Share Rights Cash, Salary & Fees $ Cash Bonus1 $ $ $ $ $ $ $ $ $ % Other Executives Craig Nelmes 5 2022 2021 232,500 219,178 101,200 - 14,331 10,959 Patrick Holywell3 2022 2021 6,780 62,040 3,000 - - - Peter Canterbury 2022 2021 347,500 145,833 102,000 35,625 15,890 6,771 Philip Tornatora 2022 2021 297,500 257,230 100,800 95,200 19,452 18,821 Sub-total other executives 2022 2021 889,280 684,281 302,000 130,825 49,673 36,551 Total key management personnel compensation 2022 2021 2,278,823 1,698,279 560,500 348,085 70,968 68,241 - - - - - - - - - - - - - - 27,500 20,822 63,292 36,068 10,279 10,341 5,712 - - - - - 27,444 2,256 - - 27,500 - 150,873 57,055 - - 27,500 24,437 113,978 54,102 - - - - - - - - 82,500 45,259 355,587 149,481 10,279 10,341 - - 952 - 11,898 - 18,562 - 454,814 297,368 37,224 64,296 644,715 245,284 571,128 449,790 1,707,881 1,056,738 - - 196,695 131,412 659,879 674,406 42,320 196,719 30,698 - 3,839,883 3,117,142 37% 16% 82% 4% 39% 38% 38% 33% ¹The FY2022 bonus will be paid in the FY2023 reporting period. 2 Samantha Hogg commenced with the company on 28 January 2022. 3 Patrick Holywell resigned from the company on 17 December 2021. 4 Rights issued to Glenn Jardine are issued in 3 tranches, T1 140,846 vested in September 2021, T2 91,008 were forfeited in September 2022 and T3 94,738 should vest in September 2023. The number of rights to be issued for T2 and T3 have been adjusted for the actual issue. As the T2 rights were forfeited any amount previously recorded for these rights has been reversed in the current reporting period. ⁵ The bonus consists of the FY2021 bonus approved and paid in FY2022 reporting period of $55,000 (inclusive of 10% superannuation) and $46,200 bonus will be paid in the FY2023 reporting period. 41 De Grey Mining Limited Shareholdings of Key Management Personnel Opening Balance 1 July 2021 Received on exercise of rights &/or options3 Held at resignation Disposals during the year Other changes during the year Closing Balance 30 June 2022 No. No. No. No. No. No. 13,739,063 - 8,031,668 - 4,300,000 - - 4,948,253 170,000 4,000 5,648,479 36,841,463 - - - - - - - - - - - - - - 600,000 - - 800,000 1,400,000 - (170,000) - - (170,000) (500,000) - (1,985,000) - (850,000) - - (555,000) - - - (3,890,000) - - - - - - - - - - - - 13,239,063 - 6,046,668 - 3,450,000 - - 4,993,253 - 4,000 6,448,479 34,181,463 2022 Directors Simon Lill Glenn Jardine Andrew Beckwith Samantha Hogg1 Peter Hood Bruce Parncutt Eduard Eshuys Other executives Craig Nelmes Patrick Holywell2 Peter Canterbury Philip Tornatora Total 1Samantha Hogg was appointed 28 January 2022 and at the time held nil shares. 2Patrick Holywell resigned 17 December 2021 and at the time held 170,000 shares. 3 Shares received on the exercise of options carried an exercise price of $0.35. The share price on the date of exercise was $1.405. Option-holdings of Key Management Personnel Opening Balance 1 July 2021 Options granted during the year Options exercised during the year Options Lapsed during the year Closing Balance 30 June 2022 Vested and exercisable 30 June 20222 Held at resignation No. No. No. No. No. No. No. 130,566 553,454 659,896 - 52,227 52,227 52,227 827,058 325,714 547,422 1,140,587 4,341,378 - 47,971 - - - - - - - 55,966 95,942 - - - - - - - (600,000) - - (800,000) 199,879 (1,400,000) - - - - - - - - - - - - - - - - - - - - (325,714) - - 130,566 601,425 659,896 - 52,227 52,227 52,227 227,058 - 603,388 436,529 130,566 - 163,207 52,227 52,227 52,227 - - - - (325,714) 2,815,543 450,454 2022 Directors Simon Lill Glenn Jardine Andrew Beckwith Samantha Hogg1 Peter Hood Bruce Parncutt Eduard Eshuys Other executives Craig Nelmes Patrick Holywell2 Peter Canterbury Philip Tornatora Total 1Samantha Hogg was appointed 28 January 2022 and at the time held nil options. 2Patrick Holywell resigned 17 December 2021 and at the time held 325,714 options. 42 De Grey Mining Limited Performance rights of Key Management Personnel Opening Balance 1 July 2021 Rights granted during the year Rights exercised during the year Rights forfeited during the year Other changes during the year3 Closing Balance 30 June 2022 Vested and exercisable 30 June 2022 No. No. No. No. No. No. No. 500,000 723,632 400,000 - - - - 300,000 - - - 1,923,632 - - - - 21,816 - - - - - - 21,816 - - - - - - - - - - - - - (91,008) - - - - - - - - - (91,008) - (306,032) - - - - - - - - - (306,032) 500,000 326,592 400,000 - 21,816 - - 300,000 - - - 1,548,408 - 140,846 - - 21,816 - - - - - - 162,662 2022 Directors Simon Lill Glenn Jardine Andrew Beckwith Samantha Hogg1 Peter Hood Bruce Parncutt Eduard Eshuys Other executives Craig Nelmes Patrick Holywell2 Peter Canterbury Philip Tornatora Total 1Samantha Hogg was appointed 28 January 2022 and at the time held nil rights. 2Patrick Holywell resigned 17 December 2021 and at the time held nil rights. 3 Rights issued to Mr Jardine are issued in 3 tranches, T1 140,846 vested in September 2021, T2 91,008 have been forfeited in September 2022 and T3 94,738 should vest in September 2023. The number of rights to be issued for T2 and T3 have been adjusted for the actual issue. I. Securities based compensation – options The Company granted 199,879 (2021: 2,641,378) options over unissued ordinary shares during the financial year to Directors and other key management personnel as part of their remuneration, as detailed in the table below: Grant Date 29 Nov 21 21 Dec 21 21 Dec 21 Expiry Date 3 Dec 24 3 Dec 24 3 Dec 24 2022 Glenn Jardine Peter Canterbury Philip Tornatora 2021 Andrew Beckwith 10 Jul 2020 29 Jul 2022 Simon Lill 10 Jul 2020 29 Jul 2022 Eduard Eshuys 10 Jul 2020 29 Jul 2022 Bruce Parncutt 10 Jul 2020 29 Jul 2022 Peter Hood 10 Jul 2020 29 Jul 2022 Andrew Beckwith 4 Dec 2020 3 Dec 2024 Glenn Jardine 4 Dec 2020 3 Dec 2024 Philip Tornatora 4 Dec 2020 3 Dec 2024 Craig Nelmes 4 Dec 2020 3 Dec 2024 Patrick Holywell 31 May 2021 30 Jun 2022 Peter Canterbury 1 Feb 2021 3 Dec 2024 Value per option at grant date (cents) Exercise Price (cents) Granted Number Value of Options Granted Vesting Date Number Vested and exercisable in prior periods Maximum expense to be recognised in future years - - - - - - - - - - - - - - 124.5 112.0 112.0 47,971 $59,724 55,966 $62,682 3 Dec 24 3 Dec 24 95,942 $107,455 3 Dec 24 - - - 48,159 51,577 88,416 163,207 $129,750 30 Jul 2020 130,566 $103,800 30 Jul 2020 52,227 $41,520 30 Jul 2020 52,227 $41,520 30 Jul 2020 52,227 $41,520 30 Jul 2020 496,689 $553,808 3 Dec 2024 553,454 $617,101 3 Dec 2024 340,587 $379,755 3 Dec 2024 227,058 $253,170 3 Dec 2024 25,714 $29,700 30 Jun 2022 547,422 $536,474 3 Dec 2024 163,207 130,566 52,227 52,227 52,227 - - - - - - - - - - - 474,910 529,185 325,652 217,102 27,444 479,418 79.5 79.5 79.5 79.5 79.5 111.5 111.5 111.5 111.5 115.5 98.00 43 De Grey Mining Limited Options granted to Key management personnel under the shareholder approved Employee Option plans as both compensation for their past performance and as a mechanism to retain key management personnel. Options are subject to vesting conditions which are disclosed in Part B, Remuneration Policy. J. Securities based compensation – performance rights The Company granted 21,816 (2021: 723,632) performance rights over unissued ordinary shares during the financial year to Directors and other key management personnel as part of their remuneration, as detailed in the table below: Grant Date Expiry Date Value per right at grant date (cents) Granted Number Exercised Number Expired Number Vesting Date Number Vested at end of year Maximum expense to be recognised in future years 2022 Peter Hood 29 Nov 2021 31 Dec 2026 124.5 21,816 2021 Glenn Jardine Glenn Jardine 10 Jul 2020 23 Sep 2023 10 Jul 2020 23 Sep 2024 69.2 33.3 140,8461 91,0081 - - - - 30 Jun 2022 21,816 - - 15 Sep 2021 140,846 15 Sep 2022 - - - - 10 Jul 2020 1,604 Glenn Jardine 1 Rights issued to Mr Jardine are issued in 3 tranches, T1 140,846 vested in September 2021, T2 91,008 have been forfeited in September 2022 and T3 94,738 should vest in September 2023. The number of rights to be issued for T2 and T3 have been adjusted on the actual issue. Refer to section B above for further information. 15 Sep 2023 23 Sep 2025 94,7381 35.4 - - - K. Other transactions and balances with Key Management Personnel De Grey have entered into a number of contracts which resulted in transactions with key management personnel as follows. Paid for promotional activities Paid to relatives of Mr Beckwith Paid to relatives of Mr Tornatora 2022 $ 2021 $ 9,961 86,715 81,651 - 95,323 78,500 • Victoria Lill provided promotional filming and corporate photography services. Victoria Lill is the daughter of Simon Lill, the non-executive chairman of De Grey. Where personnel are employed by De Grey and are considered a related party to key management personnel, those transactions are entered into in the ordinary course of business at arm’s length. • De Grey employed a relative of Mr Andrew Beckwith and a relative of Mr Phil Tornatora. None of these employees reported directly to a KMP. Terms and conditions of transactions with related parties Outstanding balances at the yearend are unsecured and interest free and settlement occurs in cash and are presented as part of trade payables. ----------- End of Audited Remuneration Report ----------- 44 De Grey Mining Limited Directors’ and Committee Meetings The number of meetings of the Company’s Board of Directors and its committees held in the 12 months to 30 June 2022 and the number of meetings attended by each Director are as per the following table: Directors Meetings Audit & Risk Committee1 Remuneration & Nomination Committee2 Environment, Social Governance Committee Eligible Attended Eligible Attended Eligible Attended Eligible Attended Simon Lill Glenn Jardine Andrew Beckwith Samantha Hogg Peter Hood Eduard Eshuys Bruce Parncutt 1The Committee Chair changed on 28 January 2022, when Peter Hood took over the role of Committee Chair, Samantha Hogg was appointed, with Eduard Eshuys and Bruce Parncutt leaving the Committee. The Committee have both an Independent Chair as well as a composition consisting of a majority of Independent Directors. The Committee Chair moved to Samantha Hogg from 24 March 2022. 1 n/a n/a 1 1 1 n/a 4 n/a n/a 2 4 4 2 4 n/a n/a 2 4 4 2 4 n/a n/a 2 4 4 2 1 n/a n/a 1 1 1 n/a 4 n/a n/a 2 4 4 2 11 11 11 4 11 11 11 11 11 11 4 11 11 11 2The Committee Chair changed from Eduard Eshuys to Peter Hood on 24 March 2022, with Samantha Hogg appointed and with Bruce Parncutt leaving the Committee. Share Options and Performance rights At the date of this report there are 3,966,574 unissued ordinary shares in respect of which options are outstanding and 1,566,554 performance rights outstanding. Type Unlisted options Unlisted options Performance rights Performance rights Performance rights Number 927,022 3,039,552 21,816 1,450,000 94,7381 Exercise Price Nil cents Nil cents N/A N/A N/A Expiry Date 31 July 2024 3 December 2024 31 December 2024 30 November 2022 23 September 2025 1 Rights issued to Mr Jardine are issued in 3 tranches, T1 140,846 vested in September 2021, T2 91,008 were forfeited in September 2022 and T3 94,738 should vest in September 2023. Refer to section B above for further information. During the financial year 420,226 options were issued, 2,790,000 options were exercised, and 242,150 options were forfeited. 112,824 performance rights were issued, none were exercised, and none expired. Since the end of the financial year, 927,022 options have been issued and 1,811,544 options have been exercised. Since the end of the financial year 94,738 performance rights have been issued, 140,846 have been exercised and 91,008 have been forfeited. No person entitled to exercise options and/or performance rights had or has any right by virtue of the option to participate in any share issue of the Company or a right to vote at a shareholder meeting. Insurance of Directors and Officers During the financial year, De Grey paid a premium to insure the directors, officers and joint secretaries of the Company. The total amount of insurance contract premiums paid is confidential under the terms of the insurance policy. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. 45 De Grey Mining Limited Indemnification of auditors To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young Australia during or since the financial year. Non-Audit Services There were no non-audit services provided by the Group’s current auditor, Ernst & Young, or associated entities (refer Note 23) in the current year. Proceedings on behalf of the Company As at the date of this report there are no leave applications or proceedings booked on behalf of De Grey under section 237 of the Corporations Act 2001. Environmental Regulation The Group is subject to environmental regulation in respect to its exploration activities. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and compliant with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for the year under review. 46 Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 48. De Grey Mining Limited This report is made in accordance with a resolution of the Directors Simon Lill Non-Executive Chairman Perth, 30 September 2022 Samantha Hogg Chair of the Audit & Risk Committee 47 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s independence declaration to the directors of De Grey Mining Limited As lead auditor for the audit of the financial report of De Grey Mining Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b. No contraventions of any applicable code of professional conduct in relation to the audit. c. No non- audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of De Grey Mining Limited and the entities it controlled during the financial year. Ernst & Young Pierre Dreyer Partner 30 September 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Consolidated Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2022 Notes Consolidated De Grey Mining Limited REVENUE & OTHER INCOME Revenue Interest income Other income EXPENDITURE Employee benefits expense Share based payments expense Compliance expenses Corporate advisory and consulting expenses Administration and other expenses Depreciation and amortisation Finance costs LOSS BEFORE INCOME TAX INCOME TAX EXPENSE LOSS FOR THE YEAR OTHER COMPREHENSIVE INCOME Items that may be reclassified to profit or loss Other comprehensive income for the year, net of tax 5 5 5 6/31 2022 $ 2021 $ 31,833 263,135 552,938 35,751 279,198 260,540 (3,770,003) (2,395,810) (692,768) (430,879) (2,293,149) (1,640,221) (161,786) (2,294,547) (1,043,414) (422,972) (548,389) (777,046) (636,426) (102,964) (10,536,710) (5,250,269) 7 - - (10,536,710) (5,250,269) - - TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF DE GREY MINING LIMITED (10,536,710) (5,250,269) Basic and diluted loss per share for loss attributable to the ordinary equity holders of the company (cents per share) 30 (0.77) (0.41) The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements. 49 Consolidated Statement of Financial Position AT 30 JUNE 2022 Notes Consolidated De Grey Mining Limited CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Financial assets Deferred exploration & evaluation expenditure Property, plant and equipment Right of use asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Lease liabilities Employee benefit obligations TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities Employee benefit obligations Rehabilitation provision TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY 2022 $ 63,494,235 1,878,079 279,071 1,308,943 66,960,328 24,866 233,963,542 8,815,213 1,843,584 244,647,205 2021 $ 70,949,700 1,503,359 206,656 924,936 73,584,651 111,871 114,402,821 6,581,282 2,223,792 123,319,766 311,607,533 196,904,417 18,217,028 420,745 946,684 19,584,457 1,474,351 136,625 2,270,954 3,881,930 17,339,122 353,212 616,570 18,308,904 1,870,580 65,303 1,022,230 2,958,113 23,466,387 21,267,017 288,141,146 175,637,400 356,706,505 3,565,203 (72,130,562) 288,141,146 235,892,228 1,339,024 (61,593,852) 175,637,400 8 9 10 11 12 13 14 15 16 17 18 17 18 19 20 21 21 The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements. 50 De Grey Mining Limited Consolidated Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2022 Share Based Contributed Payments Notes Equity Reserves Accumulated Losses Consolidated $ $ $ Total $ BALANCE AT 30 JUNE 2021 235,892,228 1,339,024 (61,593,852) 175,637,400 Loss for the year OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE LOSS TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares issued during the year Share issue costs Share based payments Transfer of reserve on exercise/expiry of SBP BALANCE AT 30 JUNE 2022 21(b) 20(a) 20(a) 21(a) 21(a) - - - - - - (10,536,710) - (10,536,710) (10,536,710) - (10,536,710) 125,976,620 (5,331,975) - 169,632 356,706,505 - - 2,395,811 (169,632) 3,565,203 - - - - (72,130,562) 125,976,620 (5,331,975) 2,395,811 - 288,141,146 BALANCE AT 30 JUNE 2020 130,713,404 862,609 (56,343,583) 75,232,430 Loss for the year OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE LOSS TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS 21(b) - - - - - - (5,250,269) - (5,250,269) (5,250,269) - (5,250,269) Shares issued during the year Share issue costs Share based payments Share based reserve transfer – exercised BALANCE AT 30 JUNE 2021 20(a) 20(a) 21(a) 21(a) 109,181,570 (4,569,745) - 566,999 235,892,228 - - 1,043,414 (566,999) 1,339,024 - - - - (61,593,852) 109,181,570 (4,569,745) 1,043,414 - 175,637,400 The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements. 51 Consolidated Statement of Cash Flows De Grey Mining Limited FOR THE YEAR ENDED 30 JUNE 2022 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Other income received Payments to suppliers and employees Interest payments Interest received NET CASH OUTFLOW FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Option payments to acquire tenements Proceeds from insurance Payments for plant and equipment Payments for exploration and evaluation expenditure NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of ordinary shares Payments of share issue transaction costs Principal elements of lease payments NET CASH INFLOW FROM FINANCING ACTIVITIES Notes Consolidated 2022 $ 2021 $ 29 36,542 469,843 (6,971,469) (63,348) 248,465 (6,279,967) - - (3,543,875) (117,918,538) (121,462,413) 125,976,620 (5,327,352) (362,353) 120,286,915 (7,455,465) 70,949,700 63,494,235 27,664 327,622 (4,723,223) (13,228) 273,892 (4,107,273) (500,000) 36,800 (5,931,327) (50,877,906) (57,272,433) 108,864,570 (4,569,746) (118,040) 104,176,784 42,797,078 28,152,622 70,949,700 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the financial year CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 8 The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements. 52 De Grey Mining Limited Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 30 June 2022 1. General Information and summary of significant accounting policies De Grey Mining Limited is a company limited by shares, domiciled and incorporated in Australia. The registered office and principal place of business of De Grey Mining Limited is Ground Floor, 2 Kings Park Road, West Perth, WA, 6005. De Grey’s principal activity is focused on the 100% owned Mallina Gold project in the Pilbara region of WA, and includes the large scale, high value, near surface 2019 Hemi gold discovery. The financial statements are for the consolidated entity consisting of De Grey Mining Limited and its subsidiaries (“Group”) and have been presented in Australian dollars rounded to the nearest dollar unless stated otherwise. The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements were authorised for issue by the directors on 30 September 2022. A. Basis of preparation These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards, and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). De Grey Mining Limited is a for-profit entity for the purpose of preparing the financial statements. (i) Compliance with IFRS The financial report also complies with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared on a historical cost basis, except for certain financial assets which have been measured at fair value through profit or loss. (iii) New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for annual periods beginning 1 July 2021. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial year. (iv) New and amended Accounting Standards and Interpretations issued but not yet adopted Several Australian Accounting Standards and Interpretations, that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2022. The Group is assessing the impacts of the amendments; however, the amendments are not expected to have a material impact on the Group. AASB 2021-2 Amendments to AASB 7, AASB 101, AASB 134 Interim Financial Reporting and AASB Practice Statement 2 Making Materiality Judgements15 – Disclosure of Accounting Policies (effective 1 January 2023) The amendments to AASB 101 Presentation of Financial Statements require disclosure of material accounting policy information, instead of significant accounting policies. Unlike ‘material’, ‘significant’ was not defined in Australian Accounting Standards. The guidance illustrates circumstances where an entity is likely to consider accounting policy information to be material. De Grey will consider where these amendments result in changes to the Group’s accounting policies and look to update any required disclosure in line with the requirements outlined. 53 De Grey Mining Limited AASB 2021-2 Amendments to AASB 108 – Definition of Accounting Estimates (effective 1 January 2023) The amendments to AASB 108 clarify the definition of an accounting estimate, making it easier to differentiate it from an accounting policy. The new definition provides that ‘Accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty.’ De Grey will consider where this amendment results in changes to the Group’s accounting policies and look to update any required accounting treatments in line with the requirements outlined. AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non-current (Effective 1 January 2023) A liability is classified as current if the entity has no right at the end of the reporting period to defer settlement for at least 12 months after the reporting period. These amendments to AASB 101 Presentation of Financial Statements clarify the requirements for classifying liabilities as current or non-current. Specifically: ► The amendments specify that the conditions which exist at the end of the reporting period are those which will be used to determine if a right to defer settlement of a liability exists. ► Management intention or expectation does not affect classification of liabilities. ► In cases where an instrument with a conversion option is classified wholly as a liability, the transfer of equity instruments would constitute settlement of the liability for the purpose of classifying it as current or non-current. The classification of liabilities between current and non-current can have important implications for key ratios, debt covenants etc. Whilst not applicable to De Grey right now, De Grey will consider the amendments and their impact on the classification of debt from future financing. AASB 2020-3 Amendments to AASs – Annual Improvements 2018–2020 and Other Amendments (effective 1 January 2022) Provides amendments in: ► AASB 116, Property, Plant & Equipment: Proceeds before Intended Use – to prohibit an entity from deducting from the cost of an item of property, plant & equipment, the proceeds from selling items produced before that asset is available for use. ► AASB 141, Taxation in Fair Value Measurements – removed from AASB 141 the requirement to exclude taxation cash flows when measuring fair value De Grey will need to consider the impact once the project goes into development. AASB 2021-5 Amendments to AASs – Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023) The amendments to AASB 112 clarify that the initial recognition exception would not normally apply. That is, the scope of this exception has been narrowed such that it no longer applies to transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. De Grey will consider where this amendment results in changes to the Group’s accounting policies and look to update any required accounting treatments in line with the requirements outlined. The impact is still being determined. (v) Going concern The financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. Management have considered the funding and operational status of the business in arriving at their assessment of going concern and believe that the going concern basis of preparation is appropriate. 54 De Grey Mining Limited B. Principles of consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of De Grey Mining Limited (“company” or “parent entity”) as at 30 June 2022 and the results of all subsidiaries for the year then ended. De Grey Mining Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and could affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group. Intercompany transactions, balances, and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Investments in subsidiaries are accounted for at cost in the separate financial statements of De Grey Mining Limited. Changes in ownership interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of De Grey Mining Limited. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. C. Joint operations A joint operation is an arrangement in which the Group shares joint control, primarily via contractual arrangements with other parties. In a joint operation, the Group has rights to the assets and obligations for the liabilities relating to the arrangement. This includes situations where the parties benefit from the joint activity through a share of the output, rather than by receiving a share of the results of trading. In relation to the Group’s interest in a joint operation, the Group recognises: its assets and liabilities, including its share of any assets and liabilities held or incurred jointly; revenue from the sale of its share of the output and its share of any revenue generated from the sale of the output by the joint operation; and its expenses including its share of expenses incurred jointly. All such amounts are measured in accordance with the terms of the arrangement, which is usually in proportion to the Group’s interest in the joint operation. Details of the joint operations are set out in Note 28. D. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the full Board of Directors. 55 De Grey Mining Limited E. Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is De Grey Mining Limited’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. F. Revenue recognition Interest Revenue Interest income is recognised as it accrues using the effective interest method. G. Cash and cash equivalents For the purposes of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. H. Inventories Inventories are valued at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Any provision for obsolescence or damage is determined by reference to specific stock items identified. The carrying value of obsolete or damaged items is written down to net realisable value. I. Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the full liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 56 De Grey Mining Limited Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. De Grey Mining Limited and its wholly owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. De Grey Mining Limited is the head entity in the tax-consolidated group. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group). Members of the tax consolidated group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote. Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the Group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in Note 7 to the financial statements. Where the tax contribution amount recognised by each member of the tax consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants. J. Financial instruments Classification of financial instruments The Group classifies its financial assets into the following measurement categories: • • The classification depends on the Group’s business model for managing financial assets and the contractual terms of the financial assets’ cash flows. those to be measured at fair value (either through other comprehensive income, or through profit or loss); and those to be measured at amortised cost. The Group classifies its financial liabilities at amortised cost unless it has designated liabilities at fair value through profit or loss or is required to measure liabilities at fair value through profit or loss such as derivative liabilities. Measurement of financial instruments Receivables Receivables are measured at amortised cost where they have: • contractual terms that give rise to cash flows on specified dates, that represent solely payments of principal and interest on the principal amount outstanding; and are held within a business model whose objective is achieved by holding to collect contractual cash flows. • Trade receivables are initially recognised at the transaction price. Other receivables are initially recognised at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest rate (EIR) method. The measurement of credit impairment is based on the expected credit loss (ECL) model described below regarding impairment of financial assets. Equity instruments Equity instruments held at fair value through profit or loss are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement as they arise. 57 De Grey Mining Limited Trade and other creditors These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are paid on normal commercial terms. All trade and other creditors are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs. For purposes of subsequent measurement, trade and other creditors are measured at amortised cost. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The ECL is based on the difference between the contractual cash flows due in accordance with the contract and all the cashflows that the Group expects to receive, discounted at an approximation of the original EIR. For trade and other receivables due in less than 12 months, the Group recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date. The Group establishes a provision matrix for these receivables that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment as sales from product eventuate or significant receivables come to hand. The Group considers a financial asset in default when contractual payments are 60 days past due. In certain cases, the Group may consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity. Recognition and derecognition of financial instruments A financial asset or financial liability is recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the instrument, which is generally on trade date. The Group derecognises a financial asset when the contractual cash flows from the asset expire or it transfers its rights to receive contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. A financial liability is derecognised from the statement of financial position when the Group has discharged its obligations, or the contract is cancelled or expires. Offsetting Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. K. Property, plant and equipment Each class of plant, equipment and motor vehicle is carried at historical cost less, where applicable, any accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the asset. The carrying amounts are reviewed annually by Directors to ensure it is not more than the estimated recoverable amount from these assets. The recoverable amount is assessed based on the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts and an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 58 Depreciation of property, plant and equipment is calculated using the straight line or reducing balance method to allocate their cost, net of their residual values, over their estimated useful lives, as follows: De Grey Mining Limited Plant and Equipment Furniture and fittings Computers Motor Vehicles Land and buildings 4% - 50% 5% - 50% 20% - 50% 17% - 40% 5% - 30% Straight line Straight line Straight line Reducing balance Straight line The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. L. Leases – group as lessee An assessment is made, at inception or when contract terms are changed, to determine whether the contract is, or contains, a lease. A contract is or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use assets The Group recognises all right of use assets, except for leases that are short-term (12 months or less) and low value leases at the lease commencement date. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include lease extension options and the exercise price of a purchase option that are reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. The present value of future lease payments is determined by discounting future lease payments using the interest rate implicit in the lease or, if that rate cannot be determined, then the Group’s incremental borrowing rate, which is generally the case. The present value of the lease liability is increased by the interest cost and decreased by the lease payment each period over the life of the lease. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset Short-term leases and leases of low-value assets For leases that are short-term (12 months or less) and/or low value asset leases at the lease commencement date, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. 59 M. Deferred exploration & evaluation expenditure De Grey Mining Limited Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which the expenditure is incurred where: • • The Group has secured (or has the legal right to) tenure, and/or the legal rights to explore an area of interest; and Exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing; or The exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale. • Where the conditions outlined are not met in relation to specific area(s) of interest, then those exploration and evaluation costs are expensed as incurred. If an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value, accumulated costs carried forward are written off or impaired in the year in which that assessment is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. When a decision is made to proceed with development in a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is transferred to mine properties under development. N. Employee benefits Wages and salaries and other short-term benefits Liabilities for wages and salaries, including non-monetary benefits are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. Other long-term employee benefits The Group’s liabilities for long service leave are included in other long-term benefits as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. They are measured using the projected unit credit valuation method. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The Group presents employee benefit obligations as current liabilities in the statement of financial position if the Group does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. 60 De Grey Mining Limited O. Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Rehabilitation provision Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability to the extent the estimated future cashflows have not been adjusted for the risks Rehabilitation costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with the requirements of the mining permits. Such costs are determined using estimates of future costs, current legal requirements, and technology. Rehabilitation costs are recognised in full at present value as a non-current liability. An equivalent amount is capitalised as part of the cost of the asset when an obligation arises to decommission or restore a site to a certain condition after abandonment because of bringing the assets to its present location. The capitalised cost is amortised over the life of the project and the provision is accreted periodically as the discounting of the liability unwinds. The unwinding of the discount is recorded as a finance cost. Any changes in the estimates for the costs or other assumptions against the cost of relevant assets are accounted for 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. P. Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Q. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 61 De Grey Mining Limited R. Share-based payments The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’), refer to Note 31. The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by a combination of internal and external sources using a Black-Scholes option pricing model and independent third-party valuations. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where awards are forfeited because non-market-based vesting conditions are not satisfied, the expense previously recognised is reversed. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. Options over ordinary shares have also been issued as consideration for the acquisition of interests in tenements and other services. These options have been treated in the same manner as employee options described above, with the expense being included as part of exploration expenditure. S. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. 62 De Grey Mining Limited T. Significant accounting judgements estimates and assumptions The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. In particular, the Group has identified a number of areas where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described and highlighted separately with the associated accounting policy note within the related qualitative and quantitative note, as described below. These include: • Deferred exploration and evaluation expenditure – Note 13 • Right of use asset & lease liability – Note 15 & 17 • Rehabilitation provision – Note 19 Share based payments – Note 31. • 2. Financial Risk Management The Group’s exposure to a variety of financial risks that may affect the Group’s future financial performance. The Board has the overall responsibility for the establishment, with the Audit and Risk Committee having oversight of all risk management policies. The Committee reports periodically to the Board on its activities and with the assistance of senior management team are responsible for identifying, assessing, treating, and monitoring risks and risk management policies. The Committee oversees management’s compliance monitoring processes as well as reviewing the adequacy of the risk management framework in relation to the risks faced by the Group. Risk management policies and systems are reviewed regularly by the senior management team to reflect changes in market conditions and the Group’s activities. The Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. A. Market risk Foreign exchange risk The Group’s operations are in Australia and currently has limited exposures to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from recognising assets and liabilities denominated in a currency that is not the functional currency of the relevant entity. The Company has a holding of Canadian dollar listed securities. Financial assets at fair value through the profit or loss Consolidated Total 2022 $ 2021 $ 24,866 24,866 111,871 111,871 The sensitivity of profit or loss to changes in the exchange rates arises mainly from Canadian dollar-denominated financial instruments. A 10 percent increase in the AUD/CAD exchange rate would increase post tax loss by $2,261 (2021: $10,170), while a 10 percent decrease in the AUD/CAD exchange rate would decrease post tax loss by $2,763 (2021: $12,430). 63 De Grey Mining Limited Price risk The Group’s listed and equity investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group manages the market price risk by placing limits on individual and total equity instruments. At the reporting date, the exposure to equity investments at fair value listed on the TSX was CAD $22,051 (2021: CAD $104,241). Given that the changes in fair values of the equity investments held are strongly positively correlated with changes of the TSX market index, the Group has determined that an increase/(decrease) of 10% on the TSX market index could have an impact of $2,487 (2021: $11,187) increase/(decrease) on the income and equity attributable to the Group. Interest rate risk The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The balance of cash and cash equivalents for the Group of $63,494,235 (2021: $70,949,700) is subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum of six months fluctuate during the year depending on current working capital requirements. The weighted average interest rate received on cash and cash equivalents by the Group was 0.39% (2021: 0.56%). Sensitivity analysis At 30 June 2022, if interest rates had changed by -/+ 100 basis points from the weighted average rate for the year with all other variables held constant, post-tax loss for the Group would have been $672,220 lower or $263,135 higher (2021: $247,756 lower/higher) as a result of lower/higher interest income from cash and cash equivalents. B. Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in financial loss to the Group. (i) Risk management The Group has adopted the policy of dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from a counterparty not meeting its obligations. Customer receivables have 30-day payment term and outstanding receivables are regularly monitored. Cash is deposited only with institutions approved by the Board and typically with a current minimum credit rating of A (or equivalent) as determined by a reputable credit rating agency. The Group has established a policy of having aggregate funds on term deposit or invested in money markets allocated across financial counterparties. The carrying amount of the Group’s financial assets represents the maximum credit risk exposure. Trade receivables Counterparties without external credit rating – other Total trade receivables Cash and cash equivalents A + external credit rating A – external credit rating Total cash and cash equivalents Consolidated 2022 $ 2021 $ 100,639 100,639 13,546 13,546 63,494,235 - 63,494,235 64,904,307 6,045,393 70,949,700 (ii) Impaired trade receivables In determining the recoverability of trade and other receivables, the Group performs a risk analysis using a provision matrix to measure expected credit losses. The provisions rates are based on the type and age of the outstanding receivable and the creditworthiness of the counterparty. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. If appropriate, an impairment loss is recognised in profit or loss. The Group does not have any impaired trade and other receivables as at 30 June 2022 (2021: nil). 64 De Grey Mining Limited C. Liquidity risk The Group manages liquidity risk by monitoring the immediate and forecasted cash requirements and ensures that adequate cash reserves and/or marketable securities are available to pay debts as and when due. The Group’s primary activities are currently mineral exploration. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities as the Group does not have ready access to credit facilities at this stage of its life cycle. Management regularly monitors its rolling cash forecasts and the state of equity markets in initiating the timing of capital raisings for its future funding requirements. Maturities of financial liabilities An analysis of the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities and on the basis of the contractual undiscounted cash flows as presented in the table that follows. As at 30 June 2022 Trade and other payables Lease liabilities Total non-derivatives As at 30 June 2021 Trade and other payables Lease liabilities Total non-derivatives D. Fair value estimation Less than 6 months $ 6 – 12 months $ 1 – 2 Years $ 2 – 5 years $ Total $ 17,676,778 235,922 17,912,700 17,339,122 190,875 17,529,997 - 235,922 235,922 - 229,051 229,051 - 486,000 486,000 - 1,060,432 1,060,432 17,676,778 2,018,276 19,695,054 - 471,844 471,844 - 1,546,432 1,546,432 17,339,122 2,438,202 19,777,324 The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. All financial assets and financial liabilities of the Group at the balance date are recorded at amounts approximating their fair value. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price. Movements in the fair value of financial assets and liabilities may be recognised through the consolidated statement of comprehensive income. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable • The financial assets and liabilities are presented by class in the table below at their carrying amounts. Financial assets Investment in listed shares Level 1 Fair value through profit and loss 24,866 111,871 Fair value hierarchy AASB 9 classification 2022 $ 2021 $ There have been no transfers between fair value levels during the reporting period. The carrying value of trade receivables and payables approximate their fair values due to their short-term nature. 65 De Grey Mining Limited 3. Capital management For the purpose of the Group’s capital management, capital includes issued capital, and all other equity reserves attributable to the equity holders of the parent. The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Group at 30 June 2022 and 30 June 2021 are as follows: Cash and cash equivalents Trade and other receivables Trade and other payables Working capital position 4. Segment Information Consolidated 2022 $ 2021 $ 63,494,235 1,878,079 (18,217,028) 70,949,700 1,503,359 (17,339,122) 47,155,286 55,113,937 Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. For management purposes, the Group has identified one reportable operating segment being exploration activities undertaken in one geographical segment being Australasia. This segment includes the activities associated with the determination and assessment of the existence of commercial economic reserves, from the Group’s mineral assets in the sole geographic location. 5. Revenue and other income Revenue Revenue Interest income Other Income EIS Grant Gain sale of assets Other income Consolidated 2022 $ 2021 $ 31,833 263,135 - - 552,938 847,906 35,751 279,198 22,775 7,200 230,565 575,489 66 6. Expenses Loss before income tax includes the following specific expenses: Contributions to superannuation funds Lease liability – interest charge Share based payments – options Share based payments – performance rights Loss on Change in fair value of investment 31 31 7. Income tax (a) Income tax expense Current tax expense Deferred tax expense Total Income tax expense per income statement De Grey Mining Limited Consolidated 2022 $ 2021 $ 459,651 57,573 2,226,375 169,436 87,005 718,030 13,228 892,717 150,697 89,405 Consolidated 2022 $ 2021 $ - - - - - - (b) Numerical reconciliation between tax expense and pre-tax net loss Net loss before tax (10,536,710) (5,250,269) Corporate tax rate applicable 30% (2021: 30%) 30% 30% Income tax benefit on above at applicable corporate tax rate (3,161,013) (1,575,081) Increase/(decrease) in income tax due to tax effect of: Share based payments expense Non-deductible expenses Deductible temporary differences not recognised Non-assessable income Effect of Tax rate change at 30% (c) Recognised deferred tax assets and liabilities Deferred tax assets Employee provisions Other provisions and accruals Rehabilitation assets and liabilities ROU assets Tax losses Set-off deferred tax liabilities Net deferred tax assets 67 718,743 18,787 2,423,483 - - - 30% 306,079 174,410 - 15,454 65,402,901 65,898,843 313,024 45,603 1,227,704 (11,250) - - 30% 204,562 10,736 306,669 - 29,921,240 30,443,207 (65,898,843) - (30,443,207) - Deferred tax liabilities Prepayments Exploration & mine properties Unearned Income Gross deferred tax liabilities Set-off of deferred tax assets Net deferred tax liabilities (d) Unused tax losses and temporary differences for which no deferred tax asset has been recognised Deductible temporary differences Tax revenue losses Tax capital losses Total unrecognised deductible temporary differences De Grey Mining Limited Consolidated 2022 $ 2021 $ (33,967) (65,850,853) (14,023) (65,898,843) - (30,433,585) (9,622) (30,443,207) 65,898,843 - 30,443,207 - 30% 30% 2,565,666 20,008,838 77,100 22,651,604 1,750,095 16,693,707 - 18,443,802 The corporate tax rates on both recognised and unrecognised deferred tax assets and deferred tax liabilities have been calculated with respect to the tax rate that is expected to apply in the year the deferred tax asset is realised, or the liability is settled. (e) Tax consolidation Effective 1 July 2004, for the purposes of income taxation, De Grey Mining Limited and its 100% owned Australian subsidiaries formed a tax consolidated group. The head entity of the tax consolidated group is De Grey Mining Limited. Members of the group have entered a tax sharing arrangement that provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote. Measurement method adopted under AASB Interpretation 1052 Tax Consolidation Accounting De Grey Mining Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes. In addition to its own current and deferred tax amounts, De Grey Mining Limited also recognises current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate De Grey Mining Limited for any current tax payable assumed and are compensated by De Grey Mining Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to De Grey Mining Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables. Subsidiaries will recognise any current tax expense equal to the current tax liability and be charged through intercompany by the head entity. (f) Franking credits The company has no franking credits available for use in future years (2021: Nil). 68 8. Cash and cash equivalents Cash at bank & on hand (i) Short-term deposits (ii) De Grey Mining Limited Consolidated 2022 $ 2021 $ 32,056,853 31,437,382 63,494,235 52,427,074 18,522,626 70,949,700 (i) Cash at bank earns interest at floating rates based on daily bank deposit rates. (ii) Short term deposits held for the purposes of meeting short term cash commitments of the Group are made for varying periods typically between one day and three months depending on the immediate cash requirements of the Group. If the short-term deposits have an original maturity greater than three months, principal amounts must be able to be redeemed in full prior to scheduled maturity with no significant penalty otherwise the deposits will be classified as other financial assets. The weighted average interest rate achieved for the year was 0.39% (2021: 0.56%). 9. Trade and other receivables Trade and other receivables GST receivable (net) Accrued interest Consolidated 2022 $ 257,069 1,574,268 46,742 1,878,079 2021 $ 536,931 934,356 32,072 1,503,359 As the majority of receivables are short term in nature, their carrying amount approximates fair value. Trade and other receivables are measured at amortised cost as the SPPI test is satisfied. Receivables are generally due for settlement within 30 days and held for the business model of collecting contractual cash flows. 10. Inventories Diesel fuel inventories 11. Other assets Prepayment – other (i) Advances & deposits Consolidated 2022 $ 2021 $ 279,071 279,071 206,656 206,656 Consolidated 2022 $ 2021 $ 1,308,943 - 1,308,943 918,388 6,548 924,936 (i) Prepayments – other includes prepaid insurance premiums for the period 1 July 2022 to 30 April 2023. 69 12. Financial assets Financial assets at fair value through profit or loss Canadian (TSX-V) listed equity securities (i) (ii) De Grey Mining Limited Consolidated 2022 $ 2021 $ 24,866 24,866 111,871 111,871 (i) The financial assets are presented as non-current assets unless management intends to dispose of them within 12 months of the end of the reporting period. (ii) Financial assets are valued at the quoted closing share price as at reporting date, being CAD $0.44 (2021: CAD $2.08). During the year, a loss of $87,005 (2021: loss of $89,405) was recognised in the consolidated statement of comprehensive income (Note 5). 13. Deferred exploration & evaluation expenditure Beginning of financial year Exploration expenditure - all areas of interest (i) Tenement acquisition Rehabilitation additions Fuel Tax credit offset Consolidated 2022 $ 2021 $ 114,402,821 119,756,940 - 1,248,724 (1,444,943) 233,963,542 48,938,399 65,908,260 817,000 - (1,260,838) 114,402,821 (i) The Group has capitalised all costs associated with The Mallina Project. The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. (ii) At 30 June 2022, the Group conducted an assessment to determine whether there were any indicators of impairment in relation to the carrying value of its capitalised deferred exploration and evaluation expenditure. No indicators of impairment were present and therefore the Group did not impair any previously capitalised expenditure (2021: $Nil). Significant judgements, estimates and assumptions The application of the Group’s accounting policy for E&E expenditure requires judgement to determine whether future economic benefits are likely from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves. In addition to applying judgement to determine whether future economic benefits are likely to arise from the Group’s E&E assets or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves, the Group has to apply a number of estimates and assumptions. The determination of a JORC (The Australasian Code for Reporting of exploration results, mineral resources and ore reserves) resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e., measured, indicated or inferred). The estimates directly impact when the Group defers E&E expenditure. The deferral policy requires management to make certain estimates and assumptions about future events and circumstances, particularly, whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the relevant capitalised amount is written off to the statement of profit or loss and other comprehensive income in the period when the new information becomes available. 70 De Grey Mining Limited 14. Property, plant and equipment 2022 Gross carrying amount – at cost Accumulated depreciation Net book amount Property, plant and equipment movement 2022 Opening net book amount Additions Depreciation charge Closing net book amount Plant & Equipment Computer Equipment Furniture & Fittings Motor Vehicles Land & Buildings Medical Equipment Assets in Progress $ $ $ $ $ $ $ Total $ Consolidated 2,205,161 (699,309) 1,505,852 931,135 (412,929) 518,206 778,821 (155,578) 623,243 1,706,303 (534,247) 1,172,056 842,099 (432,135) 409,964 1,850 (307) 1,543 4,584,349 11,049,718 (2,234,505) 8,815,213 - 4,584,349 939,917 909,162 (343,227) 1,505,852 332,469 445,019 (259,282) 518,206 93,690 654,665 (125,112) 623,243 1,213,417 259,596 (300,957) 1,172,056 607,433 - (197,469) 409,964 - 1,850 (307) 1,543 3,394,356 1,189,993 - 4,584,349 6,581,282 3,460,285 (1,226,354) 8,815,213 Plant & Equipment Computer Equipment Furniture & Fittings Motor Vehicles Land & Buildings Medical Equipment Assets in Progress $ $ $ $ $ $ $ Total $ Consolidated 2021 Gross carrying amount – at cost 1,295,999 486,116 124,156 1,446,707 842,099 Accumulated depreciation (356,082) (153,647) (30,466) (233,290) (234,666) Net book amount 939,917 332,469 93,690 1,213,417 607,433 Property, plant and equipment movement 2021 Opening net book amount Additions Completion of assets in progress Assets written off Depreciation charge Closing net book amount 204,895 898,641 - - (163,619) 939,917 122,360 304,692 - - (94,583) 332,469 36,698 78,664 - - (21,672) 93,690 427,444 965,214 - (29,600) (149,641) 1,213,417 507,782 31,586 172,641 - (104,576) 607,433 - - - - - - - - - 3,394,356 7,589,433 - (1,008,151) 3,394,356 6,581,282 155,826 3,411,171 (172,641) - - 3,394,356 1,455,005 5,689,968 - (29,600) (534,091) 6,581,282 71 15. Right of use asset Right of use asset – office premises Gross carrying amount (i) Accumulated depreciation Net book amount De Grey Mining Limited Consolidated 2022 $ 2021 $ 2,257,449 (413,865) 1,843,584 2,223,792 - 2,223,792 Opening net book amount Additions on inception Additions – additions for the year Depreciation for the year – leased office premises Office lease cancelled during the year Closing net book amount (i) The right of use asset consists of De Grey Mining Limited’s head office lease and assumes that the options for office lease term 2,223,792 - 33,657 (413,865) - 1,843,584 499,975 2,223,792 - (102,335) (397,640) 2,223,792 extensions will not be exercised. (ii) The present value of future lease payments is determined by discounting future lease payments using the incremental borrowing rate at the commencement date of the lease. The incremental borrowing rate for the year ending 30 June 2022 is 3% (2021: 3%). See Note 17 for associated lease liabilities. (iii) The expense relating to the short-term leases is $8,570,049 (2021: $1,367,904) which includes $6,437,541 (2021: $243,000) of camp site accommodation. The rental of this accommodation was terminated in July 2022. All short-term lease expenses were capitalised to deferred exploration and evaluation expenditure (Note 13). (iv) The total cash outflow for all leases, including short-term leases, was $8,306,478 (2021: $1,351,182). 16. Trade and other payables Trade payables Other payables and accruals(i) Consolidated 2022 $ 2021 $ 16,803,472 1,413,556 18,217,028 15,950,850 1,388,272 17,339,122 (i) Other payables and accruals are non-interest bearing and are normally settled on terms of 30-90 days. 17. Lease liabilities Current Lease liabilities – office premises Non-current Lease liabilities – office premises Carrying value - beginning of the year Interest expense Lease payments lease terminations Additions Carrying value - end of the year Consolidated 2022 $ 2021 $ 420,745 353,212 1,474,351 1,870,580 2,223,792 57,573 (419,926) - 33,657 1,895,096 515,679 13,899 (129,763) (399,815) 2,223,792 2,223,792 The group is required to make significant judgements, estimates and assumptions in assessing the lease liability of the office lease and has used an interest rate of 3% and a term of 5 years. However, the contract provides for an extension of a further 3 years and this has not been included in the calculations of the lease liability and would have the effect of increasing the lease liability. 72 18. Employee benefit obligations Current Annual Leave (i) Non-current Long Service Leave (ii) De Grey Mining Limited Consolidated 2022 $ 2021 $ 946,684 616,570 136,625 65,303 (i) The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service. The entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement and has an expectation that employees will take the full amount of accrued leave or require payment within the next 12 months. (ii) The Group’s employee benefit obligations for long service leave are shown as non-current as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. 19. Rehabilitation provision Opening balance Additions for the Withnell Project Closing balance Consolidated 2022 $ 2021 $ 1,022,230 1,248,724 2,270,954 1,022,230 - 1,022,230 (i) This provision was brought to account on settlement of the Indee Gold acquisition and covers the mining leases that are subject of an approved Mine closure plan. The Group assesses its mine rehabilitation provision annually and have prepared an updated mine closure financial assurance cost estimate for the Withnell Project as at 30 June 2022. Significant judgement is required in determining the provision for mine rehabilitation and closure as there are many factors that will affect the ultimate liability payable to rehabilitate the mine sites, including future disturbances caused by further development, changes in technology, changes in regulations, price increases, changes in timing of cash flows which are based on life of mine plans and changes in discount rates. When these factors change or become known in the future, such differences will impact the mine rehabilitation provision in the period in which the change becomes known. The timing of the rehabilitation activities is expected to occur between FY2033 and FY2034. In determining the liability, a discount rate of 3.66% has been applied. Sensitivity analysis was performed to evaluate the difference by increasing or decreasing the discount rate by +/- 200 basis points which provided a NPV of $1,841,225 and $2,817,907 respectively. 73 De Grey Mining Limited 20. Contributed equity (a) Share capital Ordinary shares issued and fully paid 2022 2021 Issue Price Number of shares 1,408,843,525 $ Number of shares 356,706,505 1,292,417,061 $ 235,892,228 Total contributed equity 1,408,843,525 356,706,505 1,292,417,061 235,892,228 (b) Movements in ordinary share capital Beginning of the financial year Issued during the current & prior years: Placement share issue(i) Shares issued on exercise of options Shares issued on exercise of options Shares issued on exercise of options Placement share issue Placement share issue $1.10 $0.10 $0.30 $0.35 $0.28 $1.20 Shares issued as part consideration for tenement purchase $1.585 Transaction costs Share based payments reserve transfer on exercise End of the financial year 1,292,417,061 235,892,228 1,172,514,206 130,713,404 113,636,364 - - 2,790,000 - 100 - - - 1,408,843,525 125,000,000 - - 976,500 - 120 - (5,331,975) 169,632 - 9,210,714 5,733,333 2,110,000 19,232,142 83,416,666 200,000 - - 356,706,505 1,292,417,061 - 921,071 1,720,000 738,500 5,385,000 100,100,000 317,000 (4,569,746) 566,999 235,892,228 (c) Movements in options on issue Beginning of the financial year Net issued / (exercised or cancelled) during the year: − Exercisable at 10 cents, on or before 31 Oct 2020 − Exercisable at 30 cents, on or before 30 May 2021 − Exercisable at 30 cents, on or before 30 Sept 2021 − Exercisable at 10 cents, on or before 31 Dec 2021 − Exercisable at 35 cents, on or before 12 Mar 2021 − Exercisable at 35 cents, on or before 12 Mar 2022 − Exercisable at 0 cents, on or before 29 July 2022 − Exercisable at 0 cents, on or before 3 Dec 2024 − Exercisable at 0 cents, on or before 29 Jun 2022 − Forfeited at 0 cents, on 30 Jun 2022 End of the financial year Number of options 2022 7,463,020 2021 19,844,047 Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted - - - - - (2,790,000) - 420,226 - (242,150) 4,851,096 (7,210,714) (4,233,333) (1,500,000) (2,000,000) (2,110,000) - 450,454 2,619,326 1,603,240 - 7,463,020 (i) De Grey issued 113,636,364 ordinary fully paid shares at $1.10 per share. Canaccord Genuity (Australia) Limited acted as Global Coordinator, Joint Lead Manager, Joint Underwriter and Joint Bookrunner to the Placement. Argonaut Securities Pty Ltd acted as Joint Lead Manager and Joint Bookrunner, and Argonaut PCF Limited acted as Joint Underwriter to the Placement. Azure Capital acted as Corporate Advisor to the Placement. 74 (d) Movement in performance/share rights on issue During the year there were 21,816 unlisted Performance/Share Rights issued (2021: 140,846) to directors of the Group. De Grey Mining Limited 2022 Opening balance – 1 July 2021 Performance/Share rights issued Adjustments made during the year – T2 Revised estimate of the provisional rights – T3 Closing balance – 30 June 2022 2021 Opening balance – 1 July 2020 Performance rights issued Performance rights issued Performance rights issued Closing balance – 30 June 2021 2017 Tranche 4 2021 Tranche 1,2 and 3 Peter Hood Share Rights Total 1,450,000 - - - 1,450,000 723,632 - (209,292)1 (187,748)1 326,592 - 21,816 - - 21,816 2,173,632 21,816 (209,292) (187,748) 1,798,408 1,450,000 - - - 1,450,000 - 140,8461 300,3001 282,4861 723,632 - - - - - 1,450,000 140,846 300,300 282,486 2,173,632 1Rights issued to Mr Jardine are issued in 3 tranches, T1 140,846 vested in September 2021, T2 91,008 have been forfeited in September 2022 and T3 94,738 should vest in September 2023. The number of rights to be issued for T2 and T3 have been adjusted on the actual issue. 1. Tranche 1-2021 - Vesting conditions for the performance rights issued during 2021 are. • the Company’s shares reaching a price equal to or greater than 120% of the volume weighted average price of the Company’s shares for 10 trading days after acceptance of the Offer, within the period 27 July 2020 and 15 September 2021. For completeness it is noted the share price target to be achieved is $0.852 which must be achieved on or before 15 September 2021. • Satisfactory completion of a probationary period; and • remaining employed by the Company as at 15 September 2021. Tranche 2 – 2021 - Vesting conditions for the performance rights issued during 2022 are. • the Company’s shares reaching a price equal to or greater than 120% of the volume weighted average price of the Company’s shares. For completeness it is noted the share price target to be achieved is $1.318; and • The executive remaining employed as Managing Director by the Company as at 15 September 2022. Tranche 3 - 2021 was approved for issue on 10 July 2020 and will be issued at 15 September 2022. The number of performance rights to be issued is 94,738 and have the following vesting conditions: • the Company’s shares reaching a price equal to or greater than 120% of the volume weighted average price of the Company’s shares; and • The executive remaining employed as Managing Director by the Company as at 15 September 2023. 2. Performance Rights issued in November 2017 have mostly vested, however this tranche remains outstanding as at the end of the financial year and have the following vesting conditions: • Tranche Four – The Company securing Project Financing for the Mallina Gold Project at a minimum throughput of 1 million tpa. 3. The Share Rights issued to Peter Hood are in lieu of directors fees and have the following vesting conditions: • remaining employed by the Company as at 30 June 2022. (e) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value, and the Company does not have a limited number of authorised shares. Neither the Company, nor any of its subsidiaries, holds any shares in the Company at 30 June 2022 (2021: Nil). 75 21. Reserves and accumulated losses (a) Reserves Share-based payments reserve (i) Movements: Share-based payments reserve Balance at beginning of year Share based payments (options) expense (Directors & EOP plan) Share based payments (performance rights) expense (Directors & PR plan) Transfer to Issued Capital on exercise of options Balance at end of year (b) Accumulated losses Balance at beginning of year Net loss for the year Balance at end of year De Grey Mining Limited Consolidated 2022 $ 2021 $ 3,565,203 3,565,203 1,339,024 1,339,024 1,339,024 2,226,375 169,436 (169,632) 3,565,203 862,609 892,717 150,697 (566,999) 1,339,024 (61,593,852) (10,536,710) (56,343,583) (5,250,269) (72,130,562) (61,593,852) (i) Share-based payments reserve - the share-based payments reserve is used to recognise the value of equity benefits provided to either employees or directors as remuneration or to suppliers as payment for products and services. 22. Dividends Consolidated 2022 $ 2021 $ - - Consolidated 2022 $ 2021 $ - 65,000 65,000 4,718 49,000 53,718 No dividends were paid during the financial year (2021: Nil). No recommendation for payment of dividends has been made. 23. Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms: (a) Audit services Butler Settineri (Audit) Pty Ltd - audit and review of financial reports Ernst & Young - audit and review of financial reports Total remuneration for audit services 76 24. Contingent liabilities Mount Dove Iron Rights On 22 September 2015, the company entered into a Deed of Termination with the Atlas Iron Group, where the Atlas Iron Group relinquished its iron ore rights on any of the Turner River Project tenements. If De Grey mines iron ore on any of its the Turner River Project tenements it will pay the Atlas Iron Group a one-off payment of $50,000. De Grey Mining Limited 25. Commitments (a) Exploration commitments The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest in. Outstanding Mallina Project exploration commitments are as follows: Mallina Project tenements (100% owned) Tenements under option agreements (i) Annual commitment for the Mallina Project assets Consolidated 2022 $ 2021 $ 1,732,320 126,000 1,858,320 1,569,040 199,280 1,768,320 (i) The tenements that remain under option and/or earn-in agreements are with respect to the Farno McMahon, as detailed in Note 28. (b) Capital commitments The Group did not have any capital commitments as at the current or prior balance date. 26. Related party transactions (a) Parent entity The ultimate parent entity within the Group is De Grey Mining Limited. (b) Subsidiaries Interests in subsidiaries are set out in Note 27. (c) Transactions with related parties De Grey have entered into a number of contracts which resulted in transactions with key management personnel as follows: Transactions with related parties Paid for promotional activities Paid to relatives of Mr Beckwith (ii) Paid to relatives of Mr Tornatora (ii) 2022 $ 2021 $ 9,961 86,715 81,651 - 95,323 78,500 (i) Victoria Lill provided promotional filming and corporate photography services. Victoria Lill is the daughter of Simon Lill, the non-executive chairman of De Grey. (ii) Where personnel are employed by De Grey and are considered a related party to key management personnel, those transactions are entered into in the ordinary course of business at arm’s length. a. De Grey employed a relative of Mr Andrew Beckwith, the Technical Director of De Grey; and b. De Grey employed a relative of Mr Phil Tornatora, the General Manager – Exploration of De Grey. None of these employees reported directly to a KMP. 77 Details of compensation paid to key management personnel are disclosed in the Remuneration Report. De Grey Mining Limited Compensation of key management personnel of the Group Short term employee benefits Post-Employment benefits Termination benefits Long term benefits Share based payment transaction Total compensation paid to key management personnel 27. Subsidiaries 2022 $ 2021 $ 2,910,291 196,695 - 30,698 702,199 3,839,883 2,114,605 131,412 - - 871,125 3,117,142 The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in accordance with the accounting policy described in Note 1(b): Name Country of Incorporation Class of Shares Equity Holding¹ Beyondie Gold Pty Ltd Domain Mining Pty Ltd Winterwhite Resources Pty Ltd Last Crusade Pty Ltd Indee Gold Pty Ltd Australia Australia Australia Australia Australia Ordinary Ordinary Ordinary Ordinary Ordinary ¹ The proportion of ownership interest is equal to the proportion of voting power held. 2022 % 2021 % 100 100 100 100 100 100 100 100 100 100 28. Interests in joint operations Farno McMahon Project Option Principal place of business: Perth, WA On 28 July 2017, De Grey secured an option to enter into a joint arrangement for tenement E47/2502 and referred to as the Farno McMahon Project. An option fee of $40,000 was paid to the vendor granting De Grey an exclusive right and period to assess the project and on 2 October 2017, the Company elected to enter into a Joint Venture Earn-in. The vendor retains all alluvial rights. During the 2021 financial year De Grey Mining successfully earned a 75% equity interest in the Farno McMahon Project and has continued exploration during the 2022 financial year. De Grey Mining Limited will manage the joint arrangement. 78 29. Notes to the statement of cash flows a) Reconciliation of net loss after income tax to net cash outflow from operating activities Net loss for the year Non-Cash Items Depreciation of non-current assets Share based payments (options and performance rights) Loss on foreign currency fluctuation Loss on available for sale investments Loss on disposal of PP&E Change in operating assets and liabilities (Increase) in prepayments (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Increase in provisions Net cash outflow from operating activities 30. Loss per share (a) Basic and Diluted Loss per Share Basic and diluted loss per share for loss attributable to the ordinary equity holders of the company (cents per share) De Grey Mining Limited Consolidated 2022 $ 2021 $ (10,536,710) (5,250,269) 1,640,221 2,395,810 11,433 87,005 - (581,797) (733,105) 1,035,745 401,431 (6,279,967) 636,426 1,043,414 - 89,405 (7,200) - 58,285 (677,334) - (4,107,273) Consolidated 2022 $ 2021 $ (0.77) (0.41) (b) Reconciliation of earnings used in calculating loss per share Loss attributable to the owners of the company used in calculating basic and diluted loss per share (10,536,710) (5,250,269) (c) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share 1,369,724,240 1,266,164,930 (d) Information on the classification of options As the Group has made a loss for the year ended 30 June 2022, all options on issue are considered antidilutive and have not been included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future. There are 4,851,096 unlisted options, of which 1,811,544 are fully vested and potentially issued as ordinary shares at 30 June 2022. No further options will vest and become exercisable with the potential to become ordinary shares in the next financial year. Since the end of the financial year, 927,022 options have been issued and 1,811,544 options have been exercised. 79 De Grey Mining Limited 31. Share-based payments From time-to-time options are granted to; (i) Eligible employees under the shareholder approved Performance Rights and Option Plan (PR&OP) of De Grey Mining Limited (previously under the separate Performance Rights Plan (PRP) and Employee Option Plan (EOP)) to align their interests with that of the shareholders of the company. (ii) Directors under rules comparable with the PR&OP, but subject to shareholder approval pursuant to the provisions of the ASX Listing Rules and the Corporations Act 2001. (a) Options Performance rights and Option Plan (‘PR&OP’) of De Grey Mining Limited Shareholders last approved the PR&OP at the Annual General Meeting held on 29 November 2021. The PR&OP is designed to attract and retain eligible employees, provide an incentive to deliver growth and value for the benefit of all shareholders and facilitate capital management by enabling the Company to preserve cash reserves for expenditure on principal activities. Participation in the PR&OP is at the discretion of the Board and no eligible employee has a contractual right to receive an option under the Plan. The exercise price and expiry date for all options granted will be determined by the board prior to granting of the options, and in the case of Director options subject to shareholder approval. The options granted may also be subject to conditions on exercise and usually have a contractual life of two to three years. Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share in the capital of the company with full dividend and voting rights. ZEPO’s have been issued during the year to executives and directors. The ZEPO’s will vest upon satisfaction of all of the following non-market vesting conditions, or where, despite vesting conditions not being satisfied, the Board (in its absolute discretion) resolves that unvested Options have vested: • Upon the satisfaction of the following project milestones (LTIP Milestones): a) Delineation of Mineral Resources (as that term is defined in JORC, 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves) of not less than 12 million ounces of gold at the Company’s Mallina Gold Project (inclusive of the existing regional 2.2 million ounces) as at the date of this Meeting); b) Completion of a Definitive Feasibility Study (DFS) confirming feasibility for a 500,000 ounces of gold per annum project through a mine life of no less than 12 years, or such other number as approved by the Board following completion of a Pre-Feasibility Study. The DFS is to be signed off in its entirety by a suitably qualified engineering group (with oversight from the Board); and c) The Company securing debt and/or equity finance for a Board approved Project arising from the DFS; and • Upon the executive achieving a score of 65% or more on the annual short term incentive criteria (STIC), as determined by the Board annually. If the executive does not achieve the score of 65% or more, 50% of the Options will be cancelled, whilst the balance will vest solely subject to achieving the LTIP Milestones. • The ZEPO’s were granted on 29 November and 21 December 2021 and have an expiry date of 3 December 2024. 80 De Grey Mining Limited There were 47,971 director options granted (2021: 1,500,597) and 372,255 employee options granted (2021: 3,172,423) in the financial year ended 30 June 2022. They are all currently outstanding and detailed in the following table: Grant date Expiry date Weighted average exercise price Cents Balance at start of the year Granted during the year Forfeited during the year Exercised during the year Balance at end of the year Vested and exercisable at end of the year1 2021-2022 12 Mar 2020 10 Jul 2020 4 Dec 2020 1 Feb 2021 31 May 2021 29 Nov 2021 21 Dec 2021 2020-2021 24 Sept 2017 17 Oct 2018 12 Mar 2020 10 Jul 2020 4 Dec 2020 1 Feb 2021 31 May 2021 12 Mar 2022 29 Jul 2022 3 Dec 2024 3 Dec 2024 30 Jun 2022 3 Dec 2024 3 Dec 2024 31 Oct 2020 30 May 2021 12 Mar 2022 29 Jul 2022 3 Dec 2024 3 Dec 2024 30 Jun 2022 35 cents 0 cents 0 cents 0 cents 0 cents 0 cents 0 cents 10 cents 30 cents 35 cents 0 cents 0 cents 0 cents 0 cents 2,790,000 450,454 2,071,904 547,422 1,603,240 - - 7,463,020 - - - - - 47,971 372,255 420,226 - - - - (242,150) - - (242,150) (2,790,000) - - - - - - (2,790,000) - 450,454 2,071,904 547,422 1,361,090 47,971 372,255 4,851,096 - 450,454 - - 1,361,090 - - 1,811,544 2,250,000 4,233,333 4,900,000 - - - - 11,383,333 - - - 450,454 2,071,904 547,422 1,603,240 4,673,020 - - - - - - - - (2,250,000) (4,233,333) (2,110,000) - - - - (8,593,333) - - 2,790,000 450,454 2,071,904 547,422 1,603,240 7,463,020 - - 2,790,000 450,454 - - - 3,240,454 1There are no options that have vested that are not exercisable. Expenses arising from share-based payment transactions - options The weighted average fair value of the options granted during the year was $1.13 (2021: $1.12). The price was calculated by using the Black-Scholes European Option Pricing Model applying the following inputs: 2021-2022 Weighted average exercise price (cents) Weighted average life of the option (years) Weighted average underlying share price (cents) Expected share price volatility Weighted average risk-free interest rate 2020-2021 Weighted average exercise price (cents) Weighted average life of the option (years) Weighted average underlying share price (cents) Expected share price volatility Weighted average risk-free interest rate 29 Nov 2021 21 Dec 2021 0 3.02 124.5 95%-110% 0.184% 10 Jul 2020 0 2.05 79.5 95%-110% 0.184% 0 2.96 112.0 95%-110% 0.184% 4 Dec 2020 0 4.00 111.5 95%-110% 0.184% 1 Feb 2021 0 4.01 98.0 95%-110% 0.184% 31 May 2021 0 1.08 115.5 95%-110% 0.184% Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which may not eventuate. No assumptions have been made relating to dividends and there are no other inputs to the model. There are no options that have vested that are not exercisable. 81 Total expenses arising from equity settled share-based payment transactions recognised during the period were as follows: De Grey Mining Limited Options issued to directors and EOP to eligible employees (b) Performance rights and Non-executive Director Share rights Performance rights and Option Plan (‘PR&OP’) of De Grey Mining Limited 2022 $ 2,226,375 2021 $ 892,717 Shareholders last approved the PR&OP at the Annual General Meeting held on 29 November 2021. This shareholder plan is designed to attract and retain eligible employees, provide an incentive to deliver growth and value for the benefit of all shareholders and facilitate capital management by enabling the Company to preserve cash reserves for expenditure on principal activities. Participation in the PR&OP is at the discretion of the Board and no eligible employee has a contractual right to receive performance rights under the PR&OP. Non-executive Director Share Plan (‘NED-Share Plan’) of De Grey Mining Limited Shareholders approved the NED-Share Plan at the Annual General Meeting held on 29 November 2021. The objective of the NED-Share Plan is to attract, motivate and retain its non-executive directors and the Company considers that the adoption of the Share Plan and the future issue of Shares Rights under the Share Plan will provide non-executive directors with the opportunity to participate in the future growth of the Company. The performance/share rights granted will be determined by the board prior to granting of the rights, and in the case of grants to Directors, these are subject to shareholder approval. The rights granted may be subject to performance milestones before the holder has the right to exercise (Refer Note 21 (d)) and can have a contractual life of up to 5 years. Rights granted carry no dividend or voting rights. When exercisable, each right is convertible into one ordinary share in the capital of the company with full dividend and voting rights. The following vesting conditions apply to the performance/share rights issued during 2022: Rights issued in January 2022 (Approved 29 November 2021): • The director remaining employed by the Company at 30 June 2022. Rights issued to Glenn Jardine (Managing Director) in September 2021 (granted 10 July 2020) Tranche 2 – FY2022. The executive remaining employed as the Managing Director by the Company at 15 September 2022, and The Company’s share price reaching a price equal to or greater than 120% of the volume weighted average price at 15 September 2021 and calculated as $1.0988 on the next annual issue date of 15 September 2022. • • Rights that have been granted in FY2021 but will be issued at 15 September 2022 (Tranche 3), have the following vesting conditions; • • The executive remaining employed as the Managing Director by the Company at 15 September 2023, and The Company’s share price reaching a price equal to or greater than 120% of the volume weighted average price at 15 September 2022 on the next annual issue date of 15 September 2023. 82 De Grey Mining Limited Grant date Expiry date 2021-2022 20 Dec 2017 10 July 2020 29 Nov 2021 30 Nov 2022 23 Sep 2023 31 Dec 2026 2020-2021 20 Dec 2017 10 July 2020 30 Nov 2022 23 Sep 2023 Balance at start of the year Number Granted during the year Number Adjustments made during the year (T2) Revised estimate of the provisional rights (T3) Balance at end of the year Number Vested and exercisable 30 June 2022 1,450,000 723,632 - 2,173,632 - 21,816 21,816 - (209,292)1 - (209,292) - (187,748)1 - (187,748) 1,450,000 326,592 21,816 1,798,408 - 140,846 21,816 162,662 1,450,000 - 1,450,000 - 723,6321 723,632 - - - - - - 1,450,000 723,632 2,173,632 - - - 1 Rights issued to Mr Jardine are issued in 3 tranches, T1 140,846 vested in September 2021, T2 was forfeited in September 2022 and T3 94,738 should vest in September 2023. The number of rights to be issued for T3 will be adjusted on the actual issue. Expenses arising from share-based payment transactions – performance/share rights On 12 January 2022, 21,816 unlisted share rights were issued to directors of the Group. As at the end of the financial year 1,986,156 performance/share rights remain outstanding. Number Issued (No.) Grant Date Exercise Price ($) Expiry Date Amortisation date Underlying Share Price on Grant ($) Fair value of performance rights Total Fair Value ($) – Life of Right issued during 2022 Issued January 2022 21,816 29 November 2021 N/A 31 December 2026 30 June 2022 $1.245 $1.245 $27,161 Total Fair Value for all rights ($) – Expensed 30 June 2022 $169,436 32. Events occurring after the reporting date Subsequent to the end of the financial year, De Grey mining limited announced the Prefeasibility Study Outcomes for the Mallina Gold Project showing a substantial improvement in grade, annual productions, mine life, cashflow and NVP from the release of the scoping study earlier in the financial year. The PFS also resulted in the Company’s maiden 5.1Moz reserve statement. The Mallina Gold Project includes the Hemi and some Regional deposits, and the PFS outcomes boasts gold production of 540,000ozpa over the first 10 years. This has a total gold production of 6.4Moz over a mine life of 13.6 years. The PFS financial metrics outcomes over the project include a NPV of $3.9 billion pre-tax and $2.7 billion post-tax, IRR of 51% pre-tax and 41% post tax with a payback of 1.6 years pre-tax and 1.8 years post-tax, and an AISC of $1.220/oz in the first 5 years and then $1,280/oz to year 10. The PFS capital costs outcomes for the 10Mtpa plant and site infrastructure estimated to be $985M inclusive of $100M in growth allowance and an additional mine preproduction pre-strip capital cost of $68M. 83 33. Parent entity information De Grey Mining Limited Parent Entity 2022 $ 2021 $ The following information relates to the parent entity, De Grey Mining Limited, at 30 June 2022. The information presented here has been prepared using accounting policies consistent with those presented in Note 1. Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Reserves Accumulated losses Total equity Loss for the year Other comprehensive loss Total comprehensive loss for the year Contingent liabilities 66,960,327 244,687,884 311,648,211 19,721,077 3,745,305 23,466,382 356,706,505 3,565,203 (72,089,879) 288,181,829 (10,536,710) - (10,536,710) 73,584,651 120,949,948 194,534,599 16,920,632 1,935,883 18,856,515 235,892,228 1,339,024 (61,553,168) 175,678,084 (5,250,269) - (5,250,269) The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021. Capital commitments The parent entity had no capital commitments as at 30 June 2022 and 30 June 2021. Accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1. 84 De Grey Mining Limited Director’s Declaration In the directors’ opinion: (a) the financial statements and notes set out on pages 49 to 84 are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date; (b) (c) the audited remuneration report set out on pages 32 to 44 of the directors’ report complies with section 300A of the Corporations Act 2001; there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. Simon Lill Non-Executive Chairman Perth, 30 September 2022 85 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent auditor’s report to the members of De Grey Mining Limited Report on the audit of the financial report Opinion We have audited the financial report of De Grey Mining Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial 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 judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 2 Carrying amount of exploration and evaluation assets Why significant How our audit addressed the key audit matter As disclosed in Note 13 to the financial statements, at 30 June 2022 the Group held capitalised exploration and evaluation assets of $233.9 million. The carrying amount of capitalised exploration and evaluation assets is assessed for impairment by the Group when facts and circumstances indicate that the carrying amount of capitalised exploration and evaluation assets may exceed its recoverable amount. The determination as to whether there are any indicators of impairment, involves a number of judgments including whether the Group has tenure, will be able to perform ongoing expenditure and whether there is sufficient information for a decision to be made that the area of interest is not commercially viable. The directors did not identify any impairment indicators as at 30 June 2022. Given the size of the balance and the judgmental nature of impairment indicator assessments associated with exploration and evaluation assets, we consider this a key audit matter. In performing our procedures, we: • Considered whether the Group’s right to explore was current, which included obtaining and assessing supporting documentation such as license agreements. • Considered the Group’s intention to carry out significant ongoing exploration and evaluation activities in the relevant areas of interest which included reviewing the Group’s Board meeting minutes and enquiring of senior management and the directors as to their intentions and the strategy of the Group. • Assessed whether exploration and evaluation data existed to indicate that the carrying amount of capitalised exploration and evaluation is unlikely to be recovered through development or sale. • Assessed the adequacy of the disclosures in the financial report. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Company’s 2022 annual report, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information 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. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 3 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 Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: ► Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. ► Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. ► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. ► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ► Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 4 ► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of De Grey Mining Limited for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young Pierre Dreyer Partner Perth 30 September 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation De Grey Mining Limited ASX Additional Information Additional information required by Australian Stock Exchange Ltd, and not shown elsewhere in this report, is as follows. The information is current as at 16 September 2021. (a) Distribution of equity securities Analysis of numbers of equity security holders by size of holding: 1 1,001 5,001 10,001 100,001 - - - - 1,000 5,000 10,000 100,000 and over Ordinary shares Number of holders 2,780 4,624 2,054 3,292 641 13,391 Number of shares 1,772,771 13,031,307 16,454,529 110,150,083 1,269,387,225 1,410,795,915 The number of shareholders holding less than a marketable parcel of shares are: 762 205,362 (b) Twenty largest shareholders The names of the twenty largest holders of quoted ordinary shares are as follows: NATIONAL NOMINEES LIMITED BNP PARIBAS NOMINEES PTY LTD CS THIRD NOMINEES PTY LIMITED CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NORTHWEST NONFERROUS AUSTRALIA MINING PTY LTD BNP PARIBAS NOMS PTY LTD 1 2 3 4 5 6 7 Mr Yi Weng & Ms Ning Li 8 9 10 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM 11 BNP PARIBAS NOMINEES PTY LTD 12 Mr Yi Weng & Ms Ning Li Super A/C's 13 CAROLINE HOUSE SUPERANNUATION FUND PTY LTD 14 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 15 WARBONT NOMINEES PTY LTD 16 MR ANDREW RHYS JACKSON 17 UBS NOMINEES PTY LTD 18 FIRST SAMUEL LTD ACN 086243567 19 PENAND PTY LTD 20 MR JOHN HENRY MATTERSON 90 Listed ordinary shares Number of shares 281,992,494 235,637,196 229,914,436 75,855,984 43,580,870 28,431,382 21,336,597 20,467,566 9,536,071 8,971,270 8,653,293 8,235,603 7,236,364 6,801,187 5,750,000 5,595,000 4,452,140 4,062,345 4,023,334 3,800,000 1,014,333,132 Percentage of ordinary shares 19.99% 16.70% 16.30% 5.38% 3.09% 2.02% 1.51% 1.45% 0.68% 0.64% 0.61% 0.58% 0.51% 0.48% 0.41% 0.40% 0.32% 0.29% 0.29% 0.27% 71.90% (c) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: De Grey Mining Limited Gold Road Resources Limited Jupiter Investment Management Limited (d) Unquoted (unlisted) Securities Number of Shares % 281,992,494 114,615,663 19.99% 8.12% Class Holders of 20% or more of the class Number of Securities Number of Holders Holder Name Number of Securities Unlisted $Nil options, expiry 31 July 2024 Unlisted $Nil options, expiry 3 December 2024 927,022 3,039,552 77 Nil Nil 9 Performance rights – Series 1 1,450,000 Performance rights – Series 2 Tranche 3 Share rights 94,738 21,816 5 1 1 Simon Lill Andrew Beckwith Craig Nelmes Glenn Jardine Peter Hood 500,000 400,000 300,000 94,738 21,816 (e) Voting rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. The Quoted and unquoted (unlisted) options have no voting rights. (f) Corporate Governance De Grey Mining Ltd, its subsidiaries (“Group”) and its Board of directors are committed to achieving and demonstrating the highest standards of corporate governance. The Board is responsible to its shareholders for the performance of the Company and seeks to communicate extensively with shareholders. The Board believes that sound corporate governance practices will assist in the creation of shareholder wealth and provide accountability. In accordance with ASX Listing Rule 4.10.3, the Company has elected to disclose its corporate governance policies and its compliance with them on its website, rather than in this Annual Report. Accordingly, information about the Company's corporate governance practices is set out on the Company's website at www.https://degreymining.com.au/corporate-governance. (g) Application of Funds During the financial year, in accordance with ASX Listing Rule 4.10.19, De Grey Mining Limited confirms that it has used its cash and assets (in a form readily convertible to cash) in a manner which is consistent with the Company’s business objectives. 91 Annual Mineral Resources and Ore Reserve Statement De Grey Mining Limited Ore Reserves – Hemi Mining Centre, September 2022 Deposit Oxide Transition Sulphide Total Tonnes Mt Proved Au g/t Au Moz Tonnes Mt 7.3 6.0 90.1 103.4 Probable Au g/t 1.7 1.7 1.5 1.5 Au Moz 0.4 0.3 4.4 5.1 Tonnes Mt 7.3 6.0 90.1 103.4 Total Au g/t 1.7 1.7 1.5 1.5 Au Moz 0.4 0.3 4.4 5.1 Mallina Gold Project - Global Mineral Resource Estimate, May 2022 Measured Indicated Inferred Total Mining Centre Hemi Mining Centre Withnell Mining Centre Wingina Mining Centre Total Mt 1.6 3.1 4.7 Au g/t 1.8 1.7 1.7 Koz Mt 139.1 92 11.7 173 265 2.5 153.4 Au g/t 1.3 1.8 1.5 1.3 Koz Mt 5,804 664 122 74.1 12.2 6.3 6,590 92.6 Au g/t 1.1 2.2 1.2 1.3 Koz Mt 2,666 213.3 870 243 25.6 11.9 3,779 250.7 Au g/t 1.2 2.0 1.4 1.3 Koz 8,470 1,626 538 10,634 The regional resource estimates at the Withnell and Wingina Mining Centres have not changed since the April 2020 statement. Mallina Gold Project – Global Mineral Resource Estimate by Type, May 2022 Mining Centre Hemi Mining Centre Withnell Mining Centre Wingina Mining Centre Type Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Total Sulphide Total Measured Indicated Inferred Total Mt Au g/t Au KOz 1.0 0.7 1.6 2.7 0.4 3.1 3.7 1.1 4.7 1.8 1.7 1.8 1.8 1.6 1.7 1.8 1.6 1.7 58 35 92 152 21 173 210 55 Mt 6.7 132.4 139.1 2.7 9.0 11.7 1.8 0.7 2.5 11.2 142.1 265 153.4 Au KOz 324 5,480 Mt 1.4 72.7 5,804 74.1 113 550 664 88 35 122 525 1.7 10.5 12.2 2.2 4.0 6.3 5.3 6,065 87.3 6,590 92.6 Au g/t 0.9 1.1 1.1 1.4 2.4 2.2 1.1 1.3 1.2 1.1 1.3 1.3 Au KOz 41 Mt 8.1 2,624 205.1 2,666 213.3 74 796 870 75 168 243 190 5.4 20.2 25.6 6.7 5.1 11.9 20.2 3,589 230.5 3,779 250.7 Au g/t 1.4 1.2 1.2 1.4 2.1 2.0 1.5 1.4 1.4 1.4 1.3 1.3 Au KOz 365 8,105 8,470 245 1,381 1,626 315 224 538 925 9,709 10,634 Au g/t 1.5 1.3 1.3 1.3 1.9 1.8 1.5 1.6 1.5 1.5 1.3 1.3 92 Mallina Gold Project – Mineral Resource Estimate by Mining Centre and Deposit, May 2022 Hemi Mining Centre De Grey Mining Limited Measured Au g/t Koz Mt Deposit Type Oxide Aquila Sulphide Brolga Total Oxide Sulphide Total Oxide Crow Sulphide Diucon Total Oxide Sulphide Total Oxide Eagle Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Falcon Hemi Mining Centre Wingina Mining Centre Deposit Type Oxide Wingina Sulphide Mt Berghaus Total Oxide Sulphide Total Oxide Amanda Sulphide Wingina Mining Centre Total Oxide Sulphide Total Measured Au g/t 1.8 1.6 1.7 Koz 152 21 173 Mt 2.7 0.4 3.1 2.7 0.4 3.1 1.8 1.6 1.7 152 21 173 Mt 1.3 11.6 12.9 2.2 35.1 37.3 1.0 19.2 20.3 0.2 29.2 29.4 0.1 16.5 16.6 1.8 20.9 22.7 6.7 132.4 139.1 Mt 0.6 0.3 1 0.7 0.3 1 0.5 0.1 0.6 1.8 0.7 2.5 Indicated Au g/t 1.4 1.5 1.5 1.5 1.3 1.3 1.0 1.1 1.1 1.9 1.4 1.4 1.9 1.2 1.2 1.8 1.2 1.3 1.5 1.3 1.3 1.5 1.4 1.8 1.7 1.7 1.3 1.8 1.4 1.5 1.6 1.5 93 Inferred Au g/t 0.5 1.3 1.3 0.9 1.1 1.1 0.7 1.2 1.2 1.2 1.2 1.2 0.6 1.0 1.0 0.0 1.2 1.2 0.9 1.1 1.1 Koz 2 309 311 28 793 821 4 471 474 7 318 325 0 312 312 0 422 422 41 Mt 1.4 19.1 20.5 3.2 58.4 61.6 1.2 31.6 32.8 0.4 37.5 37.9 0.2 26.3 26.5 1.8 32.3 34.1 8.1 2,624 205.1 2,666 213.3 Total Au g/t 1.3 1.4 1.4 1.3 1.2 1.2 1.0 1.1 1.1 1.6 1.3 1.3 1.8 1.1 1.1 1.8 1.2 1.2 1.4 1.2 1.2 Koz 58 863 921 136 2,296 2,432 37 1,137 1,174 20 1,616 1,635 9 939 948 106 1,253 1,359 365 8,105 8,470 Koz 56 554 610 Mt 0.1 7.5 7.6 107 1,503 1.0 23.3 1,611 24.2 33 667 700 13 1,298 1,311 9 627 636 106 831 937 324 0.2 12.4 12.5 0.2 8.4 8.6 0.0 9.9 9.9 0.0 11.4 11.4 1.4 5,480 72.7 5,804 74.1 Indicated Au g/t 1.3 Koz Inferred Au g/t 1.3 1.7 1.6 1.1 1.2 1.2 0.9 1.1 0.9 1.1 1.3 1.2 Total Au g/t 1.6 1.6 1.6 1.4 1.2 1.3 1 1.2 1.1 1.5 1.4 1.4 Koz 194 94 288 75 106 181 46 23 70 315 224 538 Koz Mt 14 57 72 36 92 128 25 19 44 75 168 243 3.7 1.8 5.5 1.7 2.7 4.3 1.4 0.6 2 6.7 5.1 11.9 Mt 0.3 1.1 1.4 1 2.4 3.4 0.9 0.6 1.4 2.2 4 6.3 27 16 43 39 14 53 22 4 26 88 35 123 Withnell Mining Centre Deposit Type Withnell OP Withnell UG Mallina Toweranna OP Toweranna UG Camel Calvert Roe Dromedary Leach Pad Hester Withnell Mining Centre Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Oxide Sulphide Total Measured Au g/t 1.4 1.6 1.5 Koz 29 33 62 Mt 0.6 0.6 1.3 0.2 0 0.2 2.8 2.1 2.8 16 1 17 0.1 0 0.1 0.1 2.7 2.5 2.7 2.2 0.1 2.2 6 1 7 7 7 1 0.7 1.6 1.8 1.7 1.8 58 35 92 Mt 0.4 2.7 3 0.1 0.1 0.5 1.1 1.6 0 4.3 4.3 0.3 0.1 0.5 0.4 0.6 1 0.1 0.1 0.2 0 0 0.1 0.9 0.9 0 0 0.1 2.7 9 11.7 Koz Indicated Au g/t 1.2 1.9 1.8 De Grey Mining Limited Inferred Au g/t 1.1 2.2 2 2.5 3.9 3.9 1.4 1.5 1.5 2.2 2.1 2.1 3.6 3.6 1.1 1.8 1.7 0.8 1.2 1.2 1.6 2.2 2 1.6 1.8 1.7 1.3 1.4 1.4 1.4 2.4 2.2 Mt 0.2 0.5 0.7 0 2.4 2.4 1.2 3.9 5.1 0 2.4 2.5 0.6 0.6 0 0.1 0.2 0.1 0.2 0.3 0.1 0.2 0.3 0 0.1 0.1 0 0 0.1 1.7 10.5 12.2 Total Au g/t 1.3 1.9 1.8 2.5 3.9 3.9 1.3 1.4 1.4 2.6 2.1 2.1 3.6 3.6 2.6 1.7 2.2 1.3 1.3 1.3 1.8 2.2 2 1.9 1.7 1.9 0.7 0.7 1.8 1.6 1.7 1.4 2.1 2.0 Koz 48 235 283 0 317 317 73 235 307 8 451 460 65 65 45 16 60 19 33 52 17 21 38 11 6 17 19 19 4 3 7 245 1,381 1,626 Koz Mt 5 38 43 0 301 301 53 190 243 4 163 166 65 65 2 9 10 1 9 11 6 15 21 2 5 7 1 2 3 74 796 870 1.1 3.8 5 0 2.5 2.5 1.7 5.1 6.8 0.1 6.7 6.8 0.6 0.6 0.5 0.3 0.8 0.5 0.8 1.3 0.3 0.3 0.6 0.2 0.1 0.3 0.9 0.9 0.1 0.1 0.1 5.4 20.2 25.6 14 164 178 16 16 20 44 64 5 289 293 27 7 33 18 24 42 6 5 11 1 2 3 19 19 3 1 4 113 550 664 4.3 4.3 1.3 1.2 1.2 3.1 2.1 2.1 2.6 1.4 2.2 1.3 1.3 1.3 1.5 2.3 1.8 1.6 1.6 1.6 0.7 0.7 2.1 2.1 2.1 1.3 1.9 1.8 94 De Grey Mining Limited Review of Material Changes Material changes have been made to the Company’s Gold Mineral Resources between June 2021 and May 2022, and then a further material change subsequent to the end of the financial year with the release of the maiden Hemi Ore Reserves in September 2022 that coincided with the release of the Prefeasibility Study Outcomes on 8 September 2022. The Hemi maiden Ore Reserves are compiled in the Table “Ore Reserves – Hemi Mining Centre – September 2022” and represents a material change in its totality. The Hemi Ore Reserves were reported as a result of the PFS completed in September 2022. The Hemi Mining Centre total inventory for the Gold Mineral Resources has increased from 6.8Moz to 8.47Moz between June 2021 and May 2022, as shown for the various deposits in the table below. All the Wingina and Withnell Mineral Resources remain unchanged. Table: Comparison of June 2021 and May 2022 Hemi Gold Mineral Resources Deposit Type Measured Mt Au g/t Koz Indicated Au g/t Koz 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Aquila Brolga Crow Diucon Eagle Falcon Hemi Mining Centre Mt 10.6 12.9 28.1 37.3 9.8 20.3 - 29.4 - 16.6 17 22.7 65.5 139.1 1.5 1.5 1.3 1.3 1.1 1.1 - 1.4 - 1.2 1.3 1.3 1.3 1.3 Inferred Au g/t 1.3 1.3 0.9 1.1 1.1 1.2 0.9 1.2 - 1.0 1.0 1.2 1.0 1.1 10% Koz 317 311 1,050 821 680 474 1,450 325 - 312 529 422 4,026 2,666 -34% Mt 7.5 7.6 34.7 24.2 19.5 12.5 48.6 8.6 - 9.9 16.6 11.4 126.9 74.1 -42% Total Au g/t 1.4 1.4 1.1 1.2 1.1 1.1 0.9 1.3 - 1.1 1.1 1.2 1.1 1.2 9% Mt 18.1 20.5 62.8 61.6 29.3 32.8 48.6 37.9 - 26.5 33.7 34.1 192.5 213.3 11% Koz 841 921 2,256 2,432 1,032 1,174 1,450 1,635 - 948 1,226 1,359 6,805 8,470 24% 525 610 1,206 1,611 352 700 - 1,311 - 636 697 937 2,779 5,804 109% 0% Note: For the 2021 MRE, Diucon and Eagle were combined Change 112% - - - The changes to Mineral Resources occurred at the various Hemi deposits due to increased infill and extensional drilling. A large portion of the drilling programme was focussed on infill drilling to increase the confidence from Inferred to Indicated category which is reflected in the 109% overall increase in Indicated Resources and occurred across all deposits. The overall 34% reduction in Inferred Resources is a direct result in large portions of the Inferred Resources being elevated to Indicated category. Additionally, significant resources were discovered at the Diucon and Eagle deposits. The Diucon and Eagle resources were reported individually in the May 2022 resource statement whereas they were reported as a combined deposit in 2021. Mineral Resource and Ore Reserve governance and internal controls De Grey ensures that the Mineral Resource and Ore Reserve estimates quoted are subject to governance arrangements and internal controls activated at a site level and at the corporate level. Internal and external reviews of Mineral Resource estimation procedures and results are carried out through a team of experience technical personnel that is comprised of highly competent and qualified professionals. These reviews have not identified any material issues. De Grey reports its Mineral Resources and Ore Reserves on at least an annual basis in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) 2012 Edition. Competent Persons named by De Grey are Members or Fellows of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code. The Company’s procedures for the sample techniques and sample preparation are regularly reviewed and audited by independent experts. Assays are performed by independent internationally accredited laboratories with a QAQC program showing acceptable levels of accuracy and precision. The exploration assay results database is maintained and appropriate backed-up internally. All De Grey Mineral Resource estimates have been undertaken independently by Payne Geological Services Pty Ltd. 95 De Grey Mining Limited COMPETENT PERSON STATEMENT Exploration Results The information in this report that relates to Exploration Results is based on, and fairly represents information and supporting documentation prepared by Mr. Phil Tornatora, a Competent Person who is a Member of The Australian Institute of Geoscientists. Mr. Tornatora is an employee of De Grey Mining Limited. Mr. Tornatora has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves”. Mr. Tornatora consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. Ore Reserves - Hemi The information in this report that relates to Ore Reserves at the Hemi Gold Project is based on and fairly represents information and supporting documentation compiled by Mr Quinton de Klerk, a Competent Person who is a full-time employee of Cube Consulting Pty Ltd, a company engaged by De Grey. Mr de Klerk is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr de Klerk has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 JORC Code). Mr de Klerk consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Mineral Resources - Regional The Information in this report that relates to Wingina and Withnell Mining Centre Mineral Resources is based on information compiled by Mr Paul Payne, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Payne Geological Services. Mr Payne has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Payne consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Mineral Resources - Hemi The Information in this report that relates to Hemi Mining Centre Mineral Resources is based on information compiled by Mr. Michael Job, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Job is a full- time employee of Cube Consulting. Mr Job has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Job consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 96 De Grey Mining Limited Forward Looking Statements These materials prepared by De Grey Mining Limited (or the “Company”) include forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs. Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the Company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. Forward looking statements are based on the Company and its management’s good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the Company’s business and operations in the future. The Company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the Company’s business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the Company or management or beyond the Company’s control. Although the Company attempts and has attempted to identify factors that would cause actual actions, events, or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the Company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant securities exchange listing rules, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based. 97 Schedule of Interests in Mining Tenements De Grey Mining Limited Project/Location Country Tenement Percentage held/earning Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Farno-McMahon Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Mallina Gold Project Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia E47/891 E45/2533 E45/2364 E45/2983 E45/2995 E45/3390 E45/3391 E45/3392 E45/5140 E45/4751 E47/3552 E47/3553 E47/3554 E47/3750 E47/4565 P45/3029 P47/1866 E47/2502 E47/2720 E47/3504 M47/473 M47/474 M47/475 M47/476 M47/477 M47/480 L45/578 L47/164 L47/165 E47/3399 E47/3428 E47/3429 E47/3430 P47/1732 P47/1733 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 75%¹ 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% ¹ De Grey has earned a 75% interest in the joint venture agreement with Farno McMahon Pty Ltd (owned 100% by Novo Resources Corp) details of the agreement can be found in Note 298(d). 98 

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