Eagle Mountain Mining Limited
Annual Report 2019

Plain-text annual report

CORPORATE DIRECTORY DIRECTORS Rick Crabb (Non-Executive Chairman) Charles Bass (Managing Director) Roger Port (Non-Executive Director) REGISTERED OFFICE Ground Floor 22 Stirling Highway Nedlands WA 6009 ALTERNATE DIRECTOR AUDITORS Brett Rowe (Alternate Director for Charles Bass) COMPANY SECRETARY Mark Pitts REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Ground Floor, 22 Stirling Highway Nedlands, Western Australia 6009 Email: Website: eaglemountain.com.au info@eaglemountain.com.au William Buck Audit (WA) Pty Ltd Level 3 15 Labouchere Road South Perth WA 6151 SHARE REGISTRY Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 CORPORATE GOVERNANCE The Company has adopted the 3rd Edition the ASX Corporate Governance of Recommendations. A summary statement which has been approved by the Board together with current policies and charters is available on the Company website. http://eaglemountain.com.au/corporate- governance/ ASX CODE EM2 ABN 34 621 541 204 ASX ADDITIONAL INFORMATION Schedule of mineral tenure Eagle Mountain mineral licences as at 4 October 2019 are all presently located in the State of Arizona, United States of America. Prospect & Tenure type Pacific Horizon Patented Claims (26 individual claims) Claim Reference (Tenement) Percentage held Empire, Copper Ash, Palestine, Buffalo, Little Pittsburg, Austin, Wellington, Eagle, Number Ten, Number Eleven, Number Twelve, Number Thirteen, Noonday, South Noonday, Dudley, Comet, Alameda, Virginia, Mars, Ashland, Oakland, Sunnyside, Cuprite, Azurite, Yavapai and Jumbo Unpatented Claims (150 individual claims) SMM#1-14, SMM#17-145, SMM#147, SMM#149, SMM151, SMM#155, SMM#157, SMM#159, SMM#161 Exploration Permit (1 individual permit) Scarlett Unpatented Claims (92 individual claims) Exploration Permit (2 individual permits) Red Mule Unpatented Claims (98 individual claims) Exploration Permit (2 individual permits) Rhyolite Target Unpatented Claims (70 individual claims) Exploration Permit (1 individual permit) 08-117371 SCA#1-15, SCA#57-133 SMMSO#001 - 015; SMMSO#023 - 048; SMMSO#054; SMMSO#056; SMMSO#058 - 084 SMM#146, SMM#148, SMM#150, SMM#152, SMM#153, SMM#154, SMM#158, SMM#160, SMM#162-207, SMM#210-212, SCA#16-56 008-120871, 008-120872 SMMSO#001 - 015; SMMSO#023 - 048; SMMSO#054; SMMSO#056; SMMSO#058 - 084 08-120101 100% 100% 100% 100% 100% 100% 100% 100% 100% 2019 Annual Report 2019 Annual Report Page 63 CONTENTS PAGE Corporate Directory Chairman’s Letter Operations Report Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional information Page INSIDE COVER 1 3 8 21 22 23 24 25 26 56 57 61 2019 Annual Report Arizona is at the heart of America’s mining industry and home to some of the world’s largest copper discoveries. Silver Mountain, which comprises three prospects, Pacific Horizon, Scarlett and Red Mule, lies on the same geological setting that hosts world-class porphyry copper mines such as Bagdad, Miami and Resolution, one of the largest undeveloped copper deposits in the world. It also lies on the southern extension of the metallogenic belt that hosts United Verde and Iron King. Bradshaw Mountains Northwest of Phoenix, Arizona. Managing Director, Mr Charles Bass stated: “We have undertaken the first modern exploration in very difficult and remote terrain at the Pacific Horizon and Scarlett Prospects. The results to date have confirmed the variety and complexity of mineralisation we believed was present. “The work of our exploration team and our consultant’s Dr Linus Keating, Dr David Compston and Dr Jeff Jaacks has been of great value and has added to our understanding of our Silver Mountain Cu-Au Project. Having completed an aggressive exploration drilling program during the past year the Company is now compiling and reviewing the data to determine the next steps. It is early days, but the team is excited by the potential of Silver Mountain and other opportunities available in this world class mineral province. In addition to detailed analyses of the considerable amount of data obtained from our field work, we have been actively reviewing a number of other opportunities in Arizona to complement Silver Mountain. 2019 Annual Report Arizona is at the heart of America’s mining industry and home to some of the world’s largest copper discoveries. Silver Mountain, which comprises three prospects, Pacific Horizon, Scarlett and Red Mule, lies on the same geological setting that hosts world-class porphyry copper mines such as Bagdad, Miami and Resolution, one of the largest undeveloped copper deposits in the world. It also lies on the southern extension of the metallogenic belt that hosts United Verde and Iron King. Bradshaw Mountains Northwest of Phoenix, Arizona. Managing Director, Mr Charles Bass stated: “We have undertaken the first modern exploration in very difficult and remote terrain at the Pacific Horizon and Scarlett Prospects. The results to date have confirmed the variety and complexity of mineralisation we believed was present. “The work of our exploration team and our consultant’s Dr Linus Keating, Dr David Compston and Dr Jeff Jaacks has been of great value and has added to our understanding of our Silver Mountain Cu-Au Project. Having completed an aggressive exploration drilling program during the past year the Company is now compiling and reviewing the data to determine the next steps. It is early days, but the team is excited by the potential of Silver Mountain and other opportunities available in this world class mineral province. Mountain. In addition to detailed analyses of the considerable amount of data obtained from our field work, we have been actively reviewing a number of other opportunities in Arizona to complement Silver Chairman’s Report Since listing on the Australian Securities Exchange in March 2018, Eagle Mountain has focussed its exploration and project evaluation work in Arizona, a premier mining jurisdiction. As detailed in this Annual Report, a successful first pass exploration program was completed at our Silver Mountain Project. The results have provided the management team with optimism on the potential of Silver Mountain, with further work to be undertaken on the various prospects identified in this complex province. In conjunction with the exploration work completed at Silver Mountain, a considerable amount of time was spent completing due diligence on several greenfields and advanced opportunities identified to broaden the Company’s project portfolio. This process led to the Company announcing the proposed acquisition of an 80% interest in the Oracle Ridge Copper project in Arizona. Oracle Ridge is an advanced stage opportunity, comprising an existing underground mine (currently on care and maintenance) with significant exploration upside. Oracle Ridge is complementary to the Silver Mountain providing Eagle Mountain with an ideal mix of advanced and greenfields exploration projects, and we look forward to completing the acquisition of this exciting project and commencing a significant resource expansion exploration program. To lead this dual-project strategy, the Company announced the appointment of Mr Tim Mason as Chief Executive Officer, commencing 15 January 2020. Tim has 18 years’ experience in the mining and engineering sectors across a broad range of corporate, operations, business development and engineering roles. Tim is an underground mining expert, who brings significant experience in project development, feasibility studies, financing and operation start-ups to Eagle Mountain. I look forward to working with Tim and advancing our exciting project portfolio. Mr Charles Bass, Eagle Mountain’s founder and current Managing Director/CEO will remain as Managing Director for an appropriate period to ensure a smooth transition, particularly in regard to the Company’s corporate activities in Arizona. On behalf of the Board and shareholders, I sincerely thank Charlie for his hard work and dedication in growing Eagle Mountain and for the path he has created for all our future endeavours. I would also like to thank all Eagle Mountain staff and contractors for their continued hard work. Lastly, we are very fortunate to have a supportive shareholder base. The Board and management thank you for your ongoing support and assure you we will continue to work diligently on executing our corporate strategy and building a Company of significance. Yours faithfully Rick Crabb Chairman 2019 Annual Report 2019 Annual Report 1 Figure 1 - The Silver Mountain Project located just outside of Phoenix, Arizona 2019 Annual Report 2 Review of Operations Silver Mountain Project The preliminary drilling program completed at the Silver Mountain Project focused on the Pacific Horizon, Red Mule and Scarlett areas. This program was completed over a nine month period during the financial year. The Company’s drilling contractor together with Eagle Mountain staff completed all holes in compliance with regulatory requirements and de- mobilised from site in June of this year. Figure 2 below shows the various prospect locations and illustrates the various types of mineralisation targets within the Silver Mountain Project. The Silver Dollar and Rhyolite targets were not tested by drilling as more exploration work is required before drill targets can be established. Figure 1 - The Silver Mountain Project located just outside of Phoenix, Arizona Figure 2 Silver Mountain Project overview with landholding and unique mineralisation styles 2019 Annual Report 2 2019 Annual Report 3 Pacific Horizon Quartz-carbonate breccia is a key copper-gold mineralization style and was encountered in all drill holes completed at the Pacific Horizon. The current interpretation suggests that there are two different quartz-carbonate breccias: • The first occurs within the Volcanogenic Massive Sulphide (VMS) Horizon itself and tends to be smaller intervals with lower values; and • The second occurs below the Horizon footwall and tend to be larger intervals with more significant and anomalous assays. Drilling along the Pacific Horizon confirmed the very complex mineralogy at this target with results to date providing a significant volume of technical and structural information. It was unexpected that quartz-carbonate breccia would occur below the Horizon footwall, and this has given us cause to reassess the mineralization genesis and model. Dr Jeff Jaack’s geochemical analysis suggests a possible epithermal gold signature, and this model remains to be investigated. Figure 3 below shows a hypothetical long-section illustrating the different types of mineralisation targets at the Silver Mountain Project. Figure 3 Mineralisation targets at the Silver Mountain Project 2019 Annual Report 4 Pacific Horizon Quartz-carbonate breccia is a key copper-gold mineralization style and was encountered in all drill holes completed at the Pacific Horizon. The current interpretation suggests that there are two different quartz-carbonate breccias: • The first occurs within the Volcanogenic Massive Sulphide (VMS) Horizon itself and tends to be smaller intervals with lower values; and • The second occurs below the Horizon footwall and tend to be larger intervals with more significant and anomalous assays. Drilling along the Pacific Horizon confirmed the very complex mineralogy at this target with results to date providing a significant volume of technical and structural information. It was unexpected that quartz-carbonate breccia would occur below the Horizon footwall, and this has given us cause to reassess the mineralization genesis and model. Dr Jeff Jaack’s geochemical analysis suggests a possible epithermal gold signature, and this model remains to be investigated. Figure 3 below shows a hypothetical long-section illustrating the different types of mineralisation targets at the Silver Mountain Project. Mineralisation occurs abruptly with little anomalism either side of significant or anomalous intercepts. This may suggest that other “hidden” ore zones may occur near to or just off the drill holes. This type of discovery is referred to as “blind” as there is little indication of the mineralisation occurring outside if directly “hit” by drilling. Interpretation of assays received to date from drilling, indicate that: • The VMS system along the Pacific Horizon has been overprinted with at least two phases of hydrothermal alteration. This is quite different to other VMS deposits in the region. • There are at least two mineralised systems intersected by drilling. Newspaper reports from the time of operation of the Pacific Mine talk about 4-5 veins being found. • The same newspaper reports talk about gold values increasing in veins moving to the west • while copper grades decrease. Increased molybdenum and bismuth values are indicators of a potential buried porphyry. As determined from a surface geochemistry report by Dr Jeff Jaacks (refer to the Independent Geologist Report – Eagle Mountain’s Prospectus dated 23 January 2018), molybdenum and bismuth increase along the Pacific Horizon moving south-westwards from the Pacific Mine. The highest values encountered in the drilling were near the Buffalo mine and from holes that reached the lowest elevations; and • A characteristic epithermal gold chemical signature occurs in the hydrothermal breccia and the meta-chert tuff of the Pacific Horizon. Scarlett Drilling at the Gold Vein target at the Scarlett Prospect area was designed to test the porphyry potential of the area. This is quite different to the mineralisation encountered along the Pacific Horizon. Results from two holes were inconclusive but did reveal indicators of a potential porphyry in the vicinity. The simplified types of alteration encountered in porphyry systems are illustrated below in Figure 4, including the shell-like alteration that occurs in porphyry systems both outside and below the main ore zone. The areal extent of the actual ore zone comprises only a small portion of the overall porphyry system. Figure 3 Mineralisation targets at the Silver Mountain Project 2019 Annual Report 4 2019 Annual Report 5 Figure 4 Simplified alteration model of porphyry deposits. Porphyry-style alteration was observed in all holes drilled at the Gold Vein target, including: • Propylitic alteration as chlorite disseminated in the hosting granodiorite and in vein selvedges. The overall intensity of the alteration increases with depth in the three holes completed 19SMDD014, 19SMDD015 and 19SMDD016. • Thin quartz-carbonate-K-feldspar veins are widespread in the drill core and show alteration selvedges with white mica (sericite). Minor sulphides are associated with the veins. Alteration can be pervasive over several metres. This may represent the outer edge of a Phyllic zone. The Company was very encouraged by the extent and style of alteration encountered in drilling. Further work is required to understand where the mineralised parts of the system could be found. Red Mule and Rhyolite Target The VMS Horizon discovered near the Rhyolite target and south of Red Mule has a slightly different rock mineralogy that is similar to that of known VMS deposits in the district. This area requires more field work including mapping and sampling before drill targets can be established. 2019 Annual Report 6 New Projects Although the Company’s focus had been on the highly prospective Silver Mountain Project, the Company was aware of several advanced project opportunities within Arizona that would complement the Silver Mountain Project. Subsequent to the end of the financial year, the Company has announced the proposed acquisition of an 80% interest in the Oracle Ridge Copper project in Arizona. Eagle Mountain looks forward to completing the acquisition of this exciting project and commencing a significant resource expansion exploration program. Appointment of Chief Executive Officer Subsequent to the end of the financial year, the Board announced the engagement of Mr Tim Mason as Chief Executive Officer effective 15 January 2020. Tim is a Mining Engineer who holds an MBA and has 18 years’ experience in the mining and engineering sectors across a broad range of corporate, operations, business development and engineering roles. His recent roles of General Manager Operations and General Manager Projects and Innovation involved conducting feasibility studies, project development and operations start-up, business development, project financing and corporate presentations COMPETENT PERSON STATEMENT Information in this report relating to Exploration Results is based on information compiled under the supervision of Mr Charles Bass who is an employee of the company. Mr Bass is a Fellow of the Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute of Geoscientist. He holds shares and options in the Company. Mr Bass has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Bass consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. Where the Company references previous ASX announcements, JORC Table 1 disclosures are included within them. The Company confirms that it is not aware of any new information or data that materially effects the information included in those announcements, and that the form and context in which the Competent Persons findings are presented have not been materially modified from the original reports. Figure 4 Simplified alteration model of porphyry deposits. Porphyry-style alteration was observed in all holes drilled at the Gold Vein target, including: • Propylitic alteration as chlorite disseminated in the hosting granodiorite and in vein selvedges. The overall intensity of the alteration increases with depth in the three holes completed 19SMDD014, 19SMDD015 and 19SMDD016. • Thin quartz-carbonate-K-feldspar veins are widespread in the drill core and show alteration selvedges with white mica (sericite). Minor sulphides are associated with the veins. Alteration can be pervasive over several metres. This may represent the outer edge of a Phyllic zone. The Company was very encouraged by the extent and style of alteration encountered in drilling. Further work is required to understand where the mineralised parts of the system could be found. Red Mule and Rhyolite Target The VMS Horizon discovered near the Rhyolite target and south of Red Mule has a slightly different rock mineralogy that is similar to that of known VMS deposits in the district. This area requires more field work including mapping and sampling before drill targets can be established. 2019 Annual Report 6 2019 Annual Report 7 DIRECTOR’S REPORT The Directors present their report on Eagle Mountain Mining Limited (“Eagle Mountain” or the “Company”) and its controlled entities (the “Group”) for the year ended 30 June 2019. DIRECTORS The names and details of the Group’s Directors in office during the period until the date of this report are as follows. Directors were in office for this entire year unless otherwise stated. Rick Crabb - B. Juris (Hons), LLB, MBA, FAICD (Non-Executive Chairman) Rick Crabb holds degrees of Bachelor of Jurisprudence (Honours), Bachelor of Laws and Master of Business Administration from the University of Western Australia. He practised as a solicitor from 1980 to 2004 with Robinson Cox (now Clayton Utz) and Blakiston & Crabb (now Gilbert + Tobin) specialising in mining, corporate and commercial law, advised in relation to numerous project developments in Australia and Africa. Rick has since focused on his public company directorships and investments. He has been involved as a director and strategic shareholder in a number of successful public companies. He is currently also Chairman of Ora Gold Limited and Paladin Energy Limited. Charles Bass - B.Sc. Geology, M.Sc. Mining Engineering/Mineral Processing, FAICD, FAusIMM, FAIG (Managing Director and Chief Executive Officer) Charles Bass completed his B.Sc. in Geology at Michigan Technological University, followed by a M.Sc in Mining Engineering & Mineral Processing at Queen’s University, Canada. Between his degrees Charles worked as a geologist and then Plant Metallurgist at a copper-gold mine in northern Quebec. Charles joined AMAX Inc, an American mining company in their Head Office in 1976 and came to Perth in 1978. Between 1980 to 1981, AMAX had him work in Tuscon, Arizona at the Twin Buttes copper mine. Charles returned to Australia and established his first company, Metech Pty Ltd in late 1981. Charles established Eagle Mining Corporation in 1992 with Tony Poli and was responsible for the deal that led to the discovery of the very successful Nimary Gold Mine. Eagle Mining Corporation won both Explorer of the Year and then Developer of the Year at Diggers and Dealers conference and was subject to a hostile takeover in 1997. Charles then co-founded Aquila Resources Ltd with Tony Poli in 2000 and helped transition it from a gold explorer to iron ore and coal before it too was subject to a hostile $1.4 billion takeover in 2014 at the hands of a joint bid between Baosteel and ASX listed Aurizon. 2019 Annual Report Page 8 DIRECTOR’S REPORT DIRECTORS The Directors present their report on Eagle Mountain Mining Limited (“Eagle Mountain” or the “Company”) and its controlled entities (the “Group”) for the year ended 30 June 2019. The names and details of the Group’s Directors in office during the period until the date of this report are as follows. Directors were in office for this entire year unless otherwise stated. Rick Crabb - B. Juris (Hons), LLB, MBA, FAICD (Non-Executive Chairman) Rick Crabb holds degrees of Bachelor of Jurisprudence (Honours), Bachelor of Laws and Master of Business Administration from the University of Western Australia. He practised as a solicitor from 1980 to 2004 with Robinson Cox (now Clayton Utz) and Blakiston & Crabb (now Gilbert + Tobin) specialising in mining, corporate and commercial law, advised in relation to numerous project developments in Australia and Africa. Rick has since focused on his public company directorships and investments. He has been involved as a director and strategic shareholder in a number of successful public companies. He is currently also Chairman of Ora Gold Limited and Paladin Energy Limited. Charles Bass - B.Sc. Geology, M.Sc. Mining Engineering/Mineral Processing, FAICD, FAusIMM, FAIG (Managing Director and Chief Executive Officer) Charles Bass completed his B.Sc. in Geology at Michigan Technological University, followed by a M.Sc in Mining Engineering & Mineral Processing at Queen’s University, Canada. Between his degrees Charles worked as a geologist and then Plant Metallurgist at a copper-gold mine in northern Quebec. Charles joined AMAX Inc, an American mining company in their Head Office in 1976 and came to Perth in 1978. Between 1980 to 1981, AMAX had him work in Tuscon, Arizona at the Twin Buttes copper mine. Charles returned to Australia and established his first company, Metech Pty Ltd in late 1981. Charles established Eagle Mining Corporation in 1992 with Tony Poli and was responsible for the deal that led to the discovery of the very successful Nimary Gold Mine. Eagle Mining Corporation won both Explorer of the Year and then Developer of the Year at Diggers and Dealers conference and was subject to a hostile takeover in 1997. Charles then co-founded Aquila Resources Ltd with Tony Poli in 2000 and helped transition it from a gold explorer to iron ore and coal before it too was subject to a hostile $1.4 billion takeover in 2014 at the hands of a joint bid between Baosteel and ASX listed Aurizon. DIRECTOR’S REPORT Roger Port – BA, FCA, SF Fin, FAICD (Non-Executive Director) Roger Port was a partner of PricewaterhouseCoopers from 1997 to 2016. He has 30 years’ experience in financial analysis, company and business valuations, transaction due diligence and mergers and acquisitions and led the PricewaterhouseCoopers Perth Deals team from 2009 to 2016. He has had significant experience in the resources sector in his career and jointly led the PwC Australia Deals Energy & Mining industry group for five years. Roger is a graduate of Macquarie University and gained a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia. He is a Fellow of Chartered Accountants Australia and New Zealand, a Senior Fellow of the Financial Services Institute of Australasia and a Fellow of the Australian Institute of Company Directors. Roger is a board member of the Harry Perkins Institute of Medical Research, Chair of Council of Guildford Grammar School and a board member of Guildford Grammar School Foundation. Brett Rowe - BComm, MAcc, GAICD (Alternate Director for Charles Bass) Brett Rowe has over 20 years’ experience in the financial services industry and is a graduate of the Australian Institute of Company Directors. He holds a Bachelor of Commerce degree and a Masters of Accounting. Brett is a director and the chief executive officer of The Bass Group, as well as a director of The Bass Family Foundation and Silver Mountain Mining Pty Ltd. Brett is responsible for managing the global financial interests of the Bass Family, as well as The Foundation’s ongoing support of education and health in disadvantaged children and youth in regional Western Australia. Brett is also a director of the Centre for Entrepreneurial Research and Innovation Limited (CERI). CERI aims to assist the growth of WA’s non-mining industry through a strong innovation base where high-knowledge start-up company formation can be accelerated. This is achieved through the co-creation of a WA-based venture capital industry. COMPANY SECRETARY Mark Pitts - B.Bus; FCA; GAICD (Company Secretary) Mark Pitts is a Partner in Corporate Advisory firm Endeavour Corporate and has over 30 years’ experience in business administration and corporate compliance. Having started his career with KPMG in Perth, Mark has worked at a senior management level in a variety of commercial and consulting roles including mining services, healthcare and property development. The majority of the past 15 years has been spent working for or providing services to publicly listed companies in the resources sector. Mark is a registered company auditor and holds a Bachelor of Business Degree from Curtin University, is a Fellow of Chartered Accountants Australia and New Zealand and is a graduate of the Australian Institute of Company Directors. 2019 Annual Report Page 8 2019 Annual Report Page 9 DIRECTOR’S REPORT DIRECTORS’ INTERESTS As at the date of this report, the Directors’ interests in shares and unlisted options of the Company are as follows: Director R Crabb C Bass R Port B Rowe (alternate for C Bass) Directors’ Interests in Ordinary Shares 732,000 43,980,001 516,000 500,000 Directors’ Interests in Unlisted Options Options vested at the reporting date 1,561,000 9,665,000 1,543,000 1,000,000 1,561,000 9,665,000 1,543,000 1,000,000 The Directors’ interests include Unlisted Options which are vested or exercisable as at the date of signing this report. DIRECTORS’ MEETINGS The number of meetings of the Company’s Directors held during the year ended 30 June 2019, and the number of meetings attended by each Director are as follows: Director R Crabb C Bass R Port B Rowe (alternate for C Bass) Board of Directors’ Meetings Attended 9 9 9 9 Eligible to Attend 9 9 9 9 PRINCIPAL ACTIVITIES The Company’s principal activities for the year ended 30 June 2019 have been focussed on undertaking exploration activities at the wholly owned Silver Mountain Project in Arizona in the United States of America. REVIEW OF OPERATIONS The operating loss after income tax of the Group for the year ended 30 June 2019 was $6,890,466 (period ended 30 June 2018: $1,681,900). Included in the loss for the year are uncapitalized exploration costs of $6,004,485, and non-cash items (in respect of depreciation, option expenses and movement in annual leave liabilities) amounting to $258,737. At 30 June 2019 cash assets amounted to $1,879,883 (2018: $6,795,421). During the year ended 30 June 2019, the Company received $1,935,306, before related costs, on the issue of shares and options. 2019 Annual Report Page 10 Directors’ Interests in Ordinary Shares 732,000 43,980,001 516,000 500,000 Directors’ Interests in Unlisted Options Options vested at the reporting date 1,561,000 9,665,000 1,543,000 1,000,000 1,561,000 9,665,000 1,543,000 1,000,000 DIRECTOR’S REPORT DIRECTORS’ INTERESTS Director as follows: R Crabb C Bass R Port B Rowe (alternate for C Bass) signing this report. DIRECTORS’ MEETINGS R Crabb C Bass R Port B Rowe (alternate for C Bass) PRINCIPAL ACTIVITIES America. REVIEW OF OPERATIONS The Directors’ interests include Unlisted Options which are vested or exercisable as at the date of The number of meetings of the Company’s Directors held during the year ended 30 June 2019, and the number of meetings attended by each Director are as follows: Director Board of Directors’ Meetings Eligible to Attend Attended 9 9 9 9 9 9 9 9 The Company’s principal activities for the year ended 30 June 2019 have been focussed on undertaking exploration activities at the wholly owned Silver Mountain Project in Arizona in the United States of The operating loss after income tax of the Group for the year ended 30 June 2019 was $6,890,466 (period ended 30 June 2018: $1,681,900). Included in the loss for the year are uncapitalized exploration costs of $6,004,485, and non-cash items (in respect of depreciation, option expenses and movement in annual leave liabilities) amounting to $258,737. At 30 June 2019 cash assets amounted to $1,879,883 (2018: $6,795,421). During the year ended 30 June 2019, the Company received $1,935,306, before related costs, on the issue of shares and options. As at the date of this report, the Directors’ interests in shares and unlisted options of the Company are Other than the matters stated in this report there have been no significant changes in the Group’s state of affairs during the financial year. DIRECTOR’S REPORT SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS EQUITY SECURITIES ON ISSUE Class of Security Ordinary fully paid shares Unlisted options over unissued shares Performance rights Unlisted Options over Ordinary Shares 30 June 2019 103,816,039 23,801,315 30 June 2018 92,500,001 16,000,000 180,000 75,000 As at 30 June 2019 23,801,315 unissued ordinary shares of the Company were under option as follows: Number of Options Granted 4,500,000 1 7,000,000 2 4,500,000 3 26,599 4 2,130,000 5 5,644,716 6 Exercise Price 30 cents 20 cents 30 cents 80 cents 20 cents 20 cents Expiry Date 7 December 2020 15 January 2023 6 March 2021 15 December 2019 1 February 2023 31 July 2021 1 Offer options and vendor options issued as part consideration for the acquisition of Silver Mountain Mining Pty Ltd. 2 Options issued to Directors, Alternate Director, employees and Company Secretary. 3 Options issued pursuant to the IPO Offer. 4 Options issued on the exercise of options issued pursuant to an option entitlement offer. 5 Options issued to employees pursuant to the Company’s share option plan. 6 Options issued pursuant to a pro-rata entitlement offer which closed on 7 June 2019. During the year, the Company undertook an option entitlement offer, pursuant to which it issued 23,125,000 options exercisable at 40 cents each and expiring 15 December 2018. 26,599 shares were issued on the exercise of the entitlement offer options. A total of 23,098,401 options issued to the option entitlement offer were cancelled on expiry. There were no other options exercised or expiring during the year. No options have been exercised or cancelled between 30 June 2019 and the date of this report. Subsequent to 30 June 2019, 1,800,000 options exercisable at 20 cents each and expiring 1 July 2023 were issued to employees of the Company. Options do not entitle the holder to participate in any share issue of the Company or any other body corporate. The holders of unlisted options are not entitled to any voting rights until the options are exercised into ordinary shares. 2019 Annual Report Page 10 2019 Annual Report Page 11 DIRECTOR’S REPORT EQUITY SECURITIES ON ISSUE (Continued) Performance Rights over Ordinary Shares During the year ended 30 June 2019, the Company issued 105,000 performance rights to certain employees of the Company. Each performance right provides the holder with the right to be issued one ordinary share subject to satisfaction of vesting criteria. During the year 25,000, performance rights vested but have not been exercised into shares. Other than this no performance rights vested, were cancelled or converted to ordinary shares during the reporting period. On 1 July 2019, 35,000 performance rights become fully vested. Since 30 June 2019, a total of 60,000 ordinary shares have been issued to employees on the exercise of vested performance rights. Other than this, no performance rights have been issued, vested, converted or cancelled between 30 June 2019 and the date of this report. DIVIDENDS No dividend has been paid since incorporation and no dividend is recommended for the current financial year. EVENTS SUBSEQUENT TO THE END OF THE REPORTING YEAR Subsequent to the end of the financial year, the Company has issued 1,800,000 options exercisable at 20 cents each and expiring 1 July 2023 to employees and issued 60,000 ordinary fully paid shares to employees on the exercise of vested performance rights. Other than as stated above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Group intends to undertake further exploration programs at the Silver Mountain Project in Arizona in the United States of America. Any other likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group. ENVIRONMENTAL ISSUES The Group’s operations are not regulated under any significant environmental regulation under a law of the Commonwealth of Australia, a State or a Territory. The operations and proposed activities of the Group are subject to United States Federal and Arizona State laws and regulations concerning the environment. The Board believes that the Group has adequate systems in place for the management of its environmental requirements. The Group 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 Group are not aware of any breach of environmental legislation for the financial year under review. 2019 Annual Report Page 12 DIRECTOR’S REPORT INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS AND AUDITORS During the year ended 30 June 2019, the Company paid an insurance premium to insure certain officers of the Company. The officers of the Company covered by the insurance policy include the Directors named in this report. The Directors and Officers Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the officers in their capacity as officers of the Company. The insurance policy does not contain details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confidentiality clause under the insurance policy. The Company has not provided any insurance for an auditor of the Company. PROCEEDINGS ON BEHALF OF THE GROUP No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. EVENTS SUBSEQUENT TO THE END OF THE REPORTING YEAR NON-AUDIT SERVICES The following non-audit services were provided by William Buck Consulting (WA) Pty Ltd, a related entity of the entity’s auditor, William Buck Audit (WA) Pty Ltd. 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 nature and scope of each type of non-audit service provided means that auditor independence was not compromised. William Buck Consulting (WA) Pty Ltd received or are due to receive the following amounts for the provision of non-audit services: Investigating Accountant’s Report for the Initial Public Offer Prospectus 30 June 2019 30 June 2018 Nil $8,025 The following non-audit services were provided by William Buck (WA) Pty Ltd, a related entity of the entity’s auditor, William Buck Audit (WA) Pty Ltd. 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 nature and scope of each type of non-audit service provided means that auditor independence was not compromised. William Buck (WA) Pty Ltd received or are due to receive the following amounts for the provision of non-audit services: Preparation of General Purpose Financial Statements for Silver Mountain Mining Pty Ltd Taxation services for Eagle Mountain Mining Limited 30 June 2019 30 June 2018 Nil $3,880 $5,000 $2,106 DIRECTOR’S REPORT EQUITY SECURITIES ON ISSUE (Continued) Performance Rights over Ordinary Shares During the year ended 30 June 2019, the Company issued 105,000 performance rights to certain employees of the Company. Each performance right provides the holder with the right to be issued one ordinary share subject to satisfaction of vesting criteria. During the year 25,000, performance rights vested but have not been exercised into shares. Other than this no performance rights vested, were cancelled or converted to ordinary shares during the reporting period. On 1 July 2019, 35,000 performance rights become fully vested. Since 30 June 2019, a total of 60,000 ordinary shares have been issued to employees on the exercise of vested performance rights. Other than this, no performance rights have been issued, vested, converted or cancelled between 30 June 2019 and the date of this report. DIVIDENDS financial year. No dividend has been paid since incorporation and no dividend is recommended for the current Subsequent to the end of the financial year, the Company has issued 1,800,000 options exercisable at 20 cents each and expiring 1 July 2023 to employees and issued 60,000 ordinary fully paid shares to employees on the exercise of vested performance rights. Other than as stated above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Group intends to undertake further exploration programs at the Silver Mountain Project in Arizona in the United States of America. Any other likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group. ENVIRONMENTAL ISSUES The Group’s operations are not regulated under any significant environmental regulation under a law of the Commonwealth of Australia, a State or a Territory. The operations and proposed activities of the Group are subject to United States Federal and Arizona State laws and regulations concerning the environment. The Board believes that the Group has adequate systems in place for the management of its environmental requirements. The Group 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 Group are not aware of any breach of environmental legislation for the financial year under review. 2019 Annual Report Page 12 2019 Annual Report Page 13 DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) Remuneration paid to Directors and Officers of the Company is set by reference to such payments made by other ASX listed companies of a similar size and operating in the mineral exploration industry. In addition, reference is made to the specific skills and experience of the Directors and Officers. Details of the nature and amount of remuneration of each Director, and other Key Management Personnel if applicable, are disclosed annually in the Remuneration Report. Remuneration Committee The Board has adopted a formal Nomination and Remuneration Policy which provides a framework for the consideration of remuneration matters. The Company does not have a separate remuneration committee and as such all remuneration matters are considered by the Board as a whole, with no member deliberating or considering such matter in respect of their own remuneration. In the absence of a separate Remuneration Committee, the Board is responsible for: 1. Setting remuneration packages for Executive Directors, Non-Executive Directors and other Key 2. Management Personnel; and Implementing employee incentive and equity based plans and making awards pursuant to those plans. Non-Executive Remuneration The Company’s policy is to remunerate Non-Executive Directors, at rates comparable to other ASX listed companies in the same industry, for their time, commitment and responsibilities. Non-Executive Remuneration is not linked to the performance of the Company, however to align Directors’ interests with shareholders’ interests, remuneration may be provided to Non-Executive Directors in the form of equity based long term incentives. 1. Fees payable to Non-Executive Directors are set within the aggregate amount approved by shareholders at the Company’s Annual General Meeting; 2. Non-Executive Directors’ fees are payable in the form of cash and superannuation benefits; 3. Non-Executive Directors’ superannuation benefits are limited to statutory superannuation entitlements; and 4. Participation in equity based remuneration schemes by Non-Executive Directors is subject to consideration and approval by the Company’s shareholders. The maximum aggregate Non-Executive Directors fees payable are currently set at $300,000 per annum. Executive Director and Other Key Management Personnel Remuneration Executive remuneration consists of base salary, plus other performance incentives to ensure that: 1. Remuneration packages incorporate a balance between fixed and incentive pay, reflecting short and long term performance objectives appropriate to the Company’s circumstances and objectives; and 2. A proportion of remuneration is structured in a manner to link reward to corporate and individual performances. Executives are offered a competitive level of base salary at market rates (based on comparable ASX listed companies) and are reviewed regularly to ensure market competitiveness. To date the Company has not engaged external remuneration consultants to advise the Board on remuneration matters. 2019 Annual Report Page 14 DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (Continued) Remuneration paid to Directors and Officers of the Company is set by reference to such payments Incentive Plans The Board has adopted a formal Nomination and Remuneration Policy which provides a framework 2. Reviews and approves existing incentive plans established for employees; and The Company provides long term incentives to Directors and Employees pursuant to the Company’s Employee Incentive Plan. The Board, acting in remuneration matters: 1. Ensures that incentive plans are designed around appropriate and realistic performance targets and provide rewards when those targets are achieved; 3. Approves the administration of the incentive plans, including receiving recommendations for and the consideration and approval of grants pursuant to such incentive plans. Engagement of Non-Executive Directors Non-Executive Directors conduct their duties under the following terms: 1. A Non-Executive Director may resign from his/her position and thus terminate their contract on written notice to the Company; and 2. A Non-Executive Director may, following resolution of the Company’s shareholders, be removed before the expiration of their period of office (if applicable). Payment is made in lieu of any notice period if termination is initiated by the Company, except where termination is initiated for serious misconduct. In consideration of the services provided by Mr Rick Crabb as Non-Executive Chairman, the Company will pay him a fee inclusive of statutory superannuation of $50,000 per annum. In consideration of the services provided by Mr Roger Port as Non-Executive Director, the Company will pay him a fee inclusive of statutory superannuation of $50,000 per annum. Messrs Crabb and Port are also entitled to fees for other amounts as the Board determines where they perform special duties or otherwise perform extra services or make special exertions on behalf of the Company. There were no such fees paid during the year ended 30 June 2019. Upon commencement of employment, Messrs Crabb and Port each received 1,500,000 unlisted options over unissued shares of the Company. An expense of $120,000 was recognised through the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period to 30 June 2018 in respect of the 3,000,000 options issued. Engagement of Executive Directors The Company has entered into an executive service agreement with Mr Charles Bass in his role as Managing Director and Chief Executive Officer on the following material terms and conditions. Mr Bass receives a base salary inclusive of statutory superannuation of $50,000 per annum from the commencement of the agreement until 1 June 2018, at which time the remuneration was reviewed. Mr Bass’ remuneration was unchanged as a result of this review. Either party may terminate the agreement by providing 30 days written notice to the other party. Eagle Mountain may otherwise terminate the Managing Director’s employment in accordance with the Constitution or the Corporations Act. Upon termination of the agreement, Mr Bass will cease employment with Eagle Mountain as its Managing Director and Chief Executive Officer and will become a Non-Executive Director of Eagle Mountain. made by other ASX listed companies of a similar size and operating in the mineral exploration industry. In addition, reference is made to the specific skills and experience of the Directors and Officers. Details of the nature and amount of remuneration of each Director, and other Key Management Personnel if applicable, are disclosed annually in the Remuneration Report. Remuneration Committee for the consideration of remuneration matters. The Company does not have a separate remuneration committee and as such all remuneration matters are considered by the Board as a whole, with no member deliberating or considering such matter in respect of their own remuneration. In the absence of a separate Remuneration Committee, the Board is responsible for: 1. Setting remuneration packages for Executive Directors, Non-Executive Directors and other Key 2. Implementing employee incentive and equity based plans and making awards pursuant to those Management Personnel; and plans. Non-Executive Remuneration The Company’s policy is to remunerate Non-Executive Directors, at rates comparable to other ASX listed companies in the same industry, for their time, commitment and responsibilities. Non-Executive Remuneration is not linked to the performance of the Company, however to align Directors’ interests with shareholders’ interests, remuneration may be provided to Non-Executive Directors in the form of equity based long term incentives. 1. Fees payable to Non-Executive Directors are set within the aggregate amount approved by shareholders at the Company’s Annual General Meeting; 2. Non-Executive Directors’ fees are payable in the form of cash and superannuation benefits; 3. Non-Executive Directors’ superannuation benefits are limited to statutory superannuation entitlements; and 4. Participation in equity based remuneration schemes by Non-Executive Directors is subject to consideration and approval by the Company’s shareholders. The maximum aggregate Non-Executive Directors fees payable are currently set at $300,000 per annum. Executive Director and Other Key Management Personnel Remuneration Executive remuneration consists of base salary, plus other performance incentives to ensure that: 1. Remuneration packages incorporate a balance between fixed and incentive pay, reflecting short and long term performance objectives appropriate to the Company’s circumstances and objectives; and performances. 2. A proportion of remuneration is structured in a manner to link reward to corporate and individual Executives are offered a competitive level of base salary at market rates (based on comparable ASX listed companies) and are reviewed regularly to ensure market competitiveness. To date the Company has not engaged external remuneration consultants to advise the Board on remuneration matters. 2019 Annual Report Page 14 2019 Annual Report Page 15 DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (Continued) Mr Bass may, subject to shareholder approval, participate in Eagle Mountain’s Employee Incentive Plan and other long term incentive plans adopted by the Board. Upon commencement of his employment, Mr Bass received 1,500,000 unlisted options over unissued shares of the Company. An expense of $60,000 was recognised through the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period to 30 June 2018 in respect of the 1,500,000 options issued. Short Term Incentive Payments The Non-Executive Directors set annual Key Performance Indicators (“KPIs”) for Executive Directors. The KPIs are chosen to align the reward of the individual Executives to the strategy and performance of the Company. Performance objectives, which may be financial or non-financial, or a combination of both, are weighted when calculating the maximum short term incentives payable to Executives. At the end of the year, the Non-Executive Directors will assess the actual performance of the Executives against the set Performance Objectives. The maximum amount of the Short Term Incentive, or a lesser amount depending on actual performance achieved is paid to the Executives as a cash payment. No Short Term incentives are payable to Executives where it is considered that the actual performance has fallen below the minimum requirement. Shareholding Qualifications The Directors are not required to hold any shares in Eagle Mountain under the terms of the Company’s Constitution. Group Performance In considering the Company’s performance, the Board provides the following indices in respect of the current financial year: Loss for the period attributable to shareholders $(6,890,466) $(1,681,900) Closing share price at 30 June $0.125 $0.42 2019 2018 As a Group focussed on exploration activities, the Board does not consider the loss attributable to shareholders as one of the performance indicators when implementing Short Term Incentive payments. In addition to technical exploration success, the Board considers the effective management of safety, environmental and operational matters and successful management, acquisition and consolidation of high quality landholdings, as more appropriate indicators of management performance for the financial year. Remuneration Disclosures The Key Management Personnel of the Company have been identified as: Mr Rick Crabb Mr Charles Bass Mr Roger Port Mr Brett Rowe Non-Executive Chairman Chief Executive Officer and Managing Director Non-Executive Director Alternate Director for Charles Bass 2019 Annual Report Page 16 Mr Bass may, subject to shareholder approval, participate in Eagle Mountain’s Employee Incentive Plan and other long term incentive plans adopted by the Board. Upon commencement of his employment, Mr Bass received 1,500,000 unlisted options over unissued shares of the Company. An expense of $60,000 was recognised through the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the period to 30 June 2018 in respect of the 1,500,000 options issued. Short Term Incentive Payments The Non-Executive Directors set annual Key Performance Indicators (“KPIs”) for Executive Directors. The KPIs are chosen to align the reward of the individual Executives to the strategy and performance of the Company. Performance objectives, which may be financial or non-financial, or a combination of both, are weighted when calculating the maximum short term incentives payable to Executives. At the end of the year, the Non-Executive Directors will assess the actual performance of the Executives against the set Performance Objectives. The maximum amount of the Short Term Incentive, or a lesser amount depending on actual performance achieved is paid to the Executives as a cash payment. No Short Term incentives are payable to Executives where it is considered that the actual performance has fallen below the minimum requirement. Shareholding Qualifications The Directors are not required to hold any shares in Eagle Mountain under the terms of the Company’s Constitution. Group Performance current financial year: In considering the Company’s performance, the Board provides the following indices in respect of the Loss for the period attributable to shareholders $(6,890,466) $(1,681,900) Closing share price at 30 June $0.125 $0.42 2019 2018 As a Group focussed on exploration activities, the Board does not consider the loss attributable to shareholders as one of the performance indicators when implementing Short Term Incentive payments. In addition to technical exploration success, the Board considers the effective management of safety, environmental and operational matters and successful management, acquisition and consolidation of high quality landholdings, as more appropriate indicators of management performance for the financial year. Remuneration Disclosures The Key Management Personnel of the Company have been identified as: Mr Rick Crabb Non-Executive Chairman Mr Charles Bass Chief Executive Officer and Managing Director Mr Roger Port Mr Brett Rowe Non-Executive Director Alternate Director for Charles Bass DIRECTOR’S REPORT DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (Continued) REMUNERATION REPORT (AUDITED) (Continued) The details of the remuneration of each Director and member of Key Management Personnel of the Company is as follows: Short Term Post Employment Other Long Term Year Ended 30 June 2019 Rick Crabb Charles Bass Roger Port Brett Rowe Base Salary $ 45,662 45,662 45,662 - Total 136,986 Period from 6 September 2017 to 30 June 2018 Rick Crabb Charles Bass Roger Port Brett Rowe Total Base Salary $ 19,026 19,026 19,026 - 57,078 Short Term Incentive Superannuation Contributions Value of Equity Based Remuneration Value of Equity as Proportion of Remuneration % - - - - Total $ 50,000 50,000 50,000 - $ 4,338 4,338 4,338 - $ - - - - 13,014 - 150,000 Short Term Post Employment Other Long Term Short Term Incentive Superannuation Contributions Value of Equity Based Remuneration $ Total $ 60,000 80,833 60,000 80,833 60,000 80,833 Value of Equity as Proportion of Remuneration % 74.2% 74.2% 74.2% $ 1,807 1,807 1,807 - 40,000 40,000 100.0% 5,421 220,000 282,499 $ - - - - - $ - - - - - Details of Performance Related Remuneration During the year ended 30 June 2019, no short term incentive payments were paid to the Directors or Key Management Personnel. Equity Based Remuneration During the year ended 30 June 2019, no options, rights or shares were issued to Directors or Key Management Personnel of the Company as remuneration. 2019 Annual Report Page 16 2019 Annual Report Page 17 DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (Continued) Equity Based Remuneration (Continued) During the period ended 30 June 2018 the following options were granted to Directors or Key Management Personnel of the Company following shareholder approval at a general meeting on 15 January 2018: Period from 6 September 2017 to 30 June 2018 Number of options Fair value of options Rick Crabb Charles Bass Roger Port Brett Rowe Total 1,500,000 1,500,000 1,500,000 1,000,000 $ 60,000 60,000 60,000 40,000 5,500,000 220,000 The fair value of options issued as remuneration is allocated to the relevant vesting period of the options. Options are provided at no initial cost to the recipients. No options were exercised by Key Management Personnel during the year ended 30 June 2019. Exercise of Options Granted as Remuneration During the year ended 30 June 2019, no ordinary shares were issued in respect of the exercise of options previously granted as remuneration to Directors or Key Management Personnel of the Company. Equity Instrument Disclosures Relating to Key Management Personnel Option Holdings Key Management Personnel have the following interests in unlisted options over unissued shares of the Company. Year ended 30 June 2019 Name Directors Balance at beginning of the year Received during the year as remuneration Other changes during the year1 Balance at the end of the year Vested and exercisable at the end of the year Rick Crabb 1,500,000 Charles Bass 6,000,000 Roger Port 1,500,000 Brett Rowe 1,000,000 - - - - 61,000 1,561,000 1,561,000 3,665,000 9,665,000 9,665,000 43,000 1,543,000 1,543,000 - 1,000,000 1,000,000 1 Includes options issued pursuant to pro-rata entitlement offer. 2019 Annual Report Page 18 DIRECTOR’S REPORT DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (Continued) REMUNERATION REPORT (AUDITED) (continued) Equity Instrument Disclosures Relating to Key Management Personnel (continued) to 30 Period from 6 September 2017 June 2018 Name Directors Rick Crabb Charles Bass Roger Port Brett Rowe Balance at beginning of the period Received during the period as remuneration Other changes during the period Balance at the end of the period Vested and exercisable at the end of the period2 - - - - 1,500,000 6,000,0001 1,500,000 1,000,000 - - - - 1,500,000 1,500,000 6,000,000 6,000,000 1,500,000 1,500,000 1,000,000 1,000,000 1 Includes 4,500,000 consideration options issued in part consideration for the acquisition of Silver Mountain Mining Pty Ltd. 2 Options exercisable at the end of the period are subject to ASX escrow restrictions. The fair value of options issued as remuneration is allocated to the relevant vesting period of the Share Holdings The number of shares in the Company held during the financial year by Key Management Personnel of the Company, including their related parties are set out below. There were no shares granted during the reporting period as compensation. Year ended 30 June 2019 Name Balance at beginning of the year Received during the year as remuneration Other changes during the year Balance at the end of the year Directors Rick Crabb 580,000 Charles Bass 36,650,001 Roger Port Brett Rowe 400,000 500,000 - - - - 152,000 732,000 7,330,000 43,980,001 116,000 - 516,000 500,000 Period from 6 September 2017 to 30 June 2018 Name Directors Rick Crabb Charles Bass Roger Port Brett Rowe Balance at beginning of the period Received during the period as remuneration Other changes during the period Balance at the end of the period - - - - - - - - 580,000 580,000 36,650,001 36,650,001 400,000 500,000 400,000 500,000 Equity Based Remuneration (Continued) During the period ended 30 June 2018 the following options were granted to Directors or Key Management Personnel of the Company following shareholder approval at a general meeting on 15 January 2018: Period from 6 September Number of Fair value of 2017 to 30 June 2018 options options Rick Crabb Charles Bass Roger Port Brett Rowe Total 1,500,000 1,500,000 1,500,000 1,000,000 $ 60,000 60,000 60,000 40,000 5,500,000 220,000 Company. Option Holdings the Company. Year ended 30 June 2019 Name Directors options. Options are provided at no initial cost to the recipients. No options were exercised by Key Management Personnel during the year ended 30 June 2019. Exercise of Options Granted as Remuneration During the year ended 30 June 2019, no ordinary shares were issued in respect of the exercise of options previously granted as remuneration to Directors or Key Management Personnel of the Equity Instrument Disclosures Relating to Key Management Personnel Key Management Personnel have the following interests in unlisted options over unissued shares of Balance at beginning of Received during the Other Vested and changes Balance at exercisable year as during the the end of at the end of the year remuneration year1 the year the year Rick Crabb 1,500,000 61,000 1,561,000 1,561,000 Charles Bass 6,000,000 3,665,000 9,665,000 9,665,000 Roger Port 1,500,000 43,000 1,543,000 1,543,000 Brett Rowe 1,000,000 - 1,000,000 1,000,000 - - - - 1 Includes options issued pursuant to pro-rata entitlement offer. 2019 Annual Report Page 18 2019 Annual Report Page 19 DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (continued) Loans made to Key Management Personnel No loans were made to Key Management Personnel, including personally related entities during the financial year. Other transactions with Key Management Personnel Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other parties unless otherwise stated. o o o The Company has entered into a lease agreement with Elk Mountain Mining Limited (“Elk”), an entity associated with Mr Charles Bass, for the lease of the Company’s administration offices in Perth, Western Australia (refer note 20 for details of commitments under the lease agreement). During the financial year, the Company incurred a total of $86,590 in respect of rent, outgoings and car parking pursuant to the lease agreement (2018: $48,421). During the period ended 30 June 2018, the Company issued 37,500,000 ordinary fully paid shares at 10 cents per share and 4,500,000 options over unissued shares, exercisable at 30 cents each and expiring 3 years from the date of grant to Silver Mountain Mining Nominee Pty Ltd, an entity associated with a Director Mr Charles Bass, in consideration for the acquisition of the issued capital of Silver Mountain Mining Pty Ltd (refer note 24); and During the period ended 30 June 2018 an amount of $85,447 owing by the Group to Silver Mountain Mining Nominee Pty Ltd, an entity associated with Mr Charles Bass, was repaid in full. Other than the above, there were no other transactions with Key Management Personnel. End of Remuneration Report AUDITOR’S INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, William Buck Audit (WA) Pty Ltd, to provide the Directors of the Group with an Independence Declaration in relation to the audit of the financial report. This Independence Declaration is set out on the following page and forms part of this Directors’ report for the year ended 30 June 2019. This report has been made in accordance with a resolution of the Board of Directors. Charles Bass Director Dated at Perth this 18th day of September 2019 2019 Annual Report Page 20 The Company has entered into a lease agreement with Elk Mountain Mining Limited (“Elk”), an audit. AUDITORS INDEPENDENCE DECLARATION AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF EAGLE MOUNTAIN MINING LIMITED I declare that, to the best of my knowledge and belief during the year ended 30 June 2019 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the William Buck Audit (WA) Pty Ltd ABN 67 125 012 124 Conley Manifis Director Dated this 18th day of September 2019 DIRECTOR’S REPORT REMUNERATION REPORT (AUDITED) (continued) Loans made to Key Management Personnel financial year. Other transactions with Key Management Personnel No loans were made to Key Management Personnel, including personally related entities during the Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other parties unless otherwise stated. o o o entity associated with Mr Charles Bass, for the lease of the Company’s administration offices in Perth, Western Australia (refer note 20 for details of commitments under the lease agreement). During the financial year, the Company incurred a total of $86,590 in respect of rent, outgoings and car parking pursuant to the lease agreement (2018: $48,421). During the period ended 30 June 2018, the Company issued 37,500,000 ordinary fully paid shares at 10 cents per share and 4,500,000 options over unissued shares, exercisable at 30 cents each and expiring 3 years from the date of grant to Silver Mountain Mining Nominee Pty Ltd, an entity associated with a Director Mr Charles Bass, in consideration for the acquisition of the issued capital of Silver Mountain Mining Pty Ltd (refer note 24); and During the period ended 30 June 2018 an amount of $85,447 owing by the Group to Silver Mountain Mining Nominee Pty Ltd, an entity associated with Mr Charles Bass, was repaid in full. Other than the above, there were no other transactions with Key Management Personnel. End of Remuneration Report AUDITOR’S INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, William Buck Audit (WA) Pty Ltd, to provide the Directors of the Group with an Independence Declaration in relation to the audit of the financial report. This Independence Declaration is set out on the following page and forms part of this Directors’ report for the year ended 30 June 2019. This report has been made in accordance with a resolution of the Board of Directors. Charles Bass Director Dated at Perth this 18th day of September 2019 2019 Annual Report Page 20 2019 Annual Report Page 21 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Year Ended 30 June 2019 Continuing Operations Other revenue Interest income Administration and other costs Employee expenses – non-exploration Employee expenses – equity based Depreciation expense Exploration and evaluation costs Gains on foreign currency exchange Loss before income tax Year ended 30 June 2019 A$ Period from 6 September 2017 to 30 June 2018 A$ Notes 12 27,389 (555,971) (271,771) (45,494) (154,143) (6,004,485) 113,997 - 28,151 (363,599) (122,149) (287,500) (50,038) (886,765) - (6,890,466) (1,681,900) Income tax expense 5 - - Loss after income tax from continuing operations (6,890,466) (1,681,900) Other comprehensive income net of income tax Other comprehensive income to be re-classified to profit or loss in subsequent years net of income tax Unrealised gain on foreign currency exchange Total comprehensive loss for the year/period 14a - 77,575 - 219,494 (6,812,891) (1,462,406) Basic and diluted loss per share 25 cents (7.4) cents (3.3) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 2019 Annual Report Page 22 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Year Ended 30 June 2019 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2019 30 June 2019 30 June 2018 Note A$ A$ Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-Current Assets Exploration and evaluation expenditure – land Property, plant and equipment Bonds and security deposits Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Employee leave liabilities Borrowings Total Current Liabilities Non-Current Liabilities Borrowings Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS 6 7 8 9 10 11 11 1,879,883 54,626 1,934,509 1,164,027 435.324 130,101 1,729,452 6,795,421 59,719 6,855,140 1,104,495 463,576 - 1,568,071 3,663,961 8,423,211 224,648 59,391 10,908 294,947 25,484 25,484 320,431 54,818 - 10,331 65,149 34,531 34,531 99,680 3,343,530 8,323,531 Period from 6 Year ended 30 September 2017 June 2019 to 30 June 2018 Notes A$ A$ Continuing Operations Other revenue Interest income Administration and other costs Employee expenses – non-exploration Employee expenses – equity based Depreciation expense Exploration and evaluation costs Gains on foreign currency exchange Loss before income tax 12 27,389 (555,971) (271,771) (45,494) (154,143) (6,004,485) 113,997 28,151 (363,599) (122,149) (287,500) (50,038) (886,765) - - - - Income tax expense 5 - Loss after income tax from continuing operations (6,890,466) (1,681,900) (6,890,466) (1,681,900) Other comprehensive income net of income tax Other comprehensive income to be re-classified to profit or loss in subsequent years net of income tax Unrealised gain on foreign currency exchange 14a Total comprehensive loss for the year/period Basic and diluted loss per share 25 - 77,575 (6,812,891) 219,494 (1,462,406) cents (7.4) cents (3.3) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 14 13 Equity 13,579,949 Issued capital 4,500 Option capital (1,828,582) Reserves (8,412,337) Accumulated losses 11,952,582 4,500 (1,951,651) (1,681,900) TOTAL EQUITY 3,343,530 8,323,531 The above statement of financial position should be read in conjunction with the accompanying notes. 2019 Annual Report Page 22 2019 Annual Report Page 23 s e s s o l l d e t a u m u c c A l o r t n o c e v r e s e r n o m m o C e v r e s e r t n e m y a p d e s a b e r a h S i n g e r o F y c n e r r u c e v r e s e r l n o i t a s n a r t ) ) , 6 7 2 4 1 0 3 , ( , 0 0 0 0 5 2 3 1 , ) , 8 1 4 7 9 2 1 , ( , 1 3 6 7 4 8 , 1 3 5 3 2 3 8 , - - - - - $ A l a t o T - $ A , 4 9 4 9 1 2 - ) , 0 0 9 1 8 6 1 , ( ) , 0 0 9 1 8 6 1 , ( , 6 0 4 2 6 4 1 , ( ) , 0 0 9 1 8 6 1 , ( 5 7 5 7 7 , - , 1 3 5 3 2 3 8 , ) , 6 6 4 0 9 8 6 , ( ) ) , 0 0 9 1 8 6 1 , ( , 6 6 4 0 9 8 6 , ( , 6 0 3 5 3 9 1 , - 4 9 4 5 4 , ) , 0 1 9 7 4 1 ( , 0 3 5 3 4 3 3 , ) , 1 9 8 2 1 8 6 , ( - - - , 9 2 0 0 6 1 ) , 6 6 4 0 9 8 6 , ( ) , 0 0 9 1 8 6 1 , ( ) , 6 7 2 4 1 0 3 , ( ) , 7 3 3 2 1 4 8 , ( ) , 6 7 2 4 1 0 3 , ( - - - - $ A - - - ) , 6 7 2 4 1 0 3 , ( - - - - - - - ) , 6 7 2 4 1 0 3 , ( - - - - - - - $ A , 1 3 1 3 4 8 , 1 3 1 3 4 8 - - $ A , 4 9 4 9 1 2 , 4 9 4 9 1 2 - - - - , 4 9 4 9 1 2 - - - - - - - 0 0 5 4 , 0 0 5 4 , - - - - - , 0 0 0 0 5 2 3 1 , ) , 8 1 4 7 9 2 1 , ( - , 2 8 5 2 5 9 1 1 , , 1 3 1 3 4 8 , 4 9 4 9 1 2 0 0 5 4 , - - - - - - 4 9 4 5 4 , , 5 2 6 8 8 8 - - - - - 5 7 5 7 7 , 5 7 5 7 7 , , 9 6 0 7 9 2 - - - , 0 5 2 1 3 2 ) ) 1 2 2 1 7 , ( , 9 2 0 0 6 1 ( - 0 0 5 4 , , 2 8 5 2 5 9 1 1 , - - - , 6 5 0 4 0 7 1 , ) 9 8 6 6 7 , ( - - , 9 4 9 9 7 5 3 1 , d o i r e p e h t r o f s s o l i e v s n e h e r p m o c l a t o T e h t r o f e m o c n i i e v s n e h e r p m o c r e h t O x a t e m o c n i f o t e n d o i r e p 7 1 0 2 r e b m e t p e S 6 t a e c n a a B l d o i r e p e h t r o f s s o L n o m m o c l f o n o i t e p m o c n o d e s n g o c e R i ) 4 2 , c 4 1 e t o n ( n o i t c a s n a r t l o r t n o c ) 3 1 e t o n ( s e r a h s f o e u s s I ) 3 1 e t o n ( s t s o c i g n s a r i l a t i p a C 3) 2, 1 ote 1 (n s n o i t p o d n a s e r a h s f o e u s s I r a e y e h t r o f s s o l i e v s n e h e r p m o c l a t o T e h t r o f e m o c n i i e v s n e h e r p m o c r e h t O x a t e m o c n i f o t e n r a e y 8 1 0 2 e n u J 0 3 t a e c n a a B l s n o i t p o f o e u s s I 8 1 0 2 y u l J 1 t a e c n a a B l r a e y e h t r o f s s o L s t h g i r e c n a m r o f r e p / s n o i t p o f o g n i t s e V s n o i t p o f o n o i t a l l e c n a c n o r e f s n a r T 9 1 0 2 e n u J 0 3 t a e c n a a B l 3) 2, 1 ote 1 (n s t s o c i g n s a r i l a t i p a C . s e t o n g n i y n a p m o c c a e h t h t i w n o i t c n u n o c n j i d a e r l e b d u o h s y t i u q e n i s e g n a h c f o t n e m e t a t s e v o b a e h T 4 2 e g a P t r o p e R l a u n n A 9 1 0 2 $ A $ A n o i t p O l a t i p a c d e u s s I l a t i p a c Y T I U Q E N I S E G N A H C F O T N E M E T A T S D E T A D I L O S N O C 9 1 0 2 e n u J 0 3 d e d n E r a e Y e h t r o F - $ A l a t o T 4 9 4 , 9 1 2 ) 6 7 2 , 4 1 0 , 3 ( 0 0 0 , 0 5 2 , 3 1 ) 8 1 4 , 7 9 2 , 1 ( 1 3 6 , 7 4 8 1 3 5 , 3 2 3 , 8 5 7 5 , 7 7 1 3 5 , 3 2 3 , 8 ) 6 6 4 , 0 9 8 , 6 ( 6 0 3 , 5 3 9 , 1 ) 0 1 9 , 7 4 1 ( ) 1 9 8 , 2 1 8 , 6 ( - 4 9 4 , 5 4 0 3 5 , 3 4 3 , 3 - - - - - - - - - - ) 0 0 9 , 1 8 6 , 1 ( ) 6 6 4 , 0 9 8 , 6 ( ) 6 6 4 , 0 9 8 , 6 ( 9 2 0 , 0 6 1 - - - - - - - - - - - - - - ) 0 0 9 , 1 8 6 , 1 ( ) 0 0 9 , 1 8 6 , 1 ( ) 6 0 4 , 2 6 4 , 1 ( ) 0 0 9 , 1 8 6 , 1 ( ) 6 7 2 , 4 1 0 , 3 ( - - - - - - - - - - - - - $ A $ A $ A $ A $ A $ A s e s s o l d e t a l u m u c c A l o r t n o c e v r e s e r n o m m o C e v r e s e r t n e m y a p d e s a b e r a h S n g i e r o F y c n e r r u c e v r e s e r n o i t a l s n a r t n o i t p O l a t i p a c d e u s s I l a t i p a c ) 0 0 9 , 1 8 6 , 1 ( ) 6 7 2 , 4 1 0 , 3 ( 4 9 4 , 9 1 2 1 3 1 , 3 4 8 1 3 1 , 3 4 8 0 0 5 , 4 0 0 5 , 4 0 0 0 , 0 5 2 , 3 1 ) 8 1 4 , 7 9 2 , 1 ( 2 8 5 , 2 5 9 , 1 1 ) 6 7 2 , 4 1 0 , 3 ( 1 3 1 , 3 4 8 4 9 4 , 9 1 2 0 0 5 , 4 2 8 5 , 2 5 9 , 1 1 - - - - - - - - - - - 4 9 4 , 9 1 2 4 9 4 , 9 1 2 5 7 5 , 7 7 5 7 5 , 7 7 - - - - - - - - - - - - - - - - - - - - - - 0 5 2 , 1 3 2 ) 1 2 2 , 1 7 ( ) 9 2 0 , 0 6 1 ( ) 9 8 6 , 6 7 ( 6 5 0 , 4 0 7 , 1 d o i r e p e h t r o f s s o l e v i s n e h e r p m o c l a t o T n o m m o c f o n o i t e l p m o c n o d e s i n g o c e R e h t r o f e m o c n i e v i s n e h e r p m o c r e h t O x a t e m o c n i f o t e n d o i r e p 7 1 0 2 r e b m e t p e S 6 t a e c n a l a B d o i r e p e h t r o f s s o L ) 4 2 , c 4 1 e t o n ( n o i t c a s n a r t l o r t n o c ) 3 1 e t o n ( s t s o c g n i s i a r l a t i p a C ) 3 1 e t o n ( s e r a h s f o e u s s I 8 1 0 2 e n u J 0 3 t a e c n a l a B s n o i t p o f o e u s s I 3) 2, 1 ote 1 (n s n o i t p o d n a s e r a h s f o e u s s I r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T s t h g i r e c n a m r o f r e p / s n o i t p o f o g n i t s e V s n o i t p o f o n o i t a l l e c n a c n o r e f s n a r T 3) 2, 1 ote 1 (n s t s o c g n i s i a r l a t i p a C e h t r o f e m o c n i e v i s n e h e r p m o c r e h t O x a t e m o c n i f o t e n r a e y 8 1 0 2 y l u J 1 t a e c n a l a r a e y e h t r o f s s o L B T 4 2 e g a P t r o p e R l a u n n A 9 1 0 2 Y T I U Q E N I S E G N A H C F O T N E M E T A T S D E T A D I L O S N O 9 1 0 2 e n u J 0 3 d e d n E r a e Y e h t r o F C 4 9 4 , 5 4 5 2 6 , 8 8 8 ) 7 3 3 , 2 1 4 , 8 ( ) 6 7 2 , 4 1 0 , 3 ( 9 6 0 , 7 9 2 0 0 5 , 4 9 4 9 , 9 7 5 , 3 1 9 1 0 2 e n u J 0 3 t a e c n a l a B . s e t o n g n i y n a p m o c c a e h t h t i w n o i t c n u j n o c n i d a e r e b d l u o h s y t i u q e n i s e g n a h c f o t n e m e t a t s e v o b a e h CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended 30 June 2019 Cash Flows from Operating Activities Payments to suppliers and employees Payments for exploration and evaluation Interest received Year ended 30 June 2019 A$ Period from 6 September 2017 to 30 June 2018 A$ Note (668,591) (5,941,606) 39,920 (450,421) (890,613) 15,615 Net cash used in operating activities 15 (6,570,277) (1,325,419) Cash Flows from Investing Activities Cash recognised on acquisition of subsidiary Payments for purchase of fixed assets Payments for bonds and deposits Net cash used in investing activities Cash Flows from Financing Activities Proceeds from the issue of shares and options Payments for share and option issue costs Loan repayments Net cash generated by financing activities - (116,183) (127,510) (243,693) 1,935,306 (147,910) (11,509) 1,775,887 36,079 (456,715) - (420,636) 9,504,500 (885,787) (89,013) 8,529,700 Net increase/(decrease) in cash held (5,038,083) 6,783,645 Cash and cash equivalents at the beginning of the year Effect of foreign exchange on cash and cash equivalents 6,795,421 - 122,545 11,776 Cash and cash equivalents at the end of the year 6 1,879,883 6,795,421 The above statement of cash flows should be read in conjunction with the accompanying notes. 2019 Annual Report Page 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 These consolidated financial statements and notes represent those of Eagle Mountain Mining Limited and its controlled entities (the “Group”). Eagle Mountain Mining Limited is a public limited liability company, incorporated and domiciled in Australia. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements for the year ended 30 June 2019 were approved and authorised for issue by the Board of Directors on 17 September 2019. 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (a) Basis of Preparation These general purpose financial statements for the reporting year ended 30 June 2019 have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial statements and notes comply with International Financial Reporting Standards. The financial report has been prepared on an accruals basis and is based on historical cost and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. (i) Going Concern The Group has incurred a loss of $6,890,466 and a net operating cash outflow of $6,570,277 during the year ended 30 June 2019. Cash assets at 30 June 2019 were $1,879,883 and total liabilities at that date were $320,431. The financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. The ability of the Group to continue to adopt the going concern assumption will depend on future successful capital raisings, the successful exploration and subsequent exploitation of the Group’s mining licences and permits, and/or sale of non-core assets. The Directors will continue to manage the Group’s activities with due regard to current and future funding requirements. The Directors reasonably expect that the Company will be able to raise sufficient capital to fund the Group’s exploration and working capital requirements, and that the Group will be able to settle debts as and when they become due and payable. On this basis, the Directors are therefore of the opinion that the use of the going concern basis is appropriate in the circumstances. Should the Company be unable to raise the required funding, there is a material uncertainty that may cast significant doubt on whether the company will be able to continue as a going concern and therefore, whether it will be able to realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. (ii) Basis of Consolidation The financial information comprises the financial information of Eagle Mountain and entities (including special purpose entities) controlled by Eagle Mountain (its “subsidiaries”). Control is achieved when Eagle Mountain: • • • has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. Eagle Mountain reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. 2019 Annual Report Page 26 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 These consolidated financial statements and notes represent those of Eagle Mountain Mining Limited and its controlled entities (the “Group”). Eagle Mountain Mining Limited is a public limited liability company, incorporated and domiciled in Australia. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements for the year ended 30 June 2019 were approved and authorised for issue by the Board of Directors on 17 September 2019. 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (a) Basis of Preparation These general purpose financial statements for the reporting year ended 30 June 2019 have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial statements and notes comply with International Financial Reporting Standards. The financial report has been prepared on an accruals basis and is based on historical cost and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. (i) Going Concern were $320,431. The Group has incurred a loss of $6,890,466 and a net operating cash outflow of $6,570,277 during the year ended 30 June 2019. Cash assets at 30 June 2019 were $1,879,883 and total liabilities at that date The financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. The ability of the Group to continue to adopt the going concern assumption will depend on future successful capital raisings, the successful exploration and subsequent exploitation of the Group’s mining licences and permits, and/or sale of non-core assets. The Directors will continue to manage the Group’s activities with due regard to current and future funding requirements. The Directors reasonably expect that the Company will be able to raise sufficient capital to fund the Group’s exploration and working capital requirements, and that the Group will be able to settle debts as and when they become due and payable. On this basis, the Directors are therefore of the opinion that the use of the going concern basis is appropriate in the circumstances. Should the Company be unable to raise the required funding, there is a material uncertainty that may cast significant doubt on whether the company will be able to continue as a going concern and therefore, whether it will be able to realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. (ii) Basis of Consolidation The financial information comprises the financial information of Eagle Mountain and entities (including special purpose entities) controlled by Eagle Mountain (its “subsidiaries”). Control is achieved when Eagle Mountain: has power over the investee; • • • is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. Eagle Mountain reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (ii) Basis of Consolidation (Continued) The financial information of subsidiaries is prepared for the same reporting period as Eagle Mountain, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Total comprehensive income of subsidiaries is attributed to the owners of Eagle Mountain and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date Eagle Mountain gains control until the date when Eagle Mountain ceases to control the subsidiary. When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between: the aggregate of the fair value of the consideration received and the fair value of any retained • interest; and • the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit and loss or transferred to another category of equity as specified/permitted by the applicable Accounting Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 9, or when applicable, the cost on initial recognition of an investment in an associate or a joint venture. (iii) New Accounting Standards Adopted in the Current Year Application of New and Revised Accounting Standards The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial year. Impact of Changes – AASB 9 Financial Instruments The Company has adopted AASB 9 from 1 July 2018 which have resulted in changes to accounting policies and the analysis for possible adjustments to amounts recognised in the financial statements. In accordance with the transitional provisions in AASB 9, the reclassifications and adjustments are not reflected in the statement of financial position as at 30 June 2018. The Company has not recognised a loss allowance on trade and other receivables following assessment of the impact of the new impairment model introduced by AASB 9. Classification and Measurement On 1 July 2018, the Company has assessed which business models apply to the financial instruments held by the Company and have classified them into the appropriate AASB 9 categories. The main effects resulting from this reclassification are shown in the table below. 2019 Annual Report Page 26 2019 Annual Report Page 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (ii) New Accounting Standards Adopted in the Current Year (Continued) On adoption of AASB 9, the Company classified financial assets and liabilities as measured at either amortised cost or fair value, depending on the business model for those assets and on the asset’s contractual cash flow characteristics. There were no changes in the measurement of the Company’s financial instruments. There was no impact on the statement of comprehensive income or the statement of changes in equity on adoption of AASB 9 in relation to classification and measurement of financial assets and liabilities. 2019 Annual Report Page 28 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (ii) New Accounting Standards Adopted in the Current Year (Continued) On adoption of AASB 9, the Company classified financial assets and liabilities as measured at either amortised cost or fair value, depending on the business model for those assets and on the asset’s contractual cash flow characteristics. There were no changes in the measurement of the Company’s financial instruments. There was no impact on the statement of comprehensive income or the statement of changes in equity on adoption of AASB 9 in relation to classification and measurement of financial assets and liabilities. The following table summarises the impact on the classification and measurement of the Company’s financial instruments at 1 July 2018: Presented in statement of Financial financial position Asset Bank AASB 139 AASB 9 Reported $ Restated $ Loans and Amortised No change No change Cash and cash equivalents deposits receivables Cost Trade and other Loans and Loans and Amortised No change No change receivables receivables receivables Cost Loans and Amortised Amortised No change No change Trade and other payables payables Cost Cost The Company does not currently enter into any hedge accounting and therefore there is no impact to the Company’s financial statements. Impairment AASB 9 introduces a new expected credit loss (“ECL”) impairment model that requires the Company to adopt an ECL position across the Company’s financial assets from 1 July 2018. The Company’s receivables balance consists of GST refunds from the Australian Taxation Office and interest receivables from recognised Australian banking institutions. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, an impairment loss would be considered immaterial. The loss allowances for financial assets are based on the assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Given the Company’s receivables are from the Australian Taxation Office and recognised Australian banking institutions, the Company has assessed that the risk of default is minimal and as such, no impairment loss has been recognised against these receivables as at 30 June 2019. Other amended standards adopted by the Group which do not have a material impact on the financial statements are: • • • AASB 2016-5 Amendments to Australian Accounting Standards Measurement of Share-based Payment Transactions Interpretation 22 Foreign Currency Transactions and Advance Consideration Interpretation 23 Uncertainty over Income Tax Treatments - Classification and Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. New Accounting Standards and Interpretations Not Yet Mandatory or Early Adopted Australian Accounting Standards and Interpretations that have recently been issued or amended, but are not yet mandatory, have not been early adopted by the Group for the reporting year ended 30 June 2019. The Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations most relevant to the Group are set out below: AASB 16 Leases AASB 16 Leases will replace existing accounting requirements for leases under AASB 117 Leases. Under current requirements, leases are classified based on their nature as either finance leases which are recognised on the statement of financial position, or operating leases, which are not recognised on the statement of financial position. 2019 Annual Report Page 28 2019 Annual Report Page 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Under AASB 16 , the Company’s accounting for operating leases as a lessee will result in the recognition of a right-of-use (ROU) asset and an associated lease liability on the statement of financial position. The lease liability represents the present value of future lease payments, with the exception of short term and low value leases. An interest expense will be recognised on the lease liabilities and a depreciation charge will be recognised for the ROU assets. There will also be additional disclosure requirements under the new standard. Based on the Company’s assessment to date, the adoption of AASB 16 is expected to have an immaterial impact on the financial statements of the Company due to the minimal number, if any, of non-cancellable leases currently entered into by the Company which would not fall under a short term or low value exception. Transition The Company will initially apply AASB 16 on 1 July 2019 using the modified retrospective approach. Therefore, the cumulative effect of adopting AASB 16 will be recognised as an adjustment to the opening balance of retained earnings at 1 July 2019 with no restatement of comparative information. When applying the modified retrospective approach to leases previously classified as operating leases under AASB 117, the Company can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on transition. The Company is assessing the potential impact of using these practical expedients. Based on the current assessment and conditions of the Company, it is expected that the adoption of AASB 16 will have minimal impact if any on the financial statements of the Company. The actual impact of applying AASB 16 on the financial statements in the period of initial application will depend however on future economic conditions, including the Company’s borrowing rate, the composition of the Company’s lease portfolio, the extent to which the Company elects to use practical expedients and recognition exemptions, and the new accounting policies, which are subject to change until the Company presents its first financial statements that include the date of initial application. The Company anticipates recognising rights of use assets and corresponding lease liabilities of approximately $396,000 on 1 July 2019 in respect of the Group’s various property leases (refer note 20(b) for further details of the Group’s lease commitments). (b) Exploration, Evaluation and Development Expenditure Exploration and evaluation expenditure is generally written off in the year incurred, except for acquisition of exploration properties which is capitalised and carried forward. When production commences, any accumulated costs for the relevant area of interest which have been capitalised and carried forward will be amortised over the life of the area according to the rate of depletion of the economically recoverable resources. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to the area of interest. The carrying value of any capitalised expenditure is assessed by the Directors each reporting period to determine if any provision should be made for the impairment of the carrying value. The appropriateness of the Group’s ability to recover these capitalised costs has been assessed at the end of each reporting period and the Directors are satisfied that the value is recoverable. The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at an overall level whenever facts and circumstances suggest that the carrying amount of the assets may exceed recoverable amount. An impairment exists when the carrying amount of the assets exceeds the estimated recoverable amount. The assets are then written down to their recoverable amount. Any impairment losses are recognised in the income statement. 2019 Annual Report Page 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Under AASB 16 , the Company’s accounting for operating leases as a lessee will result in the recognition of a right-of-use (ROU) asset and an associated lease liability on the statement of financial position. The lease liability represents the present value of future lease payments, with the exception of short term and low value leases. An interest expense will be recognised on the lease liabilities and a depreciation charge will be recognised for the ROU assets. There will also be additional disclosure requirements under Based on the Company’s assessment to date, the adoption of AASB 16 is expected to have an immaterial impact on the financial statements of the Company due to the minimal number, if any, of non-cancellable leases currently entered into by the Company which would not fall under a short term or low value the new standard. exception. Transition The Company will initially apply AASB 16 on 1 July 2019 using the modified retrospective approach. Therefore, the cumulative effect of adopting AASB 16 will be recognised as an adjustment to the opening balance of retained earnings at 1 July 2019 with no restatement of comparative information. When applying the modified retrospective approach to leases previously classified as operating leases under AASB 117, the Company can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on transition. The Company is assessing the potential impact of using these practical expedients. Based on the current assessment and conditions of the Company, it is expected that the adoption of AASB 16 will have minimal impact if any on the financial statements of the Company. The actual impact of applying AASB 16 on the financial statements in the period of initial application will depend however on future economic conditions, including the Company’s borrowing rate, the composition of the Company’s lease portfolio, the extent to which the Company elects to use practical expedients and recognition exemptions, and the new accounting policies, which are subject to change until the Company presents its first financial statements that include the date of initial application. The Company anticipates recognising rights of use assets and corresponding lease liabilities of approximately $396,000 on 1 July 2019 in respect of the Group’s various property leases (refer note 20(b) for further details of the Group’s lease commitments). (b) Exploration, Evaluation and Development Expenditure Exploration and evaluation expenditure is generally written off in the year incurred, except for acquisition of exploration properties which is capitalised and carried forward. When production commences, any accumulated costs for the relevant area of interest which have been capitalised and carried forward will be amortised over the life of the area according to the rate of depletion of the economically recoverable resources. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to the area of interest. The carrying value of any capitalised expenditure is assessed by the Directors each reporting period to determine if any provision should be made for the impairment of the carrying value. The appropriateness of the Group’s ability to recover these capitalised costs has been assessed at the end of each reporting period and the Directors are satisfied that the value is recoverable. The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at an overall level whenever facts and circumstances suggest that the carrying amount of the assets may exceed recoverable amount. An impairment exists when the carrying amount of the assets exceeds the estimated recoverable amount. The assets are then written down to their recoverable amount. Any impairment losses are recognised in the income statement. (c) Trade and Other Receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. (d) Interest Income Interest income is recognised as it accrues. (e) Foreign Currency Transactions Foreign currency transactions are translated into the functional currency of the Group which is Australian dollars at the rates of exchange prevailing at the dates of the transaction. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the consolidated statement of profit or loss and other comprehensive income. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the consolidated statement of profit or loss and other comprehensive income. (f) Operating Segments An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start-up operations which are yet to earn revenues. The chief operating decision maker has been identified as the Board of Directors taken as a whole. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the Board of Directors. Operating segments have been identified based on the information provided to the Board of Directors. (g) Financial Instruments Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at fair value through profit or loss 2019 Annual Report Page 30 2019 Annual Report Page 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12 month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. (h) Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. (i) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. (j) Impairment of Assets At each reporting date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from the other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. 2019 Annual Report Page 32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon (k) Property, Plant and Equipment If the recoverable amount of an asset (or cash-generated unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation increase. Property, plant and equipment assets are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for the assets to be capable of operating in the manner intended by the Group’s management. Property, plant and equipment assets are subsequently measured using the cost model which reflects cost less subsequent depreciation and impairment losses. Depreciation is recognised on a diminishing value basis to write down the cost less estimated residual value of the assets. Leasehold improvements are capitalised and subsequently amortised over the term of the respective lease. The following depreciation rates are applied to property, plant and equipment assets on the diminishing value basis: • • Motor vehicles: 25% Other property, plant and equipment: 20-50% Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment assets are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses. (l) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (“ATO”). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (m) Taxation The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit and loss is the tax payable on the taxable income using applicable income tax rates enacted or substantially enacted as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised of making a profit, or a derivative; or in profit or loss. Financial assets at fair value through other comprehensive income initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12 month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. (h) Borrowings (i) Cash and Cash Equivalents (j) Impairment of Assets Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. At each reporting date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from the other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. 2019 Annual Report Page 32 2019 Annual Report Page 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial information. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Where temporary differences exist in relation to investments in subsidiaries and associates, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. (n) Trade and Other Payables Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. (o) Provisions and Contingencies Provisions are recognised when the Group has a legal or constructive obligation, as a result of a past event, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (p) Employee benefits Short Term Employee Benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other Long Term Employee Benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined Contribution Superannuation Expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. (q) Share Based Payment Transactions The Group recognises the fair value of options granted to Directors, employees and consultants as remuneration as an expense on a pro-rata basis over the vesting period in the consolidated statement of profit or loss and other comprehensive income with a corresponding adjustment to equity. The Group provides benefits to employees (including Directors) of the Group in the form of share based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled transactions”). The cost of these equity-settled transactions with employees (including Directors) is measured by reference to fair value at the date they are granted. The fair value is determined using the Black Scholes option pricing model. 2019 Annual Report Page 34 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial information. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Where temporary differences exist in relation to investments in subsidiaries and associates, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Provisions are recognised when the Group has a legal or constructive obligation, as a result of a past event, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably (n) Trade and Other Payables (o) Provisions and Contingencies measured. (p) Employee benefits Short Term Employee Benefits Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Other Long Term Employee Benefits The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined Contribution Superannuation Expense incurred. (q) Share Based Payment Transactions Contributions to defined contribution superannuation plans are expensed in the period in which they are The Group recognises the fair value of options granted to Directors, employees and consultants as remuneration as an expense on a pro-rata basis over the vesting period in the consolidated statement of profit or loss and other comprehensive income with a corresponding adjustment to equity. The Group provides benefits to employees (including Directors) of the Group in the form of share based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled transactions”). The cost of these equity-settled transactions with employees (including Directors) is measured by reference to fair value at the date they are granted. The fair value is determined using the Black Scholes option pricing model. (r) Issued Capital Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (s) Critical Accounting Estimates and Judgments In preparing the financial information, the Group has been required to make certain estimates and assumptions concerning future occurrences. There is an inherent risk that the resulting accounting estimates will not equate exactly with actual events and results. (i) Significant Accounting Judgements In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: Acquisition of Silver Mountain Mining Pty Ltd On 7 December 2017 Eagle Mountain acquired a 100% interest in the issued capital of Silver Mountain Mining Pty Ltd, an entity which controls the Silver Mountain Project located in Arizona in the United States of America. Eagle Mountain acquired the entire share capital of Silver Mountain from an entity associated with Mr Charles Bass. Mr Bass was a Director holding an interest in the entire shareholding of Eagle Mountain. As such, the Directors considered the acquisition to be a common control transaction. Accordingly, the excess in fair value of consideration given over the net assets acquired was allocated to a common control reserve. (ii) Significant Accounting Estimates and Assumptions The carrying amount of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Key Estimates – Impairment of Capitalised Exploration and Evaluation Expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. Key Estimates – Share Based Payment Transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Fair values of share options are determined using the Black Scholes option pricing model. Should the assumptions used in these calculations differ, the amounts recognised could significantly change. 2019 Annual Report Page 34 2019 Annual Report Page 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Key Estimates – Taxation Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best estimates of the Directors. These estimates take into account both the financial performance and position of the Group 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 ATO. Key Judgment – Environmental Issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation. At the current stage of the Group’s development and its current environmental impact, the Directors believe such treatment is reasonable and appropriate. (t) Fair Value of Assets and Liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly unforced transaction between independent, knowledgeable and willing market participants at the measurement date. (u) Comparative Information Comparative information has been included for the period from when the Company was incorporated on 6 September 2017 to 30 June 2018. 2019 Annual Report Page 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Key Estimates – Taxation Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best estimates of the Directors. These estimates take into account both the financial performance and position of the Group 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 ATO. Key Judgment – Environmental Issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation. At the current stage of the Group’s development and its current environmental impact, the Directors believe such treatment is reasonable and appropriate. (t) Fair Value of Assets and Liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly unforced transaction between independent, knowledgeable and willing market participants at the measurement date. (u) Comparative Information Comparative information has been included for the period from when the Company was incorporated on 6 September 2017 to 30 June 2018. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 RELATED PARTY TRANSACTIONS 2. Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other parties unless otherwise stated. o o o The Company has entered into a lease agreement with Elk Mountain Mining Limited (“Elk”), an entity associated with Mr Charles Bass, for the lease of the Company’s administration offices in Perth, Western Australia (refer note 20 for details of commitments under the lease agreement). During the year the Company incurred a total of $86,590 in respect of rent, outgoings and car parking pursuant to the lease agreement (2018: $48,421). During the period ended 30 June 2018, the Company issued 37,500,000 ordinary fully paid shares at a deemed price of 10 cents per share and 4,500,000 options over unissued shares exercisable at 30 cents each and expiring 3 years from the date of grant to Silver Mountain Mining Nominee Pty Ltd, an entity associated with a Director Mr Charles Bass, in consideration for the acquisition of the issued capital of Silver Mountain Mining Pty Ltd (refer note 24). During the period ended 30 June 2018, an amount of $85,447 owing by the Group to Silver Mountain Mining Nominee Pty Ltd, an entity associated with Mr Charles Bass, was repaid in full. 3. REMUNERATION OF AUDITORS Audit and review of the financial statements Other services Total Year ended 30 June 2019 A$ 25,000 Period from 6 September 2017 to 30 June 2018 A$ 17,500 3,880 28,880 14,248 31,748 The auditor of Eagle Mountain Mining Limited is William Buck Audit (WA) Pty Ltd. During the reporting period William Buck Audit (WA) Pty Ltd and its related entities provided non-audit services amounting to $3,880 (2018: $14,248) to members of the Eagle Mining Group. 4. LOSS FROM ORDINARY ACTIVITIES Included in the loss before income tax are the following specific items of income/(expenses): Gains on foreign exchange Movements in employee leave liabilities Project generation costs Year ended 30 June 2019 A$ Period from 6 September 2017 to 30 June 2018 A$ 113,997 (59,391) (30,402) - - - 2019 Annual Report Page 36 2019 Annual Report Page 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 5. INCOME TAX EXPENSE Year ended 30 June 2019 A$ Period from 6 September 2017 to 30 June 2018 A$ - - - - (521,799) (355,304) 521,799 355,304 - - Current tax: Current income tax charge/(benefit) Current income tax benefit not recognised Deferred tax: Relating to origination and reversal of timing differences Deferred tax benefit not recognised (a) The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows: Loss before tax (6,890,466) (1,681,900) The prima facie tax on loss from ordinary activities attributable to parent entity before income tax: Prima facie tax (benefit) on loss from ordinary activities before income tax at 27.5% Add/(Less) tax effect of: Exploration costs not deducted for tax Non deductible share based payments Share issue costs deducted Deferred tax asset not brought to account Income tax attributable to entity b) Deferred tax – Balance Sheet Liabilities Prepaid expenses Accrued income Assets Accrued expenses Employee leave liabilities Revenue losses available to offset against future taxable income Deductible equity raising costs (1,894,878) (462,523) 1,646,348 12,511 (56,853) 292,872 - 9,803 - 9,803 11,941 16,333 679,937 178,695 886,906 243,860 79,063 (48,718) 188,318 - 8,802 3,447 12,249 - - 172,680 194,873 367,553 Net deferred tax asset not recognised 877,103 355,304 2019 Annual Report Page 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 5. INCOME TAX EXPENSE 5. INCOME TAX EXPENSE (CONTINUED) c) Deferred tax – Income Statement Liabilities Prepaid expenses Accrued income Assets Accrued expenses Employee leave liabilities Deductible equity raising costs Increase in tax losses carried forward Deferred tax benefit movement not recognised Year ended 30 June 2019 A$ Period from 6 September 2017 to 30 June 2018 A$ (1,001) 3,447 11,941 16,333 (16,178) 507,257 521,799 (8,802) (3,447) - - 194,873 172,680 355,304 The deferred tax benefit of tax losses not brought to account will only be obtained if: (i) The Company derives future assessable income of a nature and an amount sufficient to enable the benefit from the tax losses to be realised; The Company continues to comply with the conditions for deductibility imposed by tax legislation; and No changes in tax legislation adversely affect the Company realising the benefit from the deduction of the losses. (ii) (iii) 6. CASH AND CASH EQUIVALENTS Cash at bank Deposits at call Total 30 June 2019 A$ 1,879,883 - 1,879,883 30 June 2018 A$ 2,058,849 4,736,572 6,795,421 Included in cash at bank of $1,879,883 (2018: $2,058,849) are amounts held in US dollar denominated bank accounts equivalent to $229,270 (2018: $1,895,194). 7. TRADE AND OTHER RECEIVABLES GST receivable Accrued income and other receivables Prepaid expenses and deposits Total 30 June 2019 A$ 30 June 2018 A$ 2,725 16,253 35,648 54,626 5,220 12,534 41,965 59,719 Net deferred tax asset not recognised 877,103 355,304 2019 Annual Report Page 38 2019 Annual Report Page 39 Year ended 30 June Period from 6 2019 September 2017 to A$ 30 June 2018 Current tax: Current income tax charge/(benefit) Current income tax benefit not recognised Deferred tax: differences as follows: Loss before tax Relating to origination and reversal of timing (521,799) (355,304) Deferred tax benefit not recognised 521,799 355,304 (a) The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax The prima facie tax on loss from ordinary activities attributable to parent entity before income tax: Prima facie tax (benefit) on loss from ordinary activities before income tax at 27.5% (1,894,878) (462,523) (6,890,466) (1,681,900) - - - 1,646,348 12,511 (56,853) 292,872 - 9,803 - 9,803 11,941 16,333 679,937 178,695 886,906 A$ - - - 243,860 79,063 (48,718) 188,318 - 8,802 3,447 12,249 - - 172,680 194,873 367,553 Add/(Less) tax effect of: Exploration costs not deducted for tax Non deductible share based payments Share issue costs deducted Deferred tax asset not brought to account Income tax attributable to entity b) Deferred tax – Balance Sheet Liabilities Prepaid expenses Accrued income Assets Accrued expenses Employee leave liabilities Revenue losses available to offset against future taxable income Deductible equity raising costs NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 8. EXPLORATION AND EVALUATION EXPENDITURE – LAND Movement during the period Carrying value – beginning of year Recognised on acquisition of Silver Mountain Mining Pty Ltd1 Effect of movement in foreign exchange rates Carrying value – end of the year 30 June 2019 A$ 30 June 2018 A$ 1,104,495 - 59,532 - 969,897 134,598 1,164,027 1,104,495 1Capitalised exploration asset acquisition costs recognised on acquisition of Silver Mountain Mining Pty Ltd. Exploration and evaluation expenditure – land is held by Silver Mountain Mining LLC, which is a 100% owned US based subsidiary of Silver Mountain Mining Pty Ltd. The recoverability of the carrying amount of the exploration and evaluation assets is dependent upon successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. 9. PROPERTY, PLANT AND EQUIPMENT Cost at the beginning of the year Effect of foreign exchange movements Additions Cost at the end of the year the Accumulated depreciation at beginning of the year Effect of foreign exchange movements Depreciation charged in the year Accumulated depreciation at the end of the year Net book value at the beginning of the year Net book value at the end of the year Leasehold improvements A$ 306,122 1,658 48,631 356,411 (30,514) (466) (78,827) Office equipment and furniture A$ 77,489 2,159 5,727 Field equipment and vehicles A$ 146,013 8,253 61,817 Total A$ 529,625 12,070 128,246 85,375 216,084 657,870 (9,071) (26,464) (66,049) (495) (33,836) (1,393) (41,480) (2,354) (154,143) (109,807) (43,402) (69,337) (222,546) 275,608 68,418 119,549 463,576 246,604 41,973 146,747 435,324 Assets with a net book value of A$54,201 (2018: A$65,573) held by Silver Mountain Mining Operations Inc. are pledged as security in respect of vehicle loan liabilities (refer note 11). 10. TRADE AND OTHER PAYABLES Current Trade creditors and accrued expenses Other creditors Payroll liabilities Total 2019 Annual Report Page 40 30 June 2019 A$ 30 June 2018 A$ 173,713 1,496 49,439 224,648 38,775 1,419 14,624 54,818 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 8. EXPLORATION AND EVALUATION EXPENDITURE – LAND 11. BORROWINGS Movement during the period Carrying value – beginning of year Recognised on acquisition of Silver Mountain Mining Pty Ltd1 Effect of movement in foreign exchange rates Carrying value – end of the year 30 June 2019 30 June 2018 A$ 1,104,495 - 59,532 A$ - 969,897 134,598 1,164,027 1,104,495 1Capitalised exploration asset acquisition costs recognised on acquisition of Silver Mountain Mining Pty Ltd. Exploration and evaluation expenditure – land is held by Silver Mountain Mining LLC, which is a 100% owned US based subsidiary of Silver Mountain Mining Pty Ltd. The recoverability of the carrying amount of the exploration and evaluation assets is dependent upon successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. 9. PROPERTY, PLANT AND EQUIPMENT Leasehold Office Field Total improvements equipment and equipment furniture and vehicles A$ 306,122 1,658 48,631 356,411 (30,514) (466) (78,827) A$ 77,489 2,159 5,727 85,375 A$ 146,013 8,253 61,817 A$ 529,625 12,070 128,246 216,084 657,870 (9,071) (26,464) (66,049) (495) (33,836) (1,393) (41,480) (2,354) (154,143) (109,807) (43,402) (69,337) (222,546) Net book value at the beginning of the 275,608 68,418 119,549 463,576 Net book value at the end of the year 246,604 41,973 146,747 435,324 Assets with a net book value of A$54,201 (2018: A$65,573) held by Silver Mountain Mining Operations Inc. are pledged as security in respect of vehicle loan liabilities (refer note 11). Cost at the beginning of the year Effect of foreign exchange movements Additions Cost at the end of the year Accumulated depreciation at the beginning of the year Effect of foreign exchange movements Depreciation charged in the year Accumulated depreciation at the end of the year year 10. TRADE AND OTHER PAYABLES Trade creditors and accrued expenses Current Other creditors Payroll liabilities Total 30 June 2019 30 June 2018 A$ A$ 173,713 1,496 49,439 224,648 38,775 1,419 14,624 54,818 Current Vehicle loan amounts due within one year 10,908 10,331 30 June 2019 A$ 30 June 2018 A$ Non-Current Vehicle loan amounts due after one year 25,484 34,531 Vehicle loan amounts are secured over assets with a net book value of A$54,201 (2018: A$65,573) held by Silver Mountain Mining Operations Inc. (refer note 9). 12. OPTIONS AND EQUITY BASED PAYMENTS Options – Reconciliation of Movements Options on issue at the beginning of the year Consideration options issued1 Remuneration options issued2 Initial Public Offer options3 Offer options issued – entitlement offer4 Offer options exercised – entitlement offer4 Options cancelled on expiry – entitlement offer4 Options issued on exercise of offer options – entitlement offer4 Options issued to employees5 Options issued attaching to entitlement offer securities6 Options on issue at 30 June 30 June 2019 No. 16,000,000 - - - 23,125,000 (26,599) (23,098,401) 26,599 2,130,000 5,644,716 23,801,315 30 June 2018 No. - 4,500,000 7,000,000 4,500,000 - - - - - - 16,000,000 1 During the period ended 30 June 2018, the Company issued 4,500,000 options over unissued shares exercisable at 30 cents each and expiring 3 years from the date of grant in part consideration for the acquisition of Silver Mountain Mining Pty Ltd (refer note 14b and note 24). 2 The Company issued 7,000,000 options over unissued shares, exercisable at 20 cents each and expiring 5 years from the date of grant to officers and employees of the Company following shareholder approval received on 15 January 2018. 3 The Company issued 4,500,000 options over unissued shares exercisable at 30 cents each and expiring 6 March 2021 pursuant to the Initial Public Offer prospectus dated 23 January 2018. 4 The Company issued options at a price of 1 cent per option pursuant to an entitlement offer exercisable at 40 cents each expiring 15 December 2018. Upon exercise into shares the holder received a further option for each share exercised at 80 cents each and expiring 12 months from issue. 5 Unlisted options issued to employees of the Company pursuant to the Company’s employee share option plan. 6 Unlisted options issued to subscribers to the non-renounceable pro-rata entitlement offer of shares which closed on 7 June 2019. 2019 Annual Report Page 40 2019 Annual Report Page 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 12. OPTIONS AND EQUITY BASED PAYMENTS (CONTINUED) Option Capital – Reconciliation of Movements Issue Price A$ Balance at the beginning of the year Initial Public Offer options Offer options issued – entitlement offer Less: costs of option entitlement offer Less: transfer to reserves on exercise/expiry of offer options $0.001 $0.01 N/a N/a 30 June 2019 A$ 4,500 - 231,250 (71,221) (160,029) 4,500 30 June 2018 A$ - 4,500 - - - 4,500 Options outstanding at the beginning of the year Options granted during the year Options exercised during the year Options unexercised during the year Options outstanding at 30 June and expired cancelled 2019 Weighted Average Exercise Price (cents) 25.6 35.0 40.0 20.0 23.8 2018 Weighted Average Exercise Price (cents) - 25.6 - - 25.6 No. - 16,000,000 - - 16,000,000 No. 16,000,000 30,926,315 (26,599) (23,098,401) 23,801,315 Basis and Assumptions Used in the Valuation of Options The options issued during the year were valued using the Black-Scholes option valuation methodology, using the following inputs: Date granted 6 May 2019 Number of options granted 2,130,000 Exercise price (cents) 20 Risk free interest rate used 1.39% Volatility applied 99% Value of Options $216,165 Expiry date 1 Feb 2023 Historical volatility for comparable listed exploration companies has been used as the basis for determining expected share price volatility. An expense of $27,242 has been recognised through the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2019 (2018: $280,000) in respect of the vesting of options during the year. Weighted Average Contractual Life The weighted average contractual life for unexercised options is 28.4 months (2018: 34.9 months). Performance Rights During the year ended 30 June 2019 the Company issued 105,000 performance rights to an employee on the following terms: Number of Performance Rights 35,000 35,000 35,000 Vesting Date Expiry Date 1 Jul 2019 1 Jul 2020 1 Jul 2021 1 Jul 2026 1 Jul 2027 1 Jul 2028 Value of Performance Rights $11,200 $11,200 $11,200 $33,600 2019 Annual Report Page 42 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 12. OPTIONS AND EQUITY BASED PAYMENTS (CONTINUED) Option Capital – Reconciliation of Movements Balance at the beginning of the year Initial Public Offer options Offer options issued – entitlement offer Less: costs of option entitlement offer Less: transfer to reserves on exercise/expiry of offer options Issue Price A$ $0.001 $0.01 N/a N/a 30 June 2019 A$ 4,500 - 231,250 (71,221) (160,029) 30 June 2018 A$ 4,500 - - - - 4,500 4,500 No. Price (cents) No. Price (cents) 2019 Weighted Average Exercise 25.6 35.0 40.0 20.0 23.8 2018 Weighted Average Exercise 16,000,000 25.6 - - - - - - 16,000,000 25.6 Options outstanding at the beginning of the year Options granted during the year Options exercised during the year Options cancelled and expired unexercised during the year Options outstanding at 30 June 16,000,000 30,926,315 (26,599) (23,098,401) 23,801,315 Basis and Assumptions Used in the Valuation of Options The options issued during the year were valued using the Black-Scholes option valuation methodology, using the following inputs: Number of Exercise Date granted 6 May 2019 2,130,000 options granted price (cents) 20 Risk free interest rate used 1.39% Volatility applied Value of Options 99% $216,165 Expiry date 1 Feb 2023 Historical volatility for comparable listed exploration companies has been used as the basis for determining expected share price volatility. An expense of $27,242 has been recognised through the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2019 (2018: $280,000) in respect of the vesting of options during the year. Weighted Average Contractual Life Performance Rights terms: The weighted average contractual life for unexercised options is 28.4 months (2018: 34.9 months). During the year ended 30 June 2019 the Company issued 105,000 performance rights to an employee on the following Number of Vesting Date Expiry Date Value of Performance Performance Rights 35,000 35,000 35,000 1 Jul 2019 1 Jul 2020 1 Jul 2021 1 Jul 2026 1 Jul 2027 1 Jul 2028 Rights $11,200 $11,200 $11,200 $33,600 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 12. OPTIONS AND EQUITY BASED PAYMENTS (CONTINUED) 2019 105,000 performance rights were granted on 29 August 2018 and valued at 32 cents per right based on the determined underlying value of the Company’s shares. An expense of $18,252 has been recognised through the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2019 in respect of the vesting of these rights during the period. 2018 75,000 performance rights were granted on 15 January 2018 and valued at 10 cents per right based on the determined underlying value of the Company’s shares. An expense of $7,500 has been recognised through the consolidated statement of profit or loss and other comprehensive income for the period ended 30 June 2018 in respect of the issue of the 75,000 performance rights granted as remuneration. 13. ISSUED CAPITAL Shares Year ended 30 June 2019 Period 6 September 2017 to 30 June 2018 Balance at the beginning of the year 92,500,001 11,952,582 Issue price Shares A$ Shares Shares issued on incorporation Shares issued to acquire Silver Mountain Mining Pty Ltd (note 24) Shares investors to pre-IPO issued Shares issued to IPO investors Shares issued on exercise of options Entitlement issue shares issued Less: share issue costs – share based (refer note 12) Less: share issue costs – cash * Balance at 30 June $0.20 $0.10 $0.10 $0.20 $0.40 $0.15 - - A$ - - - - 1 - 37,500,000 3,750,000 - 15,000,000 1,500,000 - 40,000,000 8,000,000 - - - - 26,599 10,640 11,289,439 1,693,416 - - - - - - - (411,631) - (885,787) 103,816,039 13,579,949 92,500,001 11,952,582 (76,689) - * No deferred tax asset has been recognised in respect of the share issue costs as at the date of the financial report it is not probable that it will be realised (refer note 5). The Company is a public company limited by shares. The Company was incorporated in Perth, Western Australia. The Company’s shares are limited whereby the liability of its members is limited to the amount (if any) unpaid on the shares respectively held by them. 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. There is no limit to the authorised share capital of the Company. 2019 Annual Report Page 42 2019 Annual Report Page 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 14. RESERVES Foreign currency translation reserve Share based payments reserve Common control reserve Movements: a) Foreign currency translation reserve Balance at the beginning of the year Exchange gains for the year Balance at 30 June As at 30 June 2019 A$ As at 30 June 2018 A$ 297,069 888,625 219,494 843,131 (3,014,276) (3,014,276) (1,828,582) (1,951,651) Year ended 30 June 2019 A$ 219,494 77,575 297,069 Period 6 September 2017 to 30 June 2018 A$ - 219,494 219,494 Foreign currency translation reserve The foreign currency translation reserve records unrealised exchange gains and losses on translation of controlled entities accounts during the year. b) Share based payments reserve Balance at the beginning of the year Fair value of options and performance rights issued during the year (note 12, 24) Balance at 30 June Year ended 30 June 2019 A$ Period 6 September 2017 to 30 June 2018 A$ 843,131 - 45,494 843,131 888,625 843,131 Share based payments reserve The share based payments reserve has been used to recognise the fair value of options and performance rights issued and vested but not exercised as at the end of the reporting year. c) Common control reserve Balance at the beginning of the year Common control transactions during the year Balance at 30 June 2019 Annual Report Page 44 Year ended 30 June 2019 A$ Period 6 September 2017 to 30 June 2018 A$ (3,014,276) - - (3,014,276) (3,014,276) (3,014,276) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 14. RESERVES 14. RESERVES (Continued) Common control reserve The amount recognised in the common control reserve represents the excess in fair value consideration given, over the net assets acquired, on the acquisition of Silver Mountain Mining Pty Ltd from Silver Mountain Mining Nominees Pty Ltd on 7 December 2017 (refer note 24). On 7 December 2017 the Directors determined that the acquisition was undertaken between entities which were under common control due to respective share ownership. Foreign currency translation reserve Share based payments reserve Common control reserve Movements: a) Foreign currency translation reserve Balance at the beginning of the year Exchange gains for the year Balance at 30 June As at 30 June As at 30 June 2019 A$ 297,069 888,625 2018 A$ 219,494 843,131 (3,014,276) (3,014,276) (1,828,582) (1,951,651) Year ended 30 June 2019 A$ 219,494 77,575 297,069 Period 6 September 2017 to 30 June 2018 A$ - 219,494 219,494 Period 6 September 2017 to 30 June 2018 A$ - Year ended 30 June 2019 A$ 843,131 45,494 843,131 888,625 843,131 Year ended 30 June 2019 A$ (3,014,276) Period 6 September 2017 to 30 June 2018 A$ - - (3,014,276) (3,014,276) (3,014,276) Foreign currency translation reserve controlled entities accounts during the year. The foreign currency translation reserve records unrealised exchange gains and losses on translation of b) Share based payments reserve Balance at the beginning of the year Fair value of options and performance rights issued during the year (note 12, 24) Balance at 30 June Share based payments reserve The share based payments reserve has been used to recognise the fair value of options and performance rights issued and vested but not exercised as at the end of the reporting year. c) Common control reserve Balance at the beginning of the year Common control transactions during the year Balance at 30 June 2019 Annual Report Page 44 2019 Annual Report Page 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 15. CASH FLOW INFORMATION Reconciliation of cash flows from operating activities with loss after income tax Loss after income tax Non-cash items included in profit or loss Depreciation expense Gains on foreign exchange Share based payment expense Changes in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in prepayments (Decrease)/increase in employee leave liabilities (Decrease)/increase in accounts payable and accruals (Increase)/decrease in accrued income Year ended 30 June 2019 A$ Period 6 September 2017 to 30 June 2018 A$ (6,890,466) (1,681,900) 154,143 (113,997) 45,494 (8,040) (1,878) 59,391 172,542 12,534 50,038 - 287,500 2,660 (25,771) - 54,588 (12,534) Net cash outflows from Operating Activities (6,570,277) (1,325,419) 16. SEGMENT INFORMATION AASB 8 “Operating Segments” requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Group operates in one segment, being exploration for mineral resources. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Group. Following the acquisition of Silver Mountain Mining Pty Ltd on 7 December 2017, the Group operates in Australia and United States of America. Information regarding the non-current assets by geographical location is reported below. No segment information is provided for United States of America in relation to revenue and profit or loss for the year ended 30 June 2019 or period ended 30 June 2018. Reconciliation of Non-Current Assets by Geographical Location Australia United States of America 2019 Annual Report Page 46 30 June 2019 A$ 30 June 2018 A$ 225,536 1,503,916 1,729,452 295,541 1,272,530 1,568,071 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 15. CASH FLOW INFORMATION 17. SUBSEQUENT EVENTS Reconciliation of cash flows from operating activities with loss after income tax Loss after income tax Non-cash items included in profit or loss Depreciation expense Gains on foreign exchange Share based payment expense Changes in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in prepayments (Decrease)/increase in employee leave liabilities (Decrease)/increase in accounts payable and accruals (Increase)/decrease in accrued income Year ended 30 June 2019 A$ Period 6 September 2017 to 30 June 2018 A$ (6,890,466) (1,681,900) 154,143 (113,997) 45,494 (8,040) (1,878) 59,391 172,542 12,534 50,038 - - 287,500 2,660 (25,771) 54,588 (12,534) Net cash outflows from Operating Activities (6,570,277) (1,325,419) 16. SEGMENT INFORMATION AASB 8 “Operating Segments” requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Group operates in one segment, being exploration for mineral resources. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Group. and United States of America. Following the acquisition of Silver Mountain Mining Pty Ltd on 7 December 2017, the Group operates in Australia Information regarding the non-current assets by geographical location is reported below. No segment information is provided for United States of America in relation to revenue and profit or loss for the year ended 30 June 2019 or period ended 30 June 2018. Reconciliation of Non-Current Assets by Geographical Location Australia United States of America 30 June 2019 30 June 2018 A$ A$ 225,536 1,503,916 1,729,452 295,541 1,272,530 1,568,071 Subsequent to the end of the financial year, the Company has issued 1,800,000 options exercisable at 20 cents each and expiring 1 July 2023 to employees and issued 60,000 ordinary fully paid shares to employees on the exercise of vested performance rights. Other than as stated above, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years. 18. KEY MANAGEMENT PERSONNEL (a) Directors and Key Management Personnel The following persons were Directors of Eagle Mountain Mining Limited during the financial year: (i) (ii) (iii) Chairman – Non-Executive Rick Crabb Executive Director Charles Bass, Managing Director Non-Executive Director Roger Port Brett Rowe (as Alternate Director to Charles Bass) There were no other persons employed by or contracted to the Company during the financial year, having responsibility for planning, directing and controlling the activities of the Company, either directly or indirectly. (b) Key Management Personnel Compensation A summary of total compensation paid to Key Management Personnel is as follows: Total short term employment benefits Total equity-based payments Total post-employment benefits Year ended 30 June 2019 A$ 136,986 - 13,014 Period 6 September 2017 to 30 June 2018 A$ 57,078 220,000 5,421 150,000 282,499 2019 Annual Report Page 46 2019 Annual Report Page 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 19. CONTINGENT ASSETS AND LIABILITIES The Group has an exploration service agreement with Dragon’s Deep Exploration, Inc., an Arizona corporation (“Dragon”). Included in this agreement is a performance bonus payable to Dragon consisting of cash together with shares in Eagle Mountain Mining Limited (shares at market price, escrowed as required by the appropriate exchange) within 10 days of the events detailed below: Criteria Minimum of 24 holes completed by the Group with 70% success within 24 months of first drilling1 Commencement of a preliminary feasibility study in respect of any land covered by any mining claims or permits held by Silver Mountain Mining LLC and located in Arizona, USA.2 Cash Bonus Shares of Value US$50,000 US$150,000 US$100,000 US$200,000 1. 2. Success defined as a minimum 40 gram-metre zone (Au equivalent) within each drill hole for 70% of non- condemnation holes drilled. The milestone satisfaction date is the date on which the Company announces to the Australian Securities Exchange that it has commenced a pre-feasibility study on the relevant mining claims or permits. “Pre- feasibility Study” is as defined in the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition). Phase 1 drilling commenced at the Silver Mountain Project on 1 October 2018 and ended in early June 2019. Based on the completed drilling, current exploration plans and drill advancement rate it is considered unlikely that the first criterion listed above will be met. The Group does not currently foresee a preliminary feasibility study covering the claims held by Silver Mountain Mining LLC commencing in the near future. Other than the above, the Group has no contingent assets or liabilities outstanding at the end of the year. 20. COMMITMENTS (a) Exploration Expenditure In order to maintain the current tenure status of its exploration assets, the Group has certain obligations and minimum expenditure requirements with respect to unpatented claims and Arizona state exploration permits located in Arizona in the United States of America, as follows: Within 1 year After 1 year but not more than 5 years Total 30 June 2019 A$ 161,685 728,892 890,577 30 June 2018 A$ 178,548 665,715 844,263 2019 Annual Report Page 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 19. CONTINGENT ASSETS AND LIABILITIES The Group has an exploration service agreement with Dragon’s Deep Exploration, Inc., an Arizona corporation Included in this agreement is a performance bonus payable to Dragon consisting of cash together with shares in Eagle Mountain Mining Limited (shares at market price, escrowed as required by the appropriate exchange) within 10 days of the events detailed below: (“Dragon”). Criteria Cash Bonus Shares of Value US$50,000 US$150,000 Minimum of 24 holes completed by the Group with 70% success within 24 months of first drilling1 Commencement of a preliminary feasibility study in respect of any land covered by any mining claims or permits held by Silver US$100,000 US$200,000 Mountain Mining LLC and located in Arizona, USA.2 Success defined as a minimum 40 gram-metre zone (Au equivalent) within each drill hole for 70% of non- 1. 2. condemnation holes drilled. The milestone satisfaction date is the date on which the Company announces to the Australian Securities Exchange that it has commenced a pre-feasibility study on the relevant mining claims or permits. “Pre- feasibility Study” is as defined in the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition). Phase 1 drilling commenced at the Silver Mountain Project on 1 October 2018 and ended in early June 2019. Based on the completed drilling, current exploration plans and drill advancement rate it is considered unlikely that the first criterion listed above will be met. The Group does not currently foresee a preliminary feasibility study covering the claims held by Silver Mountain Mining LLC commencing in the near future. 20. COMMITMENTS (a) Exploration Expenditure In order to maintain the current tenure status of its exploration assets, the Group has certain obligations and minimum expenditure requirements with respect to unpatented claims and Arizona state exploration permits located in Arizona in the United States of America, as follows: After 1 year but not more than 5 years Within 1 year Total 30 June 2019 A$ 161,685 728,892 890,577 30 June 2018 A$ 178,548 665,715 844,263 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 20. COMMITMENTS (Continued) (b) Operating Lease Commitments The Company has entered into a 5 year lease commencing 1 January 2018 in respect of its offices at 22 Stirling Highway, Nedlands. The initial lease cost, inclusive of estimated outgoings, is A$79,650 per annum, with a 2% increase applied annually, and a 3 year lease for exploration offices in Arizona at an initial lease cost of US$42,000 per annum. Operating lease commitments are as follows: Due within 1 year Due after 1 year but not more than 5 years Due after more than 5 years 30 June 2019 A$ 139,450 256,498 - 395,947 30 June 2018 A$ 137,272 395,948 - 533,220 (c) Asset Acquisition The Group has no commitments for asset acquisitions at 30 June 2019 or 30 June 2018. 21. FINANCIAL RISK MANAGEMENT The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents information about the Company’s exposure to the specific risks, and the policies and processes for measuring and managing those risks. The Board of Directors has the overall responsibility for the risk management framework and has adopted a Risk Management Policy. Other than the above, the Group has no contingent assets or liabilities outstanding at the end of the year. (a) Credit Risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from transactions with customers and investments. Trade and Other Receivables The nature of the business activity of the Group does not result in trading receivables. The receivables that the Group does experience through its normal course of business are short term and the most significant recurring by quantity is receivable from the Australian Taxation Office. The risk of non-recovery of receivables from this source is considered to be negligible. Cash Deposits The Directors believe any risk associated with the use of predominantly one bank is addressed through the use of at least an A-rated bank as a primary banker. Except for this matter the Group currently has no significant concentrations of credit risk. (b) Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant of the future demands for liquid finance resources to finance the Company’s current and future operations, and consideration is given to the liquid assets available to the Company before commitment is made to future expenditure or investment. 2019 Annual Report Page 48 2019 Annual Report Page 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 21. FINANCIAL RISK MANAGEMENT (Continued) (c) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising any return. Interest Rate Risk The Group has cash assets which may be susceptible to fluctuations in changes in interest rates. Whilst the Group requires the cash assets to be sufficiently liquid to cover any planned or unforeseen future expenditure, which prevents the cash assets being committed to long term fixed interest arrangements, the Group does mitigate potential interest rate risk by entering into short to medium term fixed interest investments. Equity Risk The Group has no direct exposure to equity risk. Foreign Exchange Risk The Group holds a portion of its cash assets in US dollar denominated bank accounts and bank deposits. The Group is also significantly exposed to foreign exchange risk through transactions and arrangements in respect of its US based operations. Other than the above, the Group does not have any direct contact with foreign exchange fluctuations other than their effect on the general economy. The Group seeks to mitigate foreign exchange risk by considering capital requirements and foreign exchange rates when undertaking treasury transactions, such as utilising US dollar denominated term deposits. 22. FINANCIAL INSTRUMENTS Credit Risk The Directors do not consider that the Group’s financial assets are subject to anything more than a negligible level of credit risk, and as such no disclosures are made (refer note 21(a)). Impairment Losses The Directors do not consider that any of the Group’s financial assets are subject to impairment at the reporting date. No impairment expense or reversal of impairment charge has occurred during the financial year. Interest Rate Risk At the reporting date the interest profile of the Group’s interest-bearing financial instruments was: Fixed rate instruments Financial liabilities Variable rate instruments Financial assets 2019 Annual Report Page 50 Carrying amount ($) 2019 Carrying amount ($) 2018 (36,392) (44,862) 1,879,883 6,795,421 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 21. FINANCIAL RISK MANAGEMENT (Continued) 22. FINANCIAL INSTRUMENTS (Continued) Cash Flow Sensitivity Analysis for Variable Rate Instruments A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. 2019 Variable rate instruments 2018 Variable rate instruments Profit or loss 1% increase 1% decrease Equity 1% increase 1% decrease 18,799 (18,799) 18,799 (18,799) 67,954 (67,954) 67,954 (67,954) Foreign Exchange Risk At the reporting date the Australian dollar equivalent of amounts recognised by the Group in US dollars were as follows: Financial assets Cash at bank Deposits at call Financial liabilities Trade and other payables Borrowings Carrying amount ($) 2019 Carrying amount ($) 2018 229,270 - 1,895,194 1,736,572 229,270 3,631,766 (86,749) (36,392) (123,141) (25,359) (44,862) (70,401) Cash Flow Sensitivity Analysis for Foreign Exchange A change in foreign exchange rates of 5% at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant. Profit or loss Equity 5% increase 5% decrease 5% increase 5% decrease 2019 Financial assets - - 11,464 (11,464) (36,392) (44,862) Financial liabilities 6,157 (6,157) 6,157 (6,157) 1,879,883 6,795,421 2018 Financial assets - - 181,588 (181,588) Financial liabilities 3,520 (3,520) 3,520 (3,520) 2019 Annual Report Page 50 2019 Annual Report Page 51 (c) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising any return. Interest Rate Risk The Group has cash assets which may be susceptible to fluctuations in changes in interest rates. Whilst the Group requires the cash assets to be sufficiently liquid to cover any planned or unforeseen future expenditure, which prevents the cash assets being committed to long term fixed interest arrangements, the Group does mitigate potential interest rate risk by entering into short to medium term fixed interest investments. Equity Risk Foreign Exchange Risk The Group has no direct exposure to equity risk. The Group holds a portion of its cash assets in US dollar denominated bank accounts and bank deposits. The Group is also significantly exposed to foreign exchange risk through transactions and arrangements in respect of its US based operations. Other than the above, the Group does not have any direct contact with foreign exchange fluctuations other than their effect on the general economy. The Group seeks to mitigate foreign exchange risk by considering capital requirements and foreign exchange rates when undertaking treasury transactions, such as utilising US dollar denominated term deposits. 22. FINANCIAL INSTRUMENTS Credit Risk Impairment Losses Interest Rate Risk The Directors do not consider that the Group’s financial assets are subject to anything more than a negligible level of credit risk, and as such no disclosures are made (refer note 21(a)). The Directors do not consider that any of the Group’s financial assets are subject to impairment at the reporting date. No impairment expense or reversal of impairment charge has occurred during the financial year. At the reporting date the interest profile of the Group’s interest-bearing financial instruments was: Carrying amount ($) 2019 Carrying amount ($) 2018 Fixed rate instruments Financial liabilities Variable rate instruments Financial assets NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 22. FINANCIAL INSTRUMENTS (Continued) Liquidity Risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements (refer note 21(b)): Consolidated Carrying amount $ Contractual cash flows $ < 6 months $ 6-12 months $ 1-2 years $ 2-5 years $ > 5 years $ 2019 Trade payables Borrowings and other 2018 Trade payables Borrowings and other Fair Values 224,648 224,648 224,648 - - - 36,392 39,316 5,882 5,882 11,765 15,787 261,040 263,964 230,530 5,882 11,765 15,787 54,818 54,818 54,818 - - - 44,862 48,378 5,571 5,571 11,142 26,094 99,680 103,196 60,389 5,571 11,142 26,094 - - - - - Fair Values Versus Carrying Amounts The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position are as follows: Cash and cash equivalents Trade and other payables Borrowings Consolidated 2019 Carrying amount $ 1,879,883 (224,648) (36,392) Fair value $ 1,879,883 (224,648) (36,392) Consolidated 2018 Carrying amount $ Fair value $ 6,795,421 (54,818) (44,862) 6,795,421 (54,818) (44,862) 1,618,843 1,618,843 6,695,741 6,695,741 The Group’s policy for recognition of fair values is disclosed at note 1(t). 2019 Annual Report Page 52 The following are the contractual maturities of financial liabilities, including estimated interest payments and Eagle Mountain Mining Limited is the ultimate parent entity of the Group. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 23. CONTROLLED ENTITIES The following were controlled entities at the end of the financial year and have been included in the consolidated financial statements: Name Country of Incorporation Date acquired/incorporated Silver Mountain Mining Pty Ltd Silver Mountain Mining LLC Silver Mountain Mining Operations Inc Australia 7 December 2017 United States of America United States of America 7 December 2017 18 January 2018 Percentage Interest Held 2019 Percentage Interest Held 2018 100% 100% 100% 100% 100% 100% Silver Mountain Mining LLC and Silver Mountain Mining Operations Inc are both 100% owned subsidiaries of Silver Mountain Mining Pty Ltd. The following amounts are payable by subsidiary companies to the parent company Eagle Mountain Mining Limited at the reporting date: Name Silver Mountain Mining Pty Ltd Silver Mountain Mining LLC Silver Mountain Mining Operations Inc Amount due to Eagle Mountain Mining Limited 2019 A$ 69,727 528,472 7,082,555 2018 A$ 69,562 528,472 1,168,897 The loans to subsidiary companies are non-interest bearing and the Directors of Eagle Mountain Mining Limited do not intend to call for repayment within 12 months. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 22. FINANCIAL INSTRUMENTS (Continued) Liquidity Risk excluding the impact of netting agreements (refer note 21(b)): Consolidated amount cash flows months months years years years Carrying Contractual < 6 6-12 1-2 2-5 > 5 $ $ $ $ $ $ - $ - 224,648 224,648 224,648 - 36,392 39,316 5,882 5,882 11,765 15,787 261,040 263,964 230,530 5,882 11,765 15,787 54,818 54,818 54,818 - - - 44,862 48,378 5,571 5,571 11,142 26,094 99,680 103,196 60,389 5,571 11,142 26,094 - - - - - 2019 Trade payables Borrowings and other 2018 Trade payables Borrowings and other Fair Values Fair Values Versus Carrying Amounts financial position are as follows: Cash and cash equivalents Trade and other payables Borrowings Consolidated 2019 Carrying amount $ 1,879,883 (224,648) (36,392) Fair value $ 1,879,883 (224,648) (36,392) Consolidated 2018 Carrying amount $ Fair value $ 6,795,421 6,795,421 (54,818) (44,862) (54,818) (44,862) 1,618,843 1,618,843 6,695,741 6,695,741 The Group’s policy for recognition of fair values is disclosed at note 1(t). The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of 2019 Annual Report Page 52 2019 Annual Report Page 53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 24. ACQUISITION OF SILVER MOUNTAIN MINING PTY LTD During the period ended 30 June 2018, the Company acquired a 100% interest in the share capital of Silver Mountain Mining Pty Ltd from Silver Mountain Mining Nominee Pty Ltd, an entity associated with a Director Mr Charles Bass. The acquisition was completed on 7 December 2017. Silver Mountain Mining Pty Ltd is the holder of the Silver Mountain Project located in Arizona in the United States of America. Consideration given by the Company in respect of the acquisition of Silver Mountain Mining Pty Ltd was: Details Ordinary fully paid shares (refer note 13) Options exercisable at 30 cents each and expiring 3 years from the date of issue (refer note 12) Number 37,500,000 4,500,000 Fair value A$ 3,750,000 144,0001 3,894,000 1The options given in consideration were valued using the Black Scholes valuation model using the following inputs: Underlying share price at date of valuation Option exercise price Period to expiry Volatility Risk free rate $0.10 $0.30 3 years 87.5% 1.95% The net assets of the Silver Mountain Mining Pty Ltd group acquired by the Company on 7 December 2017 were: Details Cash assets Other receivables and prepaid expenses Property, plant and equipment Capitalised exploration acquisition costs Trade and other payables Loan Net asset value A$ 36,079 24,075 3,810 969,897 (68,690) (85,447) 879,724 The difference between the fair value of the consideration given by the Company, and the underlying net asset value of the Silver Mountain Mining Pty Ltd group as at the date of acquisition amounting to $3,014,276 has been recognised in the common control reserve (refer note 14c). 2019 Annual Report Page 54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended 30 June 2019 24. ACQUISITION OF SILVER MOUNTAIN MINING PTY LTD 25. LOSS PER SHARE During the period ended 30 June 2018, the Company acquired a 100% interest in the share capital of Silver Mountain Mining Pty Ltd from Silver Mountain Mining Nominee Pty Ltd, an entity associated with a Director Mr Charles Bass. The acquisition was completed on 7 December 2017. Silver Mountain Mining Pty Ltd is the holder of the Silver Mountain Project located in Arizona in the United States Consideration given by the Company in respect of the acquisition of Silver Mountain Mining Pty Ltd was: of America. Details Ordinary fully paid shares (refer note 13) Options exercisable at 30 cents each and expiring 3 years from the date of issue (refer note 12) Number 37,500,000 4,500,000 1The options given in consideration were valued using the Black Scholes valuation model using the following inputs: Underlying share price at date of valuation Option exercise price Period to expiry Volatility Risk free rate Details Cash assets Other receivables and prepaid expenses Property, plant and equipment Capitalised exploration acquisition costs Trade and other payables Loan The net assets of the Silver Mountain Mining Pty Ltd group acquired by the Company on 7 December 2017 were: Net asset value A$ The difference between the fair value of the consideration given by the Company, and the underlying net asset value of the Silver Mountain Mining Pty Ltd group as at the date of acquisition amounting to $3,014,276 has been recognised in the common control reserve (refer note 14c). Fair value A$ 3,750,000 144,0001 3,894,000 $0.10 $0.30 3 years 87.5% 1.95% 36,079 24,075 3,810 969,897 (68,690) (85,447) 879,724 Loss used in calculation of loss per share Weighted average number of shares used in the calculation of loss per share Period 6 September 2017 to 30 June 2018 $(1,681,900) Year Ended 30 June 2019 $(6,890,466) 92,947,012 51,744,967 Basic and diluted loss per share (7.4 cents) (3.3 cents) Options and performance rights to acquire ordinary shares granted by the Company and not exercised at the reporting date are included in the determination of diluted loss per share, to the extent that they are considered dilutive. There are 23,801,315 options and 180,000 performance rights on issue at 30 June 2019 (2018: 16,000,000 options and 75,000 performance rights) that have not been considered in calculating diluted loss per share as they are not considered to be dilutive to the reported loss. 26. PARENT ENTITY INFORMATION Assets Current assets Non-current assets1 Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities Net Assets Equity Issued capital Option capital Reserves Accumulated losses Total Equity Loss for the period1 Other comprehensive income Total comprehensive loss for the period Parent 30 June 2019 A$ Parent 30 June 2018 A$ 1,567,069 1,950,849 6,250,600 2,102,390 3,517,918 8,352,990 174,388 - 174,388 29,459 - 29,459 3,343,530 8,323,531 13,579,949 4,500 888,625 (11,129,544) 11,952,582 4,500 866,206 (4,499,757) 3,343,530 8,323,531 (6,629,787) - (4,499,757) 23,075 (6,629,787) (4,476,682) 2019 Annual Report Page 54 2019 Annual Report Page 55 1The Company has recognised a provision against the investment in subsidiary holdings to the extent that parent company net assets exceed those of the Group. DIRECTORS’ DECLARATION In the opinion of the Directors of Eagle Mountain Mining Limited (“the Company”) (a) the financial statements and notes set out on pages 22 to 55 are in accordance with the Corporations Act 2001, including: (i) (ii) complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements which, as stated in accounting policy note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and give a true and fair view of the financial position as at 30 June 2019 and of the performance for the period ended on that date of the Group. (b) (c) the remuneration disclosures that are contained in the Remuneration Report in the Directors’ Report comply with Australian Accounting Standard AASB 124 Related Party Disclosures, The Corporations Act 2001 and the Corporations Regulations 2001. there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. (d) the financial statements comply with International Financial Reporting Standards as set out in note 1. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019. This declaration is made in accordance with a resolution of the Directors. Signed at Perth this 18th day of September 2019. Charles Bass Managing Director 2019 Annual Report Page 56 DIRECTORS’ DECLARATION In the opinion of the Directors of Eagle Mountain Mining Limited (“the Company”) (a) the financial statements and notes set out on pages 22 to 55 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements which, as stated in accounting policy note 1 to the financial statements, constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and (ii) give a true and fair view of the financial position as at 30 June 2019 and of the performance for the period ended on that date of the Group. (b) the remuneration disclosures that are contained in the Remuneration Report in the Directors’ Report comply with Australian Accounting Standard AASB 124 Related Party Disclosures, The Corporations Act 2001 and the Corporations Regulations 2001. (c) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2019. This declaration is made in accordance with a resolution of the Directors. Signed at Perth this 18th day of September 2019. Charles Bass Managing Director Eagle Mountain Mining Limited Independent auditor’s report Independent auditor’s report to members Report on the Audit of the Financial Report Opinion We have audited the financial report of Eagle Mountain Mining Limited (the Company and its subsidiaries (the Group)), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations (d) the financial statements comply with International Financial Reporting Standards as set out in note 1. 2001. Material Uncertainty Related to Going Concern We draw attention to Note 1 (a) (i) in the financial report, which indicates that the Group incurred a net loss of $6,890,466 and a net operating cash outflow of $6,570,277 during the year ended 30 June 2019. As stated in Note 1 (a) (i), these events or conditions, along with other matters as set forth in Note 1 (a) (i), indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (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. 2019 Annual Report Page 56 2019 Annual Report Page 57 Independent auditor’s report to members (continued) 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 year. 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. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matters to be communicated in our report. CARRYING VALUE OF EXPLORATION COSTS How our audit addressed it Our audit procedures included: — A review of the directors’ assessment on the viability of the 26 patented mining claims and 424 unpatented mining claims, whether there were any indicators of impairment to those costs capitalised at the reporting date. — We assessed the adequacy of the Group’s disclosures in respect of the transactions. Area of focus Refer also to notes 1(b), 1 (j) and 8 The Group have incurred exploration costs in relation to exploration activities for Copper and Gold in the surrounding area of the Bradshaw Mountains of Yavapai County of Arizona, USA. Exploration and evaluation expenditure is generally written off in the year incurred, except for acquisition of exploration properties which is capitalised and carried forward. There is a risk the capitalisation of exploration and evaluation expenditure may exceed the value in use. An impairment review is only required if an impairment trigger is identified. Due to the nature of the resources industry, indicators of impairment applying the value in use model could include: — Viability of the projects — Changes to exploration plans and permits — Loss of rights to tenements — Changes to reserve estimates — Costs of extraction and production 2019 Annual Report Page 58 Independent auditor’s report to members (continued) Other Information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2019 but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. 2019 Annual Report Page 58 2019 Annual Report Page 59 Independent auditor’s report to members (continued) A further description of our responsibilities for the audit of these financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our independent auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 14 to 20 of the directors’ report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Eagle Mountain Mining Limited for the year ended 30 June 2019, 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. William Buck Audit (WA) Pty Ltd ABN 67 125 012 124 Conley Manifis Director Date this day 18th of September 2019 2019 Annual Report Page 60 ASX ADDITIONAL INFORMATION Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out below was applicable as at 4 October 2019. A. Distribution of Equity Securities Analysis of numbers of shareholders by size of holding: Ordinary Fully Paid Shares Distribution 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 More than 100,000 Totals Number of shareholders 9 41 71 238 109 468 Securities held 3,299 119,484 638,474 11,356,236 91,758,546 103,876,039 There are 27 shareholders holding less than a marketable parcel of ordinary shares. B. Substantial Shareholders An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital) is set out below: Holder of Relevant Interest Silver Mountain Mining Nominee Pty Ltd C. Twenty Largest Shareholders Issued Ordinary Shares Number of shares % of shares 43,980,001 42.36% The names of the twenty largest holders of quoted shares are listed below: Shareholder Name Silver Mountain Mining Nominee Pty Ltd Aralad Management Pty Ltd HSBC Custody Nominees (Australia) Limited Philip John Cawood Dr Salim Cassim Alitime Nominees Pty Ltd Tirumi Pty Ltd Prospect AG Trading Pty Ltd Zero Nominees Pty Ltd Flue Holdings Pty Ltd Geoffrey John Fennell & Carmel Ann Fennell GAB Superfund Pty Ltd Kero Investments Pty Ltd Snowball 3 Pty Ltd DC & PC Holdings Pty Ltd Rich Sham Nominees Pty Ltd Ocean View WA Pty Ltd Dominic O’Hanlon & Karen O’Hanlon GAB Superannuation Fund Pty Ltd Blue Crystal Pty Ltd Total Ordinary Shares - Quoted Number of shares % of Shares 43,980,001 2,900,000 2,216,312 2,000,000 1,620,000 1,362,000 1,313,200 1,250,000 1,250,000 1,200,000 1,195,296 1,000,000 966,000 932,153 916,143 897,000 830,000 760,000 750,000 737,406 68,075,511 42.36% 2.79% 2.13% 1.93% 1.56% 1.31% 1.26% 1.20% 1.20% 1.16% 1.15% 0.96% 0.93% 0.90% 0.88% 0.86% 0.80% 0.73% 0.72% 0.71% 65.54% 2019 Annual Report Page 60 2019 Annual Report Page 61 ASX ADDITIONAL INFORMATION D. Unquoted Securities Options over Unissued Shares Number Options 4,500,0001 4,500,0002 7,000,0003 2,130,0004 26,5995 5,644,7166 1,800,0004 25,601,315 of Exercise Price Expiry Date 30 cents 30 cents 20 cents 20 cents 80 cents 20 cents 20 cents 7 December 2020 6 March 2021 15 January 2023 1 February 2023 15 December 2019 31 July 2021 1 July 2023 Number of Holders 1 17 6 5 1 108 2 1 Options issued to a vendor to the initial public offer 2 Options issued pursuant to the initial public offer prospectus 3 Options issued to directors, officers and employees 4 Options issued to employees pursuant to the Company’s Employee Incentive Plan 5 Options issued pursuant to the exercise of options previously issued under an option entitlement offer 6 Options issued pursuant to a pro rata entitlement offer Performance Rights Number of Rights Expiry Date 25,000 25,000 35,000 35,000 110,000 1 December 2026 1 December 2027 1 July 2027 1 July 2028 Number of Holders 1 1 2 2 E. Voting Rights In accordance with the Company’s Constitution, voting rights in respect of ordinary shares are on a show of hands whereby each member present in person or by proxy shall have one vote and upon a poll, each share will have one vote. There are no voting rights in respect of options over unissued shares. Restricted Securities F. There are ordinary fully paid shares on issue which are subject to escrow agreements, as follows: • 17,494,226 shares restricted until 16 March 2020. There are unlisted options on issue that are subject to escrow agreements, as follows: • 10,534,000 options restricted until 16 March 2020. G. Use of Funds Pursuant to the requirements of ASX Listing Rule 4.10.19 the Company has used all funds raised from its Initial Public Offer (IPO) in a manner that is consistent with the prospectus and objectives outlined in the IPO document. 2019 Annual Report Page 62 CORPORATE DIRECTORY DIRECTORS Rick Crabb (Non-Executive Chairman) Charles Bass (Managing Director) Roger Port (Non-Executive Director) REGISTERED OFFICE Ground Floor 22 Stirling Highway Nedlands WA 6009 ALTERNATE DIRECTOR AUDITORS Brett Rowe (Alternate Director for Charles Bass) COMPANY SECRETARY Mark Pitts REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Ground Floor, 22 Stirling Highway Nedlands, Western Australia 6009 Email: Website: eaglemountain.com.au info@eaglemountain.com.au William Buck Audit (WA) Pty Ltd Level 3 15 Labouchere Road South Perth WA 6151 SHARE REGISTRY Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000 CORPORATE GOVERNANCE The Company has adopted the 3rd Edition the ASX Corporate Governance of Recommendations. A summary statement which has been approved by the Board together with current policies and charters is available on the Company website. http://eaglemountain.com.au/corporate- governance/ ASX CODE EM2 ABN 34 621 541 204 ASX ADDITIONAL INFORMATION Schedule of mineral tenure Eagle Mountain mineral licences as at 4 October 2019 are all presently located in the State of Arizona, United States of America. Prospect & Tenure type Pacific Horizon Patented Claims (26 individual claims) Claim Reference (Tenement) Percentage held Empire, Copper Ash, Palestine, Buffalo, Little Pittsburg, Austin, Wellington, Eagle, Number Ten, Number Eleven, Number Twelve, Number Thirteen, Noonday, South Noonday, Dudley, Comet, Alameda, Virginia, Mars, Ashland, Oakland, Sunnyside, Cuprite, Azurite, Yavapai and Jumbo Unpatented Claims (150 individual claims) SMM#1-14, SMM#17-145, SMM#147, SMM#149, SMM151, SMM#155, SMM#157, SMM#159, SMM#161 Exploration Permit (1 individual permit) Scarlett Unpatented Claims (92 individual claims) Exploration Permit (2 individual permits) Red Mule Unpatented Claims (98 individual claims) Exploration Permit (2 individual permits) Rhyolite Target Unpatented Claims (70 individual claims) Exploration Permit (1 individual permit) 08-117371 SCA#1-15, SCA#57-133 SMMSO#001 - 015; SMMSO#023 - 048; SMMSO#054; SMMSO#056; SMMSO#058 - 084 SMM#146, SMM#148, SMM#150, SMM#152, SMM#153, SMM#154, SMM#158, SMM#160, SMM#162-207, SMM#210-212, SCA#16-56 008-120871, 008-120872 SMMSO#001 - 015; SMMSO#023 - 048; SMMSO#054; SMMSO#056; SMMSO#058 - 084 08-120101 100% 100% 100% 100% 100% 100% 100% 100% 100% 2019 Annual Report 2019 Annual Report Page 63 

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