DGR Global Limited
Annual Report 2021

Plain-text annual report

DGR Global Limited ABN 67 052 354 837 dgrglobal.com.au D G R G o b a l l A n n u a l R e p o r t 2 0 2 1 ii iv 2021 Annual Report DGR Global Limited and controlled entitiesdgrglobal.com.au     Developing tomorrow’s resources, today. COVER PHOTO At DGR Global we are focussed on an inter-generational, global search for tier one resource projects that address booming global demand for commodities. We see this image as one that represents the speed in which the economy is gearing towards clean, green energy projects, as well as being representative of the forward thinking mindset required to develop world class projects that are developing tomorrow’s resources, today. v Directors’ report Chairman’s letter Review of operations Information on directors Remuneration report Auditor’s independence declaration Financial report Statement of profit or loss and other comprehensive income Statements of financial position Statements of changes in equity Statements of cash flows Notes to the financial statements Directors’ declaration Independent auditor’s report Further information Shareholder information Interest in tenements Corporate directory 1 2 4 23 28 40 41 43 44 45 46 47 92 93 99 100 103 105 DGR Global Limited and controlled entities1 This page has been intentionally left blank. vii 1 DIRECTORS’ REPORT DGR Global Limited and controlled entitiesOn the 28th of June Mr Vincent Mascolo completed a 19-year tenure as a Non-Executive Director of DGR Global. Vincent’s tenure covered a significant portion of the Company’s ASX-listed existence, and saw him make several key contributions to the Board over that time. On behalf of my fellow Directors, I would like to wish Vincent every success as he devotes his talents to IronRidge Resources. Additionally, Mr Ben Cleary resigned on 19th January to focus on his burgeoning Funds Management business at Tribeca. Again, on behalf of the Board, I would like to wish Ben all the best in these endeavours, and thank him for his time and contributions to DGR Global. Over the coming twelve months the Board will continue to dedicate itself to realising the value of its substantial asset base for shareholders. The Board has altered its approach to funding with a view to making better use of its substantial asset base, to which the Company trades at a material discount. I would like to thank all of our highly valued staff for their continued outstanding contributions to DGR Global. If I could please draw particular attention to Mr Karl Schlobohm who has done an outstanding job over the reporting period and also our Managing Director Nick Mather who continues to work diligently on behalf of the Company and its shareholders to deliver on DGR Global’s objectives and potential. Peter Wright Chairman Directors’ report Chairman’s letter Dear Shareholders, I would like to thank you for ongoing support over the last twelve months of DGR Global as we continue to work on realising value for a deeply compelling and broad portfolio of assets on your behalf. Additionally, we continue to search for early-stage opportunities which have the potential to deliver material returns to our shareholders over the investment horizon. Again, if I could thank you for your support over the course of the year, it is not taken lightly. It has always been my view that there are enormous opportunities in resource markets around supply and demand dislocations. Demand is dynamic and can change with the stroke of a legislative pen, a move in global intertest rates or any geopolitical events such as the COVID-19 pandemic. Supply is not so nearly dynamic. The decisions for today’s supply were made, or as it turns out for a lot of commodities not made, 6 to 8 years ago. This period is the typical gestation period from first discovery of mineral occurrence through to first concentrate on a ship for export markets. DGR Global has always sought to play a long game with a view to what global aggregate GDP (Gross Domestic Product) will be in the future, and to being well placed to supply into markets that are materially undersupplied. We are currently seeing what we view as an underinvestment in several key commodities manifest itself into strong commodity prices that DGR Global has direct exposure to. Copper: DGR Global has a material stake into the London Stock Exchange (LSE) listed SolGold, which is currently working on its PFS for the flagship Cascabel Copper-Gold Porphyry Project in Ecuador. In addition, SolGold has a substantial and prospective regional exploration program across Ecuador, making it the country’s leading copper-gold explorer. Copper is currently trading at over US$9000/t with wafer thin stockpiles at the London Metals Exchange (LME). Lithium: As the world transitions to a lower carbon footprint, a key component of this journey will be the electrification of vehicle fleets. The forward demand /supply forecast imbalances are deeply compelling to DGR Global, given it currently has a circa 12% stake in AIM listed IronRidge Resources, whose primary asset is the Ewoyaa Cape Coast Lithium project which recently announced a comprehensive funding package with Piedmont Lithium Inc to fully fund and fast track IRR’s Ewoyaa Lithium Project through to production. Whilst DGR Global is an active investor in what it sees as an inevitable switch to a lower carbon intensity future, it also sees the transition from oil and gas being some time away and is of the view that for a considerable time yet, the world will require a significant proportion of its baseload power delivered from existing and available energy sources. Accordingly, the Company maintains its significant investments in oil and gas primarily through its investment in Armour Energy Ltd (ASX:AJQ). DGR Global sees the capacity for significant investment returns for Armour over the coming 6 to 12 months as Armour prepares to spin out its considerable Northern Australian assets into McArthur Oil & Gas. 2 3 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report for the year ended 30 June 2021 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘Group’) consisting of DGR Global Limited (referred to hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2021. DIRECTORS The following persons were directors of DGR Global Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: • Peter Wright (appointed 19 January 2021) • Nicholas Mather • Brian Moller • Ben Cleary (resigned 19 January 2021) • Vincent Mascolo (resigned 28 June 2021) PRINCIPAL ACTIVITIES During the financial year, the principal continuing activities of the Group was the generation of projects, and the provision of services and support to sponsored listed companies, within the mineral resources industry. There were no significant changes in the nature of the Group’s principal activities during the financial year. DIVIDENDS There were no dividends paid, recommended or declared during the current or previous financial year. REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CAPITAL STRUCTURE CHANGES DURING THE YEAR Ordinary Shares There were 209,101,094 new ordinary shares issued during the financial year ended 30 June 2021 (2020: 153,295,756) as follows: • An aggregate of 896,347 ordinary shares issued pursuant to the exercise of unlisted options priced at 8.4 cents each; • An aggregate of 208,204,747 ordinary shares issued pursuant to the Company’s October 2020 entitlement offer priced at 8 cents each. Listed Options There were 137,415,070 listed company options issued during the year with a strike price of 12 cents each, pursuant to the Company’s October 2020 entitlement offer. FINANCIAL POSITION AND FINANCIAL PERFORMANCE FOR THE YEAR Financial position The net assets of the Group have increased by $49,230,103 to $165,935,375 as at 30 June 2021 from $116,705,272 as at 30 June 2020. This increase has primarily resulted from: • • Increase in value of investments accounted for as assets at fair value through other comprehensive income; Increase in exploration and evaluation assets primarily due to the exploration work carried out in Uganda and the acquisition of Ripple Resources Pty Ltd; • Decrease in borrowings; offset by • Increase in deferred taxation liability. During the past year the Group has continued investing in its mineral exploration tenements. Financial performance For the year ended 30 June 2021, the Group loss after income tax was $1,076,932 (2020: $5,979,261). The loss for the year has been largely driven by: • Management fee income; • Interest income on corporate bonds; • Other income; • Reversal of previous impairments on equity accounted investments; • Reversal of previous impairment on bond investment; offset by • Recognition of share of associate losses; • Fair value adjustments on convertible notes; • Employee, corporate and administration expenses; • Exploration and rehabilitation expenses; and • Finance costs. REVIEW OF OPERATIONS DGR Global’s business is the creation of resource exploration, development, and mining companies. The business uses the skills of a core team of talented geoscientists to identify resource projects capable of yielding world class discoveries of attractive commodities. This is achieved through the identification of commodities with a favourable 20-year demand, growth, and price outlook. DGR searches for geological terranes with: • A demonstrated strong endowment for that commodity in an historically under-explored region • Opportunity for the application of newly developed exploration and metallurgical techniques to assist in the definition of economic resources • Jurisdictions with improving socio-economic and regulatory frameworks • Extensive available tenures • Existing data sets which provide the basis for innovative reinterpretation 4 5 DGR Global Limited and controlled entitiesdgrglobal.com.au Directors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED DGR Global provides initial seed funding and management support to secure these assets in subsidiaries and develop these assets to more advanced funding stages. The Company maintains a pipeline of projects in daughter companies at various stages of emergence, and in 2015 crystallised a significant return through the sale of its 15% holding in Orbis Gold for $26 million. Further development of its holdings in LSE/TSX listed SolGold and AIM listed IronRidge Resources and ASX listed Aus Tin Mining, New Corporate Highlights for the Company during 2021 included: • The Company continues to focus on new project generation and value creation within its existing portfolio of listed and unlisted company investments, and also continues to seek out new investment and development opportunities to drive the creation of future resource companies. • COVID-19 continued to impact DGR’s capacity to carry out its normal business throughout FY20/21. DGR implemented a number of financial and operational strategies to minimise risk and endeavour to maintain shareholder value during this challenging period and to be appropriately prepared to resume exploration activities as soon as conditions permit. • A limited number of field visits, landholder liaison and native title holder meetings were undertaken, and relevant contractors engaged to commence exploration work, notwithstanding the continuing challenges presented in the context of COVID-19, Peak Metals and Armour Energy and unlisted Auburn Resources are expected over the coming years. including short, localised lockdowns. The previous resource exploration and funding activities of DGR’s key personnel underscore the opportunities provided by the • Exploration activities are ready to commence as soon as conditions permit, with several field programmes for entities within DGR business model. DGR’s focus on provincial tenement positions covering entire sedimentary basins or structural blocks where the group for which DGR is the Operator. • DGR holds an 83.18% (Armour Energy 16.82%) interest in a highly prospective oil project in the Kanywataba Block, Uganda1. possible, delivers capital, government, and major resource corporate attention. The Company maintains its cornerstone investor position in subsidiaries that move to listing on a recognised stock exchange as illustrated in the following diagram. • Early background and research stages of investigating possible green energy development and investment opportunities, with work continuing to assess potential viability. • Successful strategic placement of $3m completed early July 20212. • Supporting 39% owned, public, unlisted Auburn Resources Ltd capital raising preparations and advancement towards potential ASX listing. • Continuation of support to Armour Energy in expanding its gas exploration, production and distribution assets. • As part of the Lakes Blue Energy NL (formerly Lakes Oil NL) recapitalisation process and preparation for re-quotation on the ASX, in December 2020 DGR Global invested $1 million into Lakes Blue Energy NL (formerly Lakes Oil NL) (LKO) Convertible Notes priced at $0.0009 each, with a coupon rate of 15% per annum, and convertible into fully-paid ordinary shares on a 1:1 basis. The Convertible Note issue was combined with a royalty arrangement such that for every $1 million invested, the investee is entitled to a 2% royalty on future gas sales from certain Lakes Oil tenements (pro rata for less or more than $1 million)3. • HSE for the group entities for which DGR acts as Operator, maintained a rolling 12-month TRIFR of 0.00 and zero environmental incidents for the corresponding period, highlighting the continuous commitment to safe operations. DGR Global created investments (at 30 June 2021) 6 7 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Investments in Listed Companies SolGold plc (8.9%) – LSE/TSX: SOLG IronRidge Resources Limited (14.15%) – LSE: IRR • Primary focus on gold (in Chad and Ivory Coast) and lithium (in Ghana and Ivory Coast) now firmly established with extensive tenement packages secured in all three countries. • Major gold discovery at the Dorothe Project and nearby Ouchar and Echbara licence areas in Chad, gold projects in Ivory Coast, and lithium projects with proven big, high grade lithium spodumene pegmatites in Ghana and Ivory Coast. • IronRidge also reported on its best lithium grade results to date for its Ewoyaa Lithium Project in Ghana, having earlier announced completion of the acquisition of the adjacent Saltpond license and Cape Coast application from Joy Transporters • Focus on high-grade world-class copper gold porphyry systems at Cascabel in Ecuador. Cascabel is proximate to Quito and Ltd. Further high-grade results were announced on 25 May 2021, followed by the announcement on 1 July 2021 that Ewoyaa seaports, is at low elevation, and has abundant water supplies and access to hydropower. had secured conditional funding to production of USD102m. • Exploration activities continue at a number of SolGold’s wholly owned Mineral Concessions in Ecuador, with ongoing strict • In Chad, the Company was successful in having a number of its key tenures renewed for further four (4) year periods. The COVID-19 protocols in place. • SolGold remains the dominant explorer in the country. • SolGold updated the market on progress of the Pre-Feasibility Study (PFS), which is targeted for release in late 2021. • Non-Executive Director, Mr Keith Marshall commenced as Interim CEO on 1 April 2021, replacing Nick Mather who retired from executive duties for personal reasons, but remains a Non-Executive Director. • SolGold released an exploration update on the Tandayama-America Porphyry Copper-Gold target at the Cascabel Project, with assay results from Holes 1 to 7 reported. • A successful Placing and Retail Offer raised gross proceeds of USD73.8 million was announced on 28 April 2021. • An ESG initiative collaboration with Lita and Carolina Communities and Franco-Nevada was announced on 27 May 2021. • SolGold in conjunction with Cornerstone Capital Resources announced agreement to work cooperatively to advance the Cascabel Project. • An update on the Regional Exploration programme in Ecuador released in July 2021 reported encouraging results from the programme, particularly at the Porvenir Project with strong drilling results. Copies of all of SolGold’s market releases are available on the Company’s website: www.solgold.com.au Armour Energy Limited (16.18%) – ASX: AJQ • Holds highly prospective whole basin oil and gas positions in Northern Territory and North West Qld covering 139,000 km2. • Following extensive review of potential oil exploration, appraisal and development acreage, new material oil reserves and resources added to the Company’s portfolio. • Armour holds an interest in an Exploration Licence (DGR 83.18%, Armour 16.82%) over the highly prospective Kanywataba Block in the Albertine Graben, Uganda. Less than 40% of the Albertine Graben has been subjected to exploration to date where 101 wells of approximately 115 wells drilled have encountered hydrocarbons. • Armour Energy released a resource update on its contingent and prospective gas resources in the Northern Territory on 27 April 2021. • Completion of the sale of Ripple Resources to Auburn Resources Ltd was announced on 10 May 2021. • A proposed demerger of Armour’s Northern Basin Oil and Gas business was announced on 3 March 2021, with a new company, McArthur Oil & Gas Ltd proposed to be created to hold the business through an in-specie share distribution to existing shareholders. • An IPO and capital raise of $60-$65 million for McArthur Oil & Gas is proposed to fund acquisition of Northern Basin Oil & Gas assets from Armour and to fund forward exploration. • Consideration of $40 million cash plus a minimum of 33.3% retained interest by Armour shareholders in McArthur Oil & Gas is proposed. The consideration received by Armour will be used to retire its outstanding debt. • A 20,000km2 airborne geophysical survey programme planned for completion in early July 2021 on behalf of McArthur Oil & Gas in advance of the IPO and demerger was announced on 11 May 2021. Successful completion of the survey was announced after the end of the financial year on 28 July 2021. Copies of all of Armour Energy’s market releases are available on the Company’s website: www.armourenergy.com.au 8 recently renewed licenses and existing granted tenure now cover a combined 746.25km2 of prospective geological terrain with significant previous exploration work completed to date identifying multiple gold targets for immediate follow-up. IronRidge intends to drill test the Dorothe Gold Project on the basis of the results from the previous 14,500m of trenching completed, large scale artisanal workings and supporting ground geophysics. • Announcement of the company’s intention to progress the demerger of the gold assets held in Cote d’Ivoire and Chad into a new, gold focussed entity structured to permit quotation on a recognised stock exchange. • IronRidge appointed a dedicated, Sydney based CFO and Company Secretary during the year, and transferred its management and administrative functions to Sydney. This is part of the natural ‘life cycle’ of the broader DGR strategy as sponsored listed entities mature. Copies of all of IronRidge Resource’s market releases are available on the Company’s website: www.ironridgeresources.com.au NewPeak Metals Limited (9.66%) – ASX: NPM • NewPeak Metals announced a secondary listing on the Frankfurt Stock Exchange (FWB®) and the appointment of a European corporate advisor (MMG) to assist with European equity initiatives. • Initial drilling at the Vetas Cachi area of the Cachi Gold Project, has had all multi-element assays returned with elevated silver associated with gold mineralisation. Subsequent drilling at Vetas North West, Morena and Sofia was announced with gold visible to the naked eye in various sections of the Morena drill core. • Preparation for drilling during 2021 at the Company’s Las Opeñas Gold Project in San Juan province is planned to commence in spring/summer of 2021. The main targets are the highly mineralised targets of Belleza and Presagio West, with a GAIP survey undertaken in May 2021 returning outstanding results from the Belleza target. • New Peak Metals announced that its Swedish Bergslagen Strategic Metals Project, which was initially a tungsten focussed venture, following on from the recent surveying program, NewPeak was impressed with the elevated levels of other critical and base metals such as copper, zinc and molybdenum, which has provided broadened scope and opportunity. • Further developments at the Bergslagen Strategic Metals Project were announced on 15 June 2021. • Granting of the New Zealand Carrick Gold permit was announced to the market on 18 June 2021. • Completion of the acquisition of additional Southern Finland gold permits complimenting NewPeak’s Finland Tampere Gold Project, with a resource definition drilling programme planned to commence in Q3 of 2021. • After the close of the financial year, on 12 July 2021 it was released to the market that New Peak Metals had fulfilled the agreement terms with Genesis Minerals (Argentina) SA and moved to 51% ownership of its highly prospective Las Opeñas Gold Project in San Juan, Argentina. • Successful capital raising of $1.625m by way of private placement was announced after the end of the financial year on 14 July 2021. Copies of all of NewPeak Metals’ market releases are available on the company’s website: www.newpeak.com.au 9 DGR Global Limited and controlled entitiesdgrglobal.com.au Directors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Investments in Listed Companies continued Aus Tin Mining Limited (12.18%) – ASX: ANW • Focussed on a diverse commodity base including tin, silver, copper, cobalt, nickel, and metallurgical coal. • August 2013 JORC resource estimate confirmed Taronga as a world class tin project. • Successful completion of initial High-Pressure Grinding Roll (HPGR) test work for Taronga (NSW) ore, with copper and silver reappraisal and financing strategies under review. • Aus Tin Mining is currently continuing in the process of potentially acquiring two (2) metallurgical coal projects being the Ashford Coal Project in Northern NSW, and the Mackenzie Coal Project in the Bowen Basin in Qld. Subsequent announcements confirming completion of Stage 1 of the acquisition of the Ashford Coal Project and extension of acquisition optionality of the Mackenzie Coal Project have been made. • Appointment of Mr Brad Gordon as a Non-Executive Director was announced on 17 May 21. Mr Gordon is the CEO and a Director of Laneway Resources Ltd (ASX:LNY) who currently hold the remaining 60% interest in the Ashford Coal Project. Copies of all of Aus Tin Mining’s market releases are available on the company’s website: www.austinmining.com.au Exploration and Development of Unlisted Subsidiaries and Projects During the year the Group endeavoured to remain focused on advancing exploration projects within the parent and subsidiary companies. Field reconnaissance and exploration programs were substantially limited by the restrictive combination of COVID-19 and the arrival of a more ‘normal’ wet season. Significant activities which occurred during the year included: Auburn Resources Limited (39.13%) Auburn Resources is focused on the discovery and development of copper, gold, nickel, cobalt and zinc deposits in Eastern Queensland and the Northern Territory. • Large tonnage zinc, copper and gold focussed company with ongoing development of a number of projects, including 4 district scale flagship projects in QLD and the NT. • Key Iron Oxide Copper Gold (IOCG) and lead-zinc targets identified and secured in the Tanumbirini district of the Northern Territory4. • Potential for major copper gold discoveries at Mt Abbott, Calgoa and Marodian Projects5. • Exploration targets defined for zinc at the Ban Ban Project. • Under-explored areas of most endowed provinces with multiple Tier 1 targets. • Completion of the acquisition of Ripple Resources from Armour Energy (ASX:AJQ) in early May, adding substantial value to the asset package of Auburn Resources6. • Field exploration mapping and sampling programme on the recently acquired South Nicholson Project due to commence Q3 2021. 10 FIGURE 1 Location map of Auburn Resources projects The Tanumbirini and Victoria River Projects is held in Pennant Resources Pty Ltd, a wholly owned subsidiary of Auburn Resources Limited (see Figures 2 and 3 below). FIGURE 2 Location of the Tanumbirini and Victoria River Projects in the Northern Territory. FIGURE 3 The Tanumbirini Project Area – traversed by the sealed Carpentaria Highway and the gas pipeline to the McArthur River Mine. 11 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Exploration and Development of Unlisted Subsidiaries and Projects continued Auburn Resources Limited (39.13%) continued Tennant Creek and Mt Isa are the preeminent mineral resource hubs for the Northern Territory and Queensland. The region between these two hubs is a vast prospective frontier covered by a thin veneer of sediments. The total lead footprint at Tanumbirini is larger in area than that at Mt Isa to the east, and comparable in magnitude given that Tanumbirini is all under cover and Mt Isa is exposed and has been mined for approximately a century. Lead high values to 46.2 ppm characterize Mt Isa and 34 ppm characterizes the Tanumbirini area. FIGURE 5 Copper, gold, uranium, rare earths and molybdenum association at Tanumbirini – indicative of large IOCG (Iron Oxide Copper Gold) targets under relatively shallow cover. FIGURE 4 Lead (light green) and Copper (light blue) anomalism by MMITM (partial leach) geochemistry. DGR considers that in the Tanumbirini Project Area, Auburn Resources has secured two new potential mineral fields: 1. A pyritic dolomitic shale sub basin of the broader McArthur Basin prospective for lead zinc deposits at Tanumbirini East; and 2. An iron oxide copper gold target area at Tanumbirini West. Figure 6 below is a composite diagram incorporating mapped fault structures and EM supported geology on a magnetic image, indicating the interpretation of a fault bounded pyritic dolomitic shale sub basin prospective for lead zinc deposits on the east, and iron oxide copper gold (IOCG) targets on the west. The standout feature through Tanumbirini is an 80 km long magnetic terrane boundary (shaded in purple), and which DGR considers is the source of the copper-gold-uranium-molybdenum-rare earth anomalism. The soil geochemistry and EM data from the Geoscience Australia surveys adds to an already extensive knowledge of surface geology and faults in the area, as well as available detailed magnetic data and a general understanding of the local stratigraphy. FIGURE 6 Geological interpretation on magnetic image – fault bounded pyritic dolomitic shale sub-basin on the east More detailed investigation of the Northern Australia Geochemical Survey (NAGS) data sets further confirmed a large area of base metal anomalism at Tanumbirini. Examining the data sets for lead and copper by Mobile Metal Ion™ (partial leach) (MMITM) geochemistry indicated an even larger anomalous footprint at Tanumbirini, with a significant indication of copper on the western section of the project area. The highest copper in the unpolluted Tanumbirini area is 4310 ppb by MMI™. Excluding polluted exceptions, this compares to the Mt Isa area high of 2970 ppb and 2,000–3,000 ppb in the Mt Oxide Gunpowder copper district. Auburn Resources has also revisited the NAGS data sets to search for rare earths. As shown in Figure 5 (below), rare earths point to a massive IOCG target zone on the western section at Tanumbirini (yet to be supported by gravity and magnetic data). 12 13 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Exploration and Development of Unlisted Subsidiaries and Projects continued Auburn Resources Limited (39.13%) continued Figure 7 below shows a conceptual SW-NE geological cross-section of the Tanumbirini Project Area. FIGURE 7 Conceptual SW-NE geological cross-section of the Tanumbirini Project area. Pinnacle Gold Pty Ltd (94.34%) FIGURE 8 Location of the Kanywataba Block in Uganda. Armour Uganda (83.18%) Armour Uganda’s flagship project is the ‘The Kanywataba Block’ which is highly prospective for oil and gas. The project covers approximately 344 km2 and is located in a rift basin within the Albertine Graben, within close proximity to the Total and CNOOC operations in the North. Within the block there are multiple developed (untested) on-trend structural traps (3-way and 4-way dip closures) and multiple untested stratigraphic traps. The Kingfisher oil discovery (40km NE of Kanywataba) oil seeps confirm local working petroleum system. Force majeure conditions are currently in operation as a result of wet weather and the COVID-19 pandemic. Activities will resume once conditions become favourable and travel restrictions are lifted. Activities in the year and which are ongoing include: • Reprocessing of existing 2D seismic data • Geochemical surface soil gas sampling program • 2D seismic programme • Basin Analysis study 14 Pinnacle Gold holds 6 Exploration Permits (EPMs) for gold, nickel and antimony in North Queensland and 2 Mineral Exploration Licenses (MELs) for gold and copper in the Northern Territory. The Queensland EPMs include substantial gold exploration tenements south of Charters Towers, Qld. Most of the area is soil covered, with previous exploration efforts by earlier explorers largely confined to areas of outcrop and focused on mapping and sampling known workings. Only two areas have been drilled. To date there has been no wide ranging systematic geochemical survey undertaken, yet the area clearly lies on potentially mineralising structures (Charters Towers – Black Jack – Mt Leyshon). Significant stream sediment anomalisms (see Figure 9 below) may not all be due to the proximate small veins. Pinnacle has reconsidered the exploration strategy for this mostly soil covered area, looking for large targets, Pinnacle previously completed a field program of low gold detection limit soil lines on a grid pattern with infill gridding of any elevated results. Historical initial shallow RC drilling on 2 of the EPMs returned mixed results, warranting further exploration and drilling to better define drill targets. FIGURE 9 Pinnacle EPM locations Queensland. 15 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Exploration and Development of Unlisted Subsidiaries and Projects continued Pinnacle Gold Pty Ltd (94.34) continued FIGURE 12 NT stitched RTP magnetic image of the Tennant Creek region showing anomolous gold MMI catchments and MEL location. FIGURE 10 Overview of gold stream sediment geochemistry south of Charters Towers (compiled from historical data). Pinnacle Gold has secured tenure that is thought to be highly prospective for gold and copper in the Northern Territory on the back of a successful NAGS survey that identified a number of anomalous areas within remote parts of the Northern Territory and Queensland that have received almost no historical exploration. Pinnacle Gold was one of the first companies to secure tenure as a direct result of the NAGS survey and as such have started the pioneering phase into deeply covered unexplored Australian prospective terrane. FIGURE 11 Pinnacle Gold MEL Locations Northern Territory. Coolgarra Minerals Pty Ltd (100%) Coolgarra Minerals is focussed on discovery and development of gold, antimony, nickel and cobalt and holds five granted EPMs to the south of Greenvale, QLD and one EPM west of Theodore in Central Queensland. The southernmost permit covers substantial historic gold workings at Janelle’s Hope and Wade’s with the Northern tenement areas immediately adjacent to the south of the Sconi nickel-cobalt project. Initial exploration focused around several historical small-scale mining areas, in particular Wally’s Hope and Janelle’s Hope Prospects in the southern section of EPM 19270, and what is recorded as a long (several kilometres) strata bound gold occurrence in the northern section now referred to as Wade’s Prospect. 16 17 FIGURE 13 Coolgarra EPM Locations Queensland. DGR Global Limited and controlled entitiesdgrglobal.com.auFIGURE 15 Geoscience Australia MMITM stream sediment geochemistry map. Directors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Exploration and Development of Unlisted Subsidiaries and Projects continued Coolgarra Minerals Pty Ltd (100%) continued Figure 14 below is a satellite image of the southern section of EPM 19270 showing the soil grid lines with a macro view of the soil gold concentration contours at >25 ppb, > 50 ppb, and > 100 ppb. FIGURE 14 Soil Sample Grid on southern section of EPM 19270. Hartz Rare Earths Pty Ltd (100%) Hartz Rare Earths (HRE) have applications for two Mineral Exploration Licenses (MELs) in the Northern Territory. The project area is located approximately 855km south of Darwin and 420km north-west of Alice Springs. The target is a uranium copper molybdenum anomalous area highlighted in the recent Geoscience Australia survey. The geology and metal association indicate the potential for roll front uranium deposits within dry stream channels on the margin of the Tanami Desert. On grant of the exploration licenses, HRE is proposing to investigate this previously large unexplored target specifically for uranium, copper, molybdenum and vanadium using a denser geochemical survey. Initially this will involve further MMITM and conventional sampling, followed by traverses of shallow drilling. 18 19 FIGURE 16 License application location map. DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REVIEW OF OPERATIONS, MINERAL RESOURCES AND FUTURE DEVELOPMENTS CONTINUED REVIEW OF OPERATIONS CONTINUED Mineral Resources SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The Company completed a capital raising program during the year and raised $16,731,673 (before transaction costs). The proceeds from the Company’s capital raising program were used to fully repay its $10,000,000 Convertible Note facility with Tribeca Investment Partners (note 16). Following a resource drilling programme that was announced to the ASX on 4 August 20147, the Shamrock Tailings Dam contains a The Company issued a total of 209,101,094 new ordinary shares during the year (note 19). JORC 2012 compliant Mineral Resource of: • • Indicated: 770,000 tonnes @ 0.58 g/t Au for 450,000 grams (14,000 ounces) gold, and On 10 May 2021, DGR Global Limited (DGR) announced that a share acquisition agreement had been executed between public, Inferred: 770,000 tonnes @ 11 g/t Ag for 8,242,400 grams (265,000 ounces) silver. unlisted Auburn Resources Limited (Auburn) and Armour Energy Limited (Armour, ASX: AJQ) for the acquisition of Armour’s There has been no change to the Mineral Resource since its initial publication. wholly-owned subsidiary, Ripple Resources Pty Ltd (Ripple) by Auburn. Under the agreement, in consideration for the allotment of 5,600,000 fully paid Auburn shares, Armour has transferred its legal, beneficial, and unencumbered interest in 100% of the shares Future Developments in Ripple to Auburn (note 31). DGR Global aims to hold its key positions in the listed resource companies that it has created as they mature and develop. DGR has further unlisted subsidiaries that may progress to listing within the next 12–18 months, subject to further exploration, development There were no other significant changes in the state of affairs of the Group during the financial year. and market conditions. Competent Persons Statement The information herein that relates to Exploration Targets, Exploration Results and/or Mineral Resources is based on information MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR On 7 July 2021, the Company issued 57,692,308 fully paid ordinary shares and 27,634,616 quoted options in terms of a strategic placement. The shares were placed at $0.052 per share and subject to a 9 month escrow. The attaching listed options were granted compiled by Nicholas Mather B.Sc (Hons) Geol., who is a Member of The Australian Institute of Mining and Metallurgy. Mr Mather on a 3 for 8 basis. is employed by Samuel Capital Pty Ltd which provides certain consultancy services including the provision of Mr Mather as the Managing Director of DGR Global Ltd (and a director of DGR Global Ltd’s subsidiaries and associates). No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. Mr Mather has more than five years experience which is relevant to the style of mineralization and type of deposit being reported and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. This public report is issued with the prior written Information on likely developments in the operations of the Group and the expected results of operations have not been included in consent of the Competent Person(s) as to the form and context in which it appears. this report because the directors believe it would be likely to result in unreasonable prejudice to the Group. FOOTNOTES 1DGR ASX Release 14/9/17 2DGR ASX Release 2/7/21 3DGR ASX Release 14/12/20 4DGR ASX Release 20/5/19 5DGR ASX Releases 3/7/17, 8/11/18 6DGR ASX Release 10/5/21 7DGR ASX Release 4/8/14 20 ENVIRONMENTAL REGULATION The Group is subject to environmental regulation in relation to its exploration activities and its Mining Leases. The Group has conducted an extensive review of the environmental status of the Mining Leases and has estimated the potential costs for future rehabilitation and restoration to be $1,436,415. There are no matters that have arisen in relation to environmental issues up to the date of this report. 21 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 ENVIRONMENTAL MANAGEMENT The Group manages its environmental commitments and responsibilities under a Plan of Operations that is approved by the Department of Environment and Science (DES) and covers the continuing exploration activities of the Group’s tenements, including those that are currently under care and maintenance/progressive rehabilitation. The current Plan of Operations expires in December 2022, with a transition to a Progressive Rehabilitation and Closure Plan (PRCP) scheduled to be completed in October 2022, ahead of the current Plan of Operations expiry. Care and maintenance/progressive rehabilitation practices across the Group include rehabilitation of drill pads and excavations for exploration, monitoring of existing rehabilitation areas, monitoring site water flows, monitoring and maintenance of the Shamrock site tailings dam, historical mining pit and historical flue dust cell, removal of equipment from the old processing plant area (+95% complete), maintenance of roads and contour drains, erosion control, weed control and bushfire management on the tenements and their boundaries. The focus of rehabilitation during the current period has continued to be at the Shamrock mine site. Performance is measured through annual inspection of regulated structures, annual regulatory and compliance inspections by DES, annual audits based on the population and size of planted trees and self-generated trees, six-monthly water sampling data, monthly monitoring of tailings INFORMATION ON DIRECTORS NICHOLAS MATHER Executive Director BSc (Hons,Geol), MAusIMM Experience and expertise Nick Mather has 30 years of experience in exploration and resource company management. His career has taken him to a variety of countries exploring for precious and base metals and fossil fuels. He has focused his attention on the identification of and investment in large resource exploration projects. Nick was Managing Director of Bemax Resources NL and instrumental in the discovery of the world-class Gingko mineral sand deposit in the Murray Basin in 1998. As an Executive Director of Arrow Energy NL, Nick drove the acquisition and business development of Arrow’s large Surat Basin Coal Bed Methane project in South East Queensland. He was Managing Director of Auralia Resources NL, a junior gold explorer before its $23 million merger with Ross Mining NL in 1995. He was also a Non-Executive Director of Bavllarat Goldfields NL, having assisted that company in its re-emergence as a significant emerging gold producer. dam EC and pH, monitoring the condition of the background environment (native flora, weeds etc) and the growth performance of Other current directorships different species types. CLIMATE CHANGE RISK • Armour Energy Limited (since 18 December 2009) • Lakes Blue Energy NL (formerly Lakes Oil NL) (since 7 February 2012) • Aus Tin Mining Limited (since 21 October 2010) The Group does not consider that it currently has a material exposure to the risks associated with Climate Change. Accordingly, the • NewPeak Metals Limited (formerly Dark Horse Resources Limited) (since 22 January 2003) Group does not consider it necessary to reflect any impact associated with Climate Change risks (eg. impairments, provisions) in its • SolGold plc, which is dual-listed on the London Stock Exchange and the Toronto Stock Exchange (since 11 May 2005) financial statements for the year ended 30 June 2021. The Group considers the following matters to be relevant to this conclusion: Former directorships (last 3 years) a) the Group’s activities are predominantly focussed on the discovery and definition phase of natural resource projects. The Group is not yet in a mine planning, development, construction or operational phase. Accordingly, having a predominantly • IronRidge Resources Limited, which is listed on the London Stock Exchange (AIM) (from 5 September 2007 to 28 June 2021) greenfields exploration focus means that the Group currently has no significant man-made infrastructure that would be Special responsibilities subject to the potential physical risks associated with Climate Change. Furthermore, the Group has a minimal carbon footprint and negligible emissions; b) the Group’s mothballed “Shamrock” mine site in South East Queensland has been the subject of continued rehabilitation, and the historical tailings storage facility is actively managed (under active supervision conditions) to mitigate the risks associated with overspill into surrounding natural waterways as a result of seasonal and potential extreme rainfall and weather events; c) the Group is not currently aware of any pending or proposed Climate Change related regulatory or legislative changes that would materially impact it or its assets at this time; d) the Group’s oil project in Uganda is still only at the preliminary exploration stage. The next stage of exploration will include the acquisition and interpretation of seismic data, and a decision on drilling a preliminary well. Both before and after the drilling of a preliminary well, the Group can decide to relinquish the project on the basis of prospectivity and economic outlook; e) the balance of the Group’s exploration interests are predominantly focussed on minerals that are not expected to be impacted by the various categories of risk associated with Climate Change. These minerals include copper, nickel, gold and zinc; f) other than as outlined above, the Group considers that it currently has limited exposure to the technological market and reputational risks associated with Climate Change. 22 Managing Director and Chief Executive Officer Other information Interests in shares: Interests in options: 163,545,563 18,668,249 23 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 INFORMATION ON DIRECTORS CONTINUED BRIAN MOLLER Non-Executive Director LLB (Hons) Experience and expertise Brian Moller is a corporate partner in the Brisbane based law firm HopgoodGanim. He was admitted as a solicitor in 1981 and has been a partner since 1983. He practices VINCENT MASCOLO Non-Executive Director BEng (Mining), MAusIMM, MEI Aust (resigned 28 June 2021) Experience and expertise Vincent Mascolo is a qualified mining engineer with extensive experience in a variety of fields including, gold and coal mining, quarrying, civil-works, bridge-works, water and sewage treatment and estimating. almost exclusively in the corporate area with an emphasis on capital raising, mergers and Vincent Mascolo has completed numerous assignments in the Civil and Construction acquisitions. Brian holds an LLB Hons from the University of Queensland and is a member of the Australian Mining and Petroleum Law Association. Brian acts for many public listed resource and industrial companies and brings a wealth of experience and expertise to the board particularly in the corporate regulatory and governance areas. Other current directorships • Aus Tin Mining Limited (since 21 October 2010) • Platina Resources Limited (since 30 January 2007) • NewPeak Metals Limited (formerly Dark Horse Resources Limited) (since 22 January 2003) • SolGold plc, which is dual-listed on the London Stock Exchange and the Toronto Stock Exchange (since 11 May 2005) • Tempest Minerals Limited – formerly Lithium Consolidated Mineral Exploration Limited (since 13 October 2016) Former directorships (last 3 years) • Aguia Resources Limited (resigned 14 June 2019) Special responsibilities Member of the Audit and Risk Committee and the Remuneration Committee Other information Interests in shares: Interests in options: 9,933,170 838,114 Industry, including construction and project management, engineering, quality control and environment and safety management. He is also a member of both the Australian Institute of Mining and Metallurgy and the Institute of Engineers of Australia. Other current directorships • IronRidge Resources Ltd, which is listed on the AIM submarket of the London Stock Exchange (since 5 September 2007) • Tempest Minerals Limited (formerly Lithium Consolidated Mineral Exploration Limited) (since 19 May 2016) Former directorships (last 3 years) None Special responsibilities Member of the Audit and Risk Committee and the Remuneration Committee Other information Interests in shares: Interests in options: 13,062,500* 1,103,125* PETER WRIGHT Non-Executive Chairman BCom, BEcon (appointed 19 January 2021) Experience and expertise Peter Wright is the portfolio manager at Bizzell Capital Partners (BCP), a Brisbane based corporate advisory and funds management firm. Peter Wright has over 20 years’ experience working primarily in asset transactions, corporate advisory assignments, research and primary market transactions. Other current directorships • Greenwing Resources Limited (formerly Bass Metals Limited) (since 2 September 2016) • Laneway Resources Limited (since 31 October 2017) Former directorships (last 3 years) None 24 25 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 INFORMATION ON DIRECTORS CONTINUED PETER WRIGHT Non-Executive Chairman BCom, BEcon (appointed 19 January 2021) continued Special responsibilities Chairman Other information Interests in shares: Interests in options: Nil Nil BEN CLEARY Non-Executive Director BEcon, GradDip Fin (resigned 19 January 2021) Experience and expertise Ben Cleary has had an extensive career in the natural resources sector having worked in a number of specialist, director-level roles at Macquarie Bank, RBC and RBS over the past 15 years. In 2015, Ben founded Tribeca Global Natural Resources following the merger of Cleary Capital with Tribeca Investment Partners and has grown the team into one of Australia’s largest dedicated natural resources investment groups at a time where a number of investment management firms have exited the sector. ‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. * Interests in the shares and options of the Company as at the date of resignation as a director. COMPANY SECRETARY KARL SCHLOBOHM Company Secretary BCom, BEcon, MTax, CA, FGIA Karl Schlobohm is a Chartered Accountant with over 25 years of experience across a wide range of industries and businesses. He has extensive experience with financial accounting, corporate governance, company secretarial duties and board reporting. He currently also acts as the Company Secretary for ASX-listed Aus Tin Mining Limited, Armour Energy Limited and NewPeak Metals Limited. MEETINGS OF DIRECTORS The number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended 30 June 2021, and the number of meetings attended by each director were: The Tribeca Global Natural Resources team have been instrumental in corner-stoning more than $5bn of announced transactions Full Board Audit & Risk Management Remuneration & Nomination in Australasia, Europe and North America since Ben founded the business. Ben is based in Singapore and is the Chief Executive Officer for Tribeca Investment Partners Asia. Other current directorships • Tribeca Global Natural Resources Limited (since 18 July 2018) Former directorships (last 3 years) None Special responsibilities None Other information Interests in shares: Interests in options: 1,250,000* 2,375,000* Nicholas Mather Brian Moller Peter Wright* Ben Cleary** Vincent Mascolo*** Attended Held Attended Held Attended Held Committee Committee 10 10 5 3 10 10 10 5 5 10 - 2 1 - 2 - 2 1 1 2 - - - - - - - - - - Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. * ** *** appointed 19 January 2021 resigned 19 January 2021 resigned 28 June 2021 26 27 DGR Global Limited and controlled entitiesdgrglobal.com.au Directors’ report continued for the year ended 30 June 2021 MEETINGS OF DIRECTORS CONTINUED The Remuneration Committee did not meet during the year. In view of the current size of the Board, the Board considers it more effective to set aside time at Board meetings, where an independent director assumes the role of chair to specifically address the matters that would have been ordinarily attended to by the Remuneration Committee. The Board operates in accordance with the Non-executive directors’ remuneration The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. The Company’s specific policy for determining the nature and amount of remuneration of Board members of the Company is as follows. formal Remuneration Committee Charter, which has been adopted by the Board and is available from the Corporate Governance The Constitution of the Company provides that the Non-Executive Directors are entitled to remuneration as determined by the section of the Company’s website. Company in general meeting to be apportioned among them in such manner as the Directors agree and, in default of agreement, REMUNERATION REPORT (AUDITED) The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. equally. The aggregate remuneration currently determined by the Company is $350,000 per annum. Additionally, Non-Executive Directors are entitled to be reimbursed for properly incurred expenses. If a Non-Executive Director performs extra services, which in the opinion of the Directors are outside the scope of the ordinary duties of the Director, the Company may remunerate that Director by payment of a fixed sum determined by the Directors in Key management personnel are those persons having authority and responsibility for planning, directing and controlling the addition to or instead of the remuneration referred to above. However, no payment can be made if the effect would be to exceed activities of the Company, directly or indirectly, including all directors. the maximum aggregate amount payable to Non-Executive Directors. A Non-Executive Director is entitled to be paid travelling and The remuneration report is set out under the following main headings: • Principles used to determine the nature and amount of remuneration • Details of remuneration • Service agreements • Share-based compensation • Additional information • Additional disclosures relating to key management personnel PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION other expenses properly incurred by them in attending Director’s or general meetings of the Company or otherwise in connection with the business of the Company. Directors may have the opportunity to qualify for participation in the Company’s option plan, subject to corporate governance considerations and the approval of shareholders. The remuneration of Non-Executive Directors for the year ended 30 June 2021 is detailed in this Remuneration Report. Executive director and senior management remuneration The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, both fixed and variable components. motivate and retain highly skilled Directors and Executives. The Remuneration and Nomination Committee of the Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the Executive team. The Remuneration and Nomination Committee assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality Board The Company aims to reward the Executive Director and Senior Management with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: • reward Executives for company and individual performance against targets set by reference to appropriate benchmarks; • align the interests of Executives with those of shareholders; • link reward with the strategic goals and performance of the Company; and and Executive team. Such officers are given the opportunity to receive their base remuneration in a variety of forms including cash • ensure total remuneration is competitive by market standards. and fringe benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost for the Company. Further details on the remuneration of Directors and Executives are set out in this Remuneration Report. The remuneration of the Executive Director and Senior Management may from time to time be fixed by the Board. The remuneration will comprise a fixed remuneration component and also may include offering specific short and long-term incentives, in the form of: The Company aims to reward the Executive Director and Senior Management with a level and mix of remuneration commensurate • performance based salary increases and/or bonuses; and/or with their position and responsibilities within the Company. The Board’s policy is to align Director and Executive objectives with • the issue of options. shareholder and business objectives by providing a fixed remuneration component and offering long-term incentives. During 2021 there were no discretionary bonuses paid (2020: $nil). There were no performance-based salary increases or options In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive Director and Senior issued that were performance-related. Management remuneration is separate and distinct. 28 29 DGR Global Limited and controlled entitiesdgrglobal.com.au Directors’ report continued for the year ended 30 June 2021 REMUNERATION REPORT (AUDITED) CONTINUED PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION CONTINUED Executive director and senior management remuneration continued DETAILS OF REMUNERATION Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. The key management personnel of the Group consisted of the following directors of DGR Global Limited: Directors may have the opportunity to qualify for participation in the Company’s Option Plan, subject to corporate governance • Nicholas Mather - Executive Director considerations and the approval of shareholders. All employees have the opportunity to qualify for participation in the DGR Global • Brian Moller - Non-Executive Director Employee Share Option Plan. The remuneration of the Executive Director and Senior Management for the year ended 30 June 2021 is detailed in this Remuneration Report. Consolidated entity performance and link to remuneration • Vincent Mascolo - Non-Executive Director (resigned 28 June 2021) • Peter Wright - Non-Executive Director (appointed 19 January 2021) • Ben Cleary - Non-Executive Director (resigned 19 January 2021) And the following persons: • Karl Schlobohm - Company Secretary and Interim Chief Financial Officer • Priy Jayasuriya - Chief Financial Officer (resigned 10 November 2020) The Company and its subsidiaries’ principal activity is the generation of projects, and the provision of services and support provided to sponsored listed companies, within the mineral resources industry and accordingly only generates revenues for services and support provided and historically has generated losses. • Peter Burge - Group General Counsel Remuneration details During the year ended 30 June 2021, the market price of the Company’s ordinary shares ranged from a low of $0.050 to a high of $0.103. As the Company is still in the generation of projects and exploration stage, the link between remuneration, company performance and shareholder wealth is tenuous. Share prices are subject to the influence of metals prices and market sentiment toward the sector, and as such increases or decreases may occur quite independent of Executive performance or remuneration. Use of remuneration consultants The company did not engage remuneration consultants to prepare a formal remuneration report during the financial year ended 30 June 2021. Voting and comments made at the Company’s 18 January 2021 Annual General Meeting (‘AGM’) At the 18 January 2021 AGM, 96.49% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. * Non-cash and other short term benefits include provision of a car park and/or an allocation of the Company’s Directors and Officers insurance premium. (1) Ben Cleary resigned on 19 January 2021 and Peter Wright was appointed on the same day. Vincent Mascolo resigned on 28 June 2021. (2) Karl Schlobohm agreed to be paid a further $120,000 per annum to act as the Company’s Interim CFO (as well as for Auburn Resources Ltd, Aus Tin Mining Ltd and NewPeak Metals Ltd). (3) Priy Jayasuriya resigned on 10 November 2020. 30 31 DGR Global Limited and controlled entitiesdgrglobal.com.au Directors’ report continued for the year ended 30 June 2021 REMUNERATION REPORT (AUDITED) CONTINUED DETAILS OF REMUNERATION CONTINUED Remuneration details continued SERVICE AGREEMENTS It is the Board’s policy that employment agreements or service contracts are entered into with all Executive Directors, Executives and employees. Contracts do not provide for pre-determining compensation values or method of payment. Rather the amount of compensation is determined by the Board in accordance with the remuneration policy set out above. The current employment agreement with the Managing Director has a notice period of three (3) months. All other Executive employment agreements have between 1 and 3 months’ notice periods. No current employment contracts contain early termination clauses. The terms of appointment for Non-Executive Directors are set out in letters of appointment. Certain Key Management Personnel are entitled to their statutory entitlements of accrued annual leave and long service leave together with any superannuation on termination. No other termination payments are payable. Managing Director DGR Global Limited has an agreement with Samuel Capital Pty Ltd, an entity associated with Nicholas Mather, for the provision of certain consultancy services by Nicholas Mather. The agreement was last updated on 1 July 2015. Samuel Capital Pty Ltd will provide Nicholas Mather as the Managing Director of DGR Global Limited for a base fee of $250,000 per annum. Effective 1 March 2017 the Managing Director’s base fee was increased to $300,000 per annum. There is no fixed term specified in this agreement. Under the terms of the present contract: * Non-cash and other short term benefits include provision of a car park and/or an allocation of the Company’s Directors and Officers insurance premium. • both DGR Global Limited and Samuel Capital Pty Ltd are entitled to terminate the contract upon giving three (3) months written notice (6 months where triggered by a change of control); (1) Greg Runge retired on 31 July 2019. Performance income as a portion of total remuneration The proportion of remuneration linked to performance and the fixed proportion are as follows: • DGR Global Limited is entitled to terminate the agreement upon the happening of various events in respect of Samuel Capital Pty Ltd’s solvency or other conduct or if Nicholas Mather ceases to be a Director of DGR Global Limited; • the contract provides for a six-monthly review of performance by DGR Global Limited. The Company currently has not set any specific KPIs; and • the contract provides for the provision of a car park. There is no termination payment provided for in the Executive Service Contract with Samuel Capital Pty Ltd, other than the agreed notice periods. Senior Management The base salary of senior management are as follows: Position Company Secretary* Chief Financial Officer* Group General Counsel Base Salary $218,500 $287,500 $350,000 * The Chief Financial Officer resigned on 10 November 2020 and the Company Secretary was appointed Interim Chief Financial Officer on the same day. The Company Secretary agreed to be paid a further $120,000 per annum to act as the Company’s Interim CFO (as well as for Auburn Resources Ltd, Aus Tin Mining Ltd and NewPeak Metals Ltd). 32 33 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REMUNERATION REPORT (AUDITED) CONTINUED SERVICE AGREEMENTS CONTINUED Senior Management continued Employment contracts entered into with senior management contain the following key terms: Event Duration Performance based salary increases and/or bonuses Short and long-term incentives, such as options Resignation / notice period Serious misconduct Company Policy Non-specific Board discretion Board discretion 1 - 3 months Company may terminate at any time Payouts upon resignation or termination, outside industrial regulations (i.e. ‘golden None handshakes’) SHARE-BASED COMPENSATION Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2021. Options There were no options over ordinary shares issued to directors and other key management personnel as part of compensation that ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL Share holdings The number of shares in the Company and controlled subsidiaries held during the financial year by each director and other member of the key management personnel of the Group, including their personally related parties is set out below: DGR Global Limited * Includes the net balance of securities acquired or sold on market or pursuant to capital raisings during the year and/or the balance held on appointment/resignation. During the year Mr Mascolo acquired a further 1,000,000 shares in the Company’s rights issue, and on resignation held 13,602,500 ordinary shares in DGR Global Limited. were outstanding as at 30 June 2021. Auburn Resources Limited There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2021. ADDITIONAL INFORMATION The factors that are considered to affect total shareholders return (‘TSR’) are summarised below: Share price at financial year end (cents) Basic earnings per share (cents per share) 2021 2020 2019 2018 2017 6.20 0.35 5.30 (0.90) 10.50 (0.70) 9.00 - 13.50 0.50 * Includes the net balance of securities acquired or sold on market or pursuant to capital raisings during the year and/or the balance held on appointment/resignation. 34 35 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 REMUNERATION REPORT (AUDITED) CONTINUED ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL CONTINUED Share holdings continued Pinnacle Gold Pty Ltd Option holdings The number of options over ordinary shares in the Company held during the financial year (including options issued as part of capital raisings) by each director and other members of key management personnel of the Group, including their personally related parties, is set out below: DGR Global Ltd * Includes the balance of shares held on appointment/resignation, and shares acquired and sold for cash in on-market transactions. (1) Vincent Mascolo resigned on 28 June 2021. Upon resignation Mr Mascolo held 13,062,500 ordinary shares in DGR Global Limited. (2) Peter Wright was appointed on 19 January 2021. (1) Vincent Mascolo resigned on 28 June 2021. (2) Peter Wright was appointed on 19 January 2021. (3) Ben Cleary resigned on 19 January 2021. (4) Priy Jayasuriya resigned on 10 November 2020. Auburn Resources Limited (3) Ben Cleary resigned on 19 January 2021. Upon resignation Mr Cleary held 1,250,000 ordinary shares in DGR Global Limited. There were no options over ordinary shares in Auburn Resources Limited held during the financial year by Directors or key (4) Priy Jayasuriya resigned by mutual agreement on 10 November 2020. Upon resignation Mr Jayasuriya held 138,108 ordinary shares in DGR Global Limited. management personnel. Pinnacle Gold Pty Ltd * Includes the balance of options held on appointment/resignation, and options expired during the period. There were no options over ordinary shares in Pinnacle Gold Pty Ltd held during the financial year by Directors or key management personnel. Loans to key management personnel and their related parties There were no loans made, guaranteed or secured to directors and key management personnel by the entity or any of its controlled entities. Other transactions with key management personnel and their related parties Mr Brian Moller (a Director), is a partner in the firm HopgoodGanim Lawyers. HopgoodGanim Lawyers were paid $253,293 (2020: $140,774) for the provision of legal services to the Group during the year. The services were based on normal commercial terms and conditions. At 30 June 2021 there was a balance of $52,069 owing (2020: nil) included within current liabilities. THIS CONCLUDES THE REMUNERATION REPORT, WHICH HAS BEEN AUDITED. 37 36 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued for the year ended 30 June 2021 SHARES UNDER OPTION Unissued ordinary shares of DGR Global Limited under option at the date of this report are as follows: NON-AUDIT SERVICES Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 26 to the financial statements. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 26 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons: • all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the At the date of this report, there is no unissued ordinary shares of Auburn Resources Limited or Pinnacle Gold Pty Ltd under option. auditor; and No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the Company or of any other body corporate. • none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards. SHARES ISSUED ON THE EXERCISE OF OPTIONS There were 896,347 ordinary shares of DGR Global Limited issued on the exercise of options during the year ended 30 June 2021 OFFICERS OF THE COMPANY WHO ARE FORMER DIRECTORS OF BDO AUDIT PTY LIMITED and up to the date of this report (2020: nil). INDEMNITY AND INSURANCE OF OFFICERS The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. INDEMNITY AND INSURANCE OF AUDITOR There are no officers of the Company who are former directors of BDO Audit Pty Limited. 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 immediately after this directors’ report. AUDITOR BDO Audit Pty Limited continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor. On behalf of the directors During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of Nicholas Mather Managing Director 30 September 2021 the Company for all or part of those proceedings. 38 39 DGR Global Limited and controlled entitiesdgrglobal.com.auDirectors’ report continued Auditor’s independence declaration DGR Global Limited Auditor's independence declaration Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY T J KENDALL TO THE DIRECTORS OF DGR GLOBAL LIMITED As lead auditor of DGR Global Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of DGR Global Limited and the entities it controlled during the year. T J Kendall Director BDO Audit Pty Ltd Brisbane, 30 September 2021 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 40 32 2 FINANCIAL REPORT 41 41 DGR Global Limited and controlled entitiesdgrglobal.com.au Financial report for the year ended 30 June 2021 GENERAL INFORMATION The financial statements cover DGR Global Limited as a Group consisting of DGR Global Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is DGR Global Limited’s functional and presentation currency. DGR Global Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 27 111 Eagle Street Brisbane QLD 4000 A description of the nature of the Group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 September 2021. The directors have the power to amend and reissue the financial statements. DDGGRR GGlloobbaall LLiimmiitteedd DDGGRR GGlloobbaall LLiimmiitteedd SSttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr ccoommpprreehheennssiivvee iinnccoommee SSttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr ccoommpprreehheennssiivvee iinnccoommee FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002211 FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002211 Statement of profit or loss and other comprehensive income for the year ended 30 June 2021 RReevveennuuee RReevveennuuee Share of losses of associates accounted for using the equity method Share of losses of associates accounted for using the equity method Other income Other income Interest revenue Interest revenue Reversal of impairment - investment in associate Reversal of impairment - investment in associate Reversal of impairment - corporate bond investments Reversal of impairment - corporate bond investments EExxppeennsseess EExxppeennsseess Administration and consulting expenses Administration and consulting expenses Depreciation expense Depreciation expense Employee benefits expense Employee benefits expense Exploration and evaluation assets written off Exploration and evaluation assets written off Impairment of investment in associates Impairment of investment in associates Impairment - corporate bond investments Impairment - corporate bond investments Legal expenses Legal expenses Movement in fair value of convertible note payable Movement in fair value of convertible note payable Movement in fair value of convertible note receivable Movement in fair value of convertible note receivable Rehabilitation expense Rehabilitation expense Finance costs Finance costs Total expenses Total expenses LLoossss bbeeffoorree iinnccoommee ttaaxx bbeenneeffiitt LLoossss bbeeffoorree iinnccoommee ttaaxx bbeenneeffiitt Income tax benefit Income tax benefit LLoossss aafftteerr iinnccoommee ttaaxx bbeenneeffiitt ffoorr tthhee yyeeaarr LLoossss aafftteerr iinnccoommee ttaaxx bbeenneeffiitt ffoorr tthhee yyeeaarr OOtthheerr ccoommpprreehheennssiivvee iinnccoommee OOtthheerr ccoommpprreehheennssiivvee iinnccoommee Items that will not be reclassified subsequently to profit or loss Items that will not be reclassified subsequently to profit or loss Gain on the revaluation of financial assets at fair value through other comprehensive income, Gain on the revaluation of financial assets at fair value through other comprehensive income, net of tax net of tax Share of other comprehensive income of associates Share of other comprehensive income of associates Other comprehensive income for the year, net of tax Other comprehensive income for the year, net of tax TToottaall ccoommpprreehheennssiivvee iinnccoommee ffoorr tthhee yyeeaarr TToottaall ccoommpprreehheennssiivvee iinnccoommee ffoorr tthhee yyeeaarr Loss for the year is attributable to: Loss for the year is attributable to: Non-controlling interest Non-controlling interest Owners of DGR Global Limited Owners of DGR Global Limited Total comprehensive income for the year is attributable to: Total comprehensive income for the year is attributable to: Non-controlling interest Non-controlling interest Owners of DGR Global Limited DDGGRR GGlloobbaall LLiimmiitteedd Owners of DGR Global Limited SSttaatteemmeenntt ooff pprrooffiitt oorr lloossss aanndd ootthheerr ccoommpprreehheennssiivvee iinnccoommee FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002211 Basic earnings per share Diluted earnings per share NNoottee NNoottee 4 4 11 11 5 5 11 11 12 12 13 13 14 14 11 11 12 12 16 16 12 12 18 18 6 6 7 7 35 35 CCoonnssoolliiddaatteedd CCoonnssoolliiddaatteedd 22002211 22002211 $$ $$ 22002200 22002200 $$ $$ 1,440,000 1,440,000 (1,875,319) (1,875,319) 920,753 920,753 403,175 403,175 3,170,857 3,170,857 558,026 558,026 (1,636,750) (1,636,750) (442,437) (442,437) (2,054,258) (2,054,258) (26,968) (26,968) - - - - (365,161) (365,161) (83,889) (83,889) (1,000,000) (1,000,000) (213,076) (213,076) (554,097) (554,097) (6,376,636) (6,376,636) (1,759,144) (1,759,144) 682,212 682,212 (1,076,932) (1,076,932) 1,596,000 1,596,000 (2,514,353) (2,514,353) 2,864,136 2,864,136 537,312 537,312 - - - - (1,635,019) (1,635,019) (445,102) (445,102) (2,347,505) (2,347,505) (270,566) (270,566) (3,349,604) (3,349,604) (1,283,252) (1,283,252) (49,381) (49,381) (61,966) (61,966) - - (182,026) (182,026) (1,428,589) (1,428,589) (11,053,010) (11,053,010) (8,569,915) (8,569,915) 2,590,654 2,590,654 (5,979,261) (5,979,261) 34,720,549 34,720,549 (103,125) (103,125) 34,617,424 34,617,424 33,540,492 33,540,492 (15,980) (15,980) (1,060,952) (1,060,952) (1,076,932) (1,076,932) (31,107,620) (31,107,620) (127,665) (127,665) (31,235,285) (31,235,285) (37,214,546) (37,214,546) (34,330) (34,330) (5,944,931) (5,944,931) (5,979,261) (5,979,261) (15,980) (15,980) 33,556,472 33,556,472 33,540,492 33,540,492 (34,330) (34,330) (37,180,216) (37,180,216) (37,214,546) (37,214,546) CCeennttss CCeennttss (0.12) (0.12) (0.95) (0.95) 42 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 35 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 35 43 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 36 DGR Global Limited and controlled entitiesdgrglobal.com.au Statement of financial position as at 30 June 2021 DDGGRR GGlloobbaall LLiimmiitteedd DDGGRR GGlloobbaall LLiimmiitteedd SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn AAss aatt 3300 JJuunnee 22002211 AAss aatt 3300 JJuunnee 22002211 AAsssseettss AAsssseettss CCuurrrreenntt aasssseettss CCuurrrreenntt aasssseettss Cash and cash equivalents Cash and cash equivalents Trade and other receivables Trade and other receivables Other assets Other assets Total current assets Total current assets NNoonn--ccuurrrreenntt aasssseettss NNoonn--ccuurrrreenntt aasssseettss Investments accounted for using the equity method Investments accounted for using the equity method Other financial assets Other financial assets Property, plant and equipment Property, plant and equipment Exploration and evaluation Exploration and evaluation Total non-current assets Total non-current assets TToottaall aasssseettss TToottaall aasssseettss LLiiaabbiilliittiieess LLiiaabbiilliittiieess CCuurrrreenntt lliiaabbiilliittiieess CCuurrrreenntt lliiaabbiilliittiieess Trade and other payables Trade and other payables Borrowings Borrowings Lease liabilities Lease liabilities Total current liabilities Total current liabilities NNoonn--ccuurrrreenntt lliiaabbiilliittiieess NNoonn--ccuurrrreenntt lliiaabbiilliittiieess Lease liabilities Lease liabilities Deferred tax Deferred tax Provisions Provisions Total non-current liabilities Total non-current liabilities TToottaall lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss NNeett aasssseettss EEqquuiittyy EEqquuiittyy Issued capital Issued capital Prepaid capital Prepaid capital Reserves Reserves Accumulated losses Accumulated losses Equity attributable to the owners of DGR Global Limited Equity attributable to the owners of DGR Global Limited Non-controlling interest Non-controlling interest TToottaall eeqquuiittyy TToottaall eeqquuiittyy NNoottee NNoottee 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 17 17 7 7 18 18 19 19 20 20 21 21 CCoonnssoolliiddaatteedd CCoonnssoolliiddaatteedd 22002211 22002211 $$ $$ 22002200 22002200 $$ $$ 1,949,698 1,949,698 703,951 703,951 1,995,839 1,995,839 4,649,488 4,649,488 6,434,252 6,434,252 139,742,096 139,742,096 1,720,351 1,720,351 13,389,188 13,389,188 161,285,887 161,285,887 165,935,375 165,935,375 1,834,745 1,834,745 - - 414,214 414,214 2,248,959 2,248,959 1,104,971 1,104,971 21,874,439 21,874,439 1,456,347 1,456,347 24,435,757 24,435,757 26,684,716 26,684,716 139,250,659 139,250,659 3,851,471 3,851,471 1,762,947 1,762,947 43,605 43,605 5,658,023 5,658,023 2,999,992 2,999,992 95,446,570 95,446,570 2,151,570 2,151,570 10,449,117 10,449,117 111,047,249 111,047,249 116,705,272 116,705,272 1,862,206 1,862,206 9,916,111 9,916,111 353,456 353,456 12,131,773 12,131,773 1,519,185 1,519,185 14,384,030 14,384,030 1,250,461 1,250,461 17,153,676 17,153,676 29,285,449 29,285,449 87,419,823 87,419,823 54,174,709 54,174,709 1,500,000 1,500,000 107,988,780 107,988,780 (26,738,630) (26,738,630) 136,924,859 136,924,859 2,325,800 2,325,800 139,250,659 139,250,659 38,911,767 38,911,767 - - 72,449,393 72,449,393 (25,677,678) (25,677,678) 85,683,482 85,683,482 1,736,341 1,736,341 87,419,823 87,419,823 Statement of changes in equity for the year ended 30 June 2021 DDGGRR GGlloobbaall LLiimmiitteedd SSttaatteemmeenntt ooff cchhaannggeess iinn eeqquuiittyy FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002211 CCoonnssoolliiddaatteedd IIssssuueedd ccaappiittaall $$ PPrreeppaaiidd ccaappiittaall $$ RReesseerrvveess $$ AAccccuummuullaatteedd lloosssseess $$ NNoonn-- ccoonnttrroolllliinngg iinntteerreesstt $$ TToottaall eeqquuiittyy $$ Balance at 1 July 2019 33,545,921 - 103,792,308 (19,732,747) 1,642,708 119,248,190 Loss after income tax benefit for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 19) Issue of shares to non controlling interest - - - 5,365,846 - - - - - - - (5,944,931) (34,330) (5,979,261) (31,235,285) - - (31,235,285) (31,235,285) (5,944,931) (34,330) (37,214,546) - (107,630) - - - 5,365,846 127,963 20,333 Balance at 30 June 2020 38,911,767 - 72,449,393 (25,677,678) 1,736,341 87,419,823 CCoonnssoolliiddaatteedd IIssssuueedd ccaappiittaall $$ PPrreeppaaiidd ccaappiittaall $$ RReesseerrvveess $$ AAccccuummuullaatteedd lloosssseess $$ NNoonn-- ccoonnttrroolllliinngg iinntteerreesstt $$ TToottaall eeqquuiittyy $$ Balance at 1 July 2020 38,911,767 - 72,449,393 (25,677,678) 1,736,341 87,419,823 - - - 15,262,942 - - - - Loss after income tax benefit for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 19) Contributions of prepaid capital, net of transaction costs (note 20) Share-based payments (note 36) Shares issued to non-controlling interest (note 31) Change in interest in controlled entity (note 21) - (1,060,952) (15,980) (1,076,932) 34,617,424 - - 34,617,424 34,617,424 (1,060,952) (15,980) 33,540,492 - - - - - 1,500,000 - - 827,402 - - - 94,561 - - - - - - - - 15,262,942 1,500,000 827,402 700,000 700,000 (94,561) - Balance at 30 June 2021 54,174,709 1,500,000 107,988,780 (26,738,630) 2,325,800 139,250,659 The above statement of financial position should be read in conjunction with the accompanying notes. The above statement of changes in equity should be read in conjunction with the accompanying notes 44 The above statement of financial position should be read in conjunction with the accompanying notes The above statement of financial position should be read in conjunction with the accompanying notes 37 37 The above statement of changes in equity should be read in conjunction with the accompanying notes 38 45 DGR Global Limited and controlled entitiesdgrglobal.com.au Statement of cash flows for the year ended 30 June 2021 DDGGRR GGlloobbaall LLiimmiitteedd DDGGRR GGlloobbaall LLiimmiitteedd SSttaatteemmeenntt ooff ccaasshh fflloowwss SSttaatteemmeenntt ooff ffiinnaanncciiaall ppoossiittiioonn FFoorr tthhee yyeeaarr eennddeedd 3300 JJuunnee 22002211 AAss aatt 3300 JJuunnee 22002211 CCoonnssoolliiddaatteedd CCoonnssoolliiddaatteedd NNoottee NNoottee 22002211 22002211 $$ $$ 22002200 22002200 $$ $$ Notes to the financial statements 30 June 2021 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. CCaasshh fflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess AAsssseettss Receipts in the course of operations (inclusive of GST) Payments to suppliers and employees (inclusive of GST) CCuurrrreenntt aasssseettss Cash and cash equivalents Trade and other receivables Interest received Other assets Government grants received Total current assets Interest and other finance costs paid Income taxes refunded NNoonn--ccuurrrreenntt aasssseettss Investments accounted for using the equity method Net cash used in operating activities Other financial assets Property, plant and equipment Exploration and evaluation CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess Total non-current assets Payment for other financial assets Payments for investments in associates TToottaall aasssseettss Payments for property, plant and equipment Payments for exploration and evaluation assets Payment of share subscription deposit for associate LLiiaabbiilliittiieess Payments for security deposits Loans from/(to) related and other parties CCuurrrreenntt lliiaabbiilliittiieess Proceeds from cash deposits and from the sale of corporate bonds Trade and other payables Proceeds from disposal of property, plant and equipment Borrowings Proceeds from release of security deposits Lease liabilities Total current liabilities Net cash from/(used in) investing activities NNoonn--ccuurrrreenntt lliiaabbiilliittiieess Lease liabilities CCaasshh fflloowwss ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Deferred tax Proceeds from issue of shares Provisions Prepaid capital Total non-current liabilities Proceeds from the issue of shares in subsidiaries to non-controlling interests Share issue transaction costs TToottaall lliiaabbiilliittiieess Repayment of borrowings Repayment of lease liabilities NNeett aasssseettss Net cash from financing activities EEqquuiittyy Issued capital Net increase/(decrease) in cash and cash equivalents Prepaid capital Cash and cash equivalents at the beginning of the financial year Reserves Accumulated losses Cash and cash equivalents at the end of the financial year Equity attributable to the owners of DGR Global Limited Non-controlling interest TToottaall eeqquuiittyy 3,304,009 (4,262,054) 880,805 (3,917,627) NEW OR AMENDED ACCOUNTING STANDARDS AND INTERPRETATIONS ADOPTED 8 9 10 11 34 12 13 14 11 13 15 16 17 17 7 18 20 34 34 19 20 21 8 1,949,698 (958,045) 703,951 403,175 1,995,839 259,740 4,649,488 (554,097) - 6,434,252 (849,227) 139,742,096 1,720,351 13,389,188 161,285,887 (2,652,421) (2,241,847) 165,935,375 (11,218) (2,267,039) (1,925,000) (318,507) - 1,756,168 1,834,745 - - - 414,214 2,248,959 (7,659,864) 1,104,971 21,874,439 16,081,121 1,456,347 1,500,000 24,435,757 - (620,347) 26,684,716 (10,000,000) (353,456) 139,250,659 6,607,318 3,851,471 (3,036,822) 1,762,947 745,125 43,605 80,000 5,658,023 (1,211,842) 12,488 2,999,992 (3,411,051) 95,446,570 2,151,570 10,449,117 111,047,249 - (1,738,507) 116,705,272 (4,888) (2,823,169) - - (175,693) 4,542,550 1,862,206 4,091 9,916,111 1,229,674 353,456 12,131,773 1,034,058 1,519,185 14,384,030 5,491,037 1,250,461 - 17,153,676 20,333 (436,441) 29,285,449 (518,356) - 87,419,823 4,556,573 54,174,709 (1,901,773) 1,500,000 3,851,471 107,988,780 (26,738,630) 1,949,698 136,924,859 2,325,800 38,911,767 2,179,580 - 1,671,891 72,449,393 (25,677,678) 3,851,471 85,683,482 1,736,341 139,250,659 87,419,823 The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The adoption of these new or amended Accounting Standards and Interpretations did not have a material impact to the financial statements. BASIS OF PREPARATION These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’). Historical cost convention The financial statements have been prepared under the historical cost convention, except for the following: • Financial assets carried at fair value through other comprehensive income – refer note 12; • Investment in convertible notes carried at fair value through profit or loss – refer note 12; • Convertible notes payable at fair value through profit or loss – refer note 16. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. PARENT ENTITY INFORMATION In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 30. PRINCIPLES OF CONSOLIDATION The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of DGR Global Limited (‘Company’ or The above statement of cash flows should be read in conjunction with the accompanying notes. ‘parent entity’) as at 30 June 2021 and the results of all subsidiaries for the year then ended. DGR Global Limited and its subsidiaries together are referred to in these financial statements as the ‘Group’. 46 The above statement of cash flows should be read in conjunction with the accompanying notes The above statement of financial position should be read in conjunction with the accompanying notes 39 37 47 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED PRINCIPLES OF CONSOLIDATION CONTINUED CURRENT AND NON-CURRENT CLASSIFICATION Assets and liabilities are presented in the statement of financial position based on current and non-current classification. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s normal or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 are de-consolidated from the date that control ceases. months after the reporting period. All other assets are classified as non-current. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised A liability is classified as current when: it is either expected to be settled in the Group’s normal operating cycle; it is held primarily losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, Deferred tax assets and liabilities are always classified as non-current. without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. ASSOCIATES Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates Group are attributed to the non-controlling interest in full, even if that results in a deficit balance. are carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates are Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term FOREIGN CURRENCY TRANSLATION The financial statements are presented in Australian dollars, which is DGR Global Limited’s functional and presentation currency. Foreign currency transactions receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The Group discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate’s carrying amount, fair value of the retained investment Foreign currency transactions are translated into Australian dollars 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 and proceeds from disposal is recognised in profit or loss. financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or INVESTMENTS AND OTHER FINANCIAL ASSETS loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in being avoided. other comprehensive income through the foreign currency reserve in equity. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. a financial asset, its carrying value is written off. 48 49 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED INVESTMENTS AND OTHER FINANCIAL ASSETS CONTINUED Financial assets 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 measurement of the loss allowance depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business model recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Financial whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial asset assets designated at fair value through OCI (equity instruments) are not subject to impairment assessment. represent contractual cash flows that are solely payments of principal and interest. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. These assets are measured at fair value with gains or losses recognised in the profit or loss. Convertible note receivables are held at fair value through profit or loss as the convertible feature does not meet the requirements of being held to collect soley payment of principal and interest and therefore cannot be carried at amortised cost or at fair value through other comprehensive income. The coupon rate received periodically over the term of the notes is classified as part of the fair value gain or loss in other income. Financial assets at fair value through other comprehensive income Equity investments are classified as being at fair value through Other Comprehensive Income. After initial recognition at fair value (being cost), the Company has elected to present in Other Comprehensive Income changes in the fair value of equity instrument investments. Unrealised gains and losses on investments are recognised in the financial assets revaluation reserve until the investment is sold or otherwise disposed of, at which time the cumulative gain or loss is transferred to retained earnings. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value of all other financial assets and liabilities, where appropriate, including recent arm’s length transactions, reference to similar instruments and option pricing models. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset’s carrying value with a corresponding expense through profit or loss. IMPAIRMENT OF NON-FINANCIAL ASSETS Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. FINANCE COSTS Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification GOODS AND SERVICES TAX (‘GST’) AND OTHER SIMILAR TAXES of fair value gains and losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss as other Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable revenue when the Company’s right to receive payments is established (see note 11) and as long as they represent a return on from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. investment. Changes in the fair value of financial assets at fair value through profit or loss are recognised in other income or other expenses in from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable the statement of profit or loss and other comprehensive income as applicable. 50 51 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED GOODS AND SERVICES TAX (‘GST’) AND OTHER SIMILAR TAXES CONTINUED KEY JUDGEMENTS – EXPLORATION & EVALUATION ASSETS The Group performs regular reviews on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and analysis of drilling results performed to Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which reporting date. are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET MANDATORY OR EARLY ADOPTED 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 2021. The Group has not yet assessed the The Directors have assessed that for the exploration and evaluation assets recognised at 30 June 2021, the facts and circumstances do not suggest that the carrying amount of an asset may exceed its recoverable amount. In considering this the Directors have had regard to the facts and circumstances that indicate a need for an impairment as noted in Accounting Standard AASB 6 Exploration for and Evaluation of Mineral Resources. Exploration and evaluation assets at 30 June 2021 were $13,389,188 (2020: $10,449,117). impact of these new or amended Accounting Standards and Interpretations. KEY JUDGEMENTS – SIGNIFICANT INFLUENCE OVER ASSOCIATES NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS Where the Group currently holds between 20% and 50% of the issued ordinary shares of certain companies management considered whether the Group has control over these companies and accordingly whether these companies should be consolidated into the Group. Several factors including but not limited to the relative proportion of other large shareholders, The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the composition of the Board and the ability to direct decisions arrived at during Board meetings were considered. Based on the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, factors considered, it was concluded that the Group does not control these companies but rather has the ability to exert significant liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical influence. Accordingly, the Group’s investments in these companies have been accounted for under the equity accounting method. experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. KEY JUDGEMENTS – SHARE BASED PAYMENT TRANSACTIONS Where the Group holds less than 20% of the issued ordinary shares of certain companies it was presumed pursuant to AASB 128 Investments in Associates and Joint Ventures, that the Group cannot exercise significant influence unless such influence can be clearly demonstrated. In determining whether the Group had significant influence, factors such as representation on the board of directors, participation in policy making decision, material transactions between the Group and the companies, interchange of managerial personnel or provision of essential technical information is considered. Other factors considered to determine whether The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments the Group had significant influence included, the Group’s voting power in comparison to other shareholders, specific rights, at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into corporate governance arrangements and the power to veto significant financial and operating decisions. account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 36 for further details. KEY JUDGEMENTS – CORPORATE BONDS The Armour Energy corporate bonds are debt instruments measured at amortised cost for financial reporting purposes. The Group’s intention is to hold these corporate bonds to collect the contractual cash flows. The characteristics of the contractual cash flows are that of soley the principal and interest. Refer to note 36 for further details. During the year ended 30 June 2020, the Group’s investment in Armour Energy Limited fell below 20%. The Group’s ownership interest at 30 June 2021 was 16.18%. As a result, management evaluated whether significant influence existed. The Group is the largest shareholder in Armour Energy Limited by a significant percentage. This results in the Group’s voting power being much larger than any other shareholder of Armour Energy Limited, giving it the ability to exert significant influence. During the year ended 30 June 2020, the Group’s investment in IronRidge Resources Limited (IRR) fell below 20%. The Group’s management concluded that DGR lost significant influence over IRR when its ownership percentage fell below 20% on 11 May 2020. IRR completed a subsequent capital raising in June 2020 and DGR did not participate in the IRR share placement resulting in DGR’s interest in IRR being further diluted. 52 53 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS CONTINUED KEY JUDGEMENTS – SIGNIFICANT INFLUENCE OVER ASSOCIATES CONTINUED With respect to the Group’s investment in SolGold plc, Aus Tin Mining Limited and NewPeak Metals Limited management concluded based on its professional judgment that there was no clearly demonstrable evidence that indicated that the Group had significant influence. NOTE 3. OPERATING SEGMENTS IDENTIFICATION OF REPORTABLE OPERATING SEGMENTS The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. DDGGRR GGlloobbaall LLiimmiitteedd NNootteess ttoo tthhee ffiinnaanncciiaall ssttaatteemmeennttss 3300 JJuunnee 22002211 NNoottee 33.. OOppeerraattiinngg sseeggmmeennttss ((ccoonnttiinnuueedd)) Operating segment information OPERATING SEGMENT INFORMATION CCoonnssoolliiddaatteedd -- 22002211 RReevveennuuee Provision of services to external customers Interest revenue TToottaall rreevveennuuee SSeeggmmeenntt nneett lloossss bbeeffoorree ttaaxx Share of profits of associates Reversal of impairment of investment in associate PPrrooffiitt//((lloossss)) bbeeffoorree iinnccoommee ttaaxx bbeenneeffiitt Income tax benefit LLoossss aafftteerr iinnccoommee ttaaxx bbeenneeffiitt AAsssseettss Segment assets Intersegment eliminations TToottaall aasssseettss LLiiaabbiilliittiieess Segment liabilities Intersegment eliminations TToottaall lliiaabbiilliittiieess The Group reports information to the Board of Directors along company lines. That is, the financial position of DGR and each of its All segment asset additions occur in Australia. All segment asset additions occur in Australia. subsidiary companies is reported discreetly, together with an aggregated Group total. Accordingly, each company within the Group that meets or exceeds the relevant threshold tests is separately disclosed below. The financial information of the subsidiaries that do not exceed the relevant thresholds outlined above, and are therefore not reported separately, is aggregated and disclosed as Others. INTERSEGMENT TRANSACTIONS Corporate charges are allocated to segments based on the segments’ overall proportion of overhead expenditure within the Group. The Board of Directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost recoveries. INTERSEGMENT RECEIVABLES, PAYABLES AND LOANS Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation. CCoonnssoolliiddaatteedd -- 22002200 RReevveennuuee Provision of services to external customers Interest revenue TToottaall rreevveennuuee SSeeggmmeenntt nneett lloossss bbeeffoorree ttaaxx Share of losses of associates Impairment of investment in associate LLoossss bbeeffoorree iinnccoommee ttaaxx bbeenneeffiitt Income tax benefit LLoossss aafftteerr iinnccoommee ttaaxx bbeenneeffiitt AAsssseettss Segment assets Intersegment eliminations TToottaall aasssseettss LLiiaabbiilliittiieess Segment liabilities Intersegment eliminations TToottaall lliiaabbiilliittiieess 54 All segment asset additions occur in Australia. 45 Auburn DGR Global Resources $ $ Other $ Total $ 1,440,000 403,175 1,843,175 (3,019,956) - - (3,019,956) - - - - - - 1,440,000 403,175 1,843,175 (26,774) - - (26,774) (7,952) (1,875,319) 3,170,857 1,287,586 162,771,534 4,165,212 1,289,501 26,405,490 313,072 2,257,026 Auburn DGR Global Resources $ $ Other $ Total $ 1,596,000 537,312 2,133,312 (2,591,247) - - (2,591,247) - - - - - - 1,596,000 537,312 2,133,312 (38,567) - - (38,567) (76,144) (2,514,353) (3,349,604) (5,940,101) 114,360,818 3,313,028 1,206,466 29,152,812 117,112 2,190,565 (3,054,682) (1,875,319) 3,170,857 (1,759,144) 682,212 (1,076,932) 168,226,247 (2,290,872) 165,935,375 28,975,588 (2,290,872) 26,684,716 (2,705,958) (2,514,353) (3,349,604) (8,569,915) 2,590,654 (5,979,261) 118,880,312 (2,175,040) 116,705,272 31,460,489 (2,175,040) 29,285,449 55 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 3. OPERATING SEGMENTS CONTINUED ACCOUNTING POLICY FOR OPERATING SEGMENTS Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. NOTE 4. REVENUE Disaggregation of revenue is not presented as all revenue for the current and prior years was derived from the provision of management fees. ACCOUNTING POLICY FOR REVENUE RECOGNITION The Group generates revenue from the provision of management services to related entities. Revenue from contracts with customers is recognised when control of the services is transferred to a customer at an amount that reflects the consideration to which the Group expects to be entitled to receive in exchange for those services. SERVICES The Group’s performance obligation on management fees charged to related entities are fulfilled over time as the Group provides those management services. Revenues are recognised over time, which are invoiced monthly based on contractual terms. All revenue is stated net of the amount of goods and services tax (GST). NOTE 5. OTHER INCOME INTEREST Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. NOTE 6. EXPENSES NOTE 7. INCOME TAX GOVERNMENT GRANTS Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. 56 57 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 7. INCOME TAX CONTINUED DEFERRED TAX DEFERRED TAX ASSETS NOT RECOGNISED In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business Test must be passed. The majority of losses are carried forward at 30 June 2021 under COT. Deferred tax assets which have not been recognised as an asset, will only be obtained if: a) the Company derives future assessable income of a nature and of an amount sufficient to enable the losses to be realised; b) the Company continues to comply with the conditions for deductibility imposed by the law; and c) no changes in tax legislation adversely affect the Company in realising the losses. ACCOUNTING POLICY FOR INCOME TAX The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: • When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or • When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. 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. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. 58 59 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 7. INCOME TAX CONTINUED ACCOUNTING POLICY FOR INCOME TAX CONTINUED DGR Global Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The Company is responsible for recognising the current tax assets and liabilities and deferred tax assets attributable to tax losses for the tax consolidation group. The tax consolidated group have entered a tax funding agreement whereby each company in the tax consolidation group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidation group. NOTE 8. CASH AND CASH EQUIVALENTS ACCOUNTING POLICY FOR CASH AND CASH EQUIVALENTS As at 30 June 2021, included in trade and other receivables is three significant debtors accounting for 83% (2020: three significant debtors accounting for 92%) of the total trade receivables. Movements in the allowance for expected credit losses are as follows: ACCOUNTING POLICY FOR TRADE AND OTHER RECEIVABLES Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are NOTE 10. OTHER ASSETS subject to an insignificant risk of changes in value. NOTE 9. TRADE AND OTHER RECEIVABLES NOTE 11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD ALLOWANCE FOR EXPECTED CREDIT LOSSES The ageing of the trade receivables and allowance for expected credit losses provided for are as follows: 60 61 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD CONTINUED The share price of Armour Energy Ltd at 30 June 2021 was $0.026 (2020: $0.02). The investment in Armour Energy Ltd has been written down to the lower of fair value, less costs to sell or the equity-accounted value based on level 1 fair value hierachy. INTERESTS IN ASSOCIATES Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are material to the Group are set out below: SUMMARISED FINANCIAL INFORMATION RECONCILIATION OF THE SHARE OF NET ASSETS TO THE CARRYING AMOUNT OF THE GROUP’S INVESTMENT IN ASSOCIATES NOTE 12. OTHER FINANCIAL ASSETS (A) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME Financial assets at fair value through other comprehensive income comprise an investment in the ordinary issued capital of SolGold plc, listed on the London Stock Exchange (“LSE”) and Toronto Stock Exchange (“TSX”), an investment in the ordinary issued capital of IronRidge Resources Limited, listed on the LSE, an investment in the ordinary issued capital of Block X Capital Corp., listed on the TSX, an investment in the ordinary issued capital of Aus Tin Mining Ltd a company listed on the Australian Securities Exchange, an investment in the ordinary issued capital of Lakes Blue Energy NL (formerly Lakes Oil NL) a company listed on the Australian Securities Exchange and an investment in the ordinary issued capital of NewPeak Metals Ltd a company listed on the Australian Securities Exchange. As outlined in the Company’s 2020 Annual Report, on 31 October 2019, the Company received a letter from the Australian Securities and Investments Commission (“ASIC”) as part of its financial reporting surveillance program querying the Company’s accounting for its investments in SolGold plc (“SolGold”) and Aus Tin Mining Limited (“Aus Tin”). After an extensive exchange of correspondences over the course of several months, ASIC advised on 2 December 2020 that it did not intend to pursue the investigation any further. The Company has continued to account for these equity investments at fair value through other comprehensive income. Classification of financial assets at fair value through other comprehensive income For equity securities that are not held for trading, the Group has made an irrevocable election at initial recognition to recognise changes in fair value through other comprehensive income rather than profit or loss. (B) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 62 DGR Global Limited invested $1 million into Lakes Blue Energy NL (formerly Lakes Oil NL) Convertible Notes priced at $0.0009 each, with a coupon rate of 15% per annum, and convertible into fully-paid ordinary shares on a 1:1 basis. The Convertible Note issue is combined with a royalty arrangement such that for every $1 million invested, the investee is entitled to a 2% royalty on future gas sales from certain Lakes Oil tenements (pro rata for less or more than $1 million). 63 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 12. OTHER FINANCIAL ASSETS CONTINUED (C) CORPORATE BONDS AT AMORTISED COST NOTE 13. PROPERTY, PLANT AND EQUIPMENT On 29 March 2019, post the redemption of the Armour Energy convertible notes, the Company applied for a $10,000,000 investment in the new secured and amortising notes (New Notes) in Armour Energy Limited. The offer was managed by FIIG Securities Limited and the key terms of the New Notes are as follows: • • • Issue Price: $1,000 Interest Rate: 8.75% Interest Payments: Interest paid quarterly in arrears • Term: 5 years • Security: The New Notes are secured over all of the assets of the Armour Energy Limited (D) CASH ON DEPOSIT HELD AS SECURITY AT AMORTISED COST Cash on deposit held as security is held in a term deposit account restricted under a bond with the Department of Natural Resources and Mining as security for rehabilitation works required. (E) SECURITY BONDS AT AMORTISED COST RECONCILIATIONS Security bonds are held with the Department of Natural Resources and Mining as security for rehabilitation works required. Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: (F) FAIR VALUE Refer to note 24 for fair value disclosures. 64 ACCOUNTING POLICY FOR PROPERTY, PLANT AND EQUIPMENT Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. 65 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 13. PROPERTY, PLANT AND EQUIPMENT CONTINUED ACCOUNTING POLICY FOR PROPERTY, PLANT AND EQUIPMENT CONTINUED Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Buildings Plant and equipment Computers and office equipment Furniture and fittings Motor vehicles Right-of-use asset - property lease 2.5% 10% - 35% 33.3% 20% 25% Lease term A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. A provision is raised against exploration and evaluation assets where the Directors are of the opinion that the carried forward net cost may not be recoverable or the right of tenure in the area lapses. The increase in the provision is charged against the results for the year. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. Costs of site restoration are provided over the life of the area from when exploration commences and are included in the costs of The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structure, waste An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. NOTE 14. EXPLORATION AND EVALUATION removal, and rehabilitation of the site in accordance with clauses of mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that restoration will be completed within one year of abandoning the site. NOTE 15. TRADE AND OTHER PAYABLES RECONCILIATIONS Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Refer to note 23 for further information on financial instruments. ACCOUNTING POLICY FOR TRADE AND OTHER PAYABLES These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which ACCOUNTING POLICY FOR EXPLORATION AND EVALUATION ASSETS are unpaid. Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing. 66 Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30-60 days of recognition. 67 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 16. BORROWINGS Refer to note 23 for further information on financial instruments. MOVEMENTS IN CONVERTIBLE NOTES CARRYING VALUE the liability at the issue date. The liability will subsequently be recognised on a fair value basis at each reporting period. The fair value at each reporting date has been determined using a binomial tree model. The key assumptions used and sensitivity of those assumptions in the binomial tree model has been disclosed above. NOTE 17. LEASE LIABILITIES The principal terms of the convertible notes were as follows: Number of notes issued: 50,000,000 Issue price: Interest rate: Interest payments: Maturity date: Conversion terms: Face value of $0.20 per convertible note 12% per annum Interest paid quarterly in arrears. Interest is payable as cash. 6 October 2020 Convertible at any time at the Convertible Note holder’s election into one ordinary share in DGR based on a price of $0.20 per share, subject to usual adjustment mechanisms in certain circumstances. As a result of the adjustment mechanism the fixed-for-fixed test is not met therefore the convertible notes are carried at fair value through profit or loss. Refer to note 23 for further information on financial instruments. The Company leases offices for a fixed period of 5 years. MOVEMENTS IN CARRYING VALUE OF LEASES Security: Secured by DGR’s share holding in IronRidge Resources. ACCOUNTING POLICY FOR LEASE LIABILITIES ACCOUNTING POLICY FOR BORROWINGS A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease subsequently measured at amortised cost using the effective interest method, except for convertible notes which are subsequently incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value measured at fair value through profit or loss. guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which The Group’s convertible notes have been treated as a financial liability, in accordance with the principles set out in AASB 132. The key criterion for liability classification is whether there is an unconditional right to avoid delivery of cash for another financial asset they are incurred. to settle the contractual obligation. The terms and conditions applicable to the convertible notes require the Group to settle the Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there obligation in either cash, or in the Company’s own shares. The notes are convertible into ordinary shares of the parent entity, at the option of the holder, or repayable in October 2020. The conversion rate is based on a variable formula subject to adjustments for share price movement. Management determined that these terms give rise to a derivative financial liability. The initial consideration received for the note was deemed to be fair value of 68 is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 69 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 18. PROVISIONS departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. NOTE 19. ISSUED CAPITAL SITE RESTORATION The Group has conducted an extensive review of the environmental status of the Mining Leases with a view to making an assessment of the appropriate provision it should make for liabilities in respect of rehabilitation and restoration. In the course of MOVEMENTS IN ORDINARY SHARE CAPITAL this exercise, advice was received from different parties providing estimations on the potential costs for future rehabilitation and restoration. Based on this information, the Group has provided in respect of these restoration liabilities an amount of $1,436,415. MOVEMENTS IN PROVISIONS Movements in each class of provision during the current financial year, other than employee benefits, are set out below: ACCOUNTING POLICY FOR PROVISIONS Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost. ACCOUNTING POLICY FOR EMPLOYEE BENEFITS Short-term employee benefits ORDINARY SHARES Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled have one vote. wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee 70 71 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 19. ISSUED CAPITAL CONTINUED (A) ENTITLEMENT AND ADDITIONAL OFFERS 2021 ACCOUNTING POLICY FOR ISSUED CAPITAL 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 The Company completed a capital raising program during the year consisting of an Entitlement Offer to eligible shareholders and proceeds. an Additional Offer to nominated investors. Under the Entitlement Offer, the company issued 24,693,376 and 103,188,876 new ordinary shares to Institutional and Retail investors respectively, at an issue price of $0.080 per share. Under the Additional Offer, NOTE 20. PREPAID CAPITAL the company issued 75,000,000 new ordinary shares to nominated investors at an issue price of $0.080 per share. The Entitlement Offer was fully underwritten by Bizzell Capital Partners Pty Ltd (BCP) who received 5,322,495 new ordinary shares in partial consideration of services provided for the management of the Company’s capital raising. BCP also received 2,661,248 Additional Placement Options and 33,312,759 BCP Fee Options on 8 February 2021. The Additional Placement Options and BCP Prepaid capital relates to proceeds received in advance for the Strategic Placement, which was completed on 2 July 2021 (refer to Fee Options have an exercise price of $0.12 per option and may be exercised at any time before 25 September 2023. The options note 33). Upon the issue of the related shares on 7 July 2021, the proceeds converted to issued capital. had a nil issue price. Additionally, there were approximately $224,752 of share issue costs settled in ordinary shares in lieu of cash. NOTE 21. RESERVES The Additional Offer was not underwritten. 2020 The Company issued 26,646,102 and 126,649,654 ordinary shares on 4 May 2020 and 29 May 2020 respectively, pursuant to the Institutional and Retail components of an Entitlement Offer, at an issue price of $0.037 per share. OPTIONS As at 30 June 2021, there were 173,184,526 unissued ordinary shares of DGR Global Ltd under option, held as follows: SHARE-BASED PAYMENTS RESERVE Options on Issue in DGR Global Ltd Number Exercise Price Expiry The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and Unlisted rights issue options Quoted options (ASX:DGRO) 35,769,456 137,415,070 0.084 0.120 28/02/2022 25/09/2023 $ other parties as part of their compensation for services. CHANGE IN PROPORTIONATE INTEREST RESERVE SHARE BUY-BACK There is no current on-market share buy-back. CAPITAL RISK MANAGEMENT Management controls the capital of the Group in order to provide capital growth to shareholders and ensure the Group can fund its operations and continue as a going concern. The Group’s capital comprises equity as shown on the statement of financial position. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risk and adjusting its capital structure in response to changes in these risks and the market. These responses include the management of share issues. The change in proportionate interest reserve is used to recognise differences between the amount by which non-controlling interests are adjusted and any consideration paid or received which may arise as a result of transactions with non-controlling interests that do not result in a loss of control. FINANCIAL ASSETS REVALUATION RESERVE Changes in the fair value of investments, such as equities, classified as financial assets at fair value through other comprehensive income, are recognised in other comprehensive income, as described in note 1 and accumulated in this separate reserve within equity. PROFIT RESERVE The capital risk management policy remains unchanged from the 2020 Annual Report. The profit reserve is used to quarantine annual profits when available. This allows the Company to be able to pay dividends to shareholders at its discretion. 72 73 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 21. RESERVES CONTINUED Movements in each class of reserve during the current and previous financial year are set out below: NOTE 22. DIVIDENDS Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities There were no dividends paid, recommended or declared during the current or previous financial year. denominated in a currency that is not the entity’s functional currency. MARKET RISK Foreign currency risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. The table below demonstrates the sensitivity to a reasonably possible change in the United States dollar against the Australian dollar. NOTE 23. FINANCIAL INSTRUMENTS GENERAL OBJECTIVES, POLICIES AND PROCESSES In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks, or the methods used to measure them from previous periods unless otherwise stated in this note. The Group’s financial instruments consist mainly of deposits with banks, receivables and payables, shares in listed corporations, investments in convertible notes and corporate bonds. The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Group’s risk management policies and objectives are designed to minimise the potential impacts of these risks on the results of the Group where such impacts may be material. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these matters are set out below. 74 75 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 23. FINANCIAL INSTRUMENTS CONTINUED PRICE RISK The Group has performed a sensitivity analysis relating to its exposure to equity securities price risk. The sensitivity demonstrates the effect on pre-tax profit and equity which could result from a change in these risks. The effect on equity as a result of changes in equity security prices would be as follows: The analysis assumes all other variables remain constant. It also assumes the investment in SolGold plc, Lions Gate Metals Inc, Aus Tin Mining Ltd, NewPeak Metals Ltd, Lakes Blue Energy NL (formerly Lakes Oil NL) and IronRidge Resources Ltd, were remeasured to fair value on 30 June 2021 (and that the 10% change had occurred as at that date). * On interest bearing portion At 30 June 2021, if interest rates had increased by 25 basis points (bps) from the year-end rates with all other variables held constant, pre-tax profit for the year would have been $4,874 higher (2020 changes of 25 bps: pre-tax loss $9,629 lower), as a result of higher interest income from cash and cash equivalents. CREDIT RISK It should be noted that the investment in the associate is not included in the above analysis as it is outside the scope of Accounting Standard AASB 9 Financial Instruments, as it is accounted for in accordance with Accounting Standard AASB 128 Investments in Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when counterparties fail to settle their obligations owing to the Group. The Group’s Associates and Joint Ventures. INTEREST RATE RISK The objective of interest rate risk management is to manage and control interest rate risk exposures with acceptable parameters while optimising the return. Interest rate risk is managed with a mixture of fixed and floating rate instruments. For further details on interest rate risk refer to the tables below: objective is to minimise the risk of loss from credit risk exposure. The maximum exposure to credit risk, excluding the value of any collateral or other security, in the event other parties fail to discharge their obligations under financial instruments in relation to each class of financial asset at reporting date is the carrying amount in the statement of financial position which, for the relevant assets, is summarised in the table above. Credit risk is reviewed regularly by the Board and the audit committee. It primarily arises from exposure to receivables as well as through deposits with financial institutions. There is no collateral held as security. The Group’s material credit risk exposure is to loans with related parties, related party debtors, investments in convertible notes and corporate bonds. LIQUIDITY RISK Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as they fall due. The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient liquidity to meets its liabilities when they fall due, under both normal and stressed conditions. Liquidity risk is reviewed regularly by the Board and the audit committee. 76 77 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 23. FINANCIAL INSTRUMENTS CONTINUED LIQUIDITY RISK CONTINUED The Group manages liquidity risk by monitoring forecast cash flows and liquidity ratios such as working capital. The Group’s working capital, being current assets less current liabilities, has increased from a deficit of $6,473,750 at 30 June 2020 to a surplus of $2,400,529 at 30 June 2021. Remaining contractual maturities The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. NOTE 24. FAIR VALUE MEASUREMENT FAIR VALUE HIERARCHY The following tables detail the Group’s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. FAIR VALUE OF FINANCIAL INSTRUMENTS Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. There were no transfers between levels during the financial year. VALUATION TECHNIQUES FOR FAIR VALUE MEASUREMENTS CATEGORISED WITHIN LEVEL 1 The financial assets at fair value through other comprehensive income are measured based on the quoted market prices at 30 June 2021 and 30 June 2020. VALUATION TECHNIQUES FOR FAIR VALUE MEASUREMENTS CATEGORISED WITHIN LEVEL 2 AND LEVEL 3 The fair value of convertible notes payable were determined using option pricing models, which use various inputs including current market and contractual prices for underlying instruments, time to expiry, yield curves and volatility of underlying instruments. The fair value of convertible note receivables was determined based on discounted cash flows. 78 79 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 24. FAIR VALUE MEASUREMENT CONTINUED LEVEL 3 FINANCIAL INSTRUMENTS Movements in level 3 financial instruments during the current and previous financial year are set out below: The level 3 financial instruments unobservable inputs and sensitivity are as follows: Description 2020 Unobservable inputs* Range of inputs Sensitivity Convertible note payable Share price volatility 58% Higher volatility (+10 bps) would not change FV due to the short remaining time to maturity; lower volatility (-10 bps) would not change FV due to the short remaining time to maturity. Risk-free interest rate 0.2% Lower discount rate (-25 bps) would increase FV by $5,893; higher discount rate (+25 bps) would decrease FV by $5,890. * There were no significant inter-relationships between unobservable inputs that materially affect fair values. ACCOUNTING POLICY FOR FAIR VALUE MEASUREMENT When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. NOTE 25. KEY MANAGEMENT PERSONNEL DISCLOSURES COMPENSATION The aggregate compensation made to directors and other members of key management personnel of the Group is set out below: NOTE 26. REMUNERATION OF AUDITORS During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Limited, the auditor of the Company: NOTE 27. CONTINGENT LIABILITIES AND CONTINGENT ASSETS There were no contingent liabilities and contingent assets at 30 June 2021 and 30 June 2020. 80 81 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 28. COMMITMENTS TRANSACTIONS WITH RELATED PARTIES The following transactions occurred with related parties: To keep the exploration permits in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Group has the option to negotiate new terms or relinquish the tenements. The Group also has the ability to meet expenditure requirements by joint venture or farm-in agreements. NOTE 29. RELATED PARTY TRANSACTIONS PARENT ENTITY DGR Global Limited is the parent entity. SUBSIDIARIES Interests in subsidiaries are set out in note 32. ASSOCIATES Interests in associates are set out in note 11. KEY MANAGEMENT PERSONNEL Disclosures relating to key management personnel are set out in note 25 and the remuneration report included in the directors’ (a) DGR Global Ltd has (or had) commercial agreements with Armour Energy Ltd, Aus Tin Mining Ltd, NewPeak Mining Ltd, IronRidge Resources Ltd and SolGold Plc for the provision of administrative services. In consideration for the provision of the services, DGR Global Ltd receives a monthly administration fee. The agreements with SoldGold Plc and IronRidge Resources Ltd ended during the 2021 financial year. (b) Mr Brian Moller (a Director), is a partner in the firm HopgoodGanim Lawyers. HopgoodGanim provides legal services to the Group based on normal commercial terms and conditions. Included in the total for the year are services relating to capital raisings during the year. RECEIVABLE FROM AND PAYABLE TO RELATED PARTIES The following balances are outstanding at the reporting date in relation to transactions with related parties: report. 82 * During the year ended 30 June 2020, DGR Global Ltd provided a letter of funding support to Aus Tin Mining Ltd on an unsecured basis. The loan was repaid during the 2021 financial year. 83 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 30. PARENT ENTITY INFORMATION Set out below is the supplementary information about the parent entity. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME At 30 June 2021, the Company’s investments in associates and investments at fair value through other comprehensive income (excluding investments in Corporate Bonds) are as follows: STATEMENT OF FINANCIAL POSITION * Share price represents the market quoted price for listed investments at 30 June 2021. All quoted values above are level 1 in the fair value hierarchy. GUARANTEES ENTERED INTO BY THE PARENT ENTITY IN RELATION TO THE DEBTS OF ITS SUBSIDIARIES The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2020. CONTINGENT LIABILITIES On or about 8 September 2017 DGR Global Ltd and Armour Energy Ltd agreed that Armour Energy Ltd would hold an 83.18% interest in the exploration licence that was subsequently granted to it by the Ugandan government on 14 September 2017 (and the associated Production Sharing Agreement (the PSA)), on trust for DGR Global Ltd (the Letter Agreement). The Exploration Licence was renewed for a further two year term on 13 September 2019 (the Renewed Licence) and the term has been further extended due to various conditions of Force Majeure through to 28 May 2023. On or about 18 December 2019, DGR Global Ltd and Armour Energy Ltd entered into a deed of guarantee and indemnity (the Deed of Guarantee and Indemnity) pursuant to which DGR Global Ltd indemnifies and will keep Armour Energy Ltd indemnified against a maximum of 83.18% of Armour’s liability for: a) all costs associated with complying with the obligations under the Renewed Licence; and b) any claim, demand, debt, action, proceeding, cost, charge, expense, damage, loss or other liability related to the renewed Licence (other than where the same arises solely as a consequence of the fraud, misconduct, negligence or material breach of the PSA, Letter Agreement or the Deed of Guarantee and Indemnity by Armour Energy). Furthermore, DGR Global Ltd agrees to guarantee and indemnify Armour Energy Ltd for the due, punctual and complete performance by Armour Energy Ltd’s subsidiary (Armour Uganda), of all of its obligations under the Renewed Licence, once the Renewed Licence has been transferred to Armour Uganda. DGR Global Ltd estimates its current contingent liability under the Deed of Guarantee and Indemnity at approximately US$ 7.5 million. The parties are currently in the process of finalising the licence transfer and associated corporate restructuring arrangements, and it is expected that the Deed of Indemnity and Guarantee will be part of this restructuring process. The parent entity has no other contingent liabilities. 84 85 DGR Global Limited and controlled entitiesdgrglobal.com.auSUMMARISED FINANCIAL INFORMATION Summarised financial information of the subsidiary with non-controlling interests that are material to the Group are set out below: Notes to the financial statements continued 30 June 2021 NOTE 30. PARENT ENTITY INFORMATION CONTINUED CAPITAL COMMITMENTS - PROPERTY, PLANT AND EQUIPMENT The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020. SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1, except for the following: • • Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Investments in associates are accounted for at cost, less any impairment, in the parent entity. • Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. NOTE 31. ASSET ACQUISITIONS RIPPLE RESOURCES PTY LTD On 10 May 2021, DGR Global Limited (DGR) announced that a share acquisition agreement had been executed between public, unlisted Auburn Resources Limited (Auburn) and Armour Energy Limited (Armour, ASX: AJQ) for the acquisition of Armour’s wholly-owned subsidiary, Ripple Resources Pty Ltd (Ripple) by Auburn. Under the agreement, in consideration for the allotment of 5,600,000 fully paid Auburn shares, Armour has transferred its legal, beneficial, and unencumbered interest in 100% of the shares in Ripple to Auburn. The fair value of the shares issued by Auburn was $700,000. With reference to AASB 3 Business Combinations, it has been determined that the acquisition of Ripple by Auburn is not a business combination and has been accounted for as an asset acquisition. The cost of the acquisition, including the consideration paid to Armour, transaction costs, and liabilities assumed, have been allocated across the relative fair value of the assets acquired. NOTE 32. INTERESTS IN SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1: * Auburn Resources Limited is the immediate parent of Barlyne Mining Pty Ltd, Pennant Resources Pty Ltd and Ripple Resources Pty Ltd. These companies are wholly owned and directly held by Auburn Resources Limited and indirectly by DGR Global Limited. 86 SIGNIFICANT RESTRICTIONS There are no significant restrictions on the ability of DGR Global Limited to access the assets of the subsidiaries with non- controlling interests. TRANSACTIONS WITH NON-CONTROLLING INTERESTS During the financial year ended 30 June 2021, Auburn Resources Limited issued a total of 5,600,000 new ordinary shares (2020: 163,333). Refer to note 31 for further details on this transaction. 87 DGR Global Limited and controlled entitiesdgrglobal.com.au Notes to the financial statements continued 30 June 2021 NOTE 33. EVENTS AFTER THE REPORTING PERIOD On 7 July 2021, the Company issued 57,692,308 fully paid ordinary shares and 27,634,616 quoted options in terms of a strategic placement. The shares were placed at $0.052 per share and subject to a 9 month escrow. The attaching listed options were granted on a 3 for 8 basis. No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years. NOTE 34. CASH FLOW INFORMATION RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH USED IN OPERATING ACTIVITIES CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES NOTE 35. EARNINGS PER SHARE Options granted are not included in the determination of diluted earnings per share as they are considered to be anti-dilutive. ACCOUNTING POLICY FOR EARNINGS PER SHARE Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of DGR Global Limited, 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 financial 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. 88 89 DGR Global Limited and controlled entitiesdgrglobal.com.auNotes to the financial statements continued 30 June 2021 NOTE 36. SHARE-BASED PAYMENTS EMPLOYEE SHARE OPTION PLAN ACCOUNTING POLICY FOR SHARE-BASED PAYMENTS Equity-settled share-based compensation benefits are provided to employees. On 30 October 2018, 1,200,000 DGR Global Ltd share options were granted to employees under the Employee Share Option Plan. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the The options are to take up one ordinary share in DGR Global Ltd as a price of 20 cents each. The options vested immediately and rendering of services. expired on 12 February 2021. A value of $46,186 was calculated using the Black Scholes valuation methodology. OTHER OPTIONS The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of On 8 February 2021, 35,974,007 DGR Global Ltd share options were granted to Bizzell Capital Partners Pty Ltd as consideration dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk for the management and underwriting of the Company’s recent capital raising, pursuant to underwriting and sub-underwriting free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives arrangements. The options are to take up one ordinary share in DGR Global Ltd at a price of 12 cents each. The options vested the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. immediately and are due to expire on 25 September 2023. A value of $827,402 was calculated using the Black Scholes valuation methodology (refer below). Set out below are summaries of options granted: The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any The weighted average exercise price of options outstanding at 30 June 2021 was $0.12 (2020: $0.20). remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. The weighted average remaining contractual life of the options at 30 June 2021 was 3.24 years (2020: 0.41 years). If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated There were no vesting conditions attached to the options. as if they were a modification. The fair values of options granted during the period were calculated by using a Black-Scholes options pricing model applying the following inputs. 90 91 DGR Global Limited and controlled entitiesdgrglobal.com.au Directors’ declaration 30 June 2021 In the directors’ opinion: Independent auditor’s report to the members of DGR Global Limited DGR Global Limited Independent auditor's report to the members of DGR Global Limited • the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia • the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; INDEPENDENT AUDITOR'S REPORT • the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and To the members of DGR Global Limited • there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Report on the Audit of the Financial Report Opinion The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Nicholas Mather Managing Director 30 September 2021 We have audited the financial report of DGR Global Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, 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: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and (ii) 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 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 92 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 78 93 DGR Global Limited and controlled entitiesdgrglobal.com.au Independent auditor’s report to the members of DGR Global Limited continued DGR Global Limited Independent auditor's report to the members of DGR Global Limited DGR Global Limited Independent auditor's report to the members of DGR Global Limited Classification and carrying value of financial assets at fair value through other comprehensive income Key audit matter How the matter was addressed in our audit Refer to Note 12 of the financial report. Our audit procedures, amongst others, included: The Group carries investments in listed shares which are carried at fair value through other comprehensive income. The classification and carrying amount of financial assets at fair value through other comprehensive income is a key audit matter due: • the determination of whether the company does not hold significant influence in an investment and therefore carries the investment at fair value through other comprehensive income is a matter that requires significant judgement • the significance of the total balance. • Evaluating management’s assessment of whether significant influence existed. • Obtaining from management a schedule of investments held by the Group and vouching the movements to supporting documentation. • • • Agreeing a sample of the additions and disposals of investments during the year to supporting documentation, and ensuring that gains and losses arising were treated appropriately. Reviewing management’s assessment of the fair value of the investments by reference to quoted prices in active markets, ensuring that management have considered the effect of foreign exchange and that all gains and losses have been treated appropriately. Reviewing the adequacy of the disclosures of investments, including the fair value disclosures, by comparing these disclosures to our understanding the nature of the investment and the applicable accounting standards. Classification and carrying value of investments accounted for using the equity method Key audit matter How the matter was addressed in our audit Refer to Note 11 of the financial report. Our audit procedures, amongst others, included: The Group holds investments in associates accounted for using the equity method. The classification of each asset as an associate and measurement thereof is a key audit matter due to: • the level of judgement management were required to make in assessing the classification of the investment • the significance of the closing balance • • • Evaluating management’s assessment of whether significant influence existed. Agreeing the Group’s share of associate losses to the audited financial reports of the Associates and assessing the adequacy of the disclosures. Reviewing the financial information of the associate including assessing whether the accounting policies of the associates were consistent with DGR Global Limited. • the significance of the share of loss of associates and gain arising from reversal of impairment. • • Recalculating the impairment recorded by reference to the fair value of the investments based on quoted prices in active markets. Reviewing the adequacy of the disclosures of in the financial report. Carrying value of exploration and evaluation assets Key audit matter How the matter was addressed in our audit Refer to Note 14 in the annual report Our audit procedures, amongst other, included: The Group carries exploration and evaluation assets as at 30 June 2021 in accordance with the Group’s accounting policy for exploration and evaluation assets. The recoverability of exploration and evaluation asset is a key audit matter due to the significance of the total balance and the level of procedures undertaken to evaluate management’s application of the requirements of AASB 6 Exploration for and Evaluation of Mineral Resources (‘AASB 6’) in light of any indicators of impairment that may be present. • Obtaining evidence that the Group has valid rights to explore in the areas represented by the capitalised exploration and evaluation expenditure by obtaining supporting documentation such as license agreements and also considering whether the Group maintains the tenements in good standing. • Making enquiries of management with respect to the status of ongoing exploration programs in the respective areas of interest and assessing the Group’s cash flow budget for the level of budgeted spend on exploration projects and held discussions with management of the Group as to their intentions and strategy. • Enquiring of management, reviewing ASX announcements and reviewing directors' minutes to ensure that the Group had not decided to discontinue activities in any applicable areas of interest and to assess whether there are any other facts or circumstances that existed to indicate impairment testing was required. • Evaluating management’s support and calculations for the impairment expense by checking: - - The allocation of the expenditure across the relevant tenements The mathematical accuracy of the amount written down. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 94 79 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 80 95 DGR Global Limited and controlled entitiesdgrglobal.com.au Independent auditor’s report to the members of DGR Global Limited continued DGR Global Limited Independent auditor's report to the members of DGR Global Limited DGR Global Limited Independent auditor's report to the members of DGR Global Limited Other information Responsibilities The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and the auditor’s report thereon. 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. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. BDO Audit Pty Ltd T J Kendall Director Brisbane, 30 September 2021 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. 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 ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 23 to 29 of the directors’ report for the year ended 30 June 2021. 28 to 37 In our opinion, the Remuneration Report of DGR Global Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 96 81 82 97 DGR Global Limited and controlled entitiesdgrglobal.com.au 99 This page has been intentionally left blank. 98 3 FURTHER INFORMATION DGR Global Limited and controlled entitiesShareholder information 30 June 2021 The shareholder information set out below was applicable as at 3 September 2021. DISTRIBUTION OF EQUITABLE SECURITIES Analysis of number of equitable security holders by size of holding: EQUITY SECURITY HOLDERS TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS UNQUOTED EQUITY SECURITIES No one person holds 20% or more of the securities in this class. SUBSTANTIAL HOLDERS Substantial holders in the Company are set out below: 100 101 DGR Global Limited and controlled entitiesdgrglobal.com.auShareholder information continued 30 June 2021 SUBSTANTIAL HOLDERS CONTINUED Tenements 30 June 2021 As at the date of this report, the Group has an interest in tenements as set out below (and continued over the page). Tenure Type, Number and Name Current Holder Registered Interest Date of Expiry of Holder (%) VOTING RIGHTS The voting rights attached to ordinary shares are set out below. ORDINARY SHARES On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. EPM 19379 - Three Sisters EPM 25948 - Hawkwood EPM 26013 - Walkers Road EPM 26248 - Titi Creek EPM 26245 - Nerangy EPM 26526 - Auburn EPM 26259 - Therevale EPM 26758 - Hillgrove EPM 18534 - Quaggy Creek EPM 26523 - Calrossie EPM 27217 - Quaggy Extended EPM 27403 - Hawkwood Extended EPM 27404 - Calrossie Extended EPM 27405 - Quaggy South EPM 27406 - Hawkwood South EPM27614 - Argyle Creek EPM 15134 - Gayndah EPM 18451 - Calgoa EPM 19087 - Mt Abbott EPM 26274 - Euri Creek EPM 26607 - Otter Ridge EPM 27250 - Kolbar EPM 19270 - Pandanus Creek EPM 26265 - Britannia EPM 26355 - Big Rush EPM 26382 - Crooked Creek EPM 26386 - Roebourne EPM 27061 - Wade Creek ML 3678 - United Reefs Mine ML 3741 - Shamrock Extended ML 3748/ 50291 - Black Shamrock ML3749 - North Chinaman ML 3752 - Shamrock Tailings ML 3753 - Shamrock Tailings Exte ML 50059 - Manumbar ML 50099 - Manumbar Extended ML 50148 - Tableland EL 32042 - Green Swamp West EL 32043 - Green Swamp East EPM 26769 - Stockhaven NT EL 31980 - Tanumbirini North NT EL 31981 - Tanumbirini South Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Auburn Resources Ltd Barlyne Mining Pty Ltd Barlyne Mining Pty Ltd Barlyne Mining Pty Ltd Barlyne Mining Pty Ltd Barlyne Mining Pty Ltd Barlyne Mining Pty Ltd Coolgarra Minerals Pty Ltd Coolgarra Minerals Pty Ltd Coolgarra Minerals Pty Ltd Coolgarra Minerals Pty Ltd Coolgarra Minerals Pty Ltd Coolgarra Minerals Pty Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd Hartz Rare Earths Hartz Rare Earths Pennant Resources Pty Ltd Pennant Resources Pty Ltd Pennant Resources Pty Ltd 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 29-01-2024 29-01-2024 13-03-2024 29-01-2023 14-05-2023 03-01-2024 23-08-2023 27-08-2021 11-10-2023 10-12-2023 27-08-2022 02-12-2025 02-12-2025 10-03-2026 02-12-2023 24-06-2024 29-09-2021 20-05-2023 28-07-2023 28-05-2022 12-07-2024 15-07-2023 17-09-2021 15-03-2023 12-07-2024 08-05-2023 24-11-2023 20-05-2022 31-05-2022 30-09-2030 30-04-2029 31-07-2027 31-01-2021 31-08-2021 31-12-2018 31-08-2025 30-04-2029 31-10-2021 31-10-2021 27-08-2021 06-05-2025 06-05-2025 102 103 DGR Global Limited and controlled entitiesdgrglobal.com.auTenements continued 30 June 2021 Corporate directory Tenure Type, Number and Name Current Holder Registered Interest Date of Expiry of Holder (%) NT EL 32002 - Tanumbirini East Pennant Resources Pty Ltd NT EL 32006 - Victoria River Downs Pennant Resources Pty Ltd NT EL 32008 - Cooee Hill NT EL 32009 - Williams Creek Pennant Resources Pty Ltd Pennant Resources Pty Ltd NT EL 32010 - Lagoon Creek West Pennant Resources Pty Ltd NT EL 32011 - Lagoon Creek NT EL 32012 - Lansen Creek NT EL 32013 - Parsons Creek NT EL 32014 - Newcastle Creek NT EL 32039 - Bullock Creek EL 32032 - Blue Bush Bore EL 32031 - Corella EPM 25525 - Mabel Jane EPM 25963 - Leyshonview EPM 25964 - Blind Freddy EPM 25965 - Black Knob EPM 25966 - Bulldog EPM 27289 - Rannes West Pennant Resources Pty Ltd Pennant Resources Pty Ltd Pennant Resources Pty Ltd Pennant Resources Pty Ltd Pennant Resources Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd Pinnacle Gold Pty Ltd EP25802 - Walford East (Sth N) EPM19833 - South Nicholson Ripple Resources Pty Ltd Ripple Resources Pty Ltd EPM19835 - Shadforth East (Sth N) Ripple Resources Pty Ltd EPM19836 - Shadforth (Sth N) EP25504 - Argyle Creek (Sth N) EPM25505 - Border (Sth N) EPM26497 - South Nicholson EP30494 - Statler & Waldorf EPM30817 - Victoria River Downs EP30818 - Birrindudu (VRD) EPM31012 - Carpentaria Ripple Resources Pty Ltd Ripple Resources Pty Ltd Ripple Resources Pty Ltd Ripple Resources Pty Ltd Ripple Resources Pty Ltd Ripple Resources Pty Ltd Ripple Resources Pty Ltd Ripple Resources Pty Ltd 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 06-05-2025 06-05-2025 06-05-2025 06-05-2025 06-05-2025 06-05-2025 06-05-2025 06-05-2025 06-05-2025 04-07-2025 08-07-2025 08-07-2025 14-01-2023 23-12-2023 23-12-2023 23-12-2023 23-12-2023 16-10-2024 19-05-2023 10-02-2022 10-09-2021 10-09-2021 09-11-2021 10-08-2023 19-10-2021 07-04-2021 14-02-2022 14-02-2022 29-09-2022 104 Directors Nicholas Mather Managing Director / CEO Brian Moller Non-Executive Director Peter Wright Non-Executive Chairman Company Secretary Karl Schlobohm Auditors BDO Audit Pty Ltd Level 10 12 Creek Street Brisbane QLD 4000 Australia Solicitors HopgoodGanim Lawyers Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000 Australia Share Register Link Market Services Limited 10 Eagle Street Brisbane QLD 4000 Australia Phone: 1300 554 474 Stock exchange listing ASX (ticker code DGR) Internet address dgrglobal.com.au Twitter @DGRGlobal Country of incorporation Australia Australian Business Number 67 052 354 837 Corporate governance statement www.dgrglobal.com.au/corporate-governance Postal and contact address DGR Global Limited GPO Box 5261 Brisbane QLD 4001 Australia Registered office and principal business address DGR Global Limited Level 27, 111 Eagle Street Brisbane QLD 4000 Australia 105 DGR Global Limited and controlled entitiesdgrglobal.com.au 

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