Duketon Mining Limited
Annual Report 2021

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DUKETON MINING LIMITED ANNUAL REPORT 2021 Corporate Information DUKETON MINING LIMITED ABN 76 159 084 107 Directors Seamus Cornelius (Non-Executive Chairman) Stuart Fogarty (Managing Director) Heath Hellewell (Non-Executive Director) Company Secretary Dennis Wilkins Registered Office Suite 2, 11 Ventnor Avenue WEST PERTH WA 6005 Principal Place of Business Level 2, 25 Richardson Street WEST PERTH WA 6005 Telephone: +61 8 6315 1490 Solicitors House Legal 86 First Avenue MT LAWLEY WA 6050 Share Registry Automic Pty Ltd Level 2, 267 St Georges Terrace PERTH WA 6000 Telephone: 1300 288 664 Web: www.automicgroup.com.au Auditors Rothsay Auditing Level 1, Lincoln House 4 Ventnor Avenue WEST PERTH WA 6005 Internet Address www.duketonmining.com.au Stock Exchange Listing Duketon Mining Limited shares are listed on the Australian Securities Exchange (ASX code: DKM) 2 Review of Operations Directors' Report Auditor’s Independence Declaration Corporate Governance Statement Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report ASX Additional Information 4 14 22 23 24 25 26 27 28 43 44 48 Review of Operations 1. Review of Operations 1.1 Strategy and Objectives The Company is in a strong position to build shareholder value from measured exploration focused on our current nickel/copper and PGE’s assets. Shareholders should be encouraged as the Company is in a position of having a technically de-risked portfolio of projects and continues to have the appropriate personnel to take full advantage of those opportunities as they develop. During the year ended 30 June 2021 the Company has worked actively to multiple internal and external opportunities. The Company remains focused on creating value through advancing its internal pipeline of opportunities including the following: • Expanding known nickel deposits through targeted extensions to Rosie and C2; • Discovering new nickel deposits through regional work in the Bulge area and other new areas; and • Opportunistically acquiring tenements on prospective ground within Western Australia. The Company’s primary objective continues to focus on achieving returns for shareholders through focused proactive exploration and advancement of mining studies in the Duketon Belt whilst maintaining a watch over potential acquisitions outside of this area. We are uniquely de-risked technically with respect to nickel within the Duketon Belt and surrounding areas. The Company’s tenement and nickel rights are within the Duketon Greenstone Belt in an area immediately north of the town of Laverton. The Company believes that there is considerable upside in the areas covered by these and continues to review the tenements to further understand the geological potential and mineralising controls with the intention of unlocking additional value from within the Company’s current asset base. Economic nickel sulphides have already been found within the Duketon tenements at Rosie, C2, and the Nariz prospect. These discoveries show the further upside potential of the tenement package that Duketon controls. During March 2021 the Rosie Mineral Resource was reviewed and recalculated. The total Mineral Resource that Duketon has at the C2 and Rosie deposits (see below), is now 87,100t of nickel, 12,900t of copper and 230,000oz of PGEs (see ASX announcement 4 March 2021). During the year the Rosie Nickel Sulphide Project Scoping Study was completed. This study confirmed the viability of a mining, trucking and toll treating operation over an 8 year mine life (see ASX Announcement 28 April 2021). The following are highlights from the study: • Nickel Price of US $8lb (range US$7.50 to US$8.50) • NPV5 of ~ $161M (range $56m to $204M) • IRR of ~ 54% (range 21% to 66%) • Pre-tax cashflow of ~ $223M (range $91M to $278M) • Pre-production capital cost of ~ $18M • Simple decline and underground mine – minimal surface infrastructure • Annual production of approximately 315kt of ore at 2.1% NiEq • Resource already situated on a granted mining tenement with ample room for all surface works and infrastructure. • Metallurgy work shows a positive outcome with high recoveries of nickel, copper and PGE’s (see ASX announcement 8 and 10 July,2020) Towards the end of the year a drilling program at the Rosie deposit commenced with the aim of increasing the confidence of the resource in the Upper North area, confirming the presence of PGEs in the oxide zone above the Rosie deposit and to test for extensions at depth in the Southeast of the deposit. 4 Review of Operations (Cont’d) Figure 1: Location of the Duketon Project 5 Review of Operations (Cont’d) Figure 2: Duketon Project showing DKM tenements and location of Nickel Prospects 6 Review of Operations (Cont’d) 1.2 Exploration 1.2.1 Rosie The Rosie deposit is situated approximately 110km north of Laverton, Western Australia. The project can be accessed via sealed and formed gravel roads from either Leonora or Laverton. Mineralisation at Rosie consists of disseminated, matrix, stringer and brecciated massive Ni-Cu-PGE sulphides at, or adjacent to, the contact of the Bulge ultramafic complex, interpreted to be a classic komatiitic lava channel style nickel sulphide mineralisation. The Nariz prospect is situated directly to the south east of Rosie and is now incorporated into the Rosie Mineral Resource. During March 2021, the Rosie Mineral Resource was reviewed and recalculated (see Tables 1 and 2). Figure 3: Location Plan of C2 and Rosie. 7 Review of Operations (Cont’d) Rosie Nickel Resource >1% NiEq Classification Indicated Inferred Total Sulphide Pentlandite Violarite Sub-Total Pentlandite Violarite Sub-Total All Tonnes 960,893 745,813 1,706,706 751,559 98,676 850,234 2,556,940 Ni (%) 2.3 1.7 2.0 1.8 1.5 1.7 1.9 Cu (%) 0.41 0.36 0.39 0.47 0.43 0.47 0.42 Co (ppm) 610 490 560 570 460 560 560 Total PGEs (g/t) 2.6 2.5 2.5 2.5 2.2 2.5 2.5 NiEq (%) 3.60 2.70 3.21 3.08 2.51 3.01 3.14 Table 1a: Rosie Nickel Resource > 1.0% Ni as at 4th March 2021 Rosie Nickel Resource >1% NiEq Classification Sulphide Pentlandite Indicated Violarite Tonnes 960,893 745,813 Sub-Total 1,706,706 Pentlandite 751,559 Inferred Violarite 98,676 Sub-Total 850,234 Total All 2,556,940 Ni (%) 2.3 1.7 2.0 1.8 1.5 1.7 1.9 Cu (%) 0.41 0.36 0.39 0.47 0.43 0.47 0.42 Co (ppm) 610 490 560 570 460 560 560 Total PGEs (g/t) 2.6 2.5 2.5 2.5 2.2 2.5 2.5 NiEq (%) 3.3 2.6 3.0 2.8 2.4 2.8 2.9 Table 1b: Rosie Nickel Resource > 1.0% Ni as at 3rd August 2020 Contained Metal Co (t) Total PGEs (oz) Classification Ore Type Ni (t) Pentlandite 21,973 Indicated Violarite 12,336 Sub-Total 34,309 Pentlandite 13,354 Cu (t) 3,987 2,679 6,666 3,537 Inferred Violarite 1,452 421 Sub-Total 14,806 3,958 588 363 951 428 45 473 79,041 59,014 138,056 60,331 6,937 67,268 Total 49,115 10,624 1,423 205,324 Table 2: Rosie Nickel Resource > 1.0% Ni with Auxiliary Attributes as at 4th March 2021 8 Review of Operations (Cont’d) Figure 4: Long section of Rosie looking toward the north east showing significant intercepts 9 Review of Operations (Cont’d) 1.2.2 C2 The C2 deposit is situated approximately 2km to the north of Rosie and consists of a series of disseminated, blebby and matrix sulphide zones within and proximal to the contacts of the ultramafic complex. Three broad zones of mineralisation have been interpreted. During 2015 the Company published the initial mineral resource estimate for the C2 resource. This Inferred Mineral Resource estimate at C2 is 5.7 million tonnes averaging 0.7% nickel, 0.04% copper and 0.14g/t platinum and palladium for a contained 38,000 tonnes of nickel and associated copper, platinum and palladium (see Tables 4 and 5). This represents the in-situ undiluted Mineral Resource at 0.5% nickel cut-off (see Tables 4 and 5). Nickel mineralisation is robust and continuous. The total Mineral Resource for the Duketon project, comprising C2 and the Rosie deposit (see ASX Announcement 4 March 2021), is now 87,100t of nickel, 12,900t of copper and 231,500oz of PGEs. C2 Nickel Resource >0.5%Ni Classification Oxidation Inferred Fresh Transitional Total (as at 30 June 2020) Total (as at 30 June 2021) Tonnes 5,100,000 600,000 5,700,000 5,700,000 Ni (%) 0.7 0.6 0.7 0.7 Ni (t) 34,200 3,800 38,000 38,000 Table 3: C2 Nickel Resource > 0.5% Ni C2 Nickel Resource >0.5%Ni (as at 30 June 2015) Classification Oxidation Tonnes Ni (%) Cu (%) Pt (ppb) Pd (ppb) S (%) Inferred Fresh 5,100,000 Transitional 600,000 Total (as at 30 June 2020) 5,700,000 Total (as at 30 June 2021) 5,700,000 0.7 0.6 0.7 0.7 0.04 0.04 0.04 0.04 60 72 61 61 79 105 82 82 3.3 0.9 3.1 3.1 Table 4: C2 Resource > 0.5% Ni with Auxiliary Attributes Cut-Off (Ni %) 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 Tonnes 18,775,665 10,776,805 5,721,787 3,008,201 2,019,653 1,018,985 641,066 148,053 62,461 Grade (Ni %) 0.5 0.6 0.7 0.8 0.8 0.9 1.0 1.1 1.1 Table 5: C2 Deposit Grade Tonnage Table for different Ni cut-offs Ni (t) 88,902 60,356 37,967 23,249 16,940 9,503 6,265 1,577 694 10 Review of Operations (Cont’d) Figure 5: C2 Cross Section C2 - Grade Tonnage Curve for Fresh and Transitional Material Tonnes Grade 20000000 18000000 16000000 14000000 12000000 s e n 10000000 n o T 8000000 6000000 4000000 2000000 0 0.3 0.4 0.5 0.6 0.7 Cut off 0.8 0.9 1 1.1 Figure 6: Grade Tonnage Curve at Ni cut-offs 11 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 f f o - t u c e v o b a e d a r G Review of Operations (Cont’d) 1.2.3 Regional Exploration Regional exploration has been ongoing throughout the year. Multiple new targets in both nickel and gold have been generated creating a significant and robust pipeline of organic opportunities. 2. Corporate 2.1 Element 25 Limited The Company holds an equity position in Element 25 Limited. For further details, please refer to the Element 25 Limited website at www.element25.com.au. 2.2 Buxton Resources Limited The Company holds an equity position in Buxton Resources Limited. For further details, please refer to the Buxton Resources Limited website at www.buxtonresources.com.au. 2.3 Other Equities The Company continues to hold some minor equity positions in several other listed and unlisted companies. For further details, please refer to the Company website. 12 Review of Operations (Cont’d) Appendix 1 – Summary of JORC Resources Table 1a: Total Nickel Mineral Resources as at 4 March 2021 and unchanged at 30 June 2021 Table 2a: Total Nickel Mineral Resources as at 3 August 2020 and reported in the 2020 Annual Report Mineral Resources Attached as Appendix 1 are two tables comparing the Company’s Mineral Resources as at 4 March 2021. Mineral Resources are unchanged from 4 March 2021 to 30 June 2021. (Table 1a Appendix 1) against those at 3 August 2020 (Table 2a Appendix 1). No ore reserves have been estimated. Review of material changes During March 2021 (refer ASX announcement 4 March 2021) the Company reported an update to the Rosie Nickel Mineral Resources which is included in the Total Nickel Mineral Resources reported above (Table 1a Appendix 1). The Nickel Mineral Resource as at 30 June 2021 was unchanged from that reported at 3 August 2020 (Table 2a Appendix 1). The August 2020 announcement reported an increase of 50% contained nickel metal compared to the previous mineral resource estimate. There have been no changes to the Company’s Mineral Resources after 3 August 2020. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original announcements and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. Governance controls All Mineral Resource estimates are prepared by qualified professionals following JORC Code compliant procedures and follow standard industry methodology for drilling, sampling, assaying, geological interpretation, 3-dimensional modelling and grade interpolation techniques. The Mineral Resource estimates have been calculated by a suitably qualified consultant and overseen by suitably qualified Duketon Mining Limited employee and/or consultant. Competent Persons Statements The information in this report that relates to exploration results is based on information compiled by Miss Kirsty Culver, Member of the Australian Institute of Geoscientists (AIG) and an employee of Duketon Mining Limited. Miss Culver has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify as a competent person as defined in the JORC Code 2012. Miss Culver consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The information that relates to Mineral Resources for Rosie is extracted from the ASX announcement titled “Increase to Nickel Equivalent Grade - Rosie Resource” dated 4 March 2021 and is available to view on the Company’s website (www.duketonmining.com.au). The information in the announcement that relates to Mineral Resources for C2 is extracted from ASX announcement 29 January 2015. The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. 13 TonnesNi TonnesNi TonnesNi TonnesNi ('000)Tonnes('000)Tonnes('000)Tonnes('000)TonnesRosie1,7062.034,3098501.714,8062,5561.949,115C25,7000.738,0005,7000.738,000TOTAL1,7062.034,3096,5501.352,8068,2561.0687,115Project MeasuredIndicatedInferredNi (%)Ni (%)Ni (%)Ni (%)TotalTonnesNi TonnesNi TonnesNi TonnesNi ('000)Tonnes('000)Tonnes('000)Tonnes('000)TonnesRosie1,7062.034,3098501.714,8062,5561.949,115C25,7000.738,0005,7000.738,000TOTAL1,7062.034,3096,5501.352,8068,2561.0687,115Project MeasuredIndicatedInferredNi (%)Ni (%)Ni (%)Ni (%)Total Directors’ Report The directors present their report together with the financial report of Duketon Mining Limited (“Duketon” or “the Company”) for the year ended 30 June 2021. DIRECTORS The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below. Directors were in office for this entire period unless otherwise stated. Names, qualifications, experience and special responsibilities Seamus Cornelius Non-Executive Chairman, LLB, LLM (Age 55) Mr Cornelius is an experienced international corporate lawyer and company director. He was a partner with a major international law firm from 2000 to 2010 and resided in China from 1993 until 2017. In 2010, Mr Cornelius commenced his public company career as company director and is currently a director and non-executive chairman of Buxton Resources Ltd since 29 November 2010 and Element 25 Ltd since 30 June 2011. Mr Cornelius has been a director of Danakali Ltd since 15 July 2014 and is currently the Executive Chairman. Stuart Fogarty Managing Director B.Sc (Geology) (Hons) (Age 49) Mr Fogarty has over 20 years of exploration experience with BHP Billiton and Western Mining Corporation, and prior to leaving he was BHP’s Senior Exploration Manager for North and South America. Mr Fogarty has a very strong background in nickel and gold exploration, having commenced his career at Kambalda Nickel Operations in 1994. He has held senior roles with BHP including Senior Geoscientist for nickel exploration in the Leinster and Mt Keith region, Project Manager WA Nickel Brownfields and Regional Manager Australia – Asia where he was responsible for a $100 million per annum exploration budget. Mr Fogarty is currently a non-executive director of ASX listed Buxton Resources Ltd since 15 March 2017, and of unlisted Wildcat Resources Ltd. Heath Hellewell B.Sc (Hons), MAIG (Age 51) Mr Hellewell is an exploration geologist with over 20 years of experience in gold, base metals and diamond exploration predominantly in Australia and West Africa. Most recently, Mr Hellewell was the co-founding Executive Director of Doray Minerals Ltd (Doray), where he was responsible for the company’s exploration and new business activities. Following the discovery of its Andy Well gold deposits in 2010, Doray was named “Gold Explorer of the Year” in 2011 by The Gold Mining Journal. In 2014 Mr Hellewell was the co-winner of the prestigious “Prospector of the Year” award, presented by the Association of Mining and Exploration Companies. Mr Hellewell was also part of the Independence Group NL team that identified and acquired the Tropicana project area, eventually leading to the discovery of the Tropicana and Havana gold deposits. Mr Hellewell is currently an independent Non-Executive Director of Core Lithium Ltd (formerly Core Exploration Ltd) since 15 September 2014 and Discovex Resources Ltd since 11 March 2021. Within the last 3 years Mr Hellewell has been a former director of Capricorn Metals Ltd (resigned 8 November 2018). COMPANY SECRETARY Dennis Wilkins B.Bus, MAICD, ACIS (Age 58) Mr Wilkins is the founder and principal of DWCorporate Pty Ltd a leading privately held corporate advisory firm servicing the natural resources industry. Since 1994 he has been a director of, and involved in the executive management of, several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. From 1995 to 2001 he was the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was acquired by the group. He was also founding director and advisor to Atlas Iron Ltd at the time of Atlas’ initial public offering in 2006. Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector. Mr Wilkins is currently a non-executive director of Key Petroleum Ltd since 5 July 2006. Within the last 3 years Mr Wilkins has been a former alternate director of Middle Island Resources Ltd (resigned 31 January 2021). 14 Directors’ Report (Cont’d) Interests in the shares and options of the company and related bodies corporate As at the date of this report, the interests of the directors in the shares and options of Duketon Mining Limited were: Seamus Cornelius Stuart Fogarty Heath Hellewell Ordinary Shares 7,649,723 1,550,000 600,000 Options over Ordinary Shares 1,750,000 5,000,000 1,500,000 PRINCIPAL ACTIVITIES The principal activities of the Company during the year consisted of exploration and evaluation of mineral resources. There was no significant change in the nature of the Company’s activities during the year. DIVIDENDS No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made. OPERATING REVIEW During the year ended 30 June 2021 the Company actively identified opportunities and drilled exploration targets. The Company remains focused on creating value through advancing its internal pipeline of opportunities including the following: • • Expanding known nickel deposits through targeted extensions to Rosie and C2; Discovering new nickel deposits through regional work in the Bulge area and other new areas; and Opportunistically acquiring tenements on prospective ground within Western Australia. • The Company’s primary objective continues to focus on achieving returns for shareholders through focused proactive exploration and advancement of mining studies in the Duketon Belt whilst maintaining a watch over potential acquisitions outside of this area. Finance Review The Company began the year with cash reserves of $20,322,227 and listed equity investments with a market value of $2,280,615. During the year, the Company issued 80,000 ordinary shares, with a value of $20,000, as part of employee remuneration, and received $560,000 for the issue of 2,800,000 ordinary shares upon the exercise of unlisted options. Funds were used for exploration activities on nickel targets within the Duketon Project and working capital purposes. The Company recorded a net profit after tax of $3,167,660 (2020: $19,130,177) for the financial year ended 30 June 2021 and included in the result for the year was exploration expenditure of $1,293,387 (2020: $1,316,818). In line with the Company’s accounting policies, all exploration expenditure is expensed as it is incurred. The Company had total cash on hand at the end of the year of $20,823,389, and listed equity investments with a market value of $9,350,013. Operating Results for the Year Summarised operating results are as follows: Revenues and profit from ordinary activities before income tax expense Shareholder Returns Basic earnings per share (cents) 2021 Revenues $ Profit $ 136,185 6,269,928 2021 2.6 2020 16.2 15 Directors’ Report (Cont’d) Risk Management The board is responsible for ensuring that risks, and opportunities, are identified on a timely basis and that activities are aligned with the risks and opportunities identified by the board. The Company believes that it is crucial for all board members to be a part of this process, and as such the board has not established a separate risk management committee. The board has numerous mechanisms in place to ensure that management's objectives and activities are aligned with the risks identified by the board. These include the following: • Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’ needs and manage business risk. Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets. • SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than as disclosed in this Report, no significant changes in the state of affairs of the Company occurred during the financial year. SIGNIFICANT EVENTS AFTER THE REPORTING DATE No matters or circumstances, besides those disclosed at note 19, have arisen since the end of the year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Details of important developments occurring in this financial year have been covered in the Review of Operations section of the Directors’ Report. The Company will continue activities in the exploration, evaluation and development of the Duketon Project and mineral tenements with the objective of developing a significant mining operation and any significant information or data will be released to the market and the shareholders pursuant to the Continuous Disclosure rules as and when they come to hand. ENVIRONMENTAL REGULATION AND PERFORMANCE The Company is subject to significant environmental regulation in respect to its exploration activities. The Company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The directors of the Company are not aware of any breach of environmental legislation for the year under review. REMUNERATION REPORT (AUDITED) The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. Principles used to determine the nature and amount of remuneration Remuneration Policy The remuneration policy of Duketon Mining Limited has been designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Company’s financial results. The board of Duketon Mining Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the Company. The board’s policy for determining the nature and amount of remuneration for board members and senior executives (if any) of the Company is as follows: The remuneration policy, setting the terms and conditions for the executive directors, was developed by the board. All executives receive a base salary (which is based on factors such as length of service, performance and experience) and superannuation. The board reviews executive packages annually by reference to the Company’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries. The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. The directors and executives (if any) receive a superannuation guarantee contribution required by the government, which was 9.5% for the 2021 financial year. Some individuals may choose to sacrifice part of their salary to increase payments towards superannuation. 16 Directors’ Report (Cont’d) All remuneration paid to key management personnel is valued at the cost to the Company and expensed. Options are valued using the Black-Scholes methodology. The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is (currently $300,000) and set in accordance with the constitution of the Company. Fees for non-executive directors are not linked to the performance of the Company. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company. Performance based remuneration The Company currently has no performance-based remuneration component built into key management personnel remuneration packages. Company performance, shareholder wealth and key management personnel remuneration The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and key management personnel performance. Currently, this is facilitated through the issue of options to the majority of key management personnel to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. If the Company were to commence mine production, performance- based bonuses based on key performance indicators are expected to be introduced. For details of key management personnel interests in options at year end, refer to the ‘Option holdings’ section later in the Remuneration Report. The table below shows the gross revenue, profits or losses and earnings per share for the last five years for the listed entity. Revenue and other income Net profit/(loss) Earnings/(loss) per share (cents) Share price at year end (cents) Total KMP compensation No dividends have been paid. 2021 $ 136,185 3,167,660 2.6 32.5 572,139 2020 $ 21,448,874 19,130,177 16.2 17.0 507,639 2019 $ 2018 $ 2017 $ 158,809 (2,890,296) (2.5) 13.0 469,344 507,639 (3,160,112) (3.0) 25.0 360,518 114,094 (4,470,221) (4.5) 13.5 451,175 Use of remuneration consultants The Company did not employ the services of any remuneration consultants during the financial year ended 30 June 2021. Voting and comments made at the Company’s 2020 Annual General Meeting The Company received approximately 99.9% of “yes” votes on its remuneration report for the 2020 financial year. The Company did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices. 17 Directors’ Report (Cont’d) Details of remuneration Details of the remuneration of the key management personnel of the Company are set out in the following table. The key management personnel of the Company include the directors as per page 14 above. Key management personnel of the Company Post- Short-Term Salary & Fees Annual Leave $ $ Employment Long-Term Long Service Leave $ Super- annuation $ Share-based Payments Total Options $ $ Directors Seamus Cornelius 2021 2020 Stuart Fogarty 2021 2020 Heath Hellewell 2021 2020 45,662 47,144 245,247 245,247 30,000 33,400 - - 1,887 - - - 4,338 1,585 23,299 23,299 - - - - 53,500 38,050 7,706 4,764 107,000 76,100 - - 53,500 38,050 103,500 86,779 385,139 349,410 83,500 71,450 Total key management personnel compensation 2021 2020 320,909 325,791 1,887 - 27,637 24,884 7,706 4,764 214,000 152,200 572,139 507,639 Service agreements Stuart Fogarty, Managing Director: • Annual salary of $268,545 (including statutory superannuation). • The Company or the Executive may terminate, without cause, the Executive’s employment at any time by giving three • calendar months’ written notice. In the event the Managing Director is terminated as result of one of the following circumstances the Company will make a twelve calendar months Redundancy Payment to the Executive at the base salary: o o o the Executive’s position is made redundant by the Board; there is a material diminution in the responsibilities or powers assigned to the Executive by the Board; or there is a material reduction in the remuneration payable to the Executive as determined by the Board. Share-based compensation Options are issued at no cost to key management personnel as part of their remuneration. The options are not issued based on performance criteria but are issued to the key management personnel of Duketon Mining Limited to increase goal congruence between key management personnel and shareholders. The following options over ordinary shares of the Company were granted to or vesting with key management personnel during the year: Grant Date Granted Number Vesting Date Expiry Date Exercise Price (cents) Value per option at grant date (cents) (1) Exercised Number % of Remuner- ation Directors Seamus Cornelius Stuart Fogarty Heath Hellewell 30/11/2020 500,000 30/11/2020 26/11/2025 30/11/2020 1,000,000 30/11/2020 26/11/2025 500,000 30/11/2020 26/11/2025 30/11/2020 28.8 28.8 28.8 10.7 10.7 10.7 Nil Nil Nil 51.7 27.8 64.1 18 Directors’ Report (Cont’d) (1) The value at grant date in accordance with AASB 2: Share Based Payments of options granted during the year as part of remuneration. For options granted during the current year, the valuation inputs for the Black-Scholes option pricing model were as follows: Underlying Share Price (cents) Exercise Price (cents) Volatility Interest Rate Valuation Date Expiry Date Risk Free Directors 26.5 28.8 50.0% 0.3% 30/11/2020 26/11/2025 Details of ordinary shares in the Company provided as a result of the exercise of remuneration options to key management personnel of the Company are set out below: Number of ordinary shares issued on exercise of options during the year Amount paid per ordinary share (cents) Value exercised ($) (1) Directors Seamus Cornelius Stuart Fogarty Heath Hellewell 500,000 1,000,000 500,000 20.0 20.0 20.0 32,500 65,000 32,500 No amounts are unpaid on any shares issued on the exercise of options. (1) The value at exercise date of the options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at that date. Equity instruments held by key management personnel Share holdings The numbers of shares in the Company held during the financial year by each director of Duketon Mining Limited and other key management personnel of the Company, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation. 2021 Acquired during the year on the exercise of options Balance at start of the year Other changes during the year Balance at end of the year Directors of Duketon Mining Limited Ordinary shares Seamus Cornelius Stuart Fogarty Heath Hellewell 7,149,723 550,000 100,000 500,000 1,000,000 500,000 - - - 7,649,723 1,550,000 600,000 Option holdings The numbers of options over ordinary shares in the Company held during the financial year by each director of Duketon Mining Limited and other key management personnel of the Company, including their personally related parties, are set out below: 2021 Balance at start of the year Granted as compen- sation Exercised Other changes Balance at end of the year Vested and exercisable Unvested Directors of Duketon Mining Limited Seamus Cornelius Stuart Fogarty Heath Hellewell 1,750,000 5,000,000 1,500,000 500,000 1,000,000 500,000 (500,000) (1,000,000) (500,000) Loans to key management personnel There were no loans to key management personnel during the year. End of audited Remuneration Report - - - 1,750,000 5,000,000 1,500,000 1,750,000 5,000,000 1,500,000 - - - 19 Directors’ Report (Cont’d) DIRECTORS’ MEETINGS The number of meetings of the Company’s Board of Directors held during the year ended 30 June 2021 and the number of meetings attended by each Director were: Directors Meetings Audit Committee Meetings Total Available Attended Total Available Attended Remuneration Committee Meetings Attended Total Available Seamus Cornelius Stuart Fogarty Heath Hellewell 1 1 1 1 1 1 - - - - - - - - - - - - SHARES UNDER OPTION Unissued ordinary shares of Duketon Mining Limited under option at the date of this report are as follows: Date options issued Expiry date Exercise price (cents) Number of options 1 December 2016 31 January 2017 28 November 2018 29 November 2019 30 November 2020 2 March 2021 24 November 2021 31 January 2022 28 November 2023 28 November 2024 26 November 2025 17 February 2026 30.0 25.0 20.0 21.4 20.0 36.0 Total number of options outstanding at the date of this report 2,500,000 250,000 2,000,000 2,250,000 2,250,000 410,000 9,660,000 No option holder has any right under the options to participate in any other share issue of the Company or any other 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 any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. INSURANCE OF DIRECTORS AND OFFICERS During the year, the Company has paid a premium in respect of Directors’ and Executive Officers’ insurance. The contract contains a prohibition on disclosure of the amount of the premium and the nature of the liabilities under the policy. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. 20 Directors’ Report (Cont’d) NON-AUDIT SERVICES The following non-audit services were provided by the entity's auditor, Rothsay Auditing or associated entities. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: − All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor; − None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (Including Independence Standards). Rothsay Auditing received or are due to receive the following amounts for the provision of non-audit services: Tax compliance services 2021 $ - 2020 $ 2,000 AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 22. Signed in accordance with a resolution of the directors. Stuart Fogarty Managing Director Perth, 24 September 2021 21 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 As lead auditor of the audit of Duketon Mining Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been: • no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and • no contraventions of any applicable code of professional conduct in relation to the audit. Rothsay Auditing Donovan Odendaal Partner 24 September 2021 Liability limited by a scheme approved under Professional Standards Legislation Corporate Governance Statement Duketon Mining Limited and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Duketon Mining Limited has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th edition) published by the ASX Corporate Governance Council. The 2021 Corporate Governance Statement was approved by the Board on 24 September 2021 and is current as at 24 September 2021. A description of the Group’s current corporate governance practices is set out in the Group’s Corporate Governance Statement which can be viewed at www.duketonmining.com.au. 23 Statement of Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2021 Notes Company REVENUE Interest Profit on sale of tenements Other income Fair value gains on financial assets at fair value through the profit or loss EXPENDITURE Administration expenses Depreciation expense Employee benefits expenses Exploration expenditure Share based payment expense 2021 $ 2020 $ 86,185 - 50,000 189,288 20,000,000 50,000 8,443,083 1,209,586 (343,663) (31,832) (325,999) (1,293,386) (314,460) (359,785) (30,527) (420,807) (1,316,818) (190,760) 4 4 22 PROFIT BEFORE INCOME TAX 6,269,928 19,130,177 INCOME TAX EXPENSE 6 (3,102,268) - TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF DUKETON MINING LIMITED 3,167,660 19,130,177 Basic and diluted earnings per share (cents per share) 21 2.6 16.2 The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 24 Statement of Financial Position AS AT 30 JUNE 2021 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Financial assets at fair value through profit or loss TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Current tax liabilities Employee benefit obligations TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities Employee benefit obligations TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings/(accumulated losses) TOTAL EQUITY Notes Company 2021 $ 2020 $ 7 8 9 10 11 6(d)(ii) 20,823,389 113,810 9,350,013 30,287,212 20,322,227 114,486 2,280,615 22,717,328 44,113 44,113 67,422 67,422 30,331,325 22,784,750 520,690 842,933 83,535 1,447,158 2,259,335 26,634 2,285,969 139,232 - 72,764 211,996 - 16,676 16,676 3,733,127 228,672 26,598,198 22,556,078 12 13(a) 13(b) 23,624,235 714,835 2,259,128 26,598,198 22,970,315 494,295 (908,532) 22,556,078 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 25 Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2021 Notes Contributed Equity $ Options Reserve $ Retained Earnings / (Accumulated Losses) $ Total $ BALANCE AT 1 JULY 2018 Profit for the year TOTAL COMPREHENSIVE LOSS 22,920,030 - - 908,070 - - (20,618,209) 19,130,177 19,130,177 3,209,891 19,130,177 19,130,177 TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares issued during the year Employee and consultant options 12 13(a) 50,285 - (5,500) (408,275) - 579,500 44,785 171,225 BALANCE AT 30 JUNE 2020 Profit for the year TOTAL COMPREHENSIVE INCOME 22,970,315 494,295 (908,532) 22,556,078 - - - - 3,167,660 3,167,660 3,167,660 3,167,660 TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares issued during the year Employee and consultant options 12 13(a) 653,920 - (73,920) 294,460 - - 580,000 294,460 BALANCE AT 30 JUNE 2021 23,624,235 714,835 2,259,128 26,598,198 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 26 Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2021 Notes Company CASH FLOWS FROM OPERATING ACTIVITIES Interest received Payments to suppliers and employees Expenditure on mining interests Proceeds from government COVID-19 grant Proceeds from sale of tenements Proceeds from disposal of financial assets at fair value through profit or loss Payments for financial assets at fair value through profit or loss Payment for lease guarantee NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 20 CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment NET CASH OUTFLOW FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payments for small parcel roundup NET CASH INFLOW FROM FINANCING ACTIVITIES 2021 $ 2020 $ 114,409 (651,599) (931,007) 50,000 - 1,625,156 (220,000) (37,274) (50,315) (8,523) (8,523) 560,000 - 560,000 155,674 (750,591) (1,310,409) 50,000 20,000,000 118,699 - - 18,263,373 (51,163) (51,163) 25,250 (432) 24,818 NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the financial year CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 501,162 20,322,227 18,237,028 2,085,199 7 20,823,389 20,322,227 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 27 Notes to the Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Company consisting of Duketon Mining Limited. The financial statements are presented in Australian currency. Duketon Mining Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by the directors on 24 September 2021. The directors have the power to amend and reissue the financial statements. (a) 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 and the Corporations Act 2001. Duketon Mining Limited is a for-profit entity for the purpose of preparing the financial statements. (i) Compliance with IFRS The financial statements of Duketon Mining Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) New and amended standards adopted by the Company The Company has adopted all the new, revised or amending Accounting Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. The Company did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards. (iii) New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021 reporting periods and have not been early adopted by the Company. The Company’s assessment of the impact of these new standards and interpretations is that they are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. (iv) Historical cost convention These financial statements have been prepared under the historical cost convention, except for certain financial assets and liabilities measured at fair value. (b) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director. (c) Revenue recognition Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets. (d) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received, and the Company will comply with all attached conditions. (e) Income tax The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. 28 Notes to the Financial Statements (Cont’d) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. (f) Impairment of assets 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. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. (g) Cash and cash equivalents For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and 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 insignificant risk of changes in value, and bank overdrafts. (h) Financial assets (i) Classification The Company classifies its financial assets in the following measurement categories: • Those to be measured subsequently at fair value (either through OCI or through profit or loss); and Those to be measured at amortised cost. • The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). (ii) Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. (iii) Measurement At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. 29 Notes to the Financial Statements (Cont’d) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Debt instruments Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments: • • • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other income or expenses. Impairment losses are presented as a separate line item in the statement of profit or loss. FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income or expenses. Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other income or expenses and impairment losses are presented as a separate line item in the statement of profit or loss. FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other income or expenses in the period in which it arises. Equity instruments The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Company’s right to receive payment is established. Changes in the fair value of financial assets at FVPL are recognised in other income or expenses in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. (iv) Impairment The Company assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology depends on whether there has been a significant increase in credit risk. (i) Plant and equipment All plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the reporting period in which they are incurred. Depreciation of plant and equipment is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term. The rates used range from 10% to 33% per annum. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(f)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income. When revalued assets are sold, it is Company’s policy to transfer the amounts included in other reserves in respect of those assets to retained earnings. (j) Exploration and evaluation costs Exploration and evaluation costs are expensed as they are incurred. 30 Notes to the Financial Statements (Cont’d) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (k) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms. (l) Employee benefits (i) Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. (ii) Other long-term employee benefit obligations The Company also has liabilities for long service leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period 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 end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur. (iii) Share-based payments The Company provides benefits to employees (including directors) of the Company in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. (m) 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. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. (n) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. 31 Notes to the Financial Statements (Cont’d) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (ii) 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. (o) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. (p) Critical accounting judgements, estimates and assumptions The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’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: Environmental issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the Company’s development and its current environmental impact the directors believe such treatment is reasonable and appropriate. Taxation generally Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best estimates of the directors. These estimates consider both the financial performance and position of the Company as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents the directors’ best estimate, pending an assessment by the Australian Taxation Office. Taxation uncertain tax position The tax legislation concerning utilisation of carried forward tax losses is complex and highly subjective. The Company considers it probable that it will have access to all carried forward tax losses by satisfying either the Continuity of Ownership or Same Business tests but notes that access to losses from the 2013 financial year may be uncertain. The income tax return for the 2020 financial year was prepared on the basis that all prior losses were available, together with documentation to support this position. If the ATO were to deem that the 2013 losses were not available this would increase the Company’s current tax payable and current tax expense by $1,081,384. Share based payment transactions The Company 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 an internal valuation using a Black-Scholes option pricing model. 32 Notes to the Financial Statements (Cont’d) 2. FINANCIAL RISK MANAGEMENT The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Risk management is carried out by the full Board of Directors as the Company believes that it is crucial for all board members to be involved in this process. Senior management, as required, has responsibility for identifying, assessing, treating and monitoring risks and reporting to the board on risk management. (a) Market risk (i) Foreign exchange risk As all operations are currently within Australia, the Company is not exposed to any material foreign exchange risk. (ii) Price risk The Company is exposed to equity securities price risk. This arises from investments held by the Company and classified in the statement of financial position at fair value through the profit and loss. The Company is not exposed to commodity price risk. At the reporting date, the Company has investments in ASX listed equity securities. Sensitivity analysis The Company’s equity investments are listed on the Australian Stock Exchange (ASX) and are all classified at fair value through the profit or loss. At 30 June 2021, if the value of the equity investments held had increased/decreased by 15% with all other variables held constant, post tax profit for the Company would have been $981,751 higher/lower (2020: $342,092 higher/lower) as a result of gains/losses on the fair value of the financial assets. (iii) Interest rate risk The Company is exposed to movements in market interest rates on cash and cash equivalents. The Company’s policy is to monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The entire balance of cash and cash equivalents for the Company of $20,823,389 (2020: $20,322,227) is subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum of six months fluctuate during the year depending on current working capital requirements. The weighted average interest rate received on cash and cash equivalents by the Company was 0.4% (2020: 1.0%). Sensitivity analysis At 30 June 2021, if interest rates had changed by +/- 25 basis points from the weighted average rate for the year with all other variables held constant, post-tax profit for the Company would have been $50,658 higher/lower (2020: $46,566 higher/lower on a +/- 25 basis point change) as a result of higher/lower interest income from cash and cash equivalents. (b) Credit risk The Company has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the carrying amount (net of provision for impairment) of those assets as disclosed in the statement of financial position and notes to the financial statements. As the Company does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal credit risk management policy is not maintained. All surplus cash holdings of the Company are currently invested with AA- rated financial institutions. (c) Liquidity risk The Company manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Company. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in conjunction with the Company’s current and future funding requirements, with a view to initiating appropriate capital raisings as required. The financial liabilities of the Company are confined to trade and other payables as disclosed in the Statement of financial position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date. 33 Notes to the Financial Statements (Cont’d) 2. FINANCIAL RISK MANAGEMENT (Cont’d) (d) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The equity investments held by the Company are classified at fair value through profit or loss. The market value of all equity investments represents the fair value based on quoted prices on active markets (ASX) as at the reporting date without any deduction for transaction costs. These investments are classified as level 1 financial instruments. The carrying amounts and estimated fair values of financial assets and financial liabilities are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Financial assets at fair value through profit or loss Total Financial Assets Financial Liabilities Trade and other payables Total Financial Liabilities Company 2021 $ 2020 $ 20,823,389 113,810 9,350,013 30,287,212 20,322,227 114,486 2,280,615 22,717,328 520,690 520,690 139,232 139,232 The methods and assumptions used to estimate the fair value of financial instruments are outlined below: Cash The carrying amount is fair value due to the liquid nature of these assets. Receivables/Payables Due to the short-term nature of these financial rights and obligations, their carrying amounts are estimated to represent their fair values. Fair value measurements of financial assets The carrying values of financial assets and liabilities of the Company approximate their fair values. Fair values of financial assets and liabilities have been determined for measurement and / or disclosure purposes. Fair value hierarchy The Company classifies assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance of the inputs used in determining that value. The following table analyses financial instruments carried at fair value by the valuation method. The different levels in the hierarchy have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 3: Level 1 $ Level 2 $ Level 3 $ Total $ 30 June 2021 Financial assets at fair value through profit or loss Total as at 30 June 2021 30 June 2020 Financial assets at fair value through profit or loss Total as at 30 June 2020 9,350,013 9,350,013 2,280,615 2,280,615 - - - - - - - - 9,350,013 9,350,013 2,280,615 2,280,615 34 Notes to the Financial Statements (Cont’d) 3. SEGMENT INFORMATION Industry and geographical segment The Company operates in one segment, being the mining exploration sector in Australia. In determining operating segments, the Company has had regard to the information and reports the Managing Director uses to make strategic decisions regarding resources. The Managing Director is considered to be the chief operating decision maker and is empowered by the Board of Directors to allocate resources and assess the performance of the Company. 4. REVENUE AND OTHER INCOME Revenue Other revenue Interest from financial institutions Other income Government COVID-19 grant income 5. EXPENSES Profit or loss before income tax includes the following specific expenses: Superannuation expense Expenses relating to short-term leases 6. INCOME TAX (a) Income tax expense Current tax on profits for the year Adjustments for current tax of prior periods Increase in deferred tax liabilities Income tax expense Company 2021 $ 2020 $ 86,185 189,288 50,000 50,000 43,576 46,231 40,559 43,943 - 842,933 2,259,335 3,102,268 - - - - (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense 6,269,928 19,130,177 Prima facie tax expense at the Australian tax rate of 30% (2020: 27.5%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Share-based payments Government COVID-19 grant income Other Movements in unrecognised temporary differences Adjustments for current tax of prior periods Previously unrecognised tax losses now recouped to reduce current tax expense Income tax expense 1,880,978 5,260,799 94,338 (15,000) 334 1,960,650 298,685 842,933 - 3,102,268 52,459 (13,750) - 5,299,508 (310,999) - (4,988,509) - 35 Notes to the Financial Statements (Cont’d) 6. INCOME TAX (Cont’d) (c) Unrecognised temporary differences Deferred Tax Assets at 30% (2020: 27.5%) On Income Tax Account Financial assets at fair value through profit or loss Carry forward tax losses Set-off of deferred tax liabilities: Financial assets at fair value through profit or loss Net deferred tax assets Less deferred tax assets not recognised (d) Deferred tax balances (i) Deferred tax assets The balance comprises temporary differences attributable to: Accrued expenses Employee benefits Tax losses Total deferred tax assets Set-off of deferred tax liabilities pursuant to set-off provisions Net deferred tax assets (ii) Deferred tax liabilities The balance comprises temporary differences attributable to: Other Financial assets at fair value through profit or loss Total deferred tax liabilities Set-off of deferred tax assets pursuant to set-off provisions Net deferred tax liabilities Company 2021 $ 2020 $ - - - - - - - - 549,004 549,004 (292,639) 256,365 (256,365) - 10,750 33,051 128,752 172,553 (172,553) - 8,808 2,423,080 2,431,888 (172,553) 2,259,335 (ii) (i) - - - - - - - - - - - In April 2017, the Australian Government enacted legislation which reduces the corporate rate for small and medium business (base rate) entities from 30% to 25% over the next decade. For the 2017 financial year the corporate tax rate reduced to 27.5% for small business entities with turnover less than $10 million. This turnover threshold progressively increased until it reached $50 million in the 2020 financial year. For the 2021 financial year, the tax rate has decreased to 26% and then 25% for the 2022 and later financial years. Duketon Mining Limited satisfied the criteria to be a base rate entity for the 2020 financial year with an applicable tax rate of 27.5%. Duketon Mining Limited has not satisfied the criteria to be a base rate entity for the 2021 financial year and has therefore applied the full corporate tax rate of 30%. 7. CURRENT ASSETS - CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term deposits Cash and cash equivalents as shown in the statement of financial position and the statement of cash flows 1,293,389 19,530,000 292,227 20,030,000 20,823,389 20,322,227 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates. 36 Notes to the Financial Statements (Cont’d) Company 2021 $ 2020 $ 8. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES Trade and other receivables 113,810 114,486 9. CURRENT ASSETS – FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Australian listed equity securities 9,350,013 2,280,615 Changes in fair values of financial assets at fair value through profit or loss are disclosed directly on the face of the statement of profit or loss and other comprehensive income. 10. NON-CURRENT ASSETS - PLANT AND EQUIPMENT Plant and equipment Cost Accumulated depreciation Net book amount Plant and equipment Opening net book amount Additions Depreciation charge Closing net book amount 11. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES Trade payables Other payables and accruals Funds held on trust for unmarketable parcel roundup 144,550 (100,437) 44,113 67,422 8,523 (31,832) 44,113 374,362 122,294 24,034 520,690 136,027 (68,605) 67,422 46,786 51,163 (30,527) 67,422 35,925 79,273 24,034 139,232 12. ISSUED CAPITAL (a) Share capital 2021 2020 Notes Number of shares $ Number of shares $ Ordinary shares fully paid 12(b), 12(d) 121,114,304 23,624,235 118,234,304 22,970,315 Total issued capital 121,114,304 23,624,235 118,234,304 22,970,315 (b) Movements in ordinary share capital Beginning of the financial year Issued during the year:    Transferred from share-based payments reserve Issued upon exercise of $0.20 options Issued upon exercise of $0.202 options upon exercise of options Issued as part of employee remuneration (1)  End of the financial year 118,234,304 22,970,315 118,016,281 22,920,030 2,800,000 - 560,000 - - 125,000 - 25,250 - 80,000 121,114,304 73,920 20,000 23,624,235 - 93,023 118,234,304 5,500 19,535 22,970,315 (1) On 14 October 2020, the Company issued 80,000 ordinary shares (27 September 2019, 93,023 ordinary shares) to an employee as a reward and incentive. The closing price of $0.25 (2020: $0.21) on the date of issue was the grant date fair value of the shares issued. 37 Notes to the Financial Statements (Cont’d) 12. ISSUED CAPITAL (Cont’d) (c) Movements in options on issue Beginning of the financial year Issued, exercisable at $0.36 on or before 17 February 2026 Issued, exercisable at $0.288 on or before 26 November 2025 Issued, exercisable at $0.214 on or before 28 November 2024 Exercised at $0.202, expiring on 18 November 2019 Exercised at $0.20, expiring on 30 November 2020 Expired on 1 August 2019, exercisable at $0.20 Expired on 18 November 2019, exercisable at $0.202 End of the financial year Number of options 2020 2021 9,800,000 410,000 2,250,000 - - (2,800,000) - - 9,660,000 24,800,000 - - 2,250,000 (125,000) - (15,000,000) (2,125,000) 9,800,000 (d) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. (e) Capital risk management The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk management is the current working capital position against the requirements of the Company to meet exploration programmes and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Company at 30 June 2021 and 30 June 2020 are as follows: Cash and cash equivalents Trade and other receivables Financial assets at fair value through profit or loss Trade and other payables Current tax liabilities Employee benefit obligations (current) Working capital position Company 2021 $ 20,823,389 113,810 9,350,013 (520,690) (842,933) (83,535) 28,840,054 2020 $ 20,322,227 114,486 2,280,615 (139,232) - (72,764) 22,505,332 38 Notes to the Financial Statements (Cont’d) 13. RESERVES AND ACCUMULATED LOSSES (a) Reserves Share-based payments reserve Balance at beginning of year Employee and consultant options expense Transferred to share capital upon exercise of options Transferred to accumulated losses upon expiry of options Balance at end of year (b) Retained earnings/(accumulated losses) Balance at beginning of year Transferred from share-based payments reserve upon expiry of options Net profit for the year Balance at end of year Company 2021 $ 2020 $ 494,295 294,460 (73,920) - 714,835 908,070 171,225 (5,500) (579,500) 494,295 (908,532) (20,618,209) - 3,167,660 2,259,128 579,500 19,130,177 (908,532) (c) Nature and purpose of reserves Share-based payments reserve The share-based payments reserve is used to recognise the fair value of options granted and currently on issue. 14. DIVIDENDS No dividends were paid during the financial year. No recommendation for payment of dividends has been made. 15. RELATED PARTY TRANSACTIONS (a) Key management personnel compensation Short-term benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payments 322,796 27,637 7,706 - 214,000 572,139 325,791 24,884 4,764 - 152,200 507,639 Detailed remuneration disclosures are provided in the remuneration report on pages 16 to 19. (b) Loans to related parties There were no loans to related parties, including key management personnel, during the year. 16. REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms: (a) Audit services Rothsay Auditing - audit and review of financial reports 42,500 39,500 (b) Non-audit services Rothsay Auditing – tax compliance services - 2,000 39 Notes to the Financial Statements (Cont’d) 17. CONTINGENCIES There are no material contingent liabilities of the Company at balance date. The Company has contingent assets at balance date resulting from the sale of gold tenements to Regis Resources Limited (“Regis”) during the 2020 financial year. Gold tenements sale to Regis Under the terms of the sale agreement with Regis to sell a package of tenements from the Duketon Project the following contingent consideration is outstanding: 1) Mineral resource contingent payment – $2.5m in cash payable on the first occasion that Regis announces to the ASX mineral resources totalling more than 250,000 ounces of gold (Measured, Indicated or Inferred) on one or more of the sale tenements. Gold production contingent payment – $2.5m in cash payable on the first to occur of the following: a) first commercial gold production within the sale tenements (and not being an extension into the tenements of Regis’ existing mining operation at Petra); or in the case of an extension into the sale tenements of Regis’ existing mining operation at Petra, the mining of greater than 5,000 ounces of gold from the sale tenements. 2) b) 18. COMMITMENTS Company 2021 $ 2020 $ Exploration commitments The Company has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest in. Outstanding exploration commitments are as follows: within one year later than one year but not later than five years later than five years 222,300 889,200 1,153,800 2,265,300 192,300 769,200 1,346,100 2,307,600 19. EVENTS OCCURRING AFTER THE REPORTING DATE No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial periods. 20. CASH FLOW INFORMATION 3,167,660 (a) Reconciliation of net profit after income tax to net cash inflow/(outflow) from operating activities Net profit for the year Non-Cash Items Share-based payment expense Depreciation expense Change in operating assets and liabilities Decrease/(increase) in trade and other receivables (Increase) in financial assets at fair value through profit or loss Increase in trade and other payables Increase in current tax liabilities Increase in employee benefit obligations Increase in deferred tax liabilities Net cash (outflow)/inflow from operating activities 676 (7,069,398) 381,458 842,933 20,729 2,259,335 (50,315) 314,460 31,832 19,130,177 190,760 30,527 (64,042) (1,059,416) 18,029 - 17,338 - 18,263,373 40 Notes to the Financial Statements (Cont’d) Company 2021 $ 2020 $ 20. CASH FLOW INFORMATION (Cont’d) (b) Non-cash investing and financing activities On 14 October 2020, the Company issued 80,000 ordinary shares (27 September 2019, 93,023 ordinary shares) to an employee as a reward and incentive, for a value of $20,000 (2020: $19,535). This amount is included in ‘share-based payments expense’ on the statement of profit or loss and other comprehensive income of the Company. 21. EARNINGS PER SHARE (a) Reconciliation of earnings used in calculating earnings per share Profit attributable to the owners of the Company used in calculating basic and diluted earnings per share (b) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Dilutive options Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 3,167,660 19,130,177 No. of Shares 2021 No. of Shares 2020 119,917,372 118,163,528 1,370,469 - 121,287,841 118,163,528 (c) Information on the classification of options For the 2021 financial year the following potential ordinary shares were antidilutive as the exercise price of the options was greater than the average market price of the Company’s shares during the year and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share: Options exercisable at $0.288 on or before 26 November 2025 Options exercisable at $0.30 on or before 24 November 2021 Options exercisable at $0.36 on or before 17 February 2026 No. of Options 2021 2,250,000 2,500,000 410,000 5,160,000 These options currently on issue could potentially dilute basic earnings per share in the future. For the year ended 30 June 2020, all options on issue were anti-dilutive as the various exercise prices were all greater than the average market price of the Company’s shares during the year. This resulted in the diluted earnings per share being the same as the basic earnings per share. 22. SHARE-BASED PAYMENTS a) Employee and consultant options The Company provides benefits to employees (including directors), contractors and consultants of the Company in the form of share-based payment transactions, whereby employees, contractors and consultants render services in exchange for options to acquire ordinary shares. The options granted and on issue at 30 June 2021 have exercise prices ranging from $0.20 to $0.36 and expiry dates ranging from 24 November 2021 to 17 February 2026. Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the Company with full dividend and voting rights. 41 Notes to the Financial Statements (Cont’d) 22. SHARE-BASED PAYMENTS (Cont’d) The weighted average fair value of the options granted during the 2021 financial year was 11.1 cents (2020: 7.6 cents). The fair value was calculated by using the Black-Scholes European Option Pricing Model applying the following inputs: Weighted average exercise price (cents) Weighted average life of the option (years) Weighted average underlying share price (cents) Expected share price volatility Risk free interest rate Set out below are summaries of the share-based payment options granted: 2021 29.9 5.0 27.4 50.0% 0.4% 2020 21.4 5.0 19.0 50.0% 0.7% Outstanding at the beginning of the year Granted Forfeited Exercised Expired Outstanding at year-end Exercisable at year-end Company 2021 2020 Weighted average exercise price cents 23.0 29.9 - 20.0 - 25.8 25.8 Number of options 24,800,000 2,250,000 - (125,000) (17,125,000) 9,800,000 9,800,000 Number of options 9,800,000 2,660,000 - (2,800,000) - 9,660,000 9,660,000 Weighted average exercise price cents 21.1 21.4 - 20.2 20.0 23.0 23.0 The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.6 years (2020: 2.2 years), with exercise prices ranging from $0.20 to $0.36. b) Employee shares On 14 October 2020, the Company issued 80,000 ordinary shares (27 September 2019, 93,023 ordinary shares) to an employee as a reward and incentive. The closing price of $0.25 (2020: $0.21) on the date of issue was the grant date fair value of the shares issued. c) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period were as follows: Options issued to employees shown as share-based payments Shares issued to employees shown as share-based payments Company 2021 $ 294,460 20,000 314,460 2020 $ 171,225 19,535 190,760 42 Directors’ Declaration In the Directors’ opinion: (a) the financial statements and notes set out on pages 24 to 42 are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and giving a true and fair view of the Company’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; (b) (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been included in the notes to the financial statements. The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. Stuart Fogarty Managing Director Perth, 24 September 2021 43 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DUKETON MINING LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Duketon Mining Limited (“the Company”) which comprises the statement of financial position as at 30 June 2021, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended on that date and notes to the financial statements, including a summary of significant accounting policies and the directors’ declaration of the Company. In our opinion the financial report of the Company is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under these standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of this report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We 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. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DUKETON MINING LIMITED (continued) Key Audit Matter – Financial Assets How our Audit Addressed the Key Audit Matter The Company’s financial assets make up almost 100% of total assets by value and are considered to be the key driver of the Company’s operations. We do not consider financial assets to be at a high risk of significant misstatement, however due to the materiality in the context of the financial statements as a whole, this is considered to be an area which had an effect on our overall strategy and allocation of resources in planning and completing our audit. Our procedures over the existence of the Company’s financial assets included but were not limited to: • Documenting and assessing the processes and controls in place to record cash transactions; • Testing a sample of cash payments to determine they were bona fide payments, were properly authorised and recorded in the general ledger; and • Agreeing significant financial assets to independent third-party confirmations. Key Audit Matter – Exploration and evaluation expenditure We have also assessed the appropriateness of the disclosures included in the financial report. How our Audit Addressed the Key Audit Matter The Company has significant exploration and evaluation expenditure during the year. incurred Our procedures in assessing exploration and evaluation expenditure included but were not limited to the following: We do not consider exploration and evaluation expenditure to be at a high risk of significant misstatement, or to be subject to a significant level of judgement. However due to the materiality in the context of the financial statements as a whole, this is considered to be an area which had an effect on our overall strategy and allocation of resources in planning and completing our audit. • We assessed exploration and evaluation to AASB 6 expenditure with Exploration for and Evaluation of Mineral Resources. reference • We tested a sample of exploration and evaluation supporting expenditure documentation to ensure they were bona fide payments; and to • We documented and assessed the processes and controls in place to record exploration and evaluation transactions. We have also assessed the appropriateness of the disclosures included in the financial report. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DUKETON MINING LIMITED (continued) Other Information The directors are responsible for the other information. The other information comprises the information included in the Company’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. 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 there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Directors’ Responsibility 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 the 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 Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or cease operations, or have no realistic alternative but to do so. Auditor’s Responsibility 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 Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/Home.aspx. We communicate with the directors regarding, amongst other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DUKETON MINING LIMITED (continued) We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe those matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communications. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the remuneration report included in the directors’ report for the year ended 30 June 2021. In our opinion the remuneration report of Duketon Mining Limited for the year ended 30 June 2021 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. Rothsay Auditing Dated 24 September 2021 Donovan Odendaal Partner ASX Additional Information Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 20 September 2021. (a) Distribution of equity securities Analysis of numbers of equity security holders by size of holding: 1 1,001 5,001 10,001 100,001 - 1,000 - 5,000 - 10,000 - 100,000 and over The number of equity security holders holding less than a marketable parcel of securities are: (b) Twenty largest shareholders The names of the twenty largest holders of quoted ordinary shares are: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 HARMANIS HOLDINGS PTY LTD MCCUSKER HOLDINGS PTY LTD JETOSEA PTY LTD CITICORP NOMINEES PTY LIMITED SINO WEST ASSETS PTY LTD ARGONAUT SECURITIES (NOMINEES) PTY LTD RANGUTA LIMITED NATIONAL NOMINEES LIMITED ZERRIN INVESTMENTS PTY LTD GOLDRICH HOLDINGS PTY LTD CHEUNG SHUN RESOURCES LTD GANDRIA CAPITAL PTY LTD HARMANIS HOLDINGS PTY LTD ELEMENT 25 LIMITED CAIRNGLEN INVESTMENTS PTY LTD ALPHA BOXER LIMITED PATO NEGRO PTY LTD MR SEAMUS CORNELIUS MR SEAMUS IAN CORNELIUS MS QING MI Ordinary Shares Number of holders Number of shares 231 229 235 407 139 1,241 237 77,939 633,136 1,772,898 15,387,926 103,242,405 121,114,304 84,435 Listed ordinary shares Number of shares 20,900,000 6,050,000 4,506,738 3,952,590 3,409,177 3,237,651 Percentage of ordinary shares 17.26 5.00 3.72 3.26 2.81 2.67 3,147,597 2,195,460 2,121,796 2,000,000 1,958,709 1,700,000 1,500,000 1,450,000 1,443,537 1,367,986 1,350,000 1,310,912 1,169,888 1,039,247 65,811,288 2.60 1.81 1.75 1.65 1.62 1.40 1.24 1.20 1.19 1.13 1.11 1.08 0.97 0.86 54.34 48 ASX Additional Information (Cont’d) (c) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: Harmanis Holdings Pty Ltd Seamus Cornelius Number of Shares 22,400,000 7,149,723 (d) Voting rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. (e) Unquoted securities Class 20 cent Options, Expiry 28 November 2023 21.4 cent Options, Expiry 28 November 2024 Number of Securities 2,000,000 2,250,000 Number of Holders 1 4 25 cent Options, Expiry 31 January 2022 28.8 cent Options, Expiry 26 November 2025 250,000 2,250,000 30 cent Options, Expiry 24 November 2021 2,500,000 36 cent Options, Expiry 17 February 2026 410,000 1 4 4 3 Holders of 20% or more of the class Holder Name Pato Negro Pato Negro Seamus Cornelius Nedlands Nominees Kirsty Culver Pato Negro Seamus Cornelius Nedlands Nominees Pato Negro Seamus Cornelius Nedlands Nominees Kirsty Culver Alan Downie Number of Securities 2,000,000 1,000,000 500,000 500,000 250,000 1,000,000 500,000 500,000 1,000,000 750,000 500,000 200,000 160,000 (f) Schedule of interests in mining tenements Location Duketon Duketon Duketon Duketon Duketon Duketon Duketon North Duketon North Mulga Tank North Doris Cunyu Doris North Fisher South Dusty East Dexter Stephens Cat Camp Cunyu Barlee North Walgoolan Pelican Tenement E38/2666 E38/2805 E38/2834 E38/2866 E38/2916 M38/1252 E38/3617 (A) E38/3658 (A) E39/2211 (A) E52/3833 E52/3923 (A) E52/3991 (A) E53/2143 (A) E53/2158 (A) E53/2173 (A) E59/2414 E63/2050 E69/3763 E77/2717 (A) E77/2794 (A) E80/5493 (A) Percentage held / earning 100% Nickel rights only 100% Nickel rights only 100% Nickel rights only 100% Nickel rights only 100% Nickel rights only 100% Nickel rights only 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 49

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