More annual reports from DGR Global Limited:
2023 ReportDGR Global Limited ABN 67 052 354 837 dgrglobal.com.au DGR Global Limited dgrglobal.com.au A Resource Company Creator ANNUAL REPORT 2023 DGR Global Limited dgrglobal.com.au Developing Tomorrow’s Resources, Today. At DGR Global we are focused on an inter-generational, global search for tier one resource projects that address the 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. DGR Global Limited dgrglobal.com.au Directors Peter Wright - Non-Executive Chairman Nicholas Mather - Managing Director Brian Moller - Non-Executive Director Ben Hassell - Non-Executive Director Company Secretary Geoffrey Walker Registered Office and Principal Place of Business Level 27 111 Eagle Street Brisbane Q 4000 Share Register Auditor Solicitors Link Market Services Limited 10 Eagle Street Brisbane Q 4000 Telephone: 1300 554 474 BDO Audit Pty Ltd Level 10 12 Creek Street Brisbane Q 4000 Hopgood Ganim Level 8, Waterfront Place 1 Eagle Street Brisbane Q 4000 Stock Exchange Listing DGR Global Limited shares are listed on the Australian Securities Exchange (ASX code: DGR) Website www.dgrglobal.com.au Corporate Governance Statement www.dgrglobal.com.au/corporate-governance 2 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT Chairman’s letter Dear Shareholders, Thank you for continuing to support the company over what has been a difficult year. Persistently high interest rates, high but moderating inflation and geopolitical events have presented considerable restraints to Global Economic growth and subsequently commodity markets. This has particularly been the case in China, Australia’s largest trading partner, who continue to report moderating economic growth. This has seen a softening of demand for commodities in China and consequently prices. DGR Global Ltd (‘DGR’ or the company’) its board, senior management and staff have continued to manage the company’s considerable asset base through these challenging economic parameters which have presented the small to medium resource investment sector with one of the most challenging years I have experienced in my 25 years in financial markets. DGR continued to moderate its costs over this financial year, using its balance sheet to financially support several of its investments, and has retained a strong balance sheet. DGR intends to continue the responsible use of its balance sheet to preserve shareholder equity given the disparity between the company’s market capitalisation and asset backing. Over the course of the reporting period the company added Mr Ben Hassell to the board, Ben has made an immediate contribution to strengthening the company and I would like to thank Ben and my fellow directors Nick Mather and Brian Moller for their constant contributions and dedication to the company. I would also like to thank our dedicated staff at DGR who have delivered significant outcomes over the last twelve months by continuing to add value to both our listed and unlisted assets. With persistent and stubbornly high inflation and no end in sight to the rate cycle, coupled with ongoing and seemingly unresolvable conflict in Eastern Europe, the next 12 months provides a challenging outlook. Against this uncertainty shareholders can be certain that DGR will continue to responsibly progress and develop its asset portfolio and carefully manage its balance sheet in their interests – after all, it is your company. Again, if I would like to sincerely thank our shareholders, both new and longstanding, for your continued support of the company. This is your company, and we will continue to work for you over the coming twelve months and beyond to deliver on the potential of the company’s considerable asset base. Sincerely, Peter Wright CHAIRMAN 3 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT For the year ended 30 June 2023 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 2023. 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 - Non-Executive Chairman Nicholas Mather - Managing Director Brian Moller - Non-Executive Director Ben Hassell - Non-Executive Director (appointed 16 March 2023) 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 (a) Capital Structure Changes During the Year Ordinary Shares There were no new ordinary shares issued during the financial year ended 30 June 2023 (2022: 68,114,751 ordinary shares were issued). Listed Options There were no new options issued during the financial year (2022: 27,634,616 listed company options issued). (b) Financial Position and Financial Performance for the Year Financial Position The net assets of the Group have decreased by $39,940,934 to $108,789,455 as at 30 June 2023 from $148,730,389 as at 30 June 2022. This decrease has primarily resulted from: ▪ ▪ ▪ ▪ ▪ Decrease in the fair value of investments accounted for as assets at fair value through other comprehensive income; Sale of shares in Atlantic Lithium Limited; offset by Increase in financial assets at fair value through profit or loss - due to additions to McArthur Oil & Gas Ltd redeemable exchangeable notes; Increase in exploration and evaluation assets; and Decrease in deferred taxation liability. During the past year the Group has continued investing in its mineral exploration tenements. 5 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Financial Performance For the year ended 30 June 2023, the Group loss after income tax was $9,547,919 (2022: $9,169,564), comparable with the loss for the year ended 30 June 2022. The loss for the year has been largely driven by: ▪ Share of losses of associates; ▪ Movement in fair value of convertible note receivable and redeemable exchangeable notes receivable. Impairment of trade receivables; partially offset by: Interest income; and Reversal of impairment in associate. ▪ ▪ ▪ Cash Flows Cash outflows from operating activities were higher in the 30 June 2023 financial year when compared to 30 June 2022, mainly due to reduced inflows from management fees. There were net cash inflows from investing activities due to the sale of Atlantic Lithium Limited shares. (c) 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 exploration staff to identify resource projects capable of yielding world class discoveries of commodities with enduring strong fundamentals. 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 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 has a pipeline of projects in daughter companies at various stages of emergence. Further return from its holdings in LSE/TSX listed SolGold and AIM/ASX listed Atlantic Lithium and ASX listed Clara Resources, New Peak Metals, Lakes Blue Energy and Armour Energy and unlisted Auburn Resources, DGR Energy and Armour Energy International is expected over the coming years. The previous resource exploration and funding activities of DGR’s key personnel underscore the opportunities provided by the DGR business model. DGR Global does not generally purchase its exploration projects. DGR’s in house generative capabilities give the Company a strong competitive edge. DGR’s focus on provincial tenement positions covering entire sedimentary basins or structural blocks where 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 Figure 1. 6 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Figure 1: DGR Global created investments Figure 1: DGR Global created investments (at 30th June 2023) (at 30th June 2023) Corporate Highlights for the Company during 2023 included: ▪ ▪ ▪ ▪ ▪ During the year limited field exploration and prospecting activities were undertaken. Significant rainfall and flooding events in a number of DGR’s project/tenement areas during the period affected planned field programmes. However, DGR and its related entities remained active and continued to advance projects and plan exploration programmes within their respective portfolios as reasonably permitted by the prevailing conditions. The Company continues to focus on new project generation and value creation and also continues to seek out new investment and development opportunities to drive the creation of new resource companies. DGR, through its interest in Armour Energy International Pty Ltd, holds an 83.18% (Armour Energy 16.82%) interest in a highly prospective oil project in the Kanywataba Block, Uganda1. Supporting 39.34% owned, public, unlisted Auburn Resources Ltd capital raising preparations and advancement towards potential ASX listing. Supporting 16.07% owned Armour Energy Ltd (ASX:AJQ) by way of a $4.5M finance facility followed by an additional facility of $7.0M2. ▪ Grant of the Turaco Petroleum Exploration Licence and renewal of the Kanywataba Petroleum Exploration Licence by Uganda’s Minister of Petroleum was announced. ▪ ▪ HSEC for the group entities for which DGR acts as Operator, maintained a rolling 12-month TRIFR of 0.00 and recorded zero environmental incidents for the corresponding period, demonstrating DGR’s continuous commitment to sustainable and safe operations. Presentation at the recent Noosa Mining Conference by DGR Group Managing Director, Nick Mather. 7 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Investments in Listed Companies SolGold plc (6.8%) – LSE/TSX: SOLG www.solgold.com.au ▪ ▪ ▪ ▪ Focus on high-grade world-class copper gold porphyry systems at Cascabel in Ecuador. Cascabel is proximate to Quito and seaports, is at low elevation, and has abundant water supplies and access to hydropower. Exploration activities continue at a number of SolGold’s wholly owned Mineral Concessions in Ecuador, with ongoing strict COVID-19 protocols in place. SolGold remains the dominant explorer in the country. Announcement of the respective appointments of Mr. Scott Caldwell as CEO and Mr. Chris Stackhouse as CFO. ▪ Completion of the previously announced plan of arrangement between SolGold and Cornerstone Capital Resources Inc. ▪ ▪ ▪ ▪ SolGold released company updates, including updates in regard to Organisational Optimization and Strategic Review. An Investor Presentation by CEO, Mr. Scott Caldwell was made. SolGold announced a 25-year term renewal for the Cascabel Project Concession after the end of the reporting period. Announcement of agreement with the Government of Ecuador on the terms and conditions in preparation for execution of the Exploitation Agreement for the Cascabel Project. Copies of all of SolGold’s market releases are available on the Company’s website: www.solgold.com.au Armour Energy Limited (19.92%) – ASX: AJQ www.armourenergy.com.au ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Broad portfolio of assets, including the producing Kincora Facility, substantial production assets in the Surat Basin and the Newstead Gas storage facility. Substantial and highly prospective exploration portfolio across Basins including PEP 169 In the onshore Otway Basin and a substantive Cooper Basin portfolio. Announcement of the appointment of Mr William Ovenden as a Board Advisor was announced. A Heads of Agreement for gas supply to Australian Natural Diamonds Ltd, a wholly owned subsidiary of Lucapa Diamond Company Ltd (ASX:LOM) was announced. Announcement of a Master Sales Agreement with Shell Energy Australia, wholly owned subsidiary of Shell Group, was released to the market. Holds highly prospective whole basin oil and gas positions in Northern Territory and North-West Qld covering 139,000 km2, and a track record of exploration success. Launch of the Armour Investor Hub in partnership with Investor Hub was announced. Announcement of the completion of the retail component of its fully underwritten Entitlement Offer. Copies of all of Armour Energy’s market releases are available on the Company’s website: www.armourenergy.com.au 8 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Atlantic Lithium Limited (2.77%) – LSE: ALL and OTC:ALLIF www.atlanticlithium.com.au ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Atlantic’s focus remains on the Ewoyaa Lithium Project in Ghana. Atlantic continues to material progress toward constructing and operating the project in parallel with strong demand for Lithium Concentrates as the global economy shifts to a reduced carbon intensity. Atlantic Lithium has released a number of project related announcements and exploration updates during the quarter. Announcement of the appointment of Mr Keith Muller as Chief Executive Officer (CEO) and Mr Len Kolff as Head of Business Development and Chief Geologist. Several Corporate Updates, Investor Presentations and Initial Infill Drilling results from the Ewoyaa Lithium Project were released during the quarter. Announcement of the appointment of Mr Keith Muller as a Director and Mr Patrick Brindle as a Non- Executive Director to the Company’s Board of Directors. Announcement of the resignation of Non-Executive Director, Mr Stuart Crow was made. Release of the Definitive Feasibility Study (DFS) for the Ewoyaa Lithium Project was announced. An Expression of Interest that was received from the Minerals Income Investment Fund of Ghana for investment of up to US$30m was announced. Several Corporate Updates, an Exploration and Drilling Update, Investor Presentations and an update on the DFS were released during the quarter. A response to the online report released by Blue Orca Capital in regard to A11’s partner, Piedmont Lithium Inc. was issued. It was announced that in the S&P DJI Quarterly Rebalance, A11 was added to the All Ordinaries Index of the ASX. The awarding of the processing plant Front-End Engineering Design ("FEED") contract for the Ewoyaa Lithium Project to Primero Group, a wholly owned subsidiary of NRW Holdings (ASX:NRW), was announced. Announcement of the commencement of a 3,000m Infill Drilling Programme was made. Retention of highly prospective hematite rich iron targets in Tchibanga and Belinga Sud licence areas in Gabon (total tenure 5,400km2). Atlantic Lithium has released a number of project related announcements and exploration updates during, including several updates to the ongoing high-grade infill drilling results and a significant Mineral Resource Estimate (MRE) upgrade at its Ewoyaa Lithium Project in Ghana. Copies of all of Atlantic Lithium’s market releases are available on the Company’s website: www.atlanticlithium.com.au New Peak Metals Limited (8.17%) – ASX: NPM www.newpeak.com.au ▪ ▪ ▪ Focused on exploring for alternative world class gold deposits in multiple, diverse jurisdictions including New Zealand, Argentina, Sweden, and Finland as well as other precious and base metals project opportunities. Announcement of an agreement to acquire an initial 25% of the issued capital of private UK based lithium exploration company Southern Cross Britannia Ltd. Various project updates were announced. Copies of all of NewPeak Metals’ market releases are available on the company’s website: www.newpeak.com.au 9 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Clara Resources Limited (12.73%) – ASX: C7A www.clararesources.com.au ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Focusing on a diverse commodity base including cobalt, nickel, and metallurgical coal. Following on from the previous announcement of a binding agreement for the sale of the Granville Project, a sale update and further extension of the dates for execution and settlement were announced. Results of the EGM held on 6 June and the presentation that was delivered at the EGM was released. Announcement of a binding agreement for the sale of the Granville Project, a sale update and a subsequent extension of the dates for execution and settlement were all released. Successful $3.5M capital raising by way of placement to institutional, sophisticated and professional investors was announced. The results of the initial Options Study phase for coal processing at the Ashford Coking Coal Project were released. The findings of a Logistics Study for the trucking of coking coal from the proposed Ashford coking coal mine were released, with further refinements to the Options Study announced after the end of the quarter. Announcement that an 8-hole drill programme has been designed was made. Several company updates were released. Copies of all of Clara’s market releases are available on the company’s website: www.clararesources.com.au Lakes Blue Energy NL (6.48%) – ASX: LKO www.lakesblueenergy.com.au ▪ ▪ ▪ ▪ Focusing on realising the potential of the company’s diverse portfolio of projects to become a producer of petroleum to meet Australian industry and household requirements, in both feedstock and energy applications. Release of an update on the Enterprise North and Nagwarry Projects was made. Announcement of the farmout of South Australian acreage. Announcement that Lakes Blue Energy NL (ASX:LKO) has executed a Technical Cooperation Agreement with French Major, TotalEnergies. Copies of all of Lakes Blue Energy’s market releases are available on the company’s website: www.lakesblueenergy.com.au 10 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) EXPLORATION AND DEVELOPMENT OF UNLISTED SUBSIDIARIES AND PROJECTS The group continued to remain active and continue to advance projects and plan exploration programmes within their respective portfolios as reasonably permitted by prevailing conditions, including weather, contractor availability and capital allocation. Each project area/tenement has a specific exploration plan designed to be fit for purpose. Field exploration mapping and exploration sampling and drilling programmes are planned for multiple project areas to progress in a systematic manner with regard to available resources and specialist contractors as applicable. Auburn Resources Limited (39.37%) www.resources.com.au Significant activities which occurred during the year included: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ 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 focused 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 Maro dian Projects5. Exploration targets defined for zinc at the Ban Ban Project. Under-explored areas of most endowed provinces with multiple Tier 1 targets. Planning well advanced for proposed ASX listing in 2023/24, with opportunities for a proposed capital raise to support systematic exploration and near-tern discovery being pursued. Field exploration mapping and first phase sampling programmes planned for multiple project areas to commence Figure 2: Location map of Auburn Resources project portfolio by commodity& deposit type. 11 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Armour Uganda (83.18%) Armour Uganda’s flagship project is’The Kanywataba Block’ which is hihly 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 as a result of wet weather and the COVID-19 pandemic were lifted. Exploration work recommenced with the 2D seismic survey to be undertaken with +100-line kilometres of infill 2D seismic to refine prospectivity observed in the Kanywataba block. Activities in the year and which are ongoing include: ▪ Reprocsing of existing 2D seismic data ▪ Geochemical surface soil gas sampling program ▪ ▪ 122 line km infill 2D seismic programme Basin Analysis study Figure 3: Location of Kanywataba Block in Uganda Pinnacle Gold Pty Ltd (94.34%) Pinnacle Gold holds 6 Exploration Permits (EPMs) for gold, nickel, and antimony in North Queensland and 2 Mineral Exploration Licenses (ELs) 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 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 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. No on ground exploration activities were undertaken in the reporting year. 12 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) 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 received almost no historical that have 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 5: Pinnacle Gold EL Locations Northern Territory Figure 4: EPM Locations Queensland 13 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Figure 6: NT stitched RTP magnetic image of the Tennant Creek region showing anomolous gold MMI catchments and EL location Coolgarra Minerals Pty Ltd (100%) is focussed on discovery Coolgarra Minerals 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 in particular Wally's small-scale mining areas, the Hope and Janelle's Hope Prospects 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. in Figure 7: Coolgarra EPM Locations Queensland 14 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Figure 8: Soil Sample Grid on southern section of EPM 19270 Figure 8 above 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. Hartz Rare Earths Pty Ltd (100%) Hartz Rare Earths (HRE) have applications for two Mineral Exploration Licenses (ELs) 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. Figure 9: Geoscience Australia MMITM stream sediment geochemistry map 15 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Figure 10: License application location map Mineral Resources Following a resource drilling programme that was announced to the ASX on 4 August 20147, the Shamrock Tailings Dam contains a JORC 2012 compliant Mineral Resource of: ▪ ▪ Indicated: 770,000 tonnes @ 0.58 g/t Au for 450,000 grams (14,000 ounces) gold, and Inferred: 770,000 tonnes @ 11 g/t Ag for 8,242,400 grams (265,000 ounces) silver There has been no change to this Mineral Resource since that time. Future Developments 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 and market conditions. Footnotes: 1AJQ ASX Release 14/9/17 2DGR ASX Release 9/8/21 3DGR:ASX Release 18/05/23 4DGR:ASX Release 16/03/23 5DGR ASX Release 20/5/19 6DGR ASX Releases 3/7, 5/7/17, 8/11/18 7DGR ASX Release 04/08/14 16 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during the financial year. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Armour Convertible Notes On 2 August 2023, the shareholders of Armour Energy Limited (ASX: AJQ) approved the issue of up to 21,000,000 of Armour Convertible Notes (on a post-consolidation basis) to DGR Global Limited (ASX:DGR or the Company). On 23 August 2023, McArthur Oil and Gas Redeemable Exchangeable Notes (MOG Notes) (including accrued interest) in the sum of $16,164,172, were converted into Armour Convertible Notes, and $835,828 of the non- current loan due to DGR was also converted into Armour Convertible Notes on the same day. On 13 September 2023, Armour Convertible notes for $4,000,000 were issued to DGR in partial settlement of the non-current loan advances, Corporate Bonds and other fees due to DGR by AJQ. At 30 June 2023, DGR held 14,005,410 McArthur Oil and Gas Redeemable Exchangeable Notes (MOG Notes) (refer note 13) and was owed $15,293,601 (including accrued interest and interest on redeemed notes shown under receivables) under the terms of the MOG Notes. DGR was also owed an additional $5,989,701 by AJQ for non-current loan advances, Corporate Bonds and other fees at 30 June 2023. Ugandan Oil Exploration Projects DGR Global Limited (ASX: DGR or the Company) and Armour Energy Limited (ASX: AJQ) established a new UK- incorporated company Conjugate Energy Limited (Conjugate) on 17 February 2023, which will hold interests in oil exploration projects in the Albertine Graben, Uganda. On 7 September 2023, the Company announced that Conjugate intends to seek admission to a UK stock exchange and raise funds primarily to drill two exploration wells or drill ready prospects with substantial resources of oil. Any admission will be subject to, inter alia, compliance with the relevant regulatory requirements and accordingly, there can be no certainty that any admission will occur or the timeframe in which it will occur. Letter of support - Armour Energy Limited DGR Global Limited (ASX: DGR or the Company) has provided a formal letter of financial support to Armour Energy Limited (ASX: AJQ) to provide financial support for a period of up to 12 months of up to $17,000,000 to enable AJQ to repay their debts as and when they fall due and payable, as well as settle certain loan repayments that are currently due by AJQ and for repayment of the related principal which is due on 30 November 2023. Loan DGR Global Limited (ASX: DGR or the Company) has entered into a loan agreement with Equities First Holdings LLC (EFH). EFH has agreed to advance £600,000 (GBP) to DGR. The loan is secured by 15,000,000 ordinary shares held by DGR in SolGold plc. Although the title in the shares has been transferred to the lender, DGR has retained substantially all the risks and rewards of ownership of the shares and will continue to recognise the investment in the shares. The loan bears interest at 3.75% per annum and is repayable after 2 years. No other matter or circumstance has arisen since 30 June 2023 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. 17 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Other than the matters discussed above, in the Chairman's Letter and Review of Operations, Mineral Resources and Future Developments, no other information on likely developments in operations of the Group and the expected results of operations have been included in this report because the directors believe it would be likely to result in the unreasonable prejudice to the Group. 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 $1,476,516. There are no matters that have arisen in relation to environmental issues up to the date of this report. Environmental Management The group manages its environmental commitments and responsibilities for its mining leases (ML’s) under a Plan of Operations that was approved by the Department of Environment and Science in January 2020. This Plan had a notional expiry in December 2022; however, rehabilitation and site management operations continue under this plan during the transition to a Progressive Closure and Rehabilitation Plan (PCRP) which is scheduled to be submitted to the Department of Environment and Science for review and approval in April 2024. The group manages its environmental commitments and responsibilities for its Exploration permits (EPM’s) under the specific requirements for the Environmental Authority that is issued for each tenement and under the requirements of the Environmental Protection Act (EPA) and under the principles of the general duty of care. Material Business Risks General Disruption to international trade and travel, and likely global economic contraction as a result of government and private sector reactions to the COVID-19 pandemic and the Russia/Ukraine conflict). Climate Change, Force Majeure, Covid-19 Pandemic The performance of the company will continue to be influenced by the various external conditions both, domestically and internationally, that directly and indirectly impact the various commodities that form the company’s (and its subsidiaries') focus for exploration and mining. In addition, the company’s ability to continue operating also has a degree of dependence on the health of the capital markets (both debt and equity) which the company may need to access in order to fund potential future operations. While these markets are always influenced by the general conditions in the broader economy, the COVID-19 Pandemic has had a materially adverse effect on and continues to have some residual effect on these markets. There is also some continued uncertainty as to the future impact of the COVID-19 Pandemic including relation to government action, work stoppages, lockdowns, quarantines, travel restrictions and the impact on the Australian commodities. Significant weather events, especially flooding rain and tropical cyclones directly impact land and tenement access and the ability to undertake field exploration work, as well as the additional risk of plant, equipment and infrastructure damage and/or loss. Operational Risks Continued successful operations of the company and its subsidiaries will largely depend on the efficient and successful implementation of its exploration, business development and commercial management. The operations of the company and its subsidiaries may be disrupted by a variety of events, risks and hazards that are beyond the control of the company. Exploration has been and will continue to be influenced on occasions by unforeseen material and labour cost changes, environmental considerations, extreme weather events, and other events including but not limited to any future effects of the COVID-19 Pandemic, kinetic conflict, supply chain disruptions, economic sanctions and an increasing nationalistic approach to global trade and other macro-economic considerations. 18 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) CLIMATE CHANGE RISK The Group does not consider that it currently has a material exposure to the risks associated with Climate Change. Accordingly, the Group does not consider it necessary to reflect any impact associated with Climate Change risks (eg. impairments, provisions) in its financial statements for the year ended 30 June 2023. The Group considers the following matters to be relevant to this conclusion: i. ii. iii. iv. v. vi. 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 greenfields exploration focus means that the Group currently has no significant man-made infrastructure that would be subject to the potential physical risks associated with Climate Change. Furthermore, the Group has a minimal carbon footprint and negligible emissions; 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. 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; 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; 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; 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. 19 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) INFORMATION ON DIRECTORS Name: Title: Qualifications: Experience And Expertise: Peter Wright Non-Executive Chairman BCom, BEcon Peter Wright is a partner at Bizzell Capital Partners (BCP), a Brisbane based Corporate Advisory and Funds Management Firm. Peter has over 20 years experience working primarily in asset transactions, corporate advisory assignments, research & primary market transactions. Other Current Directorships: Former Directorships (Last 3 Yrs): Special Responsibilities: Interests In Shares: Interests In Options: Greenwing Resources Limited (formerly Bass Metals Limited) (since 2 September 2016) Laneway Resources Limited (since 31 October 2017) None Chairman Nil Nil Name: Title: Qualifications: Experience And Expertise: Other Current Directorships: Former Directorships (Last 3 Yrs): Special Responsibilities: Interests In Shares: Interests In Options: Nicholas Mather Executive Director BSc (Hons,Geol), MAusIMM 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 Ballarat Goldfields NL, having assisted that company in its re-emergence as a significant emerging gold producer. Armour Energy Limited (since 18 December 2009) Lakes Blue Energy NL (formerly Lakes Oil NL) (since 7 February 2012) Clara Resources Australia Limited (formerly Aus Tin Mining Limited) (since 21 October 2010) 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) Atlantic Lithium Limited (formerly IronRidge Resources Limited), which is listed on the London Stock Exchange (AIM) (from 5 September 2007 to 28 June 2021) Managing Director and Chief Executive Officer 170,530,128 11,683,684 20 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Name: Title: Qualifications: Experience and Expertise: Other Current Directorships: Former Directorships (Last 3 Yrs): Special Responsibilities: Interests In Shares: Interests In Options: Name: Title: Qualifications: Experience And Expertise: Brian Moller Non-Executive Director LLB (Hons) 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 almost exclusively in the corporate area with an emphasis on capital raising, mergers and 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. Clara Resources Limited (formerly 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) Tempest Minerals Limited – formerly Lithium Consolidated Mineral Exploration Limited (since 13 October 2016) SolGold plc, which is dual-listed on the London Stock Exchange and the Toronto Stock Exchange (from 11 May 2005 to 15 December 2021) Member of the Audit & Risk Committee and Remuneration Committee 9,933,170 432,448 Ben Hassell (appointed 16 March 2023) Non-Executive Director B Acc, CA Ben Hassell has worked over a broad cross-section of industries, including listed and non-listed companies. He also has extensive experience working with private discretionary trusts, SMSFs and Private Ancillary Funds. Importantly, Ben has worked at all levels - operational, management and executive level - and has an excellent understanding of business at all phases of its development. Ben also has extensive experience in Debt and Equity Funding, Stakeholder Management and Regulatory Compliance. Ben’s special areas of expertise are financial modelling, forecasting/projecting and risk mitigation. Currently, Ben holds the position of Group General Manager of the Samuel Group of Companies, a Brisbane based Investment and Consultancy Group directing and managing a diverse portfolio including cattle stations, listed mineral resource companies, rural and residential Real Estate and philanthropic services associated with DGR CEO, Nicholas Mather Other Current Directorships: Former Directorships (Last 3 Yrs): Special Responsibilities: Interests In Shares: Change In Options: None None None Nil Nil '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. 21 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) Company Secretary Geoffrey Walker is a Chartered Accountant with over 30 years of commercial experience including as Chief Financial Officer of ASX-listed entities. Geoff also acts as the Company Secretary for ASX-listed Armour Energy 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 2023, and the number of meetings attended by each director were Full Board Audit and Risk Management Committee Remuneration Committee Attended Peter Wright Nicholas Mather Brian Moller Ben Hassell 8 8 8 2 Held Attended Held Attended Held 8 8 8 2 2 - 2 - 2 2 2 - - - - - - - - - Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. 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 formal Remuneration Committee Charter, which has been adopted by the Board and is available from the Corporate Governance section of the Company’s website. 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 Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including all directors The remuneration report is set out under the following main headings: ▪ ▪ ▪ ▪ ▪ Principles used to determine the nature and amount of remuneration Details of remuneration Share-based compensation Additional information Additional disclosures relating to key management personnel Principles used to Determine the Nature and Amount of Remuneration The performance of the Company depends upon the quality of its Directors and Executives. To prosper, the Company must attract, 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 and Executive team. Such officers are given the opportunity to receive their base remuneration in a variety of forms including cash 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 22 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). 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. The Board’s policy is to align Director and Executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering long-term incentives. In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive Director and Senior Management remuneration is separate and distinct. Non-Executive Directors Remuneration The Board seeks to set aggregate remuneration at a level that 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. The Constitution of the Company provides that the Non-Executive Directors are entitled to remuneration as determined by the Company in general meeting to be apportioned among them in such manner as the Directors agree and, in default of agreement, 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 addition to or instead of the remuneration referred to above. However, no payment can be made if the effect would be to exceed the maximum aggregate amount payable to Non- Executive Directors. A Non-Executive Director is entitled to be paid travelling and 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 2023 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 both fixed and variable components. 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 Ensure total remuneration is competitive by market standards 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: ▪ Performance based salary increases and/or bonuses; and/or The issue of options. During 2023 discretionary bonuses amounting to $25,000 were paid to Key Management Personnel (2022: $76,500). There were no performance- based salary increases or options issued that were performance-related. 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. All employees have the opportunity to qualify for participation in the DGR Global Employee Share Option Plan. 23 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). The remuneration of the Executive Director and Senior Management for the year ended 30 June 2023 is detailed in this Remuneration Report. Consolidated Entity Performance and Link to Remuneration 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 During the year ended 30 June 2023, the market price of the Company’s ordinary shares ranged from a low of $0.033 to a high of $0.067 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 2023 Voting and Comments made at the Company's 30 November 2022 Annual General Meeting ('AGM') At the 30 November 2022 AGM, 86.65% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2022. The Company did not receive any specific feedback at the AGM regarding its remuneration practices 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: ▪ Geoffrey Walker - - Company Secretary and Chief Financial Officer ▪ ▪ ▪ ▪ Peter Wright - Non-Executive Chairman Nicholas Mather – Executive Director Brian Moller – Non-Executive Director Ben Hassell – Non-Executive Director And the following persons: ▪ Geoffrey Walker – Company Secretary and Chief Financial Officer 24 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). Remuneration Details Short-term benefits Post- employmen t benefits 2023 Cash salary Cash Non-cash Super- Long-term benefits Long service Share- based payments Equity- Termination and fees bonus and other* annuation leave settled benefits Total $ $ $ $ $ $ $ $ Non-Executive Directors: Peter Wright Brian Moller Ben Hassell(1) Executive Directors: Nicholas Mather(2) Other Key Management Personnel: Geoffrey Walker 100,000 25,000 70,000 13,227 397,194 230,000 810,421 - - - - 25,000 19,726 19,726 5,636 - - 1,389 19,726 - 19,726 84,540 23,792 25,181 - - - - - - - - - - - - - 144,726 - 89,726 - 20,252 - 416,920 - 273,518 - 945,142 * 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 Hassell was appointed a Director on 16 March 2023. (2) Included in Nick Mather's remuneration is backpay of $60,905 relating to Australian Consumer Price Index (CPI) changes to Nick's base fee, that had not previously been accounted for. Short-term benefits Post- employme nt benefits 2022 Cash salary Cash Non-cash Super- Long-term benefits Long service Share- based payments Equity- Terminati on and fees bonus and other* annuation leave settled benefits Total $ $ $ $ $ $ $ $ Non-Executive Directors: Brian Moller Peter Wright Executive Directors: Nicholas Mather Other Key Management Personnel: Karl Schlobohm(1) (2) Peter Burge(3) Geoff Walker(1) 66,666 91,666 - 45,000 30,457 30,457 300,000 20,000 30,457 220,389 172,030 138,885 - - 8,306 8,307 11,500 11,629 - - - - 12,225 13,588 - - - - - - - - - - - 97,123 - 167,123 - 350,457 - 228,695 - 241,643 434,205 - - 175,602 989,636 76,500 119,613 25,813 - - 241,643 1,453,205 25 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). * 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) Karl Schlobohm resigned as Company Secretary and Interim Chief Financial Officer on 31 January 2022. Geoffrey Walker commenced employment with the Company on 24 November 2021, and was appointed Company Secretary and Chief Financial Officer on 31 January 2022. The amounts shown above for Geoff, include Geoff's remuneration prior to his appointment as Chief Financial Officer and Company Secretary on 31 January 2022. (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) Peter Burge resigned on 31 December 2021. Performance Income as a Portion of Total Remuneration The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Peter Wright Brian Moller Ben Hassell Executive Directors: Nicholas Mather Other Key Management Personnel: Geoffrey Walker Peter Burge Karl Schlobohm Fixed remuneration 2022 2023 At risk - STI At risk - LTI 2023 2022 2023 2022 83% 100% 100% 73% 100% - 100% 94% 100% - - 93% 100% 100% 17% - - - - - - 27% - - 6% 7% - - - - - - - - - - - - - - - - The proportion of the cash bonus paid/payable or forfeited is as follows: Name Non-Executive Directors: Peter Wright Executive Directors: Nicholas Mather Other Key Management Personnel: Geoffrey Walker Service Agreements Cash bonus paid/payable 2022 2023 Cash bonus forfeited 2022 2023 100% 100% - - 100% 100% - - - - - - 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 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. for pre-determining 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 containearly 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. 26 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) 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 and adjusted subsequently for changes in CPI. The Managing Director's adjusted base fee for the 30 June 2023 financial year was $336,289. There is no fixed term specified in this agreement. Under the terms of the present contract: ▪ ▪ ▪ ▪ 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); 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 and Chief Financial Officer Base Salary $230,000 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 y Payouts upon resignation or termination, outside industrial regulations (i.e. ‘golden handshakes’) None 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 2023. Options There were no options over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2023. 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 2023. 27 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued) 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) 2023 3.7 (0.9) 2022 5.7 (0.9) 2021 6.2 (0.1) 2020 5.3 (0.9) 2019 10.5 (0.7) Additional Disclosures Relating to Key Management Personnel Shareholding 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 Ordinary shares Directors Peter Wright Nicholas Mather Brian Moller Ben Hassell Other Key Management Personnel Geoffrey Walker Balance at Received Received on Balance at the start of the year as part of remuneration exercise of Net change the end of options other* the year - 170,530,128 9,933,170 - 100,000 180,563,298 - - - - - - - - - - - - - - - - - 170,530,128 9,933,170 - 100,000 100,000 200,000 180,663,298 *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. Auburn Resources Limited Ordinary shares Directors Peter Wright Nicholas Mather Brian Moller Ben Hassell Other Key Management Personnel Geoffrey Walker Balance at the start of the year Received as part of remuneration Received on exercise of options Net change other* Balance at the end of the year - - 33,334 - - 33,334 - - - - - - - - - - - - - - - - - - - 33,334 - - - 33,334 *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 28 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). Pinnacle Gold Pty Limited Balance at the start of the year Received as part of remuneration Received on exercise of options Net change other* Balance at end of the the year Ordinary shares Directors Peter Wright Nicholas Mather Brian Moller Ben Hassell Other KMP Geoffrey Walker - 200,000 - - 200,000 - - - - - - - - - - - - - - - - 200,000 - - 200,000 *Includes the balance of shares held on appointment/resignation, and shares acquired and sold for cash in on-market transactions. 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 Options Over Ordinary Shares Balance at the start of the year Granted as remuneration Exercised Expired/ forfeited/ net change other* Balance at the end of the year Directors Peter Wright Nicholas Mather Brian Moller Ben Hassell Other KMP Geoffrey Walker - 11,683,684 432,448 - 12,116,132 - - - - - - - - - - - - - - - - 11,683,684 432,448 - 12,116,132 *Includes the balance of options held on appointment/resignation, and options expired during the period Auburn Resources Limited There were no options over ordinary shares in Auburn Resources Limited held during the financial year by Directors or key management personnel. Pinnacle Gold Pty Ltd 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. 29 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). 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 $145,191 (2022: $57,132) 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 2023 there was a balance of $14,064 owing (2022 : $1,581) included within current liabilities DGR Global Limited has a commercial agreement with Samuel Capital Pty Limited, an entity controlled by Nick Mather (Managing Director), for the provision of administrative and marketing services. Samuel Capital Pty Limited was paid $111,756 (2022: $28,071) for the provision of administrative and marketing services to the Group during the year. The services were based on normal commercial terms and conditions. At 30 June 2023 there was a balance of $41,585 owing (2022 : $29,700) included within current liabilities. THIS CONCLUDES THE REMUNERATION REPORT, WHICH HAS BEEN AUDITED SHARES UNDER OPTION Unissued ordinary shares of DGR Global Limited under option at the date of this report are as follows: Grant Date 22 October 2020 4 November 2021 8 February 2021 7 July 2021 Expiry date 25 September 2023 25 September 2023 25 September 2023 25 September 2023 Exercise price Number under option $0.120 $0.120 $0.120 $0.120 12,346,688 89,093,375 35,975,007 27,634,616 165,049,686 At the date of this report, there is no unissued ordinary shares of Auburn Resources Limited or Pinnacle Gold Pty Ltd under option. 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 SHARES ISSUED ON THE EXERCISE OF OPTION There were no ordinary shares of DGR Global Limited issued on the exercise of options during the year ended 30 June 2023 and up to the date of this report (2022: 10,422,443). 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 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. 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 the Company for all or part of those proceedings NON-AUDIT SERVICES There were no non-audit services provided during the financial year by the auditor. OFFICERS OF THE COMPANY WHO ARE FORMER DIRECTORS OF BDO AUDIT PTY LIMITED 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 30 DGR Global Limited dgrglobal.com.au DIRECTORS’ REPORT | for Year ended 30 June 2023 (continued). This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Nicholas Mather MANAGING DIRECTOR | DGR GLOBAL 29 September 2023 31 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 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 2023, 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, 29 September 2023 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 mem bers 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. 32 DGR Global Limited dgrglobal.com.au FINANCIAL REPORT DGR Global Limited dgrglobal.com.au FINANCIAL REPORT For the year ended 30 June 2023 Consolidated statement of profit or loss and other comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Directors' declaration Independent auditor's report to the members of DGR Global Limited Shareholder information GENERAL INFORMATION 35 36 37 38 39 82 83 89 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 Q 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 29 September 2023. The directors have the power to amend and reissue the financial statements. 34 DGR Global Limited dgrglobal.com.au STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME | For the year ended 30 June 2023 Revenue Share of losses of associates accounted for using the equity method Other income Interest income Reversal of impairment/(impairment) - investment in associate Reversal of impairment - corporate bond investments Movement in fair value of options Movement in fair value of convertible note receivable Expenses Administration and consulting expenses Depreciation expense Employee benefits expense Exploration and evaluation assets written off Impairment - trade receivables Legal expenses Rehabilitation expense Finance costs Total Expenses Loss before income tax expense Income tax expense Loss after income tax expense for the year Other comprehensive income Items that will not be reclassified subsequently to profit or loss Fair value gain on the revaluation of equity instruments at fair value through other comprehensive income Tax effect of net fair value gains on equity instruments Share of other comprehensive income of associates Other comprehensive income for the year, net of tax Total comprehensive income for the year Loss for the year is attributable to: Non-controlling interest Owners of DGR Global Limited Total comprehensive income for the year is attributable to: Non-controlling interest Owners of DGR Global Limited Basic earnings per share Diluted earnings per share Consolidated 2023 $ 2022 $ Note 4 456,323 761,141 12 (4,314,949) (2,033,652) 5 6 12 13 13 13 14 15 10 19 7 8 21 21 21 760,372 2,211,795 580,370 538,681 2,627,173 (6,286,099) 147,064 168,666 - 132,439 (1,581,006) 1,896,231 (1,850,555) (442,608) (1,795,515) (443,902) (1,662,595) (229,372) (2,271,154) (160,839) (40,101) (205,380) (6,862,604) (6,555,832) (1,887,523) (24,750) - (160,697) - (205,528) (4,517,915) (8,760,138) (2,992,087) (9,547,919) (409,426) (9,169,564) (47,624,232) 17,180,156 17,273,217 (1,791,497) 234,257 (30,393,015) 15,622,916 (39,940,934) 6,453,352 (42,000) (24,366) (9,523,553) (9,547,919) (29,054) (9,140,510) (9,169,564) (24,366) (39,916,568) (39,940,934) Cents (0.9) (0.9) (29,054) 6,482,406 6,453,352 Cents (0.9) (0.9) 35 35 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 35 DGR Global Limited dgrglobal.com.au STATEMENT OF FINANCIAL POSITION | For the year ended 30 June 2023 Assets Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Trade and other receivables Investments accounted for using the equity method Other assets Property, plant and equipment Exploration and evaluation Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Lease liabilities Income tax Total current liabilities Non-current liabilities Borrowings Lease liabilities Deferred tax Provisions Total Non-Current Liabilities Total Liabilities Net assets Equity Issued capital Reserves Accumulated losses Equity attributable to the owners of DGR Global Limited Non-controlling interest Total equity Consolidated Notes 2023 $ 2022 $ 9 10 11 10 12 13 14 15 2,432,190 824,242 72,505 3,328,937 2,620,828 2,941,072 2,576,198 2,203,082 856,871 5,636,151 - 2,248,258 93,820,301 153,300,038 883,668 21,869,379 1,306,081 17,505,637 122,135,248 174,360,014 125,464,185 179,996,165 16 18 8 17 18 8 19 1,483,685 1,523,012 568,859 485,417 2,207,498 - 4,260,042 2,008,429 3,302,380 3,116,862 50,696 619,555 7,582,630 24,071,258 1,478,982 1,449,672 12,414,688 29,257,347 16,674,730 31,265,776 108,789,455 148,730,389 20 21 57,932,187 57,932,187 93,055,797 123,448,812 (45,402,693) (35,879,140) 105,585,291 145,501,859 3,228,530 3,204,164 108,789,455 148,730,389 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 36 DGR Global Limited dgrglobal.com.au STATEMENT OF CHANGES IN EQUITY | For the year ended 30 June 2023 Consolidated Issued capital $ Prepaid capital $ Balance at 1 July 2021 54,174,709 1,500,000 Loss after income tax expense 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: - - - - Accumulated losses Non- controlling interest Total equity $ $ $ (26,738,630) 2,325,800 139,250,659 Reserves $ 107,988,780 - (9,140,510) (29,054) (9,169,564) 15,622,916 - - 15,622,916 15,622,916 (9,140,510) (29,054) 6,453,352 Contributions of equity, net of transaction costs (note 20) Share-based payments (note 36) Shares issued to non- controlling interest in Auburn Resources Ltd Change in interest in controlled entity Acquisition of subsidiary - Armour Energy International Ltd (note 31) 3,757,478 (1,500,000) - - - - - - - - - 84,361 - (247,245) - - - - - - - - 2,257,478 84,361 261,538 261,538 247,245 - 423,001 423,001 Balance at 30 June 2022 57,932,187 - 123,448,812 (35,879,140) 3,228,530 148,730,389 Consolidated Issued capital $ Prepaid capital $ Accumulated Non- controlling Reserves losses interest Total equity $ $ $ $ Balance at 1 July 2022 57,932,187 - 123,448,812 (35,879,140) 3,228,530 148,730,389 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - Balance at 30 June 2023 57,932,187 - - - - - (9,523,553) (24,366) (9,547,919) (30,393,015) - - (30,393,015) (30,393,015) (9,523,553) (24,366) (39,940,934) 93,055,797 (45,402,693) 3,204,164 108,789,455 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 37 DGR Global Limited dgrglobal.com.au STATEMENT OF CASH FLOWS | For the year ended 30 June 2023 Cash Flows from Operating Activities Receipts in the course of operations (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Government grants received Interest and other finance costs paid Notes Consolidated 2023 $ 210,695 (3,749,741) 137,804 2022 $ 1,048,307 (4,282,314) 374,737 - 193,440 (205,380) (205,528) Net Cash used in Operating Activities 34 (3,606,622) (2,871,358) Cash flows from investing activities Payments for asset acquisition - net of cash acquired Payments for other financial assets Payments for investments in associates Payments for property, plant and equipment Payments for exploration and evaluation assets Payments for security deposits Payment of share subscription deposit Loan advanced to associate Proceeds from sale of corporate bonds and release of security deposits - 14,558 (12,009,502) - (20,195) (4,593,114) (58,841) - (2,000,000) 637,000 (5,630,699) (1,974,500) (28,688) (2,549,109) (339,050) (810,000) (620,828) 1,042,000 Proceeds from the sale of other financial assets Loans advanced to subsidiary prior to acquisition of the subsidiary 13 21,992,683 - 11,146,246 (2,053,994) Net Cash From/(used in) Investing Activities 3,948,031 (1,804,064) Cash Flows from Financing Activities Proceeds from issue of shares Proceeds from the issue of shares in subsidiaries to non-controlling interests Proceeds from borrowings Payment of principal portion of lease liabilities Share issue transaction costs Net Cash from/(used in) Financing Activities 34 34 - - - (485,417) - 2,354,706 261,538 3,116,862 (414,213) (16,971) (485,417) 5,301,922 Net increase/(decrease) in cash and cash equivalents (144,008) 626,500 Cash and cash equivalents at the beginning of the financial year 2,576,198 1,949,698 Cash and Cash Equivalents at the end of the Financial Year 9 2,432,190 2,576,198 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 38 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS|For the year ended 30 June 23 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. New or Amended Accounting Standards and Interpretations Adopted: The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for 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 13; Investment in convertible notes carried at fair value through profit or loss – refer note 13. 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 Gonsolidation: The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of DGR Global Limited ('Company' or 'parent entity') as at 30 June 2023 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'. Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, 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. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance. 39 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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 value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Current and Non-Current Classification: Assets and liabilities are presented in the statement of financial position based on current and non-current classification 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 operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. 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 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 defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Associates: Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the 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. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term 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 and proceeds from disposal is recognised in profit or loss. Investments and Other Financial Assets: 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 being avoided. 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 a financial asset, its carrying value is written off. Financial Assets at Amortised Cost: A financial asset is measured at amortised only if both of the following conditions are met (i) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows and (ii)the contractual terms of the financial asset 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 designed 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. 40 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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 sole 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. is determined based on current bid prices for all quoted Fair Value: Fair value 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. subsequently measures all equity to present The Company the Company’s management has elected losses on equity in other comprehensive income, there is no subsequent reclassification of fair value gains investments and losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss as other revenue when the Company’s right to receive payments is established (see note 12) and as long as they represent a return on 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 the statement of profit or loss and other comprehensive income as applicable. investments at fair value gains and fair value. Where 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 recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Financial assets designated at fair value through OCI (equity instruments) are not subject to impairment assessment. 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. 41 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Goods and Services Tax ('GST') and Other Similar Taxes: Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable 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. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivbles or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from or payable to the 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 2023. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretation. NOTE 2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS: the that affect reported amounts The preparation of the financial statements requires management to make judgements, estimates and statements. Management assumptions continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical 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. financial the in Key Judgements – Share Based Payment Transactions: The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into 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 solely the principal and interest. Refer to note 13 for further details 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 reporting date. The Directors have assessed that for the exploration and evaluation assets recognised at 30 June 2023, 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 2023 were $21,869,379 (2022: $17,505,637). Key Judgements – Significant Influence over Associates: 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 large shareholders, composition of the Board and the limited to the relative proportion of other to direct decisions arrived at during including but not ability Board meetings were considered. Based on the factors considered, it was concluded that the Group does not control these companies but rather has the ability to exert significant influence. Accordingly, the Group’s investments in these companies have been accounted for under the equity accounting method. 42 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued) 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 had significant influence included, the Group’s voting power in comparison to other shareholders, specific rights, corporate governance arrangements and the power to veto significant financial and operating decisions. The Group’s investment in Armour Energy Limited at 30 June 2023 and 30 June 2022 was 19.92% and 18.37% respectively. 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. Additionally, judgement is exercised in determining whether impairments can be reversed. With respect to the Group’s investment in Atlantic Lithium Limited, SolGold plc, Clara Resources 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. Key judgements - Recognition of investment in Atlantic Lithium Limited: Shares held by the Group in Atlantic Lithium Limited have been used as security for a loan advanced to DGR Global Limited (refer to note 13). Title to 12,000,000 ordinary shares in Atlantic Lithium Limited, representing 71.1% of the total number of shares owned by DGR at 30 June 2023, has been transferred to the lender in terms of a Deed of Security. Although title in the shares has been transferred to the lender, the Directors have assessed that DGR has retained substantially all the risks and rewards of ownership of the shares and continues to recognise the investment in the shares. Working Capital Deficiency: Notwithstanding the deficiency in working capital, the financial report has been prepared on a going concern basis for the following reasons: ▪ Non-current assets include $75,681,695 of investments in listed equity instruments, that may be liquidated in on-market transactions to fund working capital as required. 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. The Group reports information to the Board of Directors along company lines. That is, the financial position of DGR and each of its 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. 43 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Operating Segment Information 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. Consolidated - 2023 Revenue Auburn DGR Global Resources International $ $ $ Armour Energy Other $ Total $ Provision of services to external customers 456,323 Interest revenue Total Revenue 2,211,795 2,668,118 - - - - - - - - - 456,323 2,211,795 2,668,118 Segment Net Loss Before Tax Share of losses of associates (4,474,524) - (61,866) - (291,046) - Impairment of investment in associate - - - (40,620) (4,314,949) 2,627,173 (4,868,056) (4,314,949) 2,627,173 Loss Before Income Tax Expense (4,474,524) (61,866) (291,046) (1,728,396) (6,555,832) Income tax expense Loss After Income Tax Expense Assets Segment assets Intersegment eliminations Total Assets Total assets includes: (2,992,087) (9,547,919) 119,567,167 5,231,735 9,959,061 2,155,531 136,913,494 (11,449,309) 125,464,185 Investments in associates 2,941,072 - - - 2,941,072 Acquisition of non-current assets 1,085,291 620,702 2,180,479 726,837 4,613,309 Liabilities Segment liabilities Intersegment eliminations Total liabilities 16,095,446 1,066,478 7,793,433 3,168,682 28,124,039 (11,449,309) 16,674,730 44 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Consolidated - 2022 Revenue Provision of services to external customers Interest revenue Total Revenue Auburn Armour Energy DGR Global Resources International Other $ $ $ $ Total $ 761,141 538,681 1,299,822 - - - - - - - - 761,141 538,681 - 1,299,822 Segment Net Loss Before Tax Share of losses of associates Impairment of investment in associate (314,600) (30,470) (58,135) - - - - - - Loss Before Income Tax Expense (314,600) (30,470) (58,135) (37,182) (440,387) (2,033,652) (2,033,652) (6,286,099) (6,286,099) (8,356,933) (8,760,138) (409,426) (9,169,564) Income tax expense Loss After Income Tax Expense Assets Segment assets Intersegment eliminations Total Assets Total Assets Includes: 173,952,619 4,644,172 7,869,131 1,454,646 187,920,568 (7,924,403) 179,996,165 Investments in associates 2,248,258 - - - 2,248,258 Acquisition of non-current assets 1,065,758 1,162,007 1,775,517 167,549 4,170,831 Liabilities Segment liabilities Intersegment eliminations Total Liabilities 30,933,495 417,050 5,412,457 2,427,177 39,190,179 (7,924,403) 31,265,776 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 Consolidated 2023 2022 $ $ Management fees - related parties 456,323 761,141 Disaggregation of revenue is not presented as all revenue for the current and prior years was derived from the provision of management fees. 45 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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 Government grants - including JobKeeper and Cashflow boost Foreign currency related (losses)/gains Capital raising and selling fees Other - including wages recharges to other companies Other income Consolidated 2023 $ - (151,334) 736,660 175,046 2022 $ 193,440 316,567 - 70,363 760,372 580,370 Government Grants: Government grants are recognized 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 recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. Interest: Interest revence is recognized as interest accures using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income ovr 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. Capital Raising and Selling Fees: Capital raising and selling fees represent fees received by the Company in connection with raising capital for other entites and the placement of convertible notes. The fees are recognized as income on completion of the respective trannsactions. NOTE 6. INTEREST INCOME Interest on convertible notes Interest on corporate bonds Interest on loans to associate Bank interest Other interest income Consolidated 2023 $ 1,957,266 175,016 75,000 3,403 1,110 2022 $ 316,360 220,179 - 2,123 19 2,211,795 538,681 Accounting Policy for Interest Income: 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. 46 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 7. EXPENSES Loss before income tax includes the following specific expenses: Finance Costs Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities Finance costs expensed Superannuation Expense Consolidated 2023 $ 2022 $ 107,716 59,086 97,664 146,442 205,380 205,528 Defined contribution superannuation expense 102,238 86,527 NOTE 8. INCOME TAX Income tax expense Current tax Deferred tax Aggregate Income Tax Expense Numerical Reconciliation of Income Tax Expense and Tax at the Statutory Rate Loss before income tax expense Tax at the statutory tax rate of 30% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Capital gain Other Prior period adjustments Derecognise tax losses Impact of tax rate change Income tax expense v Consolidated 2023 2022 $ $ 2,207,498 - 784,589 409,426 2,992,087 409,426 (6,555,832) (8,760,138) (1,966,750) (2,628,041) 5,017,129 (730) 3,078,001 (6,621) 3,049,649 (9,128) (48,434) - 443,339 (11,335) 59,307 (81,885) 2,992,087 409,426 41 47 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Deferred Tax Opening balance Net credited to income Net credited to other comprehensi ve income Net credited to equity Closing balance $ $ $ $ $ - - - - - - - - - - - - - - - 2,340,023 886,506 234,042 154,889 33,827 3,649,287 (9,666,768) 183,845 1,390,092 (2,963,631) (115,841) (59,614) - (11,231,917) (7,582,630) 30 June 2023 Deferred Tax Asset Carried forward tax losses 3,900,648 (1,560,625) Accruals/provisions Capital raising costs expensed Lease liabilities Other temporary differences Deferred Tax Liability Financial assets at fair value through other comprehensive income Convertible note Investment in associates 301,764 584,742 361,513 (127,471) 276,243 (121,354) - 33,827 4,840,168 (1,190,881) - - - - - - (20,607,104) - 10,940,336 (172,140) 355,985 - (5,364,733) 421,944 6,332,881 Exploration and evaluation assets (2,472,469) (491,162) Right of use assets Property, plant and equipment Unrealised foreign exchange gains (222,772) 106,931 (59,614) (12,594) - 12,594 - - - - Net deferred tax recognised (24,071,258) (784,589) 17,273,217 (28,911,426) 406,292 17,273,217 48 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 30 June 2022 Deferred tax asset Carried forward tax losses Accruals/provisions Capital raising costs expensed Lease liabilities Opening balance $ Net charged to income $ Net charged to other comprehensi ve income $ Net credited to equity $ Closing balance $ 5,152,369 268,317 497,648 379,796 6,298,130 (1,251,721) 33,447 (140,239) (103,553) (1,462,066) - - - - - - - 4,104 - 3,900,648 301,764 361,513 276,243 4,104 4,840,168 Deferred tax liability Financial assets at fair value through other comprehensive income Convertible note (21,118,464) 377,194 - (549,334) 511,360 - Investment in associates (5,141,814) 2,079,938 (2,302,857) Exploration and evaluation assets Right of use assets Property, plant and equipment Unrealised foreign exchange gains (1,900,646) (329,702) (59,137) - (571,823) 106,930 (477) (12,594) - - - - (28,172,569) 1,052,640 (1,791,497) - - - - - - - - (20,607,104) (172,140) (5,364,733) (2,472,469) (222,772) (59,614) (12,594) (28,911,426) Net deferred tax recognised (21,874,439) (409,426) (1,791,497) 4,104 (24,071,258) Deferred Tax Assets Not Recognised Unrecognised tax losses Unrecognised capital losses Tax benefit at 25% (2022: 25%) Consolidated 2023 $ 2022 $ 1,925,903 2,087,351 67,848 67,848 1,993,751 2,155,199 498,438 538,800 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 2023 under COT. Deferred tax assets which have not been recognised as an asset, will only be obtained if: (i) the Company derives future assessable income of a nature and of an amount sufficient to enable the losses to be realised; (ii) the Company continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the Company in realising the losses. 49 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued) Provision for income tax Provision for income tax Consolidated 2023 $ 2,207,498 2022 $ - 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. 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 9. CASH AND CASH EQUIVALENTS Current Assets Cash at bank and in hand Consolidated 2023 $ 2022 $ 2,432,190 2,576,198 50 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Accounting Policy for Cash and Cash Equivalents 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 subject to an insignificant risk of changes in value. NOTE 10. TRADE AND OTHER RECEIVABLES Current Assets Trade receivables Less: Allowance for expected credit losses Loan to Associate Other receivables GST receivable Non-Current Assets Loan to associate Consolidated 2023 $ 2022 $ 2,604,675 (2,488,026) 116,649 1,263,182 (216,872) 1,046,310 - 673,548 34,045 620,828 433,781 102,163 824,242 2,203,082 2,620,828 - 3,445,070 2,203,082 Allowance for Expected Credit Losses: The ageing of the trade receivables and allowance for expected credit losses provided for are as follows: Consolidated Not past due Past due 30-60 days Past due >60 days Total Carrying amount Allowance for expected credit losses 2023 2022 2023 $ 118,756 41,973 2,443,946 $ 105,702 43,644 1,113,836 $ 84,097 2022 $ - 41,973 - 2,361,956 216,872 2,604,675 1,263,182 2,488,026 216,872 As at 30 June 2023, included in trade are three significant debtors accounting for 95% (2022: four significant debtors accounting for 93%) of the total trade receivables Movements in the allowance for expected credit losses are as follows: Opening balance Additional provisions recognised Closing Balance Consolidated 2023 $ 2022 $ 216,872 216,872 2,271,154 - 2,488,026 216,872 47 51 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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. NOTE 11. OTHER ASSETS Current Assets Prepayments Prepaid capital - Lakes Blue Energy NL Consolidated 2023 $ 2022 $ 72,505 - 72,505 46,871 810,000 856,871 NOTE 12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Non-current assets Investment in Armour Energy Limited Reconciliation Reconciliation of the carrying amounts at the beginning and end of the current and previous financial year are set out below: Opening carrying amount Loss after income tax Other comprehensive income Additions - conversion of McArthur Oil & Gas Ltd notes into shares in Armour Energy Ltd (note 13) Additions - shares acquired Reversal of impairment/(impairment) Closing Carrying Amount Consolidated 2023 $ 2022 $ 2,941,072 2,248,258 2,248,258 6,434,252 (4,314,949) (2,033,652) (42,000) 234,257 2,422,590 - - 3,899,500 2,627,173 (6,286,099) 2,941,072 2,248,258 The share price of Armour Energy Limited at 30 June 2023 was $0.003 (2022: $0.006) before adjustment for the share consolidation on 8 August 2023. The investment in Armour Energy Limited has been written down to the lower of fair value, less costs to sell or the eqity-accounted value based on level 1 fair value hierarchy. 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: Name Armour Energy Limited Principal place of business / Country of incorporation Australia Ownership interest 2023 2022 % 19.92% % 18.37% 52 DGR Global Limited dgrglobal.com.au NOTES THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued) Summarised Financial Information Armour Energy Ownershi p interest % Current assets $ Non-current assets $ Current liabilities $ Non-current liabilities $ Revenue $ Profit/ (loss) before tax $ Other Comprehevsive income $ 30 June 2023 30 June 2022 19.92% 6,451,678 100,962,682 50,331,462 15,171,944 14,972,945 (21,660,815) (210,837) 18.37% 11,943,412 96,093,400 34,734,189 21,484,353 17,984,564 (11,180,392) 1,101,491 Reconciliation of the share of net assets to the carrying amount of the Group’s investment in associates Share of net assets Goodwill Net impairment Closing carrying amount NOTE 13. OTHER FINANCIAL ASSETS Consolidated 2023 $ 2022 $ 8,348,662 9,537,337 16,560,554 17,306,238 (21,968,144) (24,595,317) 2,941,072 2,248,258 2023 $ Consolidated 2022 $ Non-current assets Financial assets at fair value through other comprehensive income (a) 75,681,695 Financial assets at fair value through profit or loss (b) Corporate bonds (c) Security bonds (d) 14,986,540 1,014,836 2,137,230 142,524,263 7,192,614 1,504,772 2,078,389 93,820,301 153,300,038 53 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). (a) Financial Assets at Fair Value through Other Comprehensive Income Opening balance Additions Additions – transfer from prepaid capital (note 11) Disposals Consolidated 2023 $ 2022 $ 142,524,263 135,859,654 1,964,347 630,699 810,000 - (21,992,683) (11,146,246) Fair value adjustment through other comprehensive income (note 21) (47,624,232) 17,180,156 Closing Balance 75,681,695 142,524,263 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 Atlantic Lithium Limited (formerly IronRidge Resources Limited), listed on the LSE, an investment in the ordinary issued capital of Canadian Nexus Team Ventures Corp (formerly Block X Capital Corp.), listed on the TSX, an investment in the ordinary issued capital of Clara Resources Australia Limited (formerly Aus Tin Mining Limited) 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, an investment in the ordinary issued capital of NewPeak Metals Ltd a company listed on the Australian Securities Exchange, and an investment in the ordinary issued capital of Challenger Energy Group plc, listed on the London Stock Exchange ("LSE"). Shares held in Atlantic Lithium Limited have been used as security for a loan advanced to DGR Global Limited (refer note 17). Title to 12,000,000 ordinary shares in Atlantic Lithium Limited, representing 71.1% of the total number of shares owned by DGR at 30 June 2023, has been transferred to the lender in terms of a Deed of Security. Although title in the shares has been transferred to the lender, DGR has retained substantially all the risks and rewards of ownership of the shares and continues to recognise the investment in the shares. At 30 June 2023, the 12,000,000 ordinary shares used as security for the loan had a fair value of $5,722,590. 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. 54 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). (b) Financial Assets at Fair Value through Profit or Loss Opening Balance Consolidated 2023 $ 2022 $ 7,192,614 - Additions - Lakes Blue Energy NL - convertible notes in lieu of interest 228,903 163,944 Additions - McArthur Oil & Gas Ltd - redeemable exchangeable notes 11,428,000 5,000,000 Interest - McArthur Oil & Gas Ltd - redeemable exchangeable notes Conversion of McArthur Oil & Gas Ltd redeemable exchangeable notes into shares in Armour Energy Ltd (note 12) Conversion of Lakes Blue Energy NL convertible notes into shares in Lakes Blue Energy NL Fair value adjustment through profit or loss - convertible notes and redeemable exchangeable notes 1,962,964 (2,422,590) (1,382,845) - - - (1,581,006) 1,896,231 Fair value adjustment through profit or loss - Armour Energy Ltd options - 132,439 Interest on redeemed notes transferred to other receivables (439,500) - Closing Balance Comprising the following financial assets: Lakes Blue Energy NL convertible notes(i) McArthur Oil & Gas Ltd redeemable exchangeable notes(ii) Armour Energy Ltd options 14,986,540 7,192,614 - 1,968,331 14,854,101 5,091,844 132,439 132,439 14,986,540 7,192,614 (i) Lakes Blue Energy NL 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 was combined with a royalty arrangement such that for every $1 million invested, the investee was entitled to a 2% royalty on future gas sales from certain Lakes Oil tenements (pro rata for less or more than $1 million). All notes were converted into ordinary shares in Lakes Blue Energy NL during the 2023 financial year (ii) McArthur Oil and Gas Ltd At 30 June 2023, DGR had invested in redeemable exchangeable notes in McArthur Oil and Gas Ltd (MOG) with a face value of $14,005,410 (2022: $5,000,000). The notes have a coupon rate of 15% per annum, accrued and capitalised monthly from the issue date. MOG is a wholly owned subsidiary of Armour Energy Ltd (Armour) (an associate of DGR). (c) Corporate Bonds at Amortised Cost Opening balance Reversal of impairment Repayment Closing balance Consolidated 2023 $ 2022 $ 1,504,772 2,064,106 147,064 168,666 (637,000) (728,000) 1,014,836 1,504,772 55 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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) Security Bonds at Amortised Cost Security bonds are held with the Department of Natural Resources and Mining as security for rehabilitation works required and the lease of office premises. (e) Fair Value Refer to note 24 for fair value disclosures; NOTE 14. PROPERTY, PLANT AND EQUIPMENT Consolidated 2023 $ 2022 $ 345,000 345,000 98,115 (43,971) 54,144 90,166 (41,613) 48,553 363,061 (361,933) 1,128 363,061 (360,059) 3,002 2,443,532 (2,443,532) 2,443,532 (2,443,532) - - 114,414 111,771 (110,953) (110,113) 3,461 1,658 234,999 (218,428) 16,571 225,396 (208,614) 16,782 2,174,250 (1,710,886) 2,174,250 (1,283,164) 463,364 891,086 883,668 1,306,081 Non-Current Assets Land - at cost Buildings - at cost Less: Accumulated depreciation Plant and equipment - at cost Less: Accumulated depreciation Site infrastructure - at cost Less: Accumulated depreciation Fixtures and fittings - at cost Less: Accumulated depreciation Computers and office equipment - at cost Less: Accumulated depreciation Right of use asset - property lease Less: Accumulated depreciation 56 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Reconciliations: Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: Consolidated Land Buildings $ Balance at 1 July 2021 345,000 Additions Depreciation expense - - $ 39,704 10,932 Plant and equipment Fixtures and fittings Compute rs and office equipme nt Right-of- use asset - property lease $ $ $ $ Total $ 5,556 487 - 2,868 10,797 1,318,807 1,720,351 29,632 15,832 - (2,083) (2,554) (1,697) (9,847) (427,721) (443,902) Balance at 30 June 2022 Additions Depreciation expense 345,000 - - 48,553 7,949 3,002 - 1,658 2,643 (2,358) (1,874) (840) 16,782 891,086 1,306,081 9,603 20,195 (9,814) (427,722) (442,608) - Balance at 30 June 2023 345,000 54,144 1,128 3,461 16,571 463,364 883,668 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 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 The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. 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. 57 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 15. EXPLORATION AND EVALUATION Non-Current Assets Consolidated 2023 $ 2022 $ Exploration and evaluation assets - at cost Reconciliations Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: 21,869,379 17,505,637 Consolidated Balance at 1 July 2021 Additions Asset acquisitions (note 31) Write off of assets Balance at 30 June 2022 Additions Write off of assets Balance at 30 June 2023 $ 13,389,188 3,167,007 974,192 (24,750) 17,505,637 4,593,114 (229,372) 21,869,379 Accounting Policy for Exploration and Evaluation Assets: 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. 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 that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structure, waste 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. 58 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 16. TRADE AND OTHER PAYABLES Current Liabilities Trade payables Sundry payables and accrued expenses Employee benefits Other payables Refer to note 23 for further information on financial instruments NOTE 17. BORROWINGS Non-Current Liabilities Loan - Equities First Holdings LLC Refer to note 23 for further information on financial instruments. Consolidated 2023 2022 $ $ 830,368 594,310 397,536 666,976 248,895 135,721 6,886 126,005 1,483,685 1,523,012 Consolidated 2023 $ 2022 $ 3,302,380 3,116,862 On 16 December 2021, DGR Global Limited (DGR) entered into a loan agreement with Equities First Holdings LLC (EFH). EFH advanced £1,679,302 (GBP) to DGR. The loan is secured by 12,000,000 ordinary shares held by DGR in Atlantic Lithium Limited (refer note 13). The loan bears interest at 3.5% per annum and is repayable on 16 December 2024. The loan was fully utilised at 30 June 2023 and 30 June 2022.. Accounting Policy for Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, except for convertible notes which are subsequently measured at fair value through profit or loss NOTE 18. LEASE LIABILITIES Current Lliabilities Lease liability - land and buildings Non-Current Liabilities Lease liability - land and buildings Refer to note 23 for further information on financial instruments. The Company leases offices for a fixed period of 5 years. Consolidated 2023 $ 2022 $ 568,859 485,417 50,696 619,555 619,555 1,104,972 59 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Movements in Carrying Value of Lease Opening balance Interest expense Lease payments Closing Balance Consolidated 2023 $ 2022 $ 1,104,972 1,519,185 146,442 (583,081) (560,655) 97,664 619,555 1,104,972 Accounting Policy for Lease Liabilities 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 cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value 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 they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there 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. NOTE 19. PROVISIONS Non-Current Liabilities Long service leave Site restoration Consolidated 2023 $ 2022 $ 2,466 1,476,516 13,257 1,436,415 1,478,982 1,449,672 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 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 $1,476,516 . Movements in Provisions: Movements in each class of provision during the current financial year, other than employee benefits, are set out below: Consolidated - 2023 Carrying amount at the start of the year Additional provisions recognised Carrying amount at the end of the year Site restoration $ 1,436,415 40,101 1,476,516 60 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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 Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled 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 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 20. ISSUED CAPITAL Details Ordinary shares – fully paid Movements In Ordinary Share Capital Details Balance Share placement (a) Options exercised Share issue costs Deferred tax credit recognised directly in equity Balance Balance Consolidated 2023 Shares 2022 Shares 2023 $ 2022 $ 1,043,693,478 1,043,693,478 57,932,187 57,932,187 Date Shares Issue Price $ 1 July 2021 975,578,727 54,174,709 7 July 2021 57,692,308 $0.052 3,000,000 30 May 2022 10,422,443 $0.082 858,809 (105,435) 4,104 30 June 2022 1,043,693,478 57,932,187 30 June 2023 1,043,693,478 57,932,187 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 have one vote. 61 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Share Placement 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, and the Lead Manager was granted 6,000,000 options for services rendered (refer note 36). Options As at 30 June 2023, there were 165,049,686 unissued ordinary shares of DGR Global Ltd under option, held as follows: Options on Issue in DGR Global Number Exercise Price $ Expiry Quoted options (ASX:DGRO) 165,049,686 0.120 25/09/2023 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 capital risk management policy remains unchanged from the 2022 Annual Report. 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 proceeds NOTE 21. RESERVES Financial assets at fair value through other comprehensive income reserve Share-based payments reserve Change in proportionate interest reserve Profit reserve Consolidated 2023 $ 57,400,777 8,798,531 18,002,422 8,854,067 2022 $ 87,793,792 2 8,798,531 18,002,422 8,854,067 93,055,797 123,448,812 Share-Based Payments Reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services Change in Proportionate Interest Reserve 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 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. 62 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Movements in Reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Financial assets revaluation reserve Share-based payments reserve Change in proportionat e interest reserve Profit reserve Total $ $ $ $ $ Balance at 1 July 2021 72,170,876 8,714,170 18,249,667 8,854,067 107,988,780 Revaluation - gross Deferred tax Share-based payment expense Issue of shares interest Share of other comprehensive income in associate (net of tax) to non-controlling 17,180,156 (1,791,497) - - 234,257 - - 84,361 - - - - - (247,245) - - - - - - 17,180,156 (1,791,497) 84,361 (247,245) 234,257 Balance at 30 June 2022 87,793,792 8,798,531 18,002,422 8,854,067 123,448,812 Revaluation - gross Deferred tax Share of other comprehensive income in associate (net of tax) (47,624,232) 17,273,217 (42,000) - - - - - - - - - (47,624,232) 17,273,217 (42,000) Balance at 30 June 2023 57,400,777 8,798,531 18,002,422 8,854,067 93,055,797 NOTE 22. DIVIDENDS There were no dividends paid, recommended or declared during the current or previous financial year. 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. 63 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Financial Assets Cash and cash equivalents Trade and other receivables Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Security bonds Corporate bonds Financial Liabilities Trade and other payables Lease liabilities Borrowings Market Risk Consolidated 2023 $ 2022 $ 2,432,190 3,445,070 75,681,695 14,986,540 2,137,230 1,014,836 99,697,561 1,483,685 619,555 3,302,380 5,405,620 2,576,198 2,203,082 142,524,263 7,192,614 2,078,389 1,504,772 158,079,318 1,523,012 1,104,972 3,116,862 5,744,846 Foreign Currency Risk The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The table below demonstrates the sensitivity to a reasonably possible change in the United States dollar and the Pound Sterling (GBP) against the Australian dollar. 2023 2022 Change in US dollar rate % Effect on profit before tax $ Change in GBP rate % Effect on profit before tax $ 10% (10%) 10% (10%) 28,453 (34,776) 7,052 (8,619) 10% (10%) 10% (10%) 81,708 (99,865) 106,636 (130,333) 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 Group’s exposure to equity securities price risk arises from investments held by the Group and classified in the statement of financial position either as at fair value through other comprehensive income (FVOCI) or at fair value through profit or loss (FVPL). The effect on equity as a result of changes in equity security prices would be as follows: Average Price Increase Average Price Decrease Consolidated - 2023 Effect on loss before tax Effect on other component s of equity % change % change Equity securities 15% 2,228,115 13,580,369 15% Effect on loss before tax Effect on other component s of equity (2,228,115) (13,580,369) 64 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Consolidated - 2022 Equity securities Average Price Increase Average Price Decrease Effect on loss before tax 706,018 Effect on other component s of equity % change 10% 14,958,444 Effect on other components of equity Effect on loss before tax (706,018) (14,958,444) % change 10% Pre-tax profit for the period would increase/decrease as a result of gains/losses on equity securities classified as at FVPL. Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as at FVOCI. The analysis assumes all other variables remain constant. It also assumes the investment in SolGold plc, Canadian Nexus Team Ventures Corp (formerly Block X Capital Corp.), Clara Resources Australia Ltd (formerly Aus Tin Mining Ltd), NewPeak Metals Ltd, Lakes Blue Energy NL (formerly Lakes Oil NL), Atlantic Lithium Ltd (formerly IronRidge Resources Ltd) and Challenger Energy Group plc, were remeasured to fair value on 30 June 2023 (and that the 10% change had occurred as at that date). 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 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: 2023 Financial Assets Cash and cash equivalents Trade and other receivables Other financial assets Total Financial Assets Financial Liabilities Trade and other payables Lease liabilities Borrowings Total Financial Liabilities 2022 Financial Assets Cash and cash equivalents Trade and other receivables Other financial assets Total Financial Assets Financial Liabilities Trade and other payables Lease liabilities Borrowings Total Financial Liabilities Weighted average effective interest rate* % Floating interest rate $ Fixed interest rate $ Non-interest bearing $ Total carrying amount $ 0.01% - 14.60% - 12.00% 3.50% Weighted average effective interest rate* % 2,432,190 - - - 2,432,190 - 2,000,000 15,868,937 17,868,937 - 1,445,070 77,951,364 79,396,434 2,432,190 3,445,070 93,820,301 99,697,561 - - - - - 619,555 3,302,380 3,921,935 1,483,685 - - 1,483,685 1,483,685 619,555 3,302,380 5,405,620 Floating interest rate $ Fixed interest rate $ Non-interest bearing $ Total carrying amount $ 0.01% 2,576,198 - - 2,576,198 - 13.59% - 12.00% 3.50% - - - 8,564,947 2,203,082 144,735,091 2,203,082 153,300,038 2,576,198 8,564,947 146,938,173 158,079,318 - 1,523,012 1,523,012 1,104,972 3,116,862 4,221,834 - - 1,104,972 3,116,862 1,523,012 5,744,846 - - - - 65 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). At 30 June 2023, if interest rates had increased by 25 basis points (bps) from the year-end rates with all other variables held constant, pre-tax loss for the year would have been $6,582 lower (2022 changes of 25 bps: pre-tax loss $6,440 lower), as a result of higher interest income from cash and cash equivalents. Credit Risk 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 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. 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 surplus of $3,627,722 at 30 June 2022 to a surplus of $931,105 at 30 June 2023. 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. Consolidated - 2023 Non-derivatives Non-interest bearing Trade and other payables Interest-bearing - fixed rate Lease liability Borrowings 6 Months or less 6-12 Months $ $ 1-3 Years $ Over 3 Years $ Remaining contractual maturities $ 1,483,685 - - - 1,483,685 302,227 54,545 304,177 50,696 54,545 3,171,407 - - - 657,100 3,280,497 5,421,282 Total non-derivatives 1,840,457 358,722 3,222,103 66 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Consolidated - 2022 6 Months or less 6-12 Months $ $ 1-3 Years $ Over 3 Years $ Remaining contractual maturities $ Non-Derivatives Non-Interest Bearing Trade and other payables Interest-Bearing-Fixed Rate Lease liability Borrowings Total Non-Derivatives 1,523,012 - - - 1,523,012 290,603 54,545 1,868,160 292,478 54,545 347,023 657,100 3,276,238 3,933,338 - - - 1,240,181 3,385,328 6,148,521 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. 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 Consolidated - 2023 Level 1 Level 2 Level 3 $ $ $ Total $ Assets Financial assets at fair value through other comprehensive income 75,681,695 Financial assets at fair value through profit or loss 132,439 Total Assets Consolidated - 2022 75,814,134 - - - - 75,681,695 14,854,101 14,986,540 14,854,101 90,668,235 Level 1 Level 2 Level 3 Total $ $ $ $ Assets Financial assets at fair value through other comprehensive income 142,524,263 Financial assets at fair value through profit or loss 132,439 Total Assets There were no transfers between levels during the financial year. 142,656,702 - - - - 142,524,263 7,060,175 7,192,614 7,060,175 149,716,877 Valuation Techniques for Fair Value Measurements Categories within Level 1: The financial assets at fair value through other comprehensive income are measured based on the quoted market prices at 30 June 2023 and 30 June 2022. Valuation Techniques for Fair Value Measurements Categories within level 2 and level 3: Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. 67 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Level 3: The financial assets at fair value through profit or loss at 30 June 2022 comprise convertible notes in Lakes Blue Energy NL (Lakes) and redeemable exchangeable notes in McArthur Oil & Gas Limited (MOG). The financial assets at fair value through profit or loss at 30 June 2023 comprise redeemable exchangeable notes in MOG. The notes comprise a debt component and an equity component. The debt component was valued using a discounted cash flow method and the equity component was valued as an option. The combined value of the debt and equity components comprise the total fair value of the respective notes. Lakes - The calculation of the value of the debt component of the note involved removing the value of the equity component of the convertible notes on the day of issue and calculating an implied discount rate on the future cash flows of the liability. This implied rate was then used to calculate the present or discounted value of all future cash flows as at the date of valuation, being the face value plus accumulated interest over the life of the convertible note. MOG - At the date of valuation, the conversion of the notes into shares is uncertain. Additionally, the Company may have its notes redeemed where there is an Exit Event or an Event of Default and if either of these events occurs, then the notes will be repaid at face value, thereby forfeiting the equity exchange. At the date of valuation of 30 June 2023, management expects that the IPO and Exit event are not going to occur, and the outcome will be that the notes will be redeemed via either cash or a swap for different convertible notes. Therefore, without a conversion to shares there is no equity uplift and no equity value in the convertible notes. Level 3 Financial Instruments Movements in level 3 financial instruments during the current and previous financial year are set out below: Consolidated Balance at 1 July 2021 Additions Gains recognised in profit or loss Balance at 30 June 2022 Additions Disposals Losses recognised in profit or loss Balance at 30 June 2023 Total gains for the previous year included in profit or loss that relate to level 3 assets held at the end of the previous year Total losses for the current year included in profit or loss that relate to level 3 assets held at the end of the current year Financial assets at fair value through profit or loss $ - 5,163,944 1,896,231 7,060,175 13,180,366 (3,805,435) (1,581,005) 14,854,101 1,896,231 (1,581,005) 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. 68 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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: Short-term employee benefits Post-employment benefits Termination benefits Consolidated 2023 $ 2022 $ 919,961 1,185,749 25,181 - 25,813 241,643 945,142 1,453,205 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: Audit services - BDO Audit Pty Limited Audit or review of the financial statements Consolidated 2023 $ 2022 $ 276,895 165,950 NOTE 27. CONTINGENT LIABILITIES On or about 8 September 2017 DGR Global Limited and Armour Energy Limited agreed that Armour Energy Limited 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 Limited (the Letter Agreement). The 83.18% interest was transferred to DGR Global in December 2021 through the issue of 3,066,000 shares in Armour Energy International Pty Ltd to DGR Global Limited. 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. The licence was renewed for a further two year period on 12 May 2023. On or about 18 December 2019, DGR Global Limited and Armour Energy Limited entered into a deed of guarantee and indemnity (the Deed of Guarantee and Indemnity) pursuant to which DGR Global Limited indemnifies and will keep Armour Energy Limited 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 Limited agrees to guarantee and indemnify Armour Energy Limited for the due, punctual and complete performance by Armour Energy Limited’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 Limited estimates its current contingent liability under the Deed of Guarantee and Indemnity at approximately US$7.5 million. 69 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 28. COMMITMENTS (a) Future Exploration The Group has certain obligations to expend minimum amounts on exploration in tenement areas, or obligations to complete defined exploration programs (with budgets submitted). These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group. Committed at the reporting date but not recognised as liabilities, payable: Within one year One to five years Consolidated 2023 $ 2022 $ 3,420,383 2,603,149 33,450,793 13,646,591 36,871,176 16,249,740 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. (b) Redeemable Exchangeable Note Facility The Company has provided an unsecured redeemable exchangeable note facility to McArthur Oil and Gas Ltd (refer note 13). The facility was fully drawn at 30 June 2023. The undrawn balance on the facility at 30 June 2022 was $1,500,000. 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 12. Key Management Personnel: Disclosures relating to key management personnel are set out in note 25 and the remuneration report included in the directors' report. Transactions with Related Parties: The following transactions occurred with related parties: 70 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Consolidated 2023 $ 2022 $ 456,000 456,000 75,000 175,016 - 220,179 148,767 Provision of services to: Armour Energy Limited (a) Interest revenue: Loans to Armour Energy Limited Corporate Bonds with Armour Energy Limited Redeemable exchangeable notes with McArthur Oil and Gas Limited 1,814,197 Payment for Goods and Services: Payment for services from Hopgood Ganim Lawyers (b) Payment for services from Samuel Capital Pty Limited (c) 145,191 111,756 57,132 28,071 (a) DGR Global Limited has a commercial agreement with Armour Energy Limited, an associate of DGR Global Limited, for the provision of administrative services. In consideration for the provision of the services, DGR Global Limited receives a monthly administration fee. (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. (c) DGR Global Limited has a commercial agreement with Samuel Capital Pty Limited, an entity controlled by Nick Mather, for the provision of administrative and marketing services. Receivable From and Payable to Related Parties The following balances are outstanding at the reporting date in relation to transactions with related parties: Current Receivables: Trade receivables – Armour Energy Limited* Trade receivables – McArthur Oil and Gas Limited* Trade receivables from other related parties Non-Current Financial Assets: Consolidated 2023 $ 2022 $ 1,375,497 757,420 903,540 - 310,643 293,166 Corporate bonds - Armour Energy Limited* 1,014,836 1,504,772 Redeemable exchangeable notes - McArthur Oil and Gas Limited** 14,854,101 5,091,844 Current payables: Trade payables - HopgoodGanim Lawyers Trade payables - Samuel Capital Pty Limited 14,064 41,585 1,581 29,700 * A provision for expected credit losses of $2,271,154 has been processed at 30 June 2023 for the balances due by Armour Energy Limited and McArthur Oil and Gas Limited. ** The corporate bonds are secured over all the assets of Armour Energy Limited, earn interest at 8.75% per annum, and are repayable within 5 years of their issue date. *** The redeemable exchangeable notes are unsecured and have a coupon rate of 15% per annum. 71 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Loans to/from Related Parties The following balances are outstanding at the reporting date in relation to loans with related parties: Current Receivables: Loan to associate Non-Current Receivables: Loan to associate Consolidated 2023 $ 2022 $ - 620,828 2,620,828 - The loan to the associate is unsecured and has no fixed repayment terms. Interest is charged at 10% per annum on $2,000,000 and the remaining balance is interest free. 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 Parent 2023 2022 $ $ Loss after income tax (9,154,386) (9,043,777) Other comprehensive income for the year, net of tax (30,393,015) 15,622,916 Total Comprehensive Income (39,547,401) 6,579,139 72 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Statement of Financial Position Total current assets Total non-current assets Total assets Total current liabilities Total non-current liabilities Total liabilities Net Assets Equity Issued capital Parent 2023 $ 2022 $ 4,061,127 5,036,556 117,649,731 171,059,752 121,710,858 176,096,308 3,680,758 1,676,147 12,414,688 29,257,347 16,095,446 30,933,494 105,615,412 145,162,814 57,932,188 57,932,188 Financial assets at fair value through other comprehensive income reserve 57,400,776 87,793,792 Share-based payments reserve Profit reserve Accumulated losses Total Equity 8,798,531 8,798,531 8,854,067 8,854,067 (27,370,150) (18,215,764) 105,615,412 145,162,814 At 30 June 2023, the Company’s investments in associates and investments at fair value through other comprehensive income (excluding investments in Corporate Bonds and investments in unlisted corporate entities) are as follows: Listed Investments Number of Shares Share Price* $ Quoted Value Other Financial Assets at Fair Value through Other Comprehensive Income: Canadian Nexus Team Ventures Corp. (formerly Block X Capital Inc.) 8,750 C$0.1 997 SolGold Plc 204,151,800 £0.159 61,918,684 NewPeak Metals Limited Clara Resources Australia Limited (formerly AusTin Mining Ltd) Atlantic Lithium Limited (formerly IronRidge Resources Ltd) Lakes Blue Energy NL (formerly Lakes Oil NL) Challenger Energy Group Plc 755,896,372 23,851,041 16,866,675 3,748,698,506 114,914,001 A$0.001 A$0.042 £0.25 A$0.001 £0.00095 755,896 1,005,754 8,043,423 3,748,699 208,242 75,681,695 Associate: Armour Energy Limited Total Quoted Value 980,357,416 A$0.003 2,941,072 78,622,767 * Share price represents the market quoted price for listed investments at 30 June 2023. All quoted values above are level 1 in the fair value hierarchy. 73 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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 2023 and 30 June 2022. Contingent Liabilities Refer to note 27 for details of the parent entity's contingent liabilities. Capital Commitments - Property, Plant and Equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022. 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 30 June 2022 Armour Energy International Limited On 26 October 2021, DGR Global Limited acquired 83.18% of the ordinary shares of Armour Energy International Limited (AEI) for a total consideration of $3,066,000. AEI is an investment holding company whose principal asset is an investment in Armour Energy Uganda SMC Limited (AEU), a wholly-owned subsidiary of AEI. AEU is an exploration company located in Uganda. With reference to AASB 3 Business combinations, it was determined that the acquisition of AEI was not a business combination and was accounted for as an asset acquisition. The cost of the acquisition, including the consideration paid, transaction costs, and liabilities assumed, were allocated across the relative fair value of the assets acquired. 74 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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: Name Auburn Resources Limited* Barlyne Mining Pty Limited* Pennant Resources Pty Limited* Ripple Resources Pty Limited* DGR Energy Pty Limited*** Coolgarra Minerals Pty Limited DGR Zambia Limited Hartz Rare Earths Pty Limited Pinnacle Gold Pty Limited Tinco Pty Limited DGR Bolivia Pty Limited Andean Explomining SRL Armour Energy International Limited** Armour Energy (Uganda) - SMC Limited** DGR Energy Turaco Uganda - SMC Limited*** Conjugate Energy Limited Principal place of business / Country of incorporation Ownership interest 2023 % 2022 % Australia Australia Australia Australia Australia Australia Zambia Australia Australia Australia Australia Bolivia Australia Uganda 39% 39% 39% 39% 100% 100% 100% 100% 94% 100% 100% 100% 83% 83% Uganda 100% United Kingdom 50% 39% 39% 39% 39% 100% 100% 100% 100% 94% 100% 100% 100% 83% 83% - - * Auburn Resources Limited is the immediate parent of Barlyne Mining Pty Limited, Pennant Resources Pty Limited and Ripple Resources Pty Limited. These companies are wholly owned and directly held by Auburn Resources Limited and indirectly by DGR Global Limited. ** Armour Energy International Limited is the immediate parent of Armour Energy (Uganda) - SMC Limited. *** DGR Energy Pty Limited is the immediate parent of DGR Energy Turaco Uganda - SMC Limited. 75 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Summarised Financial Information Summarised financial information of the subsidiary with non-controlling interests that are material to the Group are set out below: Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Total liabilities Net Assets Summarised statement of profit or loss and other comprehensive income Expenses Loss before income tax expense Income tax expense Loss after income tax expense Other comprehensive income Total Comprehensive Income Statement of cash flows Net cash from/(used in) operating activities Net cash used in investing activities Net cash from financing activities Auburn Resources Ltd 2023 $ 2022 $ 20,341 11,496 5,242,948 4,639,081 5,263,289 4,650,577 1,066,478 391,899 1,066,478 391,899 4,196,811 4,258,678 (61,868) (30,470) (61,868) (30,470) - - (61,868) (30,470) - - (61,868) (30,470) 11,909 (81,138) (620,702) (492,863) 610,907 571,224 Net increase/(decrease) in Cash and Cash Equivalents 2,114 (2,777) Other financial information Loss attributable to non-controlling interests (37,528) (18,587) Accumulated non-controlling interests at the end of reporting period 2,569,267 2,597,794 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 There were no transactions with non-controlling interests during the year ended 30 June 2023. 76 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 33. EVENTS AFTER THE REPORTING PERIOD Armour Convertible Notes On 2 August 2023, the shareholders of Armour Energy Limited (ASX: AJQ) approved the issue of up to 21,000,000 of Armour Convertible Notes (on a post-consolidation basis) to DGR Global Limited (ASX:DGR or the Company). On 23 August 2023, McArthur Oil and Gas Redeemable Exchangeable Notes (MOG Notes) (including accrued interest) in the sum of $16,164,172, were converted into Armour Convertible Notes, and $835,828 of the non-current loan due to DGR was also converted into Armour Convertible Notes on the same day. On 13 September 2023, Armour Convertible notes for $4,000,000 were issued to DGR in partial settlement of the non-current loan advances, Corporate Bonds and other fees due to DGR by AJQ. At 30 June 2023, DGR held 14,005,410 McArthur Oil and Gas Redeemable Exchangeable Notes (MOG Notes) (refer note 13) and was owed $15,293,601 (including accrued interest and interest on redeemed notes shown under receivables) under the terms of the MOG Notes. DGR was also owed an additional $5,914,701 by AJQ for non-current loan advances, Corporate Bonds and other fees at 30 June 2023. Ugandan Oil Exploration Projects DGR Global Limited (ASX: DGR or the Company) and Armour Energy Limited (ASX: AJQ) established a new UK-incorporated company Conjugate Energy Limited (Conjugate) on 17 February 2023, which will hold interests in oil exploration projects in the Albertine Graben, Uganda. On 7 September 2023, the Company announced that Conjugate intends to seek admission to a UK stock exchange and raise funds primarily to drill two exploration wells or drill ready prospects with substantial resources of oil. Any admission will be subject to, inter alia, compliance with the relevant regulatory requirements and accordingly, there can be no certainty that any admission will occur or the timeframe in which it will occur. Letter of Support – Armour Energy Limited DGR Global Limited (ASX: DGR or the Company) has provided a formal letter of financial support to Armour Energy Limited (ASX: AJQ) to provide financial support for a period of up to 12 months of up to $17,000,000 to enable AJQ to repay their debts as and when they fall due and payable, as well as settle certain loan repayments that are currently due by AJQ and for repayment of the related principal which is due on 30 November 2023. Loan DGR Global Limited (ASX: DGR or the Company) has entered into a loan agreement with Euities First Holdings LLC (EFH). EFH has agreed to advance £600,000 (GBP) to DGR. The loan is secured by 15,00,000 ordinary shares held by DGR in SolGold Plc. Although the title in the shares has been transferred to the lender, DGR has retained substantially all the risks and rewards of ownership of the shares and will continue to recognise the investment in the shares. The loan bears interest at 3.75% per annum and is repayable after 2 years. No other matter or circumstance has arisen since 30 June 2023 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. 77 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 34. CASH FLOW INFORMATION Reconciliation of Loss after Income Tax to Net Cash Used in Operating Activities Loss after Income Tax Expense for the Year Adjustments for: Depreciation (Reversal of impairment)/provision for impairment - associate and corporate bonds Exploration and evaluation assets written off Share of loss - associates Movement in fair value of options and convertible note receivable Impairment - trade receivables Interest receivable on convertible notes capitalised Unrealised foreign currency losses Change in Operating Assets and Liabilities: Increase in trade and other receivables Decrease/(increase) in prepayments Decrease in trade and other payables Increase in provision for income tax Increase in deferred tax liabilities Decrease in employee benefits Increase in other provisions Consolidated 2023 $ 2022 $ (9,547,919) (9,169,564) 442,608 443,902 (2,774,237) 6,117,433 229,372 24,750 4,314,949 2,033,652 1,581,006 (2,028,670) 2,271,154 (2,191,867) 185,518 - (163,944) - (1,073,642) (175,878) (25,634) 23,968 (39,327) (379,758) 2,207,498 784,589 (10,791) 40,101 - 409,426 (6,675) - Net Cash Used in Operating Activities (3,606,622) (2,871,358) Non-Cash Investing and Financing Activities Share issue costs settled by the issue of shares and options Consolidated 2023 $ - 2022 $ 84,361 78 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). Changes in Liabilities Arising from Financing Activities Consolidated Balance at 1 July 2021 Net cash from/(used in) financing activities Balance at 30 June 2022 Net cash used in financing activities Exchange differences Loan - Equities First Holdings LLC $ Leases $ Total $ - 3,116,862 1,519,185 (414,213) 1,519,185 2,702,649 3,116,862 1,104,972 4,221,834 - 185,518 (485,417) - (485,417) 185,518 Balance at 30 June 2023 3,302,380 619,555 3,921,935 NOTE 35. EARNINGS PER SHARE Loss after income tax Non-controlling interest Loss after income tax attributable to the owners of DGR Global Limited Consolidated 2023 $ 2022 $ (9,547,919) (9,169,564) 24,366 29,054 (9,523,553) (9,140,510) Weighted average number of ordinary shares used in calculating basic earnings per share Number Number 1,043,693,478 1,033,236,417 Weighted average number of ordinary shares used in calculating diluted earnings per share 1,043,693,478 1,033,236,417 Basic earnings per share Diluted earnings per share Cents Cents (0.9) (0.9) (0.9) (0.9) 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. 79 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). NOTE 36. SHARE-BASED PAYMENTS Other Option: On 8 February 2021, 35,974,007 DGR Global Ltd share options were granted to Bizzell Capital Partners Pty Ltd as consideration for the management and underwriting of the Company’s recent capital raising, pursuant to underwriting and sub-underwriting arrangements. The options are to take up one ordinary share in DGR Global Ltd at a price of 12 cents each. The options vested immediately and are due to expire on 25 September 2023. A value of $827,402 was calculated using the Black Scholes valuation methodology. On 7 July 2021, 6,000,000 DGR Global Ltd share options were granted to Bizzell Capital Partners Pty Ltd as consideration for the management of the Company’s recent capital raising. The options are to take up one ordinary share in DGR Global Ltd at a price of 12 cents each. The options vested immediately and are due to expire on 25 September 2023. A value of $84,361 was calculated using the Black Scholes valuation methodology. Set out below are summaries of options granted: Weighted average exercise price Number of options Weighted average exercise price Number of options 2023 2023 2022 2022 Outstanding at the beginning of the financial year 41,974,007 $0.120 35,974,007 $0.120 Granted Exercised - - $0.000 6,000,000 $0.120 $0.000 - $0.000 Outstanding at the end of the financial year 41,974,007 $0.120 41,974,007 $0.120 Exercisable at the end of the financial year 41,974,007 $0.120 41,974,007 $0.120 The weighted average remaining contractual life of the options at 30 June 2023 was 0.24 years (2022: 1.24 years). There were no vesting conditions attached to the options. Accounting Policy for Share-Based Payments Equity-settled share-based compensation benefits have been provided to employees in prior periods. No share based payment compensation benefits have been granted during the financial year. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. 80 DGR Global Limited dgrglobal.com.au NOTES TO THE FINANCIAL STATEMENTS | for Year ended 30 June 2023 (continued). 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 dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. 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 remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. 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 as if they were a modification. 81 DGR Global Limited dgrglobal.com.au DIRECTORS’ DECLARATION For the year ended 30 June 2023 In the Directors' opinion: ▪ ▪ ▪ ▪ the attached financial statements and notes comply with the Corporations Act 2001, the Accounting reporting Standards, the Corporations Regulations 2001 and other mandatory professional requirements; 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; the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2023 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 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 29 September 2023 82 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 400 Australia INDEPENDENT AUDITOR'S REPORT To the members of DGR Global Limited Report on the Audit of the Financial Report Opinion 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 2023, 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) (ii) Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year ended on that date; and 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. 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 mem bers of BDO A International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability fi limited by a scheme approved under Professional Standards Legislation. 83 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 12 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; the significance of the share of loss of associates and impairment expense. • • • • • 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. 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. Accounting for redeemable exchangeable notes in McArthur Oil and Gas Ltd (MOG) Key audit matter How the matter was addressed in our audit Refer to Note 13 of the financial report. Our audit procedures, amongst others, included: The client holds investments in redeemable exchangeable notes in McArthur Oil and Gas Limited. The classification, initial accounting, subsequent accounting treatment and valuation of these notes is a key audit matter due to: the level of judgement management were required to make in assessing the classification of the investment; • • • • Reviewing the client’s assessment of initial and subsequent accounting treatment of the notes. Reviewing accounting for any redemptions that occurred during the period. Reviewing the valuation of the notes, including evaluating the reasonableness of assumptions used. Reviewing the adequacy of the disclosures of the level of judgement required in valuing in the financial report. the investment; the significance of the closing balance; the significance of any fair value movements recorded during the period. • • • • 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 mem bers 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. 84 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 13 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. • • • 85 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 mem bers of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability l imited by a scheme approved under Professional Standards Legislation. Carrying value of exploration and evaluation assets Key audit matter How the matter was addressed in our audit Refer to Note 15 in the annual report. Our audit procedures, amongst other, included: The Group carries exploration and evaluation assets as at 30 June 2023 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. • • 86 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 L td ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are mem bers of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability i mited by a scheme approved under Professional Standards Legislation. l Other information 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 2023, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 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. 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 mem bers 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. 87 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 17 to 25 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of DGR Global Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit Pty Ltd T J Kendall Director Brisbane, 29 September 2023 BD Ltd Int limi 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 mem bers 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. 88 DGR Global Limited dgrglobal.com.au SHAREHOLDER INFORMATION The shareholder information set out below was applicable as at 22 August 2023. Distribution of Equitable Securities Analysis of number of equitable security holders by size of holding 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100.001 and over Ordinary shares Number of holders 202 151 194 494 494 % of total shares issued 13.16 9.84 12.64 32.18 32.18 1,535 100.00 Holding less than a marketable parcel 643 41.89 Equity Security Holders Quoted options over ordinary shares % of total shares issued Number of holders 12 41 27 141 109 330 283 3.64 12.42 8.18 42.73 33,03 100.00 85.76 Twenty Largest Quoted Equity Security Holders: The names of the twenty largest security holders of quoted equity securities are listed below: Citicorp Nominees Pty Limited Samuel Holdings Pty Ltd - The Samuel Discretionary A/C J P Morgan Nominees Australia Pty Limited Nicholas Mather & Judith Mather Mather Super Fund Rookharp Capital Pty Limited Samuel Holdings Pty Ltd - Samuel Discretionary A/C Mr Yee Teck Teo Fortunato Pty Ltd - The Mascolo Family A/C BNP Paribas Nominees Pty Ltd - Ib Au Noms Retailclient Drp Mr Martin James Hickling & Mrs Jane Frances Hickling - M & J Hickling Super A/C W & E Maas Holdings Pty Ltd Pinegold Pty Ltd - Greg Runge Family S/F A/C Mr Jeffrey Douglas Pappin Dr Steven G Rodwell Beta Gamma Pty Ltd - Walsh Street Super A/C Frasama Pty Ltd - Jdp Super Fund A/C Hayes Investments Co Pty Ltd Mr William Gregory Runge & Mrs Wendy Kay Runge - The Greg Runge Fund A/C Mr Richard Cooney Mather Foundation Limited – The Mather Foundation A/C Ordinary Shares Number held 214,624,007 % of total shares issued 20.56 86,641,924 77,599,247 53,839,375 27,423,077 19,958,285 19,631,000 17,789,527 17,503,623 16,250,000 14,423,077 12,000,000 11,810,701 11,030,508 9,464,972 8,504,167 7,521,610 7,200,000 7,140,244 7,020,788 8.30 7.44 5.16 2.63 1.91 1.88 1.70 1.68 1.56 1.38 1.15 1.13 1.06 0.91 0.81 0.72 0.69 0.68 0.67 647,376,132 62.02 89 DGR Global Limited dgrglobal.com.au SHAREHODER INFORMATION | for Year ended 30 June 2023 (continued). Quoted Options Over Ordinary Shares Bizzell Capital Partners Pty Ltd Tenstar Trading Limited J P Morgan Nominees Australia Pty Limited Samuel Holdings Pty Ltd - The Samuel Discretionary A/C Rookharp Capital Pty Limited W & E Maas Holdings Pty Limited - Maas Family A/C Mr Jeffrey Douglas Pappin Mr Samuel James Nichols Love Moore Pty Ltd - Moore Love Superfund A/C Dr Anthony Francis Chan Jellyfish Superannuation Investments Pty Ltd - Medusa Superfund A/C Mr John Anthony Kenna Mr Andrew Thomas Gladman Mr James Alexander Love Canceler Pty Ltd - Clarence Super Fund A/C Tian Xia Pty Ltd Mr John Anthony Kenna Mr Ashley Baxter Mr Paul Simpson Challenge Resources Pty Ltd Number held 32,478,334 27,227,546 13,570,958 10,380,445 10,241,299 8,533,654 3,311,491 2,757,144 2,000,000 1,929,634 1,570,894 1,550,000 1,537,500 1,500,000 1,500,000 1,429,106 1,300,000 1,250,000 1,250,000 1,250,000 % of total options issued 19.68 16.50 8.22 6.29 6.20 5.17 2.01 1.67 1.21 1.17 0.95 0.94 0.93 0.91 0.91 0.87 0.79 0.76 0.76 0.76 Unquoted Equity Securities: There are no unquoted equity securities. Substantial Holders Substantial holders in the Company are set out below: 126,568,005 76.70 Citicorp Nominees Pty Limited Samuel Holdings Pty Ltd - The Samuel Discretionary A/C J P Morgan Nominees Australia Pty Limited Nicholas Mather & Judith Mather Mather Super Fund Ordinary Shares % of total shares issued 20.56 8.30 7.44 5.16 Number held 214,624,007 86,641,924 77,599,247 53,839,375 Quoted Options Over Ordinary Shares Bizzell Capital Partners Pty Ltd Tenstar Trading Limited J P Morgan Nominees Australia Pty Limited Samuel Holdings Pty Ltd - The Samuel Discretionary A/C Rookharp Capital Pty Limited W & E Maas Holdings Pty Limited - Maas Family A/C Number held 32,478,334 27,227,546 13,570,958 10,380,445 10,241,299 8,533,654 % of total options issued 19.68 16.50 8.22 6.29 6.20 5.17 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 90 DGR Global Limited Tenements dgrglobal.com.au Tenure Type, Number and Name Current Holder Registere d Interest of Holder (%) Expiry Date Status 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 50148 - Tableland EPM 19270 - Pandanus Creek EPM 26265 - Britannia EPM 26355 - Big Rush EPM 26382 - Crooked Creek EPM 26386 - Roebourne EPM 27061 - Wade Creek EPM 25525 - Mabel Jane EPM 25963 - Leyshonview EPM 25964 - Blind Freddy EPM 25965 - Black Knob EPM 25966 - Bulldog EPM 27289 - Rannes West EL 32032 - Blue Bush Bore EL 32031 - Corella 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 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 DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global Ltd DGR Global 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 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 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 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 31/05/2030 30/09/2030 30/04/2029 31/07/2027 31/01/2030 31/08/2030 30/04/2029 17/09/2024 15/03/2023 12/07/2024 08/05/2023 23/11/2023 20/05/2025 14/01/2023 23/12/2023 23/12/2023 23/12/2023 23/12/2023 16/10/2024 08/07/2025 08/07/2025 29/01/2024 10/02/2024 13/03/2024 29/01/2023 14/05/2023 03/01/2024 23/08/2023 11/10/2023 10/12/2023 27/08/2025 02/12/2025 02/12/2025 09/03/2026 02/12/2023 24/06/2024 29/09/2024 20/05/2023 28/07/2023 28/05/2025 12/07/2024 15/07/2023 Granted Granted Granted Granted Granted Granted Granted Granted Pending1 Granted Pending1 Granted Granted Pending1 Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Pending1 Pending1 Granted Pending1 Granted Granted Granted Granted Granted Pending1 Granted Pending1 Granted Granted Granted Granted Granted Granted 91 DGR Global Limited dgrglobal.com.au TENEMENTS | for Year ended 30 June 2023 (continued). Tenure Type, Number and Name Current Holder EPM 26769 - Stockhaven Pennant Resources Pty Ltd NT EL 32006 - Victoria River Downs Pennant Resources Pty Ltd NT EL 32008 - Cooee Hill Pennant Resources Pty Ltd NT EL 32009 - Williams Creek Pennant Resources Pty Ltd NT EL 32010 - Lagoon Creek West Pennant Resources Pty Ltd NT EL 32011 - Lagoon Creek Pennant Resources Pty Ltd NT EL 32012 - Lansen Creek Pennant Resources Pty Ltd NT EL 32013 - Parsons Creek Pennant Resources Pty Ltd NT EL 32014 - Newcastle Creek Pennant Resources Pty Ltd NT EL 32039 - Bullock Creek Pennant Resources Pty Ltd NT EL 31980 - Tanumbirini North Pennant Resources Pty Ltd NT EL 31981 - Tanumbirini South Pennant Resources Pty Ltd NT EL 32002 - Tanumbirini East Pennant Resources Pty Ltd EP25802 - Walford East (Sth N) Ripple Resources Pty Ltd EPM19833 - South Nicholson Ripple Resources Pty Ltd EPM19835 - Shadforth East (Sth N) Ripple Resources Pty Ltd EPM19836 - Shadforth (Sth N) Ripple Resources Pty Ltd EP25504 - Argyle Creek (Sth N) Ripple Resources Pty Ltd EPM25505 - Border (Sth N) Ripple Resources Pty Ltd EPM26497 - South Nicholson Ripple Resources Pty Ltd EP30494 - Statler & Waldorf Ripple Resources Pty Ltd EPM30817 - Victoria River Downs Ripple Resources Pty Ltd EP30818 - Birrindudu (VRD) Ripple Resources Pty Ltd EPM31012 - Carpentaria Ripple Resources Pty Ltd Kanywataba Armour Energy Uganda SMC Ltd Registered Interest of Holder (%) 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 Date of Expiry 27/08/2024 Status Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 04/07/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 06/05/2025 Granted 19/05/2023 Granted 10/02/2025 Granted 10/09/2024 Granted 10/09/2024 09/11/2024 10/08/2023 19/10/2024 07/04/2023 14/02/2025 14/02/2025 29/09/2023 12/05/2025 Pending1 Pending1 Pending1 Pending1 Granted Granted Pending1 Pending1 Granted Granted Turaco 1Pending tenements are those that have renewals or applications currently lodged. DGR Energy Turaco Uganda - SMC Ltd 100 12/05/2027 92
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